Huge outsourcing contract brings benefits to Air NZ

New Zealand's largest ever single desktop outsourcing contract will not only mean significant savings for Air New Zealand over the next three years but will also launch a new outsourcing division for Wang. The airline is outsourcing management of its PCs and local area networks and renting part of its data centre in Auckland to Wang, which will use the resource to seek other outsourcing business. The benefits of any business gained will be shared between the two parties.

New Zealand’s largest ever single desktop outsourcing contract will not only mean significant savings for Air New Zealand over the next three years but will also launch a new outsourcing division for Wang.

The airline is outsourcing management of its PCs and local area networks and renting part of its data centre in Auckland to Wang, which will use the resource to seek other outsourcing business. Under the contract, the benefits of any business gained will be shared between the two parties.

“The deal has all sorts of gain-share clauses,” says Air New Zealand chief information officer Garth Biggs.

A few Air New Zealand IT staff will join the Wang team of around 100, which will comprise the new outsourcing group. Sources suggest the contract is worth $20 million to Wang over the three years.

Compaq has won the business to provide PCs to 2400 desktops, as well as 400 laptops. Built in Australia, the new hardware is being pre-configured, with the airline’s standard client installed so the machines can be plugged in and ready out of the box.

“It’s a huge cost saving,” Biggs says. Central management will allow upgrades to be delivered over the airline network.

Compaq is also supplying 26 large Poliant lan servers running NT.

The standard desktop applications will include Microsoft Office 97, NT workstation, Exchange, SMS, Internet Explorer, terminal emulation software, and specific business applications which will vary from business unit to business unit.

Biggs says the decision to outsource to Wang was based on a pilot begun in December 1995. Initially, the airline had had around 17 respondents but, he says, the shortlist was very quickly narrowed down from four to Wang.

“The business case for outsourcing is extremely compelling. The net benefit will be to achieve capital and operating cost savings of around 30% a year over the next three years while completely replacing and modernising our desktop IT infrastructure.”

He says Air New Zealand’s IT investment is moving increasingly from mainframes to intelligent desktops. Core applications such as reservations, departure control, crew scheduling, and maintenance and engineering are now accessed from PCs.

Earlier, a similar outsourcing contract for the mainframe infrastructure was outsourced to IBM.

Wang chief executive Doug Wilson says clients are increasingly saying that the management, service and replacement of large, complex PC networks is not cost-effective use of their internal IT resources.

“In response to this, Wang is making a considerable internal investment in outsourcing capability which specialises in large-scale outsourcing.”

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