Tranz Rail strikes pioneer deal with CSC

Tranz Rail has signed what may be a world-first facilities management/outsourcing deal with CSC. Based on benchmarking and shared risk, the contract is true "co-sourcing", says Tranz Rail business services group general manager Garry White.

Tranz Rail has signed what may be a world-first facilities management/outsourcing deal with CSC.

Based on benchmarking and shared risk, the contract is true “co-sourcing”, says Tranz Rail business services group general manager Garry White.

Initially, it’s a facilities management contract where CSC operates the data centre from its Auckland premises, storing the physical equipment and handling operations.

“We’re also about to move our local area networks to them and we’ll see how the relationship builds from there,” White says. “Ultimately, when they upgrade their storage to, say, a silo, I will buy storage from them rather than buy new devices. I may also buy extra mips rather than more boxes.”

One of the main drivers behind the facilities management contract was disaster recovery.

Tranz Rail’s data centre was in Wellington and it had a relationship for three years with ISSC in Sydney. It had failed over a couple of times in test mode but, says White, couldn’t guarantee better than three days for recovery. “That’s too long, now.

“With the data centre now in Auckland we are running a lights-out machine in Wellington for disaster recovery. That’s reduced the recovery time to 12 hours.”

White is a strong advocate of bench-marking. “If you can’t measure it you can’t manage it,” he says.

“The issue for me with outsourcing was how would I know I was getting a good deal? If mips go down in price by 25% per annum, at the end of five years the outsourcer makes a big profit.”

The principle of the contract with CSC is linking prices to benchmarking. There’ll be an annual review and benchmark done, based on a series of formulae, that will set the annual price for the ongoing contract.

“If a particular function goes down in price and CSC does better than that, we will share the dividend. If they do worse, they will wear the cost.”

But he says because the total deal is not being outsourced, it could be unfair to CSC if Rail were holding the key bit affecting pricing. “If we don’t meet our bit, I will allow CSC to increase its price. That will keep out internal guys as sharp as the external supplier.”

It’s a concept which White says is just beginning to be talked about in North America. He is unaware of any company using it. “We’ve signed a three-year contract initially with CSC,” he says. “We’re very pleased with the working relationship and CSC’s flexibility.”

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