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Don't dismiss the outsourcing megadeal: P&G on how to make them win-win

Interview: Filippo Passerini, CIO and global services officer, P&G

In 2003, when fast-moving consumer goods giant Proctor & Gamble signed an outsourcing deal with HP, it was one of the biggest deals of its kind - in more ways than one.

The contract covered P&G's IT infrastructure including datacentre operations, desktop and end-user support, network management and some applications development and maintenance support for P&G's global operations in 160 countries and was worth $3bn.

The contract was also some 1,200 pages long and, when brought to P&G's CIO Filippo Passerini and HP's then CEO Carly Fiorina to be signed, it was delivered on a cart.

"We had to stand up to sign it because it was taller than us seated," Passerini told silicon.com.

Although the size of the document - some two and a half feet tall - means it could theoretically ensure that every requirement, every deliverable and every service level agreement is set in stone, conversely a megadeal of such magnitude can't help but be a leap of faith for both buyer and supplier. After all, in a contract so large, making sure the vendor or customer is living up to every single element of their side of the bargain is all but impossible.

"If you have to go back to the contract... you never find what you need there, no matter how detailed it is, and when you get into contractual discussions, the marriage is already compromised," Passerini said.

"It forces an alignment before you get into the deal and at that point there is no confusion. There is a lot of mutual understanding and things will go better," he continued.

P&G headquarters

P&G's Ohio headquarters
(Photo credit: P&G)

The way to ensure such mutual understanding lies in the cultural fit, according to Passerini.

"When I say cultural fit, I don't mean we get along together well and we like each other - that is important - but on top of that there is the alignment, there is the vision. Together there is the win-win intent and there is a strong process in support of that," he said.

"HP, when we did the deal with them , were a distant fourth and with our deal they got instantaneous credibility in the market - they acquired capabilities, computer centres - so they became an important player immediately and that paid dividends. They were important to us and we were - and we are - important to them," Passerini added.

P&G is one of the...

About

Jo Best has been covering IT for the best part of a decade for publications including silicon.com, Guardian Government Computing and ZDNet in both London and Sydney.

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