INFOSYS® TECHNOLOGIES LTD
GROWING SHARE OF A CUSTOMER’S BUSINESS
With annual sales of USD 4.6 billion (March 2009) and net profits exceeding USD 1.2 billion for the year ending March 31, 2009, Infosys Technologies Ltd. provided a full range of IT and consulting services. One of Infosys’ major customers was Prairie Four Square Insurance (PFS). PFS maintained extensive and mission critical IT systems across the United States. Relentless pressure from Wall Street to cut costs dramatically and the highly publicized successes of GE, prompted the PFS senior management to outsource offshore portions of its IT maintenance activities. Five years before 2010, they selected Infosys as the sole supplier in an outsourcing pilot test, awarding it three maintenance contracts. However, PFS had long favored a “best of breed” approach to IT systems work awarding contracts to those firms seen as the most competent in specific categories.
A PFS “white paper” had indicated that the purchasing department was one area where IT could make significant contributions in lowering operating costs. According to analysts in the white paper, the average cost to process an order at PFS was $78. This far exceeded the industry average of $45 per order. To remedy the situation, the white paper recommended that PFS reduce its supplier base to some 300 firms and implement an e-procurement system featuring the JAVA-based Ariba software. PFS managers decided to forego their traditional “best of breed” approach to outsourcing in favor of a pilot test of single sourcing. Thus, PFS managers bundled all activities related to procurement process re-engineering, vendor selection, Ariba software customization, system installation, and maintenance into a single project. They sought a single supplier of an end-to-end solution to handle the entire project. PFS managers then narrowed candidates for the project down to two consulting firms (i.e., Excalibur and Merrimac) plus Infosys. Clearly, Infosys...