Yarra Valley Water brings IT in-house

Yarra Valley Water has credited a nine-month “in-sourcing” project for improving its IT project delivery and shaving $2 million off its annual expenditure.

The utility has used IT outsourcers since it broke out from Melbourne Water in 1995, first relying on MITS, then Logica, then Fujitsu since 2005.

Chief information officer Leigh Berrell said Fujitsu had been a good partner but “the structure of the relationship” between the parties was not meeting Yarra Valley Water’s requirements.

“It was a good financial deal with a price below market median,” he said. “Fujitsu was capable but there’s a difference between operating IT and getting greater advantage out of it.

“Because everything was outsourced, to get anything besides business-as-usual came with an added cost.”

With Yarra Valley Water relying increasingly on IT for business and customer-facing systems, Berrell decided to bring IT service provision in-house.

The in-sourcing project – submitted to the iTnews Benchmark Awards – concluded in July and saw Yarra Valley Water’s internal Business Technology Services team assume responsibility for desktop and application support, service desk and network support.

Yarra Valley Water hired 35 new IT staff, of whom a number were former Fujitsu employees, bolstering its Business Technology Services permanent headcount to 60.

Berrell said the utility also had 18 contractors currently and would continue to use technology providers for about 20 percent of its IT requirements, instead of 75 percent previously.

The project cost $700,000; Berrell said Yarra Valley Water was on track to shave 10 percent off its annual IT budget, with savings split “fairly evenly” across operational and capital expenditure.

But the thrust of the in-sourcing business case was cultural, he said, describing the financial benefits as “just icing on the cake”.

“This was about changing from being involved to being accountable – a challenge all staff were ready and willing to accept,” he said.

“Staff were shown the benefits of the increased scope of responsibility they would have under the new in-sourced delivery model, and the opportunities that the model would provide them for personal and professional advancement.”

Under the new model, IT staff were engaged in business projects earlier because their advice no longer came with an additional outsourcing cost, resulting in leaner, more effective solution delivery.

The restructured Business Technology Services team also delivered vastly improved results in customer satisfaction surveys, with a Net Promoter Score of 74 percent in 2012, compared with 3 percent in 2011 and 28 percent in 2009.

“We’ve put a lot of effort into business engagement ... There’s been a very big shift in the way that IT is perceived,” Berrell said.

“A lot of that comes from the fact that we’re a campus. We have a strong culture – we all know each other and eat in the same cafeteria. We bump into each other every day.”