Outsourced IT Proves Crucial to Success of Global Business Transformation - ‘The Corus Advantage is IT’
Corus, one of the world’s leading manufacturers, processors and distributors of steel and steel-based solutions, was formed just ahead of the new millennium by the merger of British Steel and Koninklijke Hoogovens.
A key challenge was to achieve a unified approach to marketing opportunities and production needs based on two entirely separate IT heritages.
Capgemini was already in place in the UK arm of Corus, running virtually the entire UK IT operation in a long-term outsourcing contract signed before the merger. It was asked to work in partnership with Corus senior management and other service providers in a further ‘great leap forward’ in IT to help Corus achieve its new vision.
The result is ongoing IT support with no disruption or loss of continuity with service levels maintained at 99%+ of the time. Some 20% savings in the considerable IT annual budget for Corus have been realised.
Client Profile
Corus is one of the world’s leading manufacturers, processors and distributors of steel and steel-based solutions. Formed just ahead of the new millennium by the merger of British Steel plc and Koninklijke Hoogovens NV, Corus is a customer-focused, innovative, solutions-driven company, which combines international expertise with local service.
Corus has 20 Business Units worldwide, delivering innovative solutions to a broad range of markets, including construction, automotive, packaging, aerospace, energy and engineering industries.
The company’s strategy aims to create shareholder value by achieving world-class competitiveness through operating excellence and technological advance. The emphasis of Corus investments is in downstream added-value activities, which can achieve leading positions in attractive market sectors with sustainable growth.
Business Issues
Global over-capacity, government-subsidised competition and protectionist barriers to free trade have all helped to make today’s international steel industry one of the toughest businesses of all time.
The successful fight-back by Corus against these challenges has been based on two strategic concepts:
- the ongoing re-invention of the company as a provider of steel-based solutions as opposed to a producer of bulk tonnage of steel, with a new emphasis on innovation and close partnership with customers
- the pursuit – and achievement – of world-class standards in manufacturing and distribution, with new efficiencies facilitated by automation, streamlined operations and robotics, and with all processes throughout the business supported by world-class IT.
A key challenge for Corus was how to achieve a unified approach to its marketing opportunities and its production needs based on two entirely separate IT heritages: those of the two merging companies. The problem was compounded by the fact that both British Steel and Koninklijke Hoogovens had themselves grown largely by acquisition, resulting in a diversity of IT systems which, although having rich functionality and great fitness for purpose, were not interfacing with one another as Corus management’s new vision required.
An additional challenge for Corus was to make appropriate use of the new web-based technologies both in its internal communications and knowledge management and its external procurement and sales activities.
Solution
Capgemini was already in place in the UK arm of Corus, running virtually the entire IT operation (hardware, software and networking at Corporate, Business Unit and Plant levels) in a long-term outsourcing contract signed in 1997 with the former British Steel. Performance on this contract was manifestly on target, with significant improvements in IT service, reductions in IT costs and, most crucial of all, major contributions to the steel company’s overall competitiveness. Capgemini was therefore asked to work in partnership with Corus senior management in a further ‘great leap forward’ in IT that would help the company achieve its new vision.
The programme undertaken by Capgemini and Corus was built on three main foundations:
Integration
The new streamlined, integrated, energy-efficient manufacturing processes being
introduced by Corus demanded equally integrated IT. Yet the special needs of steel
manufacture, and the fact that the systems in place were custom-designed to meet
those needs, ruled out their wholesale replacement by a new, off-the-peg ERP solution.
The ‘hourglass’ shape of the Corus business involved multiple raw material inputs
being brought together into a vast range of outputs - tubes, pipes, coils, sheets,
pressings etc. Moreover, their properties then needed to be traced in further
processing at Corus and beyond. All this was simply beyond the capabilities of
any standardised applications packages on the market.
The solution determined was therefore to aim for greatly enhanced integration of existing applications. Preserving data integrity and achieving seamless communication between a large number of disparate applications called for systems integration skills of a high order, and these Capgemini was able to supply. The approach taken also effectively lengthened the useful life of hardware and applications software already in place, and therefore increased the ROI on the existing investment in IT, while eliminating the need for a massive investment in totally new systems.
Standardisation
It was clear that one key factor determining the success of the merger that created
Corus would be the ability to function as a single, fully connected company, able
to communicate effectively from site to site and country to country. Capgemini
and Corus therefore put a high priority on a phased programme of standardisation.
Areas such as desktop facilities and communications, knowledge communities and
databases, web access and protocols were all included in the programme, with a
strong focus on establishing agreed common standards and putting in place procedures
to ensure compliance to those standards.
Flexibility
The new focus on Corus as a customer-driven solutions company, launching many
new products every year, highlighted the need for flexibility of IT support. To
succeed in fast-moving market sectors, Corus would need the capability to move
equally fast, and therefore the idea of hard-wiring systems ‘for ever’ was rapidly
reaching its sell-by date. Capgemini was therefore tasked with giving Corus’ UK
systems a degree of flexibility never envisaged when they were originally installed.
The power and resources of the worldwide web would be key to this new flexibility. Capgemini worked with Corus in both a consulting and implementation capacity to establish a new, secure, user-friendly Corus portal. The portal would permit customers, suppliers, partners and employees to obtain the information they needed without risk to the integrity of the core Corus systems now being connected to the web.
Benefits
The Chief Information Officer at Corus outlines the benefits achieved midway through the Capgemini 10-year contract as follows:
“Corus is undergoing a successful global transformation from a supplier of bulk steel tonnage to a provider of customer-driven solutions, and that change could not have taken place without the progress we have made in IT assisted by outsourcing support to a world-class IT partner.”
“Significant progress has been made in integrating our IT to support a new and more streamlined way of running our business. This equates to significant benefits in terms of manufacturing costs, supply chain effectiveness and customer service – both in terms of delivering the right quality products with great alacrity and in terms of having up-to-the-minute information for the customer on progress against contract.”
“We have seen some highly significant quick wins from our standardisation programme with, for example, the thousands of desktops in our business able to communicate with common email tools from Day One of the merger. Standardisation of our Lotus Notes facility is providing a new level of support for our knowledge communities and enabling us to function more effectively as a unified business.”
“Underlying all the challenging new projects that they have delivered to time and budget, Capgemini has also maintained our ongoing day-to-day IT support with no disruption or loss of continuity. I expect service levels to be maintained 99%+ of the time and Capgemini meets this expectation.”
“The objective of driving down IT costs (while radically improving our IT) was key to the original plan to outsource, and performance against plan has exceeded our expectations, with some 20% savings in our very considerable IT annual budget being realised to date. Perhaps equally important, by outsourcing to a provider like Capgemini, using ‘open book’ methods, we now know and fully understand our IT costs, and how benefits and costs are related.”
“Significantly improved IT has enabled many parts of our business to achieve reduced stockholdings despite increased throughput, with significant progress towards the ‘just-in-time’ approach that has revolutionised many sectors of manufacturing.”
“Capgemini has been instrumental in helping us integrate our existing systems with the worldwide web, and helping us reap the benefits of e-commerce as buyers, sellers and partners. This has also facilitated a new style of co-operative working with many of our major customers, sharing knowledge with them via the web on major development projects.”
“By using their systems integration and middleware expertise, Capgemini has extended the life of our existing investment in IT, and therefore improved the effective return on investment, and have also given them the modern look and feel of web-based systems, with resulting improvements in user-friendliness.”
“Capgemini has taken the time and trouble to understand our large and complex business, and to explain IT, and what information technology can do, to our managers at all levels in demystified, acronym-free terms, and although not quantifiable, this is a benefit of tremendous importance to Corus.”
The CIO for Corus summarises the progress made by saying:
“Today we can state with confidence that in supporting our new business vision and in delivering competitive advantage, the Corus advantage is IT.”
Written in co-operation with Corus plc