Fletcher Building IT Sourcing and Transformation

Fletcher Building engaged Voco to lead an IT outsourcing evaluation and operating model transformation. The company was seeking to reduce cost, consolidate IT delivery and drive transformational change.

Fletcher Building is an integrated manufacturer and distributor of building and construction products and services throughout the world. It is one of New Zealand’s largest companies, encompassing 34 businesses and with operations in over 40 countries. Fletcher Builder employs over 20,000 people.

Challenge

When Fletcher Building approached Voco the company’s diverse business units each had separate IT functions. This had resulted in a profusion of applications and IT services running on overlapping and inefficient infrastructure. It was clear that consolidating these functions would enable business integration and synergies, as well as vastly improving efficiency and reducing cost.

Solution

A go to market process to assess outsourcing of IT functions had been set in motion by the time Voco was engaged. Voco was charged with leading the evaluation, proving the business case and guiding the decisionmaking process to ensure the desired outcomes were achieved.

Voco:

• Led the market engagement, vendor management and evaluation process. This included the service and financial evaluation
• Established and ran the management and executive governance and communication process
• Worked with all functions within ICT to ensure the baseline and current cost structures were fully understood and a sound financial evaluation was undertaken
• Led solution workshops and commercial negotiations with vendors
• Defined how a new operating model would look to support a different delivery model using external parties
• Led development of the full business case, decision framework and recommendation to the executive group and board.

Results

Voco’s intervention came at a time when Fletcher Building’s ICT sourcing strategy was being driven by vendors. The sourcing process was being conducted without a full understanding of the baselines and current service delivery model, let alone a more holistic view of the transformational change required.

The disciplined approach Voco brought to the engagement ensured proposals, pricing and cost reduction commitments were assessed based on facts and a solid evaluation framework and criteria. The path ultimately recommended by Voco was to refrain from outsourcing for the time being. This strategic restraint meant Fletcher Building was able to avoid significant cost and service issues.

Voco then developed a comprehensive IT transformation plan which was endorsed by the CEO and board. The plan set out a roadmap of initiatives to build IT capability, improve the operating model and reduce cost. Voco was subsequently engaged to lead the delivery of a number of the key initiatives, which directly lead to savings in the order of $5-7m per annum.