March 15, 2005

French automobile builder Renault just signed 3 IT outsourcing contracts as part of its electronic transition initiative that began two years ago.

The deals are with Atos Origin ($404 million, applications development and maintenance), CSC ($236 million, infrastructure management encompassing mainframe and network support, inter alia), and HP ($150 million, desktop computing management).

Renault also announced that it is standardizing on e-business applications and technology from IBM, Dassault (IBM's PLM partner), Microsoft, and SAP.

Overall, Renault's strategy is a clear example of the new trend in outsourcing, which favors engaging several partners over discrete project/responsibility areas in order to reduce risk and obtain faster time to value.

However, the idea is still to engage as few partners as possible in order to keep costs down. Renault did just that, saying in a statement that it had gone from many IT vendors to a handful of key partners.

The statement added that Renault's commitment to IT outsourcing is both tactical (cost savings) and strategic (aimed at core competencies).

On the tactical side, the idea is for Renault to "rationalize its infrastructure and accelerate the reduction of the number of information systems" while, on the strategic level, the company "is aiming to pursue its innovation in the core processes in the automotive industry (design, development, manufacturing, sales and aftersales) and to improve the skills of its staff."

Source: Line 56