Forrester forum: Cognis targets savings from outsourcing transformation

Health foods and chemicals group Cognis has completed the outsourcing of its IT and reckons the move will drive profit growth for its private equity owners. Outsourcers had played a crucial part, it said, in realigning its technology with its new owners’ different business strategy.

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Health foods and chemicals group Cognis has completed the outsourcing of its IT and reckons the move will drive profit growth for its private equity owners.

The company, which has 8,000 employees and UK offices in Southampton, was bought in 2001 by private equity firms Permira, Goldman Sachs Capital and SV Life Sciences, but took several years to settle on the outsourcing of IT as holding the key to its transformation agenda and profit-driving.

Speaking at Forrester’s Services and Sourcing Forum in Nice, Cognis CIO Ralf Stalinski said that the company’s IT department and infrastructure was not immediately tackled for after the private equity buy-out due to more pressing priorities, but on review was found to be being too inflexible and costly.

Cognis' project to outsource IT – known internally as its “global optimisation programme” – was only completed in the past few months, but relied, said Stalinski, on "robust" service level agreements based upon clear operational models and risk policies, together with close management of the outsourcing relationship.

“We put a clear focus on IT as an enabler of the new strategy, and we made sure we set clear service level agreements so that it all worked,” he said.

Cognis’ outsourcer has so far been able to meet some “tough” targets on low total cost of ownership for the IT infrastructure, he said. This was achieved this by setting “standard, automated processes, putting packaged applications in place instead of bespoke software, and reducing the complexity of the infrastructure”.

A key challenge to the project has been the three different SAP systems are at the heart of Cognis, reflecing different manufacturing and transportation demands in different regions of the world. But outsourcing should now mean that Cognis has “capacity on demand” more cheaply and flexibly than it could ever have managed if IT had remained in-house.

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