UnumProvident Shifts ITO to ACS

A changing outsourcing market has led UnumProvident Corp. to modify what and how much it outsources and to terminate its IT outsourcing contract with IBM in favor of a five-year, $84 million deal with Dallas-based ACS.

The contract with ACS provides for a full range of operational support services for UnumProvident's mainframe and help desk operations. Under the terms of the contract ACS will also assist in the management of the carrier's midrange and end-user environments.

Roughly five years ago, UnumProvident signed a 10-year contract with IBM (Armonk, N.Y.) for an IT outsourcing arrangement of larger scope and for a significantly larger dollar figure. Since then, according to Brent Rogers, senior vice president, IT operations and sales technology, UnumProvident, "the whole infrastructure outsourcing landscape has gotten more competitive; providers know how to do it more efficiently and it's simply a better market now." After researching the options, Rogers adds, "we determined that we were probably better off severing that contract and going to market for the services we wanted to source."

Rogers stresses that the change in contract was unrelated to any services issues, and that in fact the benefit that the IBM deal provided was such that it could be considered in retrospect to be "a kind of 'outsource to improve and bring back in-house' approach."

Rogers explains that revisiting the existing arrangement in fact meant bringing certain previously outsourced functions back in-house and increasing internal IT staff by 75. "For the distributed services that we decided to bring back in, the technology is constantly evolving," Rogers says. "We have had a lot of growth in that arena, and it requires rapid execution on our part. We just felt we could do that better internally than within a structure where the pricing always needed to be revisited and took more time than we needed."

The services UnumProvident decided to continue to outsource—principally mainframe support and help desk—are those it considers more commoditized and more oriented to scale, according to Rogers. "A technology help desk is a technology help desk," he says. "In our opinion it doesn't make sense to do something like that yourself, fully staffed by your own employees."

Rogers says additions to IT staff will include "mainly engineers and deployment people in the server environment, the distributed storage people who architect those environments as well as build and deploy new servers, etc." The changes conform to a sourcing vision that includes internal resources focused on areas of growth and strategic importance and external resources dedicated to handling the more stable, maintenance-driven platforms and services.

The manifestation of that vision within the parameters of the ACS contract resembles UnumProvident's approach on the application side of its IT organization, according to Rogers. There, he says, "We have a relationship with [offshore outsourcer] Covansys, which does more of the baseline, legacy work, where our in-house staff does more of the strategic growth work."

Rogers characterizes his organization as now roughly "a 70 percent insourced, 30 percent outsourced organization."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio