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UnumProvident Shifts to ACS

Increased outsourcing competition has led UnumProvident to modify its IT outsourcing procedures.

Achanging outsourcing market has led UnumProvident Corp. (Chattanooga, Tenn.; $10.4 billion in total revenue) 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. ACS will provide a full range of operational support services for UnumProvident's mainframe and help desk operations, and assist in the management of the carrier's midrange and end-user environments.

It has been about five years since UnumProvident signed a 10-year contract with IBM (Armonk, N.Y.). According to Brent Rogers, SVP, 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 current 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 service issues.

Revisiting the existing arrangement meant bringing certain previously outsourced functions back in-house and increasing internal IT staff by 75, relates Rogers. "For the distributed services that we decided to bring back in, the technology is constantly evolving," he 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."

The services UnumProvident decided to continue to outsource -- principally mainframe and help desk support -- 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. "It doesn't make sense to do something like that yourself."

Sourcing Vision

Rogers says additions to IT staff will include "mainly engineers and deployment people in the server environment [and] the distributed storage people who architect those environments as well as build and deploy new servers." The changes conform to a sourcing vision that includes focusing internal resources 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 Covansys [Farmington Hills, Mich.], 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

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

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