Siam Cement Group: IT Outsourcing

To focus on its core businesses and reduce costs, Siam Cement Group (SCG) outsourced its IT to Accenture in 2001. Since then, the relationship has deepened, and the two companies have created a joint venture, IT One. IT One offers services to other companies, and has emerged as a key enabler of Siam Cement Group’s plans to expand its business and ultimately attain high performance.

SCG is Thailand’s largest industrial business conglomerate with more than 100 companies under five business groups. It has approximately 38,000 employees and offers more than 64,000 products. SCG began as a cement manufacturer and has diversified to meet the needs of Thailand’s growing economy, establishing and participating in new industries as technology and market demand warranted. At present, the group has business interests in paper and packaging, petrochemicals, cement, building materials and distribution.

As part of a major restructuring program, SCG sought to introduce fundamental changes in how it conducted business. Emerging from the 1997 Asian financial crisis, it needed to divest noncore divisions aggressively and focus on its core businesses to reduce costs, regain stability and increase profitability. SCG decided to outsource its IT functions and service delivery to gain access to deep technical skills at a lower cost.

The objective was to align SCG’s IT landscape with defined business needs to position it as a high-performance business. Accenture and SCG shared an excellent, long-standing relationship. This led SCG to form a joint venture—IT One—with Accenture. By collaborating with Accenture, SCG gained access to recommended practices, insights and skill sets to support and help enable SCG’s growth agenda. SCG is now looking to expand internationally, particularly in the Association of Southeast Asian Nations (ASEAN) region as well as introduce value-added services and products in each of its business lines.

The first phase of IT One’s business plan was so successful that in early 2004 SCG renewed its agreement with Accenture to continue with IT One for an additional four years. In this second phase, IT One’s challenge was to continue to deliver world-class IT services that further increased capability and efficiency to SCG as well as to become a powerful end-to-end service provider in Thailand’s IT market.

To help achieve this vision for IT One, Accenture worked with SCG on multi-tiered outsourcing and technology programs with Accenture continuing to take responsibility for infrastructure and applications outsourcing as well as key systems integration projects.

Infrastructure Outsourcing

The backbone of the initial engagement was infrastructure outsourcing (IO). Accenture provided, and continues to provide, ongoing infrastructure management of IT One’s infrastructure functions, including service desk support for technology incidents and requests; end-to-end management of distributed computing environments; delivery of consistent and secure network experience; optimizing IT spend; and helping to enable a secure and stable environment.

In the application outsourcing (AO) space, IT One manages more than 160 applications and provides 24/7 support. The full suite of services includes application development, application maintenance, production support, enhancements, upgrades and testing, covering a wide range of technologies including enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), e-business (especially Java), business intelligence, data warehousing and workflow management.

Systems Integration

Leveraging leading processes, methods and tools, Accenture has also helped with key systems integration projects to keep SCG competitive in the marketplace, including:

• Upgrading SCG’s enterprise-wide SAP R3 system to Enterprise Edition 4.7.

• Helping implement the first SAP CRM installation in Asia Pacific for SCG Chemicals and Distribution.

• Implementing leading supply chain solutions from AspenTech and i2.

• Helping with one of the largest PeopleSoft HR implementations in the ASEAN region.

• Implementing leading practices for accounting shared service solutions from SAP R3 and OpenText document management/business process management products.

• Introducing several new technologies across the enterprise, such as enterprise integration, virtualization and Web applications.

IT One completed the transformation into an independent IT services vendor successfully, adding prestigious companies such as Siriraj Hospital, Mitr Phol Sugar and Bureau of the Crown Property as its clients. Today, IT One provides application development, application management, customer support and infrastructure support services to more than 150 companies. The current contract with Accenture runs until 2015.

With more than 400 employees possessing extensive IT skills, including 250 SAP professionals; best-in-class resources; and deep technology skills and industry focus, IT One delivers solutions that make a key difference to the profitability and performance of its clients’ businesses. 

The integration of the entire infrastructure and application landscape, with service delivery across all offerings, was a new and innovative way of delivering application solutions that IT One pioneered in Thailand. Other tangible benefits delivered by Accenture include:

• Transformed the in-house, decentralized infrastructure service management capability into a state-of-the-art, centralized and virtualized utility computing environment.

• Introduced more than 15 utility-based infrastructure services.

• Enhanced service levels with SAP R3 Actual Availability exceeding 99.94 percent in 2010.

• Introduced ITIL-aligned service management for an application portfolio comprising more than 100 applications.

• Delivered year-on-year productivity improvements over the life of the contract.

• Delivered 30 percent operational cost savings over three years.

Today, IT One has expanded its service footprint to 22 countries around the world, added more than 150 companies to its client list and serves more than 25,000 users. The venture has provided SCG with access to world-class IT skills, delivering even greater value to the shareholders. Through the IT One joint venture, Accenture has had a significant and positive impact on SCG’s growth across business units, helping the company to realize its business goals and achieve high performance.