IT outsourcing in Eurostat – our experience

Georges Pongas, Adam Wroński Meeting on the Management of Statistical Information Systems MSIS 2007, Geneva, 8-10 May 2007 Eurostat Unit B1 – IT Systems for Statistical Production 1

Presentation outline

• Outsourcing in Eurostat • Informatics environment of Eurostat.

• Framework of outsourcing activities • Principles • Contractual framework of outsourcing activities • Contractual procedures • Experience of Eurostat • Outsourcing conditions for success • Pitfalls • Conclusion Eurostat Unit B1 – IT Systems for Statistical Production 2

Outsourcing in Eurostat

Started in 1980s • • • Applied for various reasons: obtaining an expertise which cannot, in principle, be found among its own staff, the flexibility in human resources, their allocation, amount and mobility and finally the need to focus internal resources to core business activities (statistics that is difficult) Covering: requirements gathering and analysis, application design, application development, system maintenance, help desk activities.

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Informatics environment of Eurostat

• Unix • Applications developed mainly: Oracle, Java, SAS, VB.

• Also used: Excel, Business Objects, Fame, Oracle Express, C, C++, Power Builder, Cold Fusion, Web Logic.

• Major developments use 3-tier model with thin clients using web technologies (client server exists) • ~ 9% of human resources • Over 100 various applications (programs) • majority having maintenance status • Outsourcing ~ 11M€ Eurostat Unit B1 – IT Systems for Statistical Production 4

Framework for outsourcing activities - principles

Current regulations require:

• Services to be specified in terms of output (results) and not input (resources used by the contractor).

• The performance of the contractor has to be regularly and closely monitored.

• In order for services to be outsourced, there must be a competitive market to deliver these services.

• Eurostat must maintain a technical capacity to define the required service, estimate its cost and monitor and evaluate the results.

• Outsourcing does not diminish the responsibility of Eurostat (the organisation and its responsible officials).

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Call for tenders

• Pre-information announcement, the subject of the call for tenders, the duration of the programme and the maximum allocated budget • Publication, describing the details of the object of the call for tenders, and the conditions of acceptability and selection • The choice of the contractor is done using three kinds of criteria: • Selection criteria: experience, size, financial capacity • Quality of the offer • The price offered • The price is not known before the first two criteria are evaluated and published to make the technical evaluation objective • The contract is signed with the company having the best score Eurostat Unit B1 – IT Systems for Statistical Production 6

Contractual procedures

• • Open call for tenders if > 60k €. one or two up to a maximum of five years. (The Commission budget is annual) • • • • • Restricted call for tenders two step mechanism. as an open call for tenders the selection mechanism chooses two to twenty companies at a second step all pre-selected companies can participate in restricted call for tenders. for a generic service - neither the exact volume nor the exact specification can be given at the moment of the (non-restricted) call for tenders. • • (negotiated & one offer) procedures < 60k € and 5k€ respectively not used for informatics activities.

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Framework contract

• • • • special case of the restricted procedure call for tenders is done using a generic description, describing merely the technical capacity needed and the potential types of interventions (tasks) companies are ranked and then for each particular type of expertise request to the first ranked company. If the company refuses the request, sent to the second one, etc.    reduction of the elapsed time between expression of the need and start of work (6 - 9 months vs. 2 - 3 months) better flexibility and thus it is better adapted to fulfil various informatics needs most of IT developments use it Eurostat Unit B1 – IT Systems for Statistical Production 8

Framework contract - services

• • Time and means analysis, prototyping, design, testing, documentation and training, maintenance hired person works on the Eurostat premises. • • • Quoted time and means Specification in loose terms of the work to be done. several small tasks are defined to which the company must answer, giving the total cost of each task in person-days. smaller size developments and projects at evolutive maintenance level where the global specification cannot be done at the moment of the first specification • • • Fixed price contracts specification of the deliverables company responds with a project plan team structure, the composition of the development team (experience, knowledge and education), responsibilities and total workload. larger scale developments. Eurostat Unit B1 – IT Systems for Statistical Production 9

Conditions for success

• Availability of qualified project managers • statistics • informatics • project management.

• Specifications - accurate and with sufficient detail requirements and the delivery terms precisely specified. • The selection of the contactor must include appropriate choice mechanisms, i.e., assurance of choosing the best or sufficiently good offer.

• Continuous dialog and monitoring of the company during the contract execution is guaranteed.

• The specifications are realistic and correspond to the available budget. • Relation between the company and public administration must be of mutual trust.

• On an individual project level a long term budget plan is established covering not only the initial developments but also the long term evolutive and corrective maintenance.

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Pitfalls

• Internal personnel cannot specify and control the quality of deliverables of a company • Inaccurate or fuzzy or unrealistic specifications have been produced or contract does not contain a description of the critical deliverables.

• Organisational structure is inappropriate, • e.g., mixing of internal and company teams. • Too much supervision  the public organisation.

implicit transfer of the final responsibility to • Outsourcing is applied to a core activity such as strategic planning, user requirements and architecture definition. • Moving target.

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Conclusion

• Experience of Eurostat affirms that globally outsourcing can be beneficial. • The issues to be vigilant: – companies that win framework contract change every several years. Consequently, at such times there is an extra need for resources to transfer the knowledge to the new company programmers. – the need for concurrent comprehension and appreciation of statistical, informatics and project management issues. • Finally, to stay in control and keep the expertise in house the core activities should not be outsourced.

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