Under the terms of the Balancing and Settlement Code (BSC), ELEXON is mandated to outsource the majority of the work required to manage the energy market. Therefore, the energy operators which fund ELEXON put its procurement and supplier management processes under significant scrutiny. Value for money is essential.
In 1999, CGI won an initial £150m outsourcing contract to build, finance, operate, develop and maintain the central systems that underpin the market and manage and operate it for ten years.
When this contract was nearing completion, ELEXON decided to minimise the risk of outsourcing all of this work to one supplier by splitting the contract between two companies. CGI won the contract for business process outsourcing of the network and the hardware services.
ELEXON selected CGI because it needed to ensure that the contract delivered.
A professional exit from the applications contract by CGI set a strong foundation for the future of the partnership.
CGI ensured that any knowledge was transferred professionally to the new subcontractor. “It must have been a tough cultural change handing over the applications service,” says Sara Titmuss at ELEXON. “However, CGI were incredibly professional and provided access to their application expertise for four months into the new contract to ensure there were no negative impacts during the transition.”
Following the change, the two companies entered a new phase of their relationship by creating a shared account plan, which set out what both were trying to achieve from the contract.
CGI delivered a 40% reduction in costs for ELEXON required under the contract agreement, plus further savings of £170k in this year alone.
The original contract, let in 2008, was for five years with the option to extend for a further two years. As a result of a strong relationship, robust and reliable service delivery and a compelling financial proposal, ELEXON have recently committed to a two year extension resulting in further savings of £1.7m to the organisation and its customers, £500k of which pulls forward benefits into the current contract term.
Open discussions between ELEXON and CGI have led to a greater focus on key SLAs and a system of collaboratively agreed penalties and rewards have been implemented to support this. This means that if the same problem occurs more than once, a penalty could be incurred – ensuring that problems are fixed with a view to the long-term.