Royal Mail Group turns to Cloud Computing as outsourcing is reined in

The Royal Mail Group's ongoing strategy to cut its IT budgets has resulted in the signing of a Cloud services contract with CSC to provide 30,000 employees with access to Microsoft's Business Productivity Online Suite (BPOS)

CSC is the first Microsoft partner to lead and win a Cloud computing services agreement of this scale. Under terms of the contract, CSC will also provide first line helpdesk support.

"This deal forms part of Royal Mail's drive to invest in new technology to improve efficiency and customer service,” said Royal Mail Group's Head of Technology Service Delivery, Carol Olney. "The Microsoft suite will give people across Royal Mail Group the tools they need to do their jobs more effectively, enabling our business units to collaborate with each other, partners and other external organisations more freely, easily and securely while securing cost savings."

"We are pleased to expand our relationship with Royal Mail Group and deliver the benefits of Cloud services," said Kevin Brown, vice president and chief operating officer of CSC in the UK. "Working collaboratively with Microsoft, we look forward to helping Royal Mail Group lower operational costs and providing more flexibility in the management of its IT systems."

The Group has managed to cut 10% from its annual IT budget of £110 million by pulling back on outsourcing. The Group has a 10-year deal with CSC's Prism Alliance, which also includes BT and Steria, to run RMG's data centres, data networks, voice services, desktop computers, and hundreds of business application systems.

RMG decided it could cut a number of high cost services and convert others into low-cost commodity services. It was able to cut £11 million from its IT OpEx spend over the last year and, in 2010, with a view to cutting a further 20% this year. "We were looking to remove unwanted costs, switch things off and dial down the service levels to make bigger savings,” said Antony Hayes, commercial director for RMG at a Sourcing Summit in London last week.

"Public and private sector organisations, such as Royal Mail Group, are moving their critical applications to Microsoft Online Services in increasing numbers," said Ron Markezich, corporate vice president at Microsoft. "Partners like CSC are important in helping our customers take full advantage of the enterprise-grade capabilities and flexibility Microsoft's Cloud applications deliver."