Royal Dutch Shell (Shell) announced today that it has signed Master Service Agreements (MSAs) with three global IT and telecommunications suppliers to manage a significant part of its IT infrastructure and telecommunications services.
The move is part of the company's initiative to achieve top quartile performance in its businesses and functions in support of its "More Upstream, Profitable Downstream" strategy.
As well as significant improvements in efficiency and productivity, the initiative will deliver important financial benefits for Shell over the first five years. Over the same period, the total value of the Agreements to the three suppliers will be in excess of $4.0 billion.
Under the MSAs, Shell will outsource the provision of its IT infrastructure and telecommunications services in 3 service bundles, starting 1st July 2008:
AT&T for network and telecommunications, T-Systems for hosting and storage, and EDS for end user computing services and for operational integration of the infrastructure services.
With the signing of the MSAs, Shell expects to transfer the majority of affected staff to the service providers. It anticipates minimal redundancies as a result of this change. Employee representative bodies are consulted on an ongoing basis. All required regulatory consents will be obtained before proceeding with the implementation of the global master service agreements.
Alan Matula, Shell s Chief Information Officer said: "This deal is a major strategic choice for Shell. Partnering with EDS, T-Systems and AT&T gives us greater ability to respond to the growing demands of our businesses. It allows Shell IT to focus on Information Technology that drives competitive position in the oil & gas market, whilst suppliers focus on improving essential IT capability."
Additional comments:
Elesh Khakhar, Partner, TPI (advisor to Shell):
"As well as being one of the largest deals signed in the last five years, Shell s approach features a number of unique elements. By providing integrated services to more than 1,500 sites in over 100 countries, Shell s approach combines all the advantages of decentralised service provision with the benefits and efficiency of a centralised governance structure. This multi-supplier environment has been designed in line with TPI best practice to specifically encourage collaborative behaviour between suppliers, while allowing Shell to retain full control of strategy and service integration. In addition to all of the usual business benefits, Shell will be able to exploit emerging commoditised services designed for the consumer market, such as email or internet phone services, and integrate them within their services when they become robust enough for commercial use."
Ron Spears, AT&T Group President, Global Business Services:
"AT&T is committed to delivering to Shell the very highest quality communications services, leveraging our global scale and reach. Ultimately, our goal is the success of our customers and we believe that success is fueled by our ability to create business velocity - the combination of speed and direction that helps customers create competitive advantage in their own markets. This deal will I believe enable Shell to maximize its operational efficiency and focus on its core priorities."
Bill Thomas, Executive Vice President for EDS Europe, Middle East and Africa (EMEA):
"EDS's significant global presence and our experience acting as operational integrator to key partners on large-scale IT outsourcing projects will help reduce management complexity in Shell's IT environment. We are pleased to have been selected by Shell to play this vital role in improving the business flexibility, and addressing the long-term sustainability, of its IT environment. "
Reinhard Clemens, member of Deutsche Telekom s Board of Management and T-Systems CEO:
"The agreement confirms T-Systems as a preferred provider of network-centric ICT (information and communication technology) services for corporate Europe. It helps Deutsche Telekom s enterprise customer unit deliver on a promise to boost international sales. Most of Shell s SAP services will be transferred to T-Systems Dynamic Services platform in Munich. The unique solution dynamically adapts ICT capacities like bandwidth and data storage to customers business processes, boosting efficiency and reducing costs.
"Our commitment to Shell s global IT needs awarded us with the largest contract in today s market. We are making good on a promise to grow our international business while winning the confidence of Europe s largest corporation."
Notes to Editors:
Shell's IT organisation provides IT services to approximately 150,000 users worldwide in over 100 countries. These services are delivered with some 8,000 people, employees and contractors, and cover both IT applications and infrastructure.
The Infrastructure division in scope is manned by some 3,600 staff and third-party contractors located in 65 countries, majority concentrated in Shell's four IT delivery hubs - Leidschendam in the Netherlands, Wythenshawe in the UK, Houston in the US, and Cyberjaya in Malaysia. Completion of the signing will see approximately 3,000 IT infrastructure employees and contractors across these locations transfer to the suppliers. Shell retains an Infrastructure organisation with some 600 people to keep the strategic management and controls of infrastructure, including teams for specific services that provide Shell business competitive advantage in the oil & gas industry.
The outsourcing contract takes the form of a 'Master Services Agreement' under which local contracts will be drawn up.
The value of the contracts as reported in the media releases of the three suppliers is:
T-Systems - one billion euros
EDS - $US1 billion AT&T - $1.6 billion
About infrastructure services:
The activities in scope of outsourcing include designing, building, maintaining and operating the IT infrastructure, and cover the desktop and laptop computers, the telephone and handheld devices, the shared servers for running the applications that support business processes, the storage for data, and the networks and bandwidth for data and voice transmission. The infrastructure services enable Shell companies to use applications that support their business processes and goals, and enable staff and contractors for teamwork across the enterprise, whatever their location, including offshore sites and some of the world s most remote areas.
About Shell:
Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 130 countries with businesses including oil and gas exploration and production; production and marketing of Liquefied Natural Gas and Gas to Liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects including wind and solar power. For further information, visit www.shell.com <http://www.shell.com/>
About T-Systems:
T-Systems is Deutsche Telekom s enterprise customer unit. More than 160,000 corporations and public institutions use the provider s network-centric information and communications technology (ICT) services - ranging from data center operations and global Internet Protocol services to the development and management of applications. With locations in over 20 countries, T-Systems is a preferred supplier for Corporate Europe s global business activities. The company, based in Frankfurt/Main Germany, serves all industries and is a leading service provider for the automotive and telecommunications industries as well as the public sector. With approximately 56,500 employees, T Systems posted revenues of 12 billion Euro in 2007.
About EDS:
EDS (NYSE: EDS) is a leading global technology services company delivering business solutions to its clients. EDS founded the information technology outsourcing industry 45 years ago. Today, EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. Learn more at <http://www.eds.com>.
About AT&T:
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of its three-screen integration strategy, AT&T is expanding its TV entertainment offerings. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at <http://www.att.com/>
The move is part of the company's initiative to achieve top quartile performance in its businesses and functions in support of its "More Upstream, Profitable Downstream" strategy.
As well as significant improvements in efficiency and productivity, the initiative will deliver important financial benefits for Shell over the first five years. Over the same period, the total value of the Agreements to the three suppliers will be in excess of $4.0 billion.
Under the MSAs, Shell will outsource the provision of its IT infrastructure and telecommunications services in 3 service bundles, starting 1st July 2008:
AT&T for network and telecommunications, T-Systems for hosting and storage, and EDS for end user computing services and for operational integration of the infrastructure services.
With the signing of the MSAs, Shell expects to transfer the majority of affected staff to the service providers. It anticipates minimal redundancies as a result of this change. Employee representative bodies are consulted on an ongoing basis. All required regulatory consents will be obtained before proceeding with the implementation of the global master service agreements.
Alan Matula, Shell s Chief Information Officer said: "This deal is a major strategic choice for Shell. Partnering with EDS, T-Systems and AT&T gives us greater ability to respond to the growing demands of our businesses. It allows Shell IT to focus on Information Technology that drives competitive position in the oil & gas market, whilst suppliers focus on improving essential IT capability."
Additional comments:
Elesh Khakhar, Partner, TPI (advisor to Shell):
"As well as being one of the largest deals signed in the last five years, Shell s approach features a number of unique elements. By providing integrated services to more than 1,500 sites in over 100 countries, Shell s approach combines all the advantages of decentralised service provision with the benefits and efficiency of a centralised governance structure. This multi-supplier environment has been designed in line with TPI best practice to specifically encourage collaborative behaviour between suppliers, while allowing Shell to retain full control of strategy and service integration. In addition to all of the usual business benefits, Shell will be able to exploit emerging commoditised services designed for the consumer market, such as email or internet phone services, and integrate them within their services when they become robust enough for commercial use."
Ron Spears, AT&T Group President, Global Business Services:
"AT&T is committed to delivering to Shell the very highest quality communications services, leveraging our global scale and reach. Ultimately, our goal is the success of our customers and we believe that success is fueled by our ability to create business velocity - the combination of speed and direction that helps customers create competitive advantage in their own markets. This deal will I believe enable Shell to maximize its operational efficiency and focus on its core priorities."
Bill Thomas, Executive Vice President for EDS Europe, Middle East and Africa (EMEA):
"EDS's significant global presence and our experience acting as operational integrator to key partners on large-scale IT outsourcing projects will help reduce management complexity in Shell's IT environment. We are pleased to have been selected by Shell to play this vital role in improving the business flexibility, and addressing the long-term sustainability, of its IT environment. "
Reinhard Clemens, member of Deutsche Telekom s Board of Management and T-Systems CEO:
"The agreement confirms T-Systems as a preferred provider of network-centric ICT (information and communication technology) services for corporate Europe. It helps Deutsche Telekom s enterprise customer unit deliver on a promise to boost international sales. Most of Shell s SAP services will be transferred to T-Systems Dynamic Services platform in Munich. The unique solution dynamically adapts ICT capacities like bandwidth and data storage to customers business processes, boosting efficiency and reducing costs.
"Our commitment to Shell s global IT needs awarded us with the largest contract in today s market. We are making good on a promise to grow our international business while winning the confidence of Europe s largest corporation."
Notes to Editors:
Shell's IT organisation provides IT services to approximately 150,000 users worldwide in over 100 countries. These services are delivered with some 8,000 people, employees and contractors, and cover both IT applications and infrastructure.
The Infrastructure division in scope is manned by some 3,600 staff and third-party contractors located in 65 countries, majority concentrated in Shell's four IT delivery hubs - Leidschendam in the Netherlands, Wythenshawe in the UK, Houston in the US, and Cyberjaya in Malaysia. Completion of the signing will see approximately 3,000 IT infrastructure employees and contractors across these locations transfer to the suppliers. Shell retains an Infrastructure organisation with some 600 people to keep the strategic management and controls of infrastructure, including teams for specific services that provide Shell business competitive advantage in the oil & gas industry.
The outsourcing contract takes the form of a 'Master Services Agreement' under which local contracts will be drawn up.
The value of the contracts as reported in the media releases of the three suppliers is:
T-Systems - one billion euros
EDS - $US1 billion AT&T - $1.6 billion
About infrastructure services:
The activities in scope of outsourcing include designing, building, maintaining and operating the IT infrastructure, and cover the desktop and laptop computers, the telephone and handheld devices, the shared servers for running the applications that support business processes, the storage for data, and the networks and bandwidth for data and voice transmission. The infrastructure services enable Shell companies to use applications that support their business processes and goals, and enable staff and contractors for teamwork across the enterprise, whatever their location, including offshore sites and some of the world s most remote areas.
About Shell:
Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 130 countries with businesses including oil and gas exploration and production; production and marketing of Liquefied Natural Gas and Gas to Liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects including wind and solar power. For further information, visit www.shell.com <http://www.shell.com/>
About T-Systems:
T-Systems is Deutsche Telekom s enterprise customer unit. More than 160,000 corporations and public institutions use the provider s network-centric information and communications technology (ICT) services - ranging from data center operations and global Internet Protocol services to the development and management of applications. With locations in over 20 countries, T-Systems is a preferred supplier for Corporate Europe s global business activities. The company, based in Frankfurt/Main Germany, serves all industries and is a leading service provider for the automotive and telecommunications industries as well as the public sector. With approximately 56,500 employees, T Systems posted revenues of 12 billion Euro in 2007.
About EDS:
EDS (NYSE: EDS) is a leading global technology services company delivering business solutions to its clients. EDS founded the information technology outsourcing industry 45 years ago. Today, EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. Learn more at <http://www.eds.com>.
About AT&T:
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of its three-screen integration strategy, AT&T is expanding its TV entertainment offerings. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at <http://www.att.com/>
