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Diversity is the hallmark of the UMW group. The thriving industrial enterprise, based in Malaysia, stretches from Singapore to the Philippines to Canada, with spots in between, and engages in core businesses ranging from automotive and heavy equipment to material and environmental management. Several years ago, the company saw the need to connect all the dots on their corporate map with an Information Technology (IT) system that enabled them to gather and manage knowledge more effectively.

"We had businesses that had been operating independently in terms of daily management and IT capability," said Wan Salleh Mohamed, Managing Director of UMW. "We wanted to be better informed and to manage our resources better. We wanted a better system."

Now UMW is three and a half years into a five-year joint venture contract with EDS. That joint venture, called UMW/EDS Technology (UET), is moving the company toward their goals.

"We're helping them migrate from a mainframe system to a client server platform with an enterprise software solution that we're in the process of implementing," said Randy Chapin, Managing Director of UET. "That's the key to UMW's strategic direction and objectives."

Chapin, who came to the joint venture from EDS, said the outsourcer participated in the evaluation process of various hardware and software bundles that could be best utilized in implementing the solution.

The process has been an educational one, according to Wan Selleh. "We have, I think, a better perspective of what other people are doing as far as their IT is concerned," he said. "We also have a better appreciation of other people's practices, as we're trying to adopt these world class practices in our operation."

UET is in the process of introducing a new common business applications program which Wan Selleh said is showing results. "We're now beginning to see a new level of productivity and better and timely information on the business in one of the areas where we have introduced it," he said. "I'm hoping by the second quarter of next year that I'll be able to see similar results throughout the organization."

International outsourcing brought no surprises for UMW. The company is an old hand at working with firms around the globe. "We have been dealing with many different organizations and cultures over the years," said Wan Selleh. " EDS is the latest of many. We've been dealing with other American companies for more than 20 years now, and also some European and Japanese companies. So it's not a big problem."

The real dilemma was whether to outsource at all. "We know how important IT is to modern business," said Wan Selleh. "I think it's quite a big step to let someone else do it for you. If it doesn't work, we'll fall flat on our face." Chapin said, from the vendor's perspective, the issues facing the outsourcing decision are not necessarily more complex because of an international setting.

"Whether it's a US domestic entity that's facing an outsourcing decision in trying to best address their business objectives or an international setting such as UMW, the fundamentals surrounding that decision are essentially the same," he said. "If you put yourself in the customer's chair, then what they're trying to achieve strategically is not any different than any other company is trying to achieve. Their objectives may be different, but the dynamics of the evaluation process are essentially the same."

Wan Selleh appears pleased with the UMW decision. "We still have a long way to go in terms of the actual objectives, but we are well on the way," he said. "I think we're on the right track."

Lessons from the Outsourcing Primer:

• Develop enterprise software solutions that specifically meet your needs.
• Implement world class practices.

Publish Date: August 1997

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Copyright © 1997 - Everest Partners, L.P.

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