The large data centre of a Central American Bank situated in Mexico housed the processing for the company’s businesses in Mexico, Panama, Chile, Colombia, Peru, Paraguay, Costa Rica, El Salvador and Uruguay. A decision was taken by the executive management to sell the businesses in all countries other than Mexico. The businesses were sold to 3 different financial institutions. Before the divestiture of the businesses the IT budget was US$420 million with 1,550 internal IT staff supported by 200 external contractors.

Lead the initiative in the following;

Assist in the due diligance of the buying banks of the entire IT organisation.

Work with the purchasing banks to repatriate systems onto new infrastructures

Ensure there was no increase in the cost of IT to the Mexican bank following the legal separation

1. Identify which systems and applications needed to be legally installed in purchasing banks before legal separation date.

2. Where systems could not be repatriated by the legal separation date, draw up Transition Service Agreements (TSA) to provide those services from Mexico.

3. Ensure the TSAs had binding and specific exit criterea with penalty clauses should they not be met

4. Re-plan the whole IT budget to remove the sunk costs as a result of the divestitures.

5. Plan the transformation activity to use the opportunity to invest in new technology for the Mexican bank

6. Renegotiate contracts with all software, hardware and maintainence vendors

7. Take advantage of outsourcing opportunities to streamline the remaining organisation.

1. After the legal separation over 200 external IT services were provided to the purchasers under Transitional Service Agreement. The exit timescale for all TSAs was 18 months. This generated 18 months of income at commercially negotiated rates which provided the financial headroom to effect the other changes simeltaneously to streamline and transform.

2. Help Desk, Desktop Support and PC and Laptop procurement and build were outsourced realising a USD$12 million per annum saving.

3. Used legitimate accounting practices to write off the depreciation of hardware and software against restructuring costs where it could be proved the equipment was used solely to support the businesses that had been divested. This realised UD$42 million total saving.

4. Virtualised and downsized as many servers as possible to accomodate the decreased workload. This generated US$6 milion per annum in savings on hardware.

5. Renegotiated software contracts to reflect the fewer and smaller servers now installed. This generated US$26 million per annum in cost savings.

6. Reduced permanent staff by 10% and removed all contractors. This generated UD$18 million per annum savings

The annulaised cost reduction was US$85 million. This enabled the investment in new technolgy to keep the business competetive and provided a stable financial platform for IT.