March 11, 2010, 3:59 PM — PHOENIX -- When Proctor & Gamble Co., wants something from its outsourcer, Hewlett Packard Co., it doesn't deal with help desks, trouble tickets or support tiers. It gets attention from the top levels of the vendor's executive ranks.
P&G's clout with HP might make some the latter's other customers a bit jealous, but the two major firms operate in a rarefied world of mega-outsourcing deals that carry high stakes for both their bottom lines.
In 2003, P&G signed a $3 billion, 10-year outsourcing contract that called for HP to take over the consumer product maker's IT infrastructure. Once the deal was consummated, nearly 2,000 P&G employees were shifted to the vendor's payroll.
In a presentation at Computerworld Premier 100 conference here today, Jim Fortner, vice president of IT development and operations at P&G's business services division, offered insights about how the company's relationship with HP works.
Fortner said that in deals as large as this one, there's a strong need for top executive-to-top executive connections, an approach that HP and P&G have put into practice.
Ann Livermore, executive vice president of HP's enterprise business, travels to P&G headquarters in Cincinnati about once every two months for a review of the vendor's performance. HP CEO Mark Hurd attends those meetings about twice a year.
Both HP executives "are wired into our business," said Fortner. "When you have the CEO of a company sitting across the table and saying 'were going to deliver this,' you know they are going to deliver."
P&G works to get the most out of its vendors through activities like an annual "innovation day" to find ways to "innovate together," said Fortner.
Keeping a close relationship with all of its IT vendors has proved fruitful to P&G, particularly when it bought Gillette Co. in 2005 for $57 billion. Within two weeks, P&G's partners had assembled a large team to begin the effort to integrate IT systems.
Fortner's goal with this acquisition was to reduce Gillette's IT budget of $300 million by about two-thirds.
Aside from managing outsourcing contracts, one of the P&G IT operation's most important focuses is developing technology, especially systems that can create Second Life-like creations of in-store environments. Simulating data "is really big for us," said Fortner.
What simulation enables is this: A retailer, Wal-Mart for instance, and P&G can see on a visual display exactly what store shelves may look like with certain product configurations. The displays are so precise that the users can take virtual products off the shelves, read their labels, and move them virtually. The visualizations are coupled with back-end analytics to assess the impact changes to displays.