£25m contract links payment to results

Scientific research body the Medical Research Council (MRC) has signed a £25m IT outsourcing contract that makes payment dependent on the delivery of measurable business benefits.

The supplier, LogicaCMG, will only be paid a substantial portion of its fee once certain criteria are fulfilled, such as having MRC's accounts ready within one month of the end of the financial year, says chief information officer Stuart Aitken.

'Instead of buying old-style outsourcing we wanted to buy services so we defined what we wanted the business to do and left the supplier to decide what hardware and software was required,' he said.

'And instead of payment based on traditional IT terms like systems availability, we pay on delivery of business outcomes. It is all very nice having systems 24/7 but if they are not delivering business benefit then there's no purpose.'

MRC put considerable effort into defining its needs in all business areas including finance, accounts, human resources, knowledge management and document and records management.

'We worked out a very detailed specification which defines exactly what the business needs to do and when it has to do it. Our job is to say to LogicaCMG these are business needs, you work out best technological way to do that and when we get the benefits we will pay you,' said Aitken.

The key performance indicators specified in the 10-year deal will be reviewed annually, and every six months in the first year, to be sure they reflect what the MRC wants.

The main new system LogicaCMG is contracted to deliver is a corporate portal offering browser-based access to all MRC's internal systems.

The first phase is due to be in place by Christmas with added functionality coming online over the following two years.

Under the terms of the deal, LogicaCMG is only paid a portion of its fee if a certain percentage of users log into the portal a certain percentage of the time, says Aitken.

'The supplier has to deliver real benefits, not just keep the systems running,' he said.