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CLIENT
TDG, one of the world's largest logistics companies.

PROBLEM
Logistics company risks very high IT overspend implementing a new Warehouse Management System.

SOLUTION
Adopt BPG project management to minimise risk.

RESULT
Multiple simultaneous IT projects all bought in within budget.

WHAT HAPPENED
TDG is one of the world's largest logistics companies. It provides "outsourced supply chain management" - including processes and systems to manage the stock of its clients as if the clients managed the warehouses themselves. It's a business in which margins are cut to the bone and so every cost is under close focus.

That includes IT, where TDG faces more than the usual number of problems in avoiding cost overruns. Each time the company adds a new client, typically TDG integrates that client's systems with its own centralised warehouse management system (WMS).

But in some cases, the client selects the WMS to be used. Even if this system is new to the TDG team, they must execute flawlessly while still leaving enough resource to manage requests for new systems and infrastructure from existing clients.

That means the company runs more than 200 IT projects a year, 40 of which are warehouse management related. And since, as every IT director knows, IT projects often run over budget, TDG identified IT costs as a high-risk area that needed close attention.

In fact, cost reduction was one of the first tasks given TDG's Group IT Director Mike Branigan when he took on that position in 2003. An ex-managing director of one of TDG's subsidiaries and a supply-chain expert with more than 23 years experience, Branigan was given a tough job - to find ways to integrate new-client systems faster while decreasing TDG's overall IT-related financial exposure.

Branigan's solution was to look across the industry for methodologies that met three criteria. First, the methodology had to ensure that individual project costs are capped - fixed to the budget planned. Second, the methodology had to scale to work across TDG's wide range of IT development. And third, the method had to be transferable to TDG staff when it was used, so that it could be incorporated within TDG's existing project management framework without additional cost to the company.

The only group whose methods met Branigan's criteria was Best Practice Group, a consultancy that specialises in helping organisations bring in IT projects on budget and working as expected. As a first project, Branigan asked that group to bring its IT procurement-management toolkit - a combination of technical, contractual and procurement expertise - to bear on a high-budget contract renewal.

"A long-standing customer," Branigan explains, "was looking to renew their contract, which involved significant and potentially quite expensive change to their WMS and integration with TDG. They wanted to implement a new, market-leading WMS, with enhanced back-office and productivity tools. Operationally, our role also increased; we worked with an alliance partner to manage inbound stock sourced in the Far East.

"The customer had a specific piece of software in mind - an international WMS supplier with whom we had not worked before. So I asked BPG to work with my team, the supplier and customer. They reviewed planning, tendering, supplier relations, milestones and penalties, contracts and future plans. BPG's most important goal was to ensure that there would be no surprise costs in the total life of the project.

"BPG helped TDG bring the project in within budget - and within eight months rather than the usual 18. I found their process so intuitive and clear that it was straightforward to incorporate within our own internal process. We now do the majority of project management ourselves but retain a mentoring agreement with BPG for reassurance that we can ask for advice on unusually obscure or complex matters. I still intend to ask BPG to manage high-risk projects - those with a budget over £15m. Everything else TDG will manage itself - but our potential financial exposure is now been contained no matter how many projects we may take on."