Outsourcing – The Vendor Strikes Back

Things didn’t go smoothly for Ellen Barry when she reinsourced network and Internet services. As the CIO of the Metropolitan Pier and Exposition Authority (MPEA) in Chicago, she was up against an outsourcer that fought dirty.

In 2000, Barry joined the MPEA, which owns and manages the McCormick Place convention complex and popular tourist attraction Navy Pier. At the time, the municipal agency was in the second year of a three-year revenue-sharing arrangement with RedSky Technologies for all show-floor network services. The relationship started in 1995, and then the MPEA signed a deal with RedSky in January 1998. At the outset, the arrangement made sense: The MPEA didn’t see technical services as its business, the capabilities of its IS department were limited, and its clients weren’t interested in Internet and network-related services.

In the late ’90s, however, demand for such offerings at McCormick Place?the largest convention center in the country?exploded. With those services outsourced, the MPEA couldn’t effectively respond to new demands from customers for things like private virtual LANs, firewall implementations and high-speed bandwidth. It became evident to Barry that perhaps offering such value-added IT services to its customers should be part of the MPEA’s core competencies. “Some people might say that your business isn’t support. But if it touches your customers, it is your business,” says Ivy Meadors, CEO of High Tech High Touch Solutions, a Woodinville, Wash.-based IT consultancy.

RedSky, which had no plans to expand the outsourcing side of its business, invested little in network hardware and thus had to design a network for each show, leaving the MPEA to build and tear down the physical network each time a show rolled into the 2.2 million square-foot center. Barry knew there had to be a better way. So in September 2000, she began exploring what other centers were doing and evaluating the pros and cons of insourcing those IT services. What she learned convinced her to bring Internet and network services under the MPEA roof. With a year left on the contract, insourcing was worth pursuing.

However, desperate to keep MPEA’s business, RedSky did everything it could to hold on. The vendor went behind Barry’s back and approached members of the board, other MPEA IT vendors and even Mayor Richard M. Daley’s office to argue that the agency couldn’t handle the job. (RedSky declined to comment for this story.) One board member, the vendors and a fellow IT executive in the mayor’s office tipped Barry off to the bad-mouthing. “Some doubters at the MPEA didn’t trust the IS organization to manage this type of delivery,” Barry recalls. “It’s that age-old belief that government employees can’t handle that kind of service work.”

So Barry went about proving that it could be done?and that it would be a boon for the MPEA. “We had to make sure that whatever we designed was flawless,” Barry explains. With the help of Cisco Systems, the networking vendor and partner on the project, she drew up plans for the transition. Although a basic fiber infrastructure already connected the three buildings that make up McCormick Place, the MPEA would need to add 400 miles of fiber runs to create a permanent and redundant network backbone. She also saw an opportunity to connect the facilities at Navy Pier as well as the Hyatt Regency McCormick Place (owned by the MPEA and operated by Hyatt). She made the presentation to the board, who told her to pursue the insourcing alternative.

In September 2001, the MPEA prepared a proof of concept for insourcing network services at one of the biggest shows McCormick Place hosts, the Radiological Society of North America, which descends upon the Windy City every Thanksgiving. During the six-day gathering two months later, MPEA IT staff connected 40 rooms on a private network and provided uninterrupted Internet access. “It gave the organization the confidence that we could do what we needed to do,” Barry says. “And do it well.”

The MPEA spent $1.5 million to build the infrastructure, and Barry informed RedSky that the MPEA would be going through a 90-day transition period to bring network services in-house permanently. And during that transition, she told RedSky, the MPEA would provide all Internet and network services using the Cisco backbone. The outsourcer’s network would serve as backup.

Barry eventually hired four RedSky employees and brought over two from the MPEA’s IT staff. And since late March 2002, that team has been delivering all Internet and network services to the show floor. In addition, the MPEA now provides high-speed Internet access to all 800 hotel rooms at the Hyatt McCormick Place, has installed 802.11 wireless cafes to customers who request them and has implemented a connection to Internet2.

“We saw insourcing as a strategic opportunity for us,” Barry says. Expanding IT services, she believes, will attract more customers to the MPEA and ultimately lead to a stronger local economy.