One global packaging manufacturer has consolidated its telecoms network to a single provider, producing a 25% annual saving. TM case study: Rexam and AT&T
From opening a can of fizzy drink to using eye drops or applying moisturiser, people all over the world come into contact with a Rexam product on average every 15 minutes. One of the world’s largest consumer packaging companies, Rexam has around 110 manufacturing facilities in more than 20 countries in Europe, North and South America and the Asia-Pacific rim. A company of this size needs a rigorous and reliable telecommunications network.
Consolidation a driver
An important part of the company’s business strategy is consolidation, to reduce costs, complexity and duplication. A global data centre was established in the UK to support business critical (ERP) applications, supplied primarily by SAP. This is currently being used by Rexam plc and two of its business sectors. The remaining two sectors will migrate to SAP over the next two years. A critical component of the strategy is IT vendor consolidation and the management of supplier relationships.
When John Neal was appointed chief technology officer of Rexam three years ago, he recommended moving 100% to a single network provider for the company’s operations in Europe, the United States and Latin America in order to meet the needs of the business and drive consolidation. Having considered recommendations from IT research company Gartner and following a review of several network providers, the company selected AT&T as its telecoms provider of choice and recently renewed a five-year contract with AT&T worth $30m.
“Increased centralisation and consolidation brings a requirement for more resilience in the network,” says Neal. “While the backbone tends to be resilient regardless of the networking provider, the critical part is the last mile and hence the performance and management of the various local PTTs [post telegraph and telecoms] is a major consideration. It was not very effective for us to manage a multitude of network vendors internally, so we selected AT&T because they proved to us that they could take ownership of the entire infrastructure, and manage this on our behalf.”
Rexam was able to compare AT&T’s performance with other competitors before any decisions to move away from a dual vendor strategy were made, when an incident outside the company’s control caused a network outage in Spain. Construction work taking place outside the company’s facilities broke a network cable and burst a water main. There was no opportunity to physically repair the broken network cable because the premises were flooded and proved a real test. AT&T was first to restore the company’s network link.
“It is not just about having a reliable network — having a good response mechanism is equally critical too,” says Neal. “It really allowed us to judge AT&T’s performance and capabilities.”
AT&T provides Rexam with an IP-based virtual private network (VPN) that connects some 100 manufacturing operations as well as around 60 third party locations. The relationship has evolved from AT&T delivering a global WAN (wide area network) to providing a range of fully managed global networking services, from managed security services through to IP telephony.
“I just want a service, one that will support our global applications as well as the flexibility to incorporate new locations quickly,” says Neal. “It allows our IT people to spend time working on other initiatives that deliver benefits to the business and has been particularly beneficial during the past year, when we needed our IT people to focus on bringing newly acquired companies into the network, quickly.”
Resilience in the network is one of the primary deliverables to ensure that Rexam locations globally have access to centralised business-critical applications. Rexam Beverage Packaging produces around 36bn cans globally, with 2,000 cans produced every minute on production lines that run around the clock. Each production line makes one pallet of cans every five minutes. A barcode is then attached to it so that it can be scanned for storage and shipping and, as part of the customer service, each pallet’s location and history are visible within two hours of production. For pallet tracking alone, the network processes some 70,000 transactions per day. With such volumes, any downtime has an effect on operations and keeping these running 24/7 is critical.
While the biggest cost savings and efficiencies have been in the centralisation of data centres, which have resulted in a cost saving of 50%, network vendor consolidation has delivered a 25% annual saving to Rexam.
“There are not many people who can truly provide a global managed networking service,” says Paul Martin, chief information officer at Rexam. “We pride ourselves in our way of working — the Rexam way — which is built on four values of trust, teamwork, continuous improvement and recognition. The expertise that AT&T brings to our business is invaluable. It allows us to look at other opportunities that fit with our business strategy.”
Rexam is continuing to look at further ways to drive new initiatives and help the business achieve increased consolidation and collaboration by outsourcing other elements of its IT to allow Rexam staff to focus on strategy, the maximisation of in-house resources on core business, improving security and resilience. Currently a priority focus is to identify elements that are business critical and increase efficiency in the production environment.
With the network consolidation in place, Rexam has asked AT&T to extend its services to include LAN (local area network) management in addition to the WAN management, providing a true end-to-end managed service.
“With cost reduction always top of our minds, we are continuing to look at better utilisation of our internal resources,” says John Neal. “Savings made are being reinvested to extend the service that AT&T is providing so that we as a business can achieve further benefits.”
In addition, in April Rexam signed a contract worth $9m over five years for AT&T to manage the company’s email environment. A capital investment of approximately £2.5m was needed in order to extend storage and replace services to support Exchange 2007, but the company decided that instead of reinvesting in hardware, there were greater benefits to move to a fully managed service.
“We took the opportunity to review how we managed our email environment and chose to redesign the architecture to move to a fully managed service with AT&T,” Neal adds. “It avoided use of capital expenditure, as this is in greater demand for our production environment, and gave us the opportunity to move to a solution where we don’t have to worry about the hardware ourselves. Moving to this managed service will save us £1 million over the term of the contract.”