Stelco steels itself for outsourcing changes

Canada’s largest steel maker has pounded out a deal that will have the company outsourcing its entire IT department by spring.

Hamilton, Ont.-based Stelco Inc. and Toronto-based EDS Canada signed a 10-year IT services agreement Monday. EDS Canada will provide Stelco with outsourced IT support and development services for most of manufacturer’s Canadian locations. EDS Canada will also implement enterprise resource planning (ERP) systems for Stelco’s order flow, maintenance, procurement, human resources and finance functions. The agreement will take effect in April.

Al Hurd, executive vice-president at EDS Canada, said because its arrangement with Stelco is a total outsourcing agreement, the entire IT infrastructure and application team will move to EDS. That team will complete the existing tasks at Stelco, along with three new IT projects.

“The most straightforward one is the PeopleSoft implementation of HR and finance,” Hurd said in explaining the first project. “That is intended to revamp antiquated legacy applications in that area, which is a pretty standard rationalization.”

The second project involves maintenance management, which Hurd said is “a big issue financially.”

“We will be implementing software that will do full-scale maintenance management throughout their manufacturing environment,” he said.

The third, what Hurd calls the “heart of the operation,” is a custom-built supply chain and logistics management application for Stelco’s entire steel production capabilities, which he said will get customers better connected with the ordering process.

“Steel is made in a variety of stages, so this system is designed to maximize the manufacturing processes and really help them be a lot more responsive to their customer base,” he said.

All of this, according to Mark Steinman, executive vice-president and CFO at Stelco, supports the steel company’s long-run, strategic plan for IT. “Basically, we have always said that we need to upgrade our technology and lower our cost of business and IT will help us do that,” he said. “Particularly with some of the systems we are looking at, which are mainly off-the-shelf systems, although the order-flow systems is uniquely developed, well, that’s what it is all for.”

The agreement will see about 200 Stelco IT professionals going to EDS Canada.

“(These are) people that are currently operating the infrastructure and application staff, along with the management that go along with that,” Hurd said. “That’s all but less than a handful than is currently in their total IT environment. They are maintaining at Stelco a group of less than 10 to be the project management office to maintain the relationship with EDS.”

EDS Canada in Toronto is at http://www.eds.com/canada

Stelco in Hamilton, Ont. is at http://www.stelco.ca