Microsoft Continues to Outsource Internal Support and Services

REDMOND, Wash., Jan. 2, 1996 — Microsoft Corp. is moving ahead with its comprehensive outsourcing policy, which seeks to contract everyday network management chores and PC procurement and repair to vendors that specialize in support for corporate computing systems.

Microsoft’s outsourcing policy is shaped by issues that are similar to those facing many major corporations – the need to maximize computing resources and budgets, minimize administrative overhead, and maintain focus on the company’s core competencies. Outsourcing contracts, awarded to companies with successful responses to proposals solicited by Microsoft, are based on an assessment of demonstrated service commitment, excellence and suitability of support solutions, financial stability, and price.

As part of its outsourcing strategy, Microsoft this year has signed contracts with Vanstar Corp. and ENTEX Information Services Inc. A primary European procurement vendor will be selected and announced by spring 1996.

Vanstar, based in Pleasanton, Calif., will manage Microsoft’s PC procurements, including delivery, setup and installation of both PCs and peripherals. The three-year contract applies to approximately 12,500 desktops at Microsoft’s domestic sites and is worth approximately $550 million.

Vanstar is a national leader in technology integration, service and support. The company offers a life-cycle management approach to its networking services, covering key phases of the process, including analysis, design, planning, implementation, support, monitoring and maintenance. Vanstar has integrated its proprietary order management systems with Microsoft’s financial-control systems and has assumed full management responsibility for day-to-day operations as well as for the 114 Vanstar employees working on-site at Microsoft.

“Until recently, procurement has been spread among nearly 50 resellers worldwide. This is neither efficient nor the best use of our resources,”
said Joe Monteleone, director of PC procurement at Microsoft.
“Like that of any major corporation, our outsourcing policy seeks to reduce the number of administrative transactions while placing state-of-the-art PCs on desktops. We selected Vanstar for this procurement contract because it provided the right skills and tools for placing, tracking and analyzing procurement orders.”

The agreement between Microsoft and Vanstar calls for a shared-risk pricing model whereby Vanstar can benefit from reducing Microsoft’s overall costs.

ENTEX, based in Rye Brook, N.Y., is a leading PC systems integrator and provider of desktop services that recently won a three-year contract for internal help desk and PC services, covering approximately 40,000 PCs installed at 25 Microsoft locations.

“Microsoft is outsourcing nonstrategic, standard and generic network support to ENTEX, while keeping in-house the strategic skills that support emerging technologies within our network,”
said Chris Gibbons, chief information officer, information technology group at Microsoft.
“We are in the business of developing and marketing great software, services and new technologies rather than day-to-day management of networks.”

ENTEX, which has been a service provider to Microsoft for the past eight years, has more than 300 dedicated personnel working at Microsoft locations around the world, from the Redmond campus to Microsoft’s subsidiary in Dublin, Ireland. The contract, which makes ENTEX the primary desktop-service provider to Microsoft, is worth $50 million over three years and takes advantage of ENTEX’s life-cycle approach.

“Regions will have the autonomy to choose providers for their specific needs, but overall, the trend is to optimize the number of resellers we outsource to,”
said Gary Myall, general manager for computer operations and network services, information technology group at Microsoft.
“We are seeking a track record in excellence and suitability-to-task in our vendors and will distribute contracts accordingly.”

Founded in 1975, Microsoft (NASDAQ
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft is either a registered trademark or trademark of Microsoft Corp. in the United States and/or other countries.

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