British oil giant BP Amoco has outsourced its US accounting processes and related information systems to PricewaterhouseCoopers in a 10-year, $US1.1 billion deal.
The deal is one of the largest business process outsourcing agreements ever. It's also the first time the accounting and consulting firm has taken on management of a company's related enterprise resource management applications.
"We see many [business process outsourcing] deals and lots of application support deals, but in this one, the two have been integrated," said Cynthia Doyle, an analyst at IDC.
Under terms of the contract, PricewaterhouseCoopers will support BP Amoco's financial software from SAP, according to Charles Kafoglis, a partner in the accounting firm's energy practice. It will also handle accounting support applications such as Premas, an oil and gas production and revenue system licensed by PricewaterhouseCoopers.
The New York company will also acquire BP Amoco's accounting and application systems group, and has employees in Chicago and Houston as well. The group supports BP Amoco's upstream and chemical operations in the US. About 1200 employees, including 300 SAP-trained staffers, will join PricewaterhouseCoopers in those locations.
The move comes as BP Amoco looks to cut $2 billion annually in operating expenses. While BP Amoco officials wouldn't disclose how much they expect to save through the outsourcing deal, "our experience is that 10 to 20 per cent is not uncommon in an outsource," Kafoglis said.
BP Amoco already outsources downstream accounting processes to Andersen Consulting.
Amoco began using SAP enterprise resource planning software in 1995, and its last business component went live late last year.
PricewaterhouseCoopers was one of three implementation partners on the project. Today, BP Amoco supports 16,000 SAP users worldwide.