Industry news

India today signed an agreement with Sri Lanka to provide USD 318 million as line of credit to develop the island nation's railway sector, officials said. The agreement was signed by RHS Samaratunga, Secretary, Ministry of Finance and Mass media, and David Rasquinha, Managing Director of India's Export-Import Bank in Colombo.

During his first visit to Sri Lanka as prime minister in 2015, Narendra Modi had declared a line of credit of USD 318 million for the development of Sri Lanka's railway sector. That visit, the first standalone bilateral visit by an Indian prime minister since 1987, had come in the backdrop of increasing Chinese presence in the Indian Ocean nation. China has been investing heavily in Sri Lanka, developing mainly ports that could potentially be used as a base for its navy, though Beijing says the investments are part of its Belt and Road Initiative that aims to link it with Europe and Africa via the Indian Ocean.

Related news: Sri Lanka Growth to Accelerate in 2017, Sri Lanka and South Korea Strengthen Ties

According to ComputerWeekly.com, large UK firms are prepared to pay out more than £136,000 on average to cyber criminals who launch ransomware attacks, after building stockpiles of bitcoin. A survey, commissioned by secure connectivity firm Citrix, also shows that more than two-fifths are stockpiling bitcoins in case of a ransomware attack, compared with a third a year ago. The 2016 research revealed that one-fifth (20%) of companies with 250-500 employees did not have any contingency measures in place in case of a ransomware attack, however this has fallen to just 7% in 2017. Read the full story here.

Related news: Wavestone Look Into the Possibilities of Blockchain

It is amazing how different technologies can be adapted to new uses and markets. Blockchain, the technology behind the fabulously fluctuating Bitcoin, is increasingly being heralded by governments as the technology to revolutionise the public sector. An increasing number of countries are trialling blockchain for security in public records. Young countries in Eastern Europe, such as Georgia and Ukraine are pioneers of e-government, using blockchain for land registries to improve the trust in government. They are not the only ones, Sweden, Dubai and Estonia are also implementing the technology. A new wave of innovation is being embraced by government.

Related news: Wavestone Look Into the Possibilities of Blockchain

As the BA scandal moves on to the compensation phase, we need to address a problem in the whole airline industry. To compete with low-cost airlines, major airlines are cutting important costs in IT and support, meaning IT faults are becoming worryingly common. Sourcing is about finding cost advantage through experience and efficiency. By finding a quality service provider, firms can save money, expand operations and improve quality, simply focusing upon cost cutting will not provide the service customers deserve. Investing in quality is much cheaper than massive compensation.

Related news: BA Shambles Highlights Importance of Implementing Best Practice

Spending a holiday stuck in the departure lounge of an airport is not anyone’s idea of relaxation. Sadly, a massive IT fault left many passengers of British Airways (BA) in this exact situation, with the company blaming the fault on a power spike at its outsourced IT division in India. Sadly, blaming the outsourcing company is rather cliché, but the benefits of the sourcing outweigh the negatives. This is especially true if both buyers and service providers adhered to best practice which through transparency and communication helps avoid these fallouts.

Cost cutting can come from both sides of a contract, with decisions impacting on long running business operating models and leaving firms vulnerable to disruption. The BA disruption was caused primarily through a lack of appreciation for risk at the parent company, with limited and outdated plans for recovery in the case of technical disruption. As always, proper planning and good communication are a necessity, you can’t simply blame a service provider.

Kerry Hallard, CEO of the Global Sourcing Association (GSA) is available for comment, please contact jamest@gsa-uk.com or call 44 (0)7432 267 543.

Related news: BA Boss denies outsourcing was the root cause of their latest woes

UK services PMI figures have arrived and they are looking weak. The expectation of 55.0 (anything above 50.0 indicates growth) proved an unreachable summit as the index creeped in at 53.8 for May. Not great news for the stability of the Pound which is likely to fluctuate over the next week as the election reaches its final stage. Commenting on the figures, Yael Selfin, Chief Economist at KPMG UK said:

“These latest PMI figures point to a more subdued outlook for UK services. Those relying on the spending appetite of UK consumers are feeling the pressure, while export driven services still benefit from the weaker pound. The softer data for UK services contrasted with indications of a pick-up in both manufacturing and construction activity, which represent a smaller share of UK output, hence some resurgence in growth momentum this year should not be ruled out following a weak start in Q1.”

With Brexit negotiations just around the corner, the UK might be about to see a slide towards the Brexit economy that was predicted before the vote in 2016. Sadly, it is unlikely that the next government will have the stomach for liberalising reforms that the country needs to boost growth in the coming years.

Sri Lanka’s growth is forecast to accelerate to a 4.7 percent rate in 2017 and 5 percent in 2018, a new World Bank report says. According to the World Bank’s June 2017 Global Economic Prospects growth will happen as international financial institution programs support economic reforms and boost private sector competitiveness. Growth in the South Asia region is forecast to advance to a 6.8 percent pace in 2017 and accelerate to 7.1 percent in 2018, reflecting a solid expansion of domestic demand and exports.

The report says excluding India, regional growth is anticipated to hold steady at 5.7 percent this year, rising to 5.8 percent in the next, with growth accelerating in Bhutan, Pakistan, and Sri Lanka, but easing in Bangladesh and Nepal.

Related news: Sri Lanka and South Korea Strengthen Ties

Wavestone recently attended the Global Sourcing Association’s Public Sector Day 2017 that focused on the latest developments in public sector digital transformation. It also emphasised the importance of strategic sourcing at a time when public services face great pressure to deliver affordable services that satisfy an increasingly digitally connected audience.

The varied and enthusiastically delivered agenda brought together representatives from central government departments, senior public sector procurement analysts and SMEs in disruptive technologies such as RPA (Robotics Process Automation).

Capturing the curiosity of the room due its disruptive capability and mysteriousness was Blockchain – a potent platform which has the potential to significantly influence the development of digital public services.

You can read the full article from Wavestone here and learn more about upcoming GSA events here.

David Rickard, Director of Microsoft Procurement discusses with us the fundamentals of sourcing before speaking at the GSA Symposium this June.

How have buyers of sourcing services adapted to the underlying changes of the industry? Are they driving the change or is technology and innovation?

I think buyers are being compelled to change because the expectations of our internal stakeholders are changing driven by the technology and innovation available to them in the wider marketplace. Buying “stuff” is easier than ever for a consumer who can make a purchase 24x7 with a couple of clicks and have it delivered the very next day. They cannot understand why when they come to work it takes a lot more effort and a lot more time. The smart procurement orgs are the ones trying to simplify the experience as much as possible whilst gather as much BI about the purchases and suppliers as they possibly can to maximise the business benefits of every £ spent in the future. Technology should be an enabler to a world class procurement organisation, not a threat.

How important is it to have a universal standard for sourcing, such as the global sourcing standard in an increasingly globalised and disruptive industry?

Very important. Without a comprehensive and universal standard for an org to follow each department or location within a company’s buying org could be doing totally different things, some adding value but some not. A well thought out and implemented standard can set the direction and guiding principles for the entire company and can be used as a guide for implementing rapid change as the group adjust to the ever changing internal and external landscape. However it is key that any standard implemented is built with the business as it’s priority and not built for the sake of having a standard. Areas where things have to be done because the “standard says so” should be eradicated and only requirements that offer true value should be included and monitored.

How would you describe the importance of having strong fundamentals in sourcing in an increasingly digital age?

Strong fundamentals are vital for the success of any sourcing organisation but especially in an increasingly digital age. Without a strong foundation of good processes, capable staff, timely BI and a clear strategy any of the additional initiatives to leverage the digital age will fail. Digital should be the enabler to the sourcing organisation who should be looking to leverage new capabilities to offer additional value and impact to the company.

How do you build a successful sourcing contract in the age of the digital economy?

I am not sure if there is a perfect answer for this right now as many of us in Procurement are still working through what a true digital economy is and the impact it could have on sourcing. However the fundamentals of sourcing contracts, such as having clear deliverables and expectations of the supplier, will continue to be key in any age.

David will be speaking at the GSA Symposium this June, click here to learn more and book your place at the must attend event of the year for the sourcing industry.

According to statements given to various media outlets, the IT problems were caused by a power surge on Saturday morning at around 9.30am. Cruz claimed the surge had a “catastrophic effect” on some communication hardware which affected messaging across the airline’s system. He said tens of millions of messages every day are shared across the BA network's 200 systems and all systems were affected.

The BA chief then said the airline was then “unable to restore and use some of those backup systems because they themselves could not trust the messaging that had to take place amongst them”.

He went on to say neither an outsourcing of jobs or a cyber-attack were the source of the problem and everyone working with this particular hardware were "locally hired". Mr Cruz has not said who he believes was responsible for the failure or whether BA employees were involved, however, some reported ‘experts’ have questioned the statement about the power surge with some electricity companies reporting to such issues on their networks.

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Related: “British Airways boss Alex Cruz explains what went wrong in catastrophic IT meltdown”