Industry news

Last week saw the 2012 Loebner prize take place, the competition in which computers attempt to convince judges that they are human. A few years ago, the results of a competition to demonstrate a machine mimicking a human may have seemed inconsequential to our everyday lives, but today the story is becoming more and more relevant. Increasingly machines use chatbots to interact with users online, or push out discussions on twitter, and the introduction of Apple’s Siri to the consumer market last year made all of this technology much more visible.

For all the marketing fluff, a system that proves it can have a conversation like a human is not really the point. For example, what Siri attempts to do is not to interact, it is to respond and react to simple questions and commands, but as with the “voice recognition” which has been available in high end cars for several years, these are simple tasks which provide little real-world gains in efficiency. But if the principles of natural language interpretation and interactive dialogue could be combined with the ability to trigger the automated execution of tasks, then we would be closer to seeing tangible efficiencies through Artificial Intelligence (AI).

Efficiency is a word that all businesses are drawn to, and if businesses are to use technology to drive such efficiency, what better place to start than the IT department, where use of technology is second nature? If an expert system could be “taught” to act as a virtual service desk, surely that would release the potential of AI to add tangible business value? Imagine if you could deploy virtual service desk staff which are able to think, act and interact independently without human intervention. Contactable 24/7 by a phone, email, Instant Messenger or SMS, they would not only listen and understand what is required, but would have the ability to trigger automated actions, run tests and execute fixes. They would remember everything, creating a vast database of every action undertaken or issue ever resolved, which could be recalled instantly.

The systems behind this principle would not just be having a conversation, but be mimicking the behaviour of a team of service desk engineers. They would continue to learn from every problem they encountered, every request they received and every action they took, and share that knowledge between them. Also, an AI system can handle many tasks at once, can instantly correlate complex information, and can make decisions at lightning speed. But unlike the human engineers they mimic, our virtual service desk staff don’t go sick, don’t forget anything and never come in to work with a hangover. And they never ask for a pay rise!

If this all sounds too far removed from a piece of software pretending it’s a person, it’s not! The principle of a virtual service desk engineer may sound like science fiction, but in reality, the technology isn’t as far away as you might think. Innovative companies have been working on creating this for over a decade. Done right, technology such as this will shake the IT outsourcing industry to its core.

As we read about the strain between the Conservatives and Liberal Democrats in the UK coalition Government, it is worth remembering that clients and suppliers in an outsourcing arrangement often feel a similar level of stress.

While both parties obviously have different objectives, it could be argued that the basic rationale behind outsourcing should constitute a win-win situation. However, although most arrangements work sufficiently well to keep a business working, it often does not feel like a win-win in reality – particularly from the client’s perspective. High on the worry list is both obtaining and sustaining value for money. Many clients also wrestle with the alignment of their business objectives with that of the suppliers. Given the maturity of the outsourcing market and despite the majority of clients already experiencing their second, third or even fourth generation of contracts, surely it is time for this situation to be improved. But how can clients achieve this in practice?

For a start, from a client’s point-of-view, the word ‘relationship’ itself may not be appropriate in the context of outsourcing. ‘Relationship’ may suggest that this arrangement is a kind of friendship, a potential marriage or a platonic arrangement with dealings on a personal level. Nothing is further from the truth. While I am not advocating an adversarial or disrespectful stance in any way, the key aspect for clients to remember is that outsourcing should be considered strictly a business arrangement.

After all, this is the stance already taken by suppliers. At present, in most outsourcing relationships, the supplier’s skills and capability profile is far more developed in terms of managing its customer and stakeholders, as well as deploying and operating business disciplines and controls, to protect its business interests. Despite consistent advice and plenty of evidence to suggest that they would benefit from adopting a comparable approach to managing their own side of the arrangement, many clients have failed to invest in the appropriate skills to manage their supplier on an equal footing.

There are four key dimensions that need to be considered when building and maintaining an outsourcing business relationship. These dimensions include the:

1. performance metrics that inform the parties

2. business environment that the relationship operates within

3. people who engage to operate the relationship

4. characteristics of the relationship sought.

Everyone involved with outsourcing will recognise the first dimension, performance. The problem is that virtually everyone just concentrates on this aspect alone. Defining and discharging the obligations of the other three dimensions is more challenging. The usual response is, why bother? Analysis has shown that poor or inadequate relationship management can account for as much as 29% of the contract value not being realised.

No matter how it is wrapped up, outsourcing arrangements will always remain an extension of the client’s organisation. The only main difference is that outsourcing is defined by its own commercial arrangements which need to be managed and considered a fundamental part of the relationship. Too often clients treat an outsourcing arrangement as purely a transaction, comparable to buying paper-clips, with nothing further to do having signed a contract. However, they need to consider how outsourcing relationships develop and need careful management over time. Survey data again supports the case for investment in supplier relationship management: 50% of customer/supplier relationships fail. This is surpassed by those clients who take an ad-hoc approach to relationships, who can expect a failure rate of 80%

In today’s economic climate, can any business really afford not to make these achievable improvements?

Data source: United Nations survey 2010

It’s not news to anyone that we live in an increasingly globalised world, particularly when it comes to financial services. We are reminded about this on an almost daily basis, particularly following the onset of the financial crisis with events in Athens for instance, sending regular shockwaves around the globe. An international financial services sector that is so closely intertwined has exacerbated the effects of the crisis, with increasing volatility and competiveness making the market a much tougher place. However, it does open the way to a number of opportunities for firms to overhaul and perfect their business models in order to emerge from the downturn in a prominent position on the global stage. One such opportunity lies in product standardisation, with third parties able to streamline the development process of financial products, allowing organisations to launch them in various markets across different geographies at ease and at a lower expense.

There are two key factors to consider here. The first element to take into account is a standardisation of the global marketplace itself. The explosive growth of a new middle class in emerging countries, particularly in the BRIC nations, means that consumers in the developing world now have a similar purchasing power and financial needs as those in developed markets. If this is the case, then why should those markets not be given a similar options when it comes to financial products? After all we all we all have similar worries and plans and so we want insure our possessions or save for our retirement wherever we are in the world. Such a need highlights the potential that a standardisation of product development holds for firms looking to maximise efficiency and global reach whilst minimising time and cost.

Secondly, regulatory bodies have been quick to recognise the need and potential for a global standardisation of rules and guidelines. Although financial markets will always need regulation tailored to their specific conditions, we have seen a drive by bodies such as the UK’s FSA and international equivalents to homogenise their guidelines as much as possible. The European Banking Authority (EBA), for example, was set up last year to harmonise banking guidelines across the European Union and some US legislation, such as the Foreign Account Tax Compliance Act (FATCA), has a global jurisdiction. The development of financial products depends heavily on regulatory requirements and a partial standardisation of these paves the way for a more streamlined, unified process. This is where financial services firms can use an outsourcer to their full advantage. A third party will have the expertise and optimum systems in place to standardise the product development process as much as possible, which amounts to big time and money savings for organisations launching products in different markets.

The global marketplace is homogenising with regulation and demand being the principal drivers. By tapping into the international expertise third parties can offer, firms can increase the global impact of their products. Outsourcers are able to optimise the processes behind developing products and can act as a bridgehead to launch them quickly and efficiently on a shared risk model. For good or bad, the financial services sector should embrace the integrated international market as it really is too big an opportunity to miss.

www.opal-uk.com

The European Outsourcing Association (EOA) is delighted to announce the shortlisted entries for the 2012 EOA Awards after a record number of submissions.

Now in its third year, the EOA Awards will take place in London for the first time at The Law Society on the 27th June 2012. It will look to build on the success of the 2011 event by bringing together Europe’s leading outsourcing suppliers, end users and support service providers. The awards take place the day before the National Outsourcing Association’s 25th Anniversary Conference which features highly collaborative breakout sessions, key case studies and ample networking opportunities.

The award categories cover a wide cross-section of outsourcing projects and winning is regarded as a huge accolade in the industry. For the 200+ guests, the awards present a unique opportunity to gain insight into the working models of the most successful projects of 2011/12, thus spreading best practice throughout the European outsourcing community.

Martyn Hart, NOA Chairman, said: “I am very pleased to see that we have a record number of submissions again this year. The sheer variety of the partnerships and submissions show that European outsourcing is a truly dynamic and varied industry. Last year’s event proved to be extremely popular with our members and was hugely successful. This year the EOA Awards precedes the NOA 25th Conference and will offer delegates the fantastic opportunity to network, learn about and celebrate best practice in outsourcing. I look forward to seeing you all there.”

The shortlist is as follows:

BPO Contract of the Year

arvato and Microsoft

Genpact and AstraZeneca Plc

GEP

Infosys BPO

National Rail Enquiries and the National Rail Communication Centre

Sykes Global Services

IT Outsourcing Project of the Year

Centrica - British Gas

HCL and Mecom Group Plc

International Personal Finance and Fujitsu

Luxoft and Hotwire Inc

Mitchells & Butlers Plc and Fujitsu

Ness Technologies and PERFORM

Outsourcing Service Provider of the Year

Ant

BDO

Capgemini BPO Poland

Luxoft

SPi Global

Outsourcing Advisory of the Year

DLA Piper

eClerx Services Limited

Hogan Lovells

Proservartner

Offshoring Destination of the Year

Egypt - ITIDA

Morocco - MEDZ Sourcing

Romania - Computer Generated Solutions and Luxoft

Serbia - Sitel

Slovakia - Ness Technologies

South Africa – Aegis Outsourcing Ltd and CCI BPO

Outsourcing End-user of the Year

Centrica - British Gas

Dutch Public Prosecution Service - submitted by Omnext

Merck

Mitchells & Butlers Plc

National Rail Enquiries

Award for Innovation in Outsourcing

Capgemini BPO Poland

Certus

Customer Care for Philips Consumer Lifestyle Division

Genpact - Smart Enterprise Process

Mitchells & Butlers Plc and Fujitsu

Quint Wellington Redwood

Award for Corporate Social Responsibility

Ant - Ant Kids

Serco - Leicester Works

Serco - Norfolk and Norwich University Hospital

SPi Global

WNS Global Services - WNS Cares Foundation (WCF)

Award for Best Multi-sourcing Project of the Year

Centrica - British Gas

FCC, S.A.

National Grid

Contact: Natalie Milsom +44 (0) 207 292 8689 or nataliem@noa.co.uk

Google has completed its deal with Motorola Mobility for $40 a share, totalling approximately $12.5bn.

The deal marks Google’s biggest acquisition to date. However, for some the deals comes with fears that Google will use Motorola Mobility's hardware to vertically integrate its Google's Android OS product ecosystem (similar to Apple's iPhone and iPad) to the detriment of other hardware suppliers.

Google CEO Larry Page said "I'm happy to announce the deal has closed. Motorola is a great American tech company, with a track record of over 80 years of innovation. It's a great time to be in the mobile business, and I'm confident that the team at Motorola will be creating the next generation of mobile devices that will improve lives for years to come."

Google’s Dennis Woodside, who will take over from Motorola Mobility CEO Sanjay Jha, said "Motorola literally invented the entire mobile industry with the first-ever commercial cell phone in 1983. Thirty years later, mobile devices are at the center of the computing revolution. Our aim is simple: to focus Motorola Mobility's remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world."

The government has announced the launch on the Open Data Institute (ODI), marking a significant step forward in their Open Data policy.

The institute aims to provide an environment in which business, the public sector, academic institutions and developers can come together and maximise the commercial potential of open data, whilst making advances towards sustainable policy.

Plans for the ODI strategy were revealed in November 2011, however, the embryo organisation secured funding from the government's Technology Strategy Board last month, which may amount to £10m over the next five years.

The project will be headed up by data experts Professors Sir Tim Berners-Lee and Nigel Shadbolt. "The institute will connect together lots of people excited about open data,” said Berners-Lee. “Those who produce it, with those who want to put it to use in all sorts of fields and every kind of industry.”

SAP and cloud-based e-commerce vendor Ariba announced yesterday a deal worth $4.3bn, which is set to close in the third calendar quarter of this year.

Once finalised the deal will see the Ariba transaction substantially grow SAP's presence in cloud software, following on from its recent $3.4 billion acquisition of SuccessFactors, a company focused on human resources applications.

SAP co-CEO Bill McDermott said during a conference call with media and analysts that Ariba's network will grow to more than 1 million companies this year, and emphasised the huge growth potential it offered.

Ariba's trading network and procurement applications would also complement SAP's cloud-based ERP (enterprise resource planning) suite Business ByDesign, as well as the Business One application for smaller companies, McDermott said.

Aldermore Bank has signed a £1.8 million extension to a data and analytics deal agreed with Experian back in 2011, with the new updated contract totalling £4.1 million.

Aldermore Bank will increase its use of the TransactSM application processing system as well as Hunter fraud prevention software throughout the organisation. In addition to incorporating Experian’s Delphi for Customer Management service to track changes in the credit risk profile of existing customers and to identify opportunities for up-selling additional products.

Paul Myers, COO at Aldermore Bank, says: “Experian’s analytics and data expertise have enabled us to effectively control both credit and fraud risk, and to run a fast and efficient process at the point of application. This partnership extension will enable further improvements in these areas, extend the positive experience we provide to new customers across all areas of the business and to spot opportunities to strengthen and deepen relationships with our best customers.”

Millstream, a procurement services provider, has secured a £4.8million deal to run Norway’s national procurement database.

Scotland’s First Minister Alex Salmond has praised the contract win, citing it as an excellent example of Scottish companies developing strong ties with Norway, a key export partner.

The Aberdeen-based company has provided the Doffin portal for the Agency for Public Management and eGovernment (Difi) in Norway since the end of 2005 and won the renewal following a competitive tendering process.

The seven-year contract, which is one of the largest won by Millstream, will start later this year and has the option to be extended for a further five years.

Millstream is the only company providing national public procurement websites for several European member states and currently operates similar websites in Ireland and Scotland, where it runs the Public Contracts Scotland portal.

The Doffin portal was set up to help Norwegian public bodies to create and publish tender notices in accordance with Norwegian regulations, and all public contracts must be advertised on the site.

Since Millstream was first awarded the contract, it has saved the public purse around £2million a year by cutting the cost of publishing public sector notices from £2.7 million to £625,000.

Tim Williams, managing director of Millstream, said: “This is a significant win for us and the fact we have been reappointed underlines Difi’s confidence in the portal we provide for all procurement notices in Norway, as well as demonstrating that UK businesses can still win business overseas.

He continued: “Millstream’s main objective is to provide an easy and efficient procurement service to people who are buying or providing services in the public sector."

Demand for analytics services from users in the life sciences industry has helped drive growth in the UK and Europe, according to Cognizant.

The outsourcing giant posted a 3.5% increase in European revenue for its first quarter earnings for 2012 (an 11 percent increase year-on-year), despite a difficult economic climate.

Paul Roehrig, assistant VP of corporate strategy at Cognizant, said: “Primarily our focus is on banking and the financial services in the UK, as well as life sciences and pharmaceuticals. We are seeing good demand in those industries, for example, in life sciences there is demand around clinical data management and commercial analytics.”

Cognizant believe that users are focusing more on core business functions and outsourcing the periphery consequences of the process or what Roehrig describes as the “contextual”.

Roehrig exemplified in that the core goal of business analytics might be to analyse data and extract insight, while the “contextual” will be the management and cleaning of the information: “More focus on what is core will help create a more lean organisation and enable more business-efficient decisions.”

Cognizant have also benefitted from increased demand for cloud, social and mobile services.

Roehrig said: “We are also having lots of good interest in business process services. [Businesses] are looking for end-to-end business process solutions.”