Industry news

Accenture has announced that it has agreed with the U.S. Department of Justice to settle a lawsuit originally filed in 2006 (United States ex rel. Norman Rille and Neal Roberts v. Accenture LLP) for $63.68 million. The lawsuit claimed that, in work for the U.S. federal government, Accenture received payments, resale revenue or other benefits through alliance agreements with technology vendors that were not sufficiently disclosed and that were not allowed on federal contracts.

Accenture and the U.S. Department of Justice have agreed to settle the suit to avoid additional time, inconvenience and expense that would come with protracted litigation.

The agreement is not an admission of liability by Accenture. Accenture continues to vigorously deny that there was any wrongdoing. The U.S. federal government was aware of alliance relationships in the IT industry and how they would benefit customers, vendors and the IT industry. The details of how alliances worked in the IT industry were widely reported in the industry press.

Capgemini Norge AS, part of the Capgemini Group, one of the world’s foremost providers of consulting, technology and outsourcing services has been chosen as EnterCard’s partner to support their rapid growth ambitions.

EnterCard is a Nordic company that issues credit cards on behalf of partners, or under its own consumer brand. Capgemini will be the main provider for application maintenance and development services supporting EnterCard to more rapidly deliver new innovative products to the market.

Through the agreement Capgemini will provide end-to-end responsibility for application development and management including testing services. EnterCard has chosen Capgemini to consolidate the number of suppliers operating its central systems.

“EnterCard is growing rapidly and we are heavily focused on developing great propositions for our customers and partners. For us it is important to have an agile IT-partner that can match our market leading ambitions as the card industry develops and the needs of our customer are changing. To speed up the pace of development we have chosen Capgemini as the partner to help us continue our growth in the Nordic region” said Tord Topsholm, Operations Director for EnterCard.

GE and PSA Peugeot Citroen have signed an agreement that will potentially become one of the largest Electric Vehicle (EV) deals between a single corporate and a single Original Equipment Manufacturer (OEM) in Europe. The agreement, which was signed as a memorandum of understanding on September 14th in Frankfurt, involves the potential purchase of up to 1,000 EVs from PSA Peugeot Citroen, by GE Capital, which the company would offer to its customers at a pan-European level.

The agreement would see GE Capital lease EV vehicles across Belgium, France, Germany, Italy, Netherlands, Sweden, Portugal, Spain, Switzerland and the UK. GE Capital is a leading lessor of vehicles, with a customer fleet of approximately 250,000 vehicles in Europe, and 1.6 million globally. In July 2011, GE Capital announced the first European supply of EV Citroen C-Zero cars to technology giant, 3M. The PSA Peugeot Citroen move furthers GE Capital’s public commitment, made in November 2010, to purchase 25,000 electric vehicles globally by the year 2015.

“This is a landmark agreement and we are affirming our commitment to the future of electric vehicles and building on our strong relationship with European car manufacturers,” said Isabel Fernandez, CCO at GE Capital EMEA.

CSC has announced it has signed a ten-year contract with a U.S. based global multi-brand commercial products manufacturer to provide information technology (IT) and infrastructure managed services. The contract is a global 10 year agreement with an estimated value of more than $900 million and was effective on September 1, 2011.

By leveraging CSC’s expertise and global network of delivery centers, the new client expects to improve the overall efficiency and service level of its IT function.

Under the terms of the agreement, CSC will bring new innovative IT approaches covering a large scope of global infrastructure managed services, including: service desk, end user support services, network services, data center services, distributed computing services and security services.

“CSC and this new client have a common vision of what a world class IT function can bring to a large enterprise, and we are thrilled to be the IT partner of choice for such a successful and dynamic company,” said Michael W. Laphen, CSC chairman, president and chief executive officer. “CSC brings the right mix of expertise and innovation to this client that will reduce their overall cost and risk, elevate IT service levels and position them to more effectively capitalize on future growth opportunities.”

HP has abandoned plans to offshore the jobs of IT support staff working on the Adams 2 contract for the Department of Work and Pensions.

HP first revealed it was in talks to transfer some 200 roles based in north-east England to India to help it match the Government's demand to cut costs.

The move was met with obvious resistance from HP employees, the Public and Commercial Services Union and latterly local MPs, who highlighted the security implications of overseas workers managing a live database on 25 million citizens.

Hundreds of workers at a north London council are taking part in a strike in protest at changes to their terms and conditions, according to a union.

Unison said about 400 of its members at Barnet Council were staging a one-day walkout.

Highways, planning and crematorium workers are among those taking strike action over planned outsourcing.

The Capita Group Plc has announced that it has acquired Insurance Medical Group Limited (IMG) for an undisclosed sum. IMG provides medico-legal reporting, diagnostics, and pro-active physiotherapy and treatment services.

The acquisition, which follows the acquisitions, last year, of Premier Medical Group and First Assist, adds further expertise and capacity to Capita’s wellbeing and health business. It also opens up new parts of the medico-legal market, particularly claims management companies and small and medium sized law practices.

Commenting on the deal, Jason Powell, who moved to Capita with the acquisition of Premier Medical Group and now heads up Capita’s medical reporting business, said: “IMG produces more than 20, 000 medical reports each year and arranges more than 50,000 physiotherapy appointments through the Physio-link network. This acquisition will add important new expertise to Capita’s range of health services, enabling us to provide of a full suite of medical reporting and screening services. The deal also further demonstrates Capita’s commitment to, and investment in, the medico-legal market.”

HP has announced its expanded Enterprise Security Solutions portfolio, designed to help enterprises establish and execute a comprehensive security strategy that addresses threats and potential liabilities resulting from the rise of mobility, cloud computing and social media.

More than 50 percent of senior business and technology executives surveyed believe that security breaches within their organizations have increased during the last year. Nearly 30 percent responded that they experienced a security breach by unauthorized internal access, while 20 percent responded that they had experienced an external breach.

The expanded portfolio includes new capabilities to help enterprises assess, transform, manage and optimize their security investments.

“Organizations today are quickly realizing the importance of a comprehensive risk management strategy to securing assets across their corporate infrastructures and protecting corporate reputation,” said Jan Zadak, executive vice president, Global Sales and Enterprise Marketing, HP. “HP’s extended security portfolio provides the protection that enterprises require, while providing customers, employees, partners and consumers with instant access to the right enterprise assets without compromising risk.”

National Outsourcing Association Chairman Martyn Hart has commented on the Unison claim after General secretary Dave Prentis has said that taxpayers’ money had been ‘wasted’ during the outsourcing of public services.

Martyn Hart said: “Unison members are guilty of 22.8% of public sector procurement fraud, costing the UK taxpayer 547m a year. That’s nearly half a billion of your hard earned pounds down the drain, and it’s all Unison members fault.

These figures were calculated out using the same ridiculous, unscientific, logic that Unison has employed to suggest that outsourcing is responsible for 55% of procurement fraud. It remains unclear where the data in the Annual Fraud Indicator has come from, or how this estimate of a £2.4 billion ‘fraud bill’ was deduced.

“More sensible figures are mentioned in the government report Eliminating Public Sector Fraud, stating that £0.5 million has been identified for recovery. Overpayments and underpayments are common in any ongoing contractual relationship, and these are resolved in audit, and balances paid in due course. Given the size of these contracts, half a million is a pittance. A section of this new report mentions that the Home Office already has such arrangements in place concerning overpayments made to their suppliers last year.

“With regard to the allegations of price fixing, as the nature of government procurement is competitive tender, and tenders are put out to the whole of Europe, that means every company in Europe would have to be in on it. The whole of the European service sector colluding against the UK government. Now there’s a conspiracy theory.

“The National Outsourcing Association welcomes the call for civil servants to end the ‘pay first, check later culture that exists within the public sector. Strong governance is a key feature of successful outsourcing contracts. If public sector leaders need guidance on how to optimise contracts and manage ongoing relationships, we are here to help.

“The first step in the NOA's lifecycle model says you should consult your own staff on how you can achieve your objectives. Unison would be better off coming up with ideas on cost savings by asking its members, rather than relying on spurious statistics to discredit ‘the enemy.’

As the world of industry changes, the outsourcing sector has found it increasingly important to adapt to new technologies which are continuing to drive forward new, innovative services. As such the industry is now beginning to implement cloud computing, rather than just talk about adopting cloud services, and the benefits of accessibility, availability and scalability are more conspiuous than ever.

Ditlev Bredahl, CEO OnApp, believes that one of the biggest changes we’ve seen this year is the growth in cloud services provided by the traditional hosting market.

Ditlev Bredahl said: “The world’s hosting providers, which a company might already use for web hosting, application hosting, colocation and so on, are becoming the ‘go to’ people for cloud computing services. That’s especially true in the SME market. In many cases the service remains the same - you’re still hosting your website, your apps and so on – but you can now take advantage of lower prices, pay-per-use billing, instant scalability and the other benefits of the cloud model.

“As the cloud hosting market matures we’re going to see hosters begin to focus on specific industries and applications, and design services around the needs of different segments of the market. That will give companies more choice than ever when sourcing IT services in the cloud.”

Although many more organisations are looking at Cloud to deliver solutions, There’s very little doubt that a number of end-users still view the Cloud with suspicion, particularly while questions around security and data storage persist.

According to a survey carried out by hosted IT service provider Rise, a staggering 91 per cent of businesses strongly feel more needs to be done to educate end-users about the business benefits of adopting a Cloud infrastructure.

The survey, conducted at a recent IT industry event, also identified that when it came to Cloud uptake the biggest concern for firms is where their data is being stored, with 64 per cent of surveyed participants identifying this as a key issue. It also indicated that fears around security and potential loss of data were a big deterrent for businesses not investing in a Cloud infrastructure.

The research also highlighted that with over half of respondents still unsure about the business benefits of Cloud Computing, IT vendors need to take on a bigger role when it comes to educating end-users.

According to Steve Holford, a director at Rise, one of the biggest barriers to Cloud uptake is lack of education. “For a lot of firms, right from SMEs to large enterprises, Cloud uptake still remains something to be approached with caution. Last year, the message we were hearing from customers was: What is Cloud Computing? This year has seen that move on – people are aware of Cloud Computing but are unsure how this can be applied to their business. They understand that there are benefits to Cloud adoption but there is confusion around how this can be seen within their organisation.”

Aram Kananov, Product Marketing Manager EMEA, Platform and Cloud at Red Hat agrees and suggests that even though a cloud model frees organisations from managing hardware and offers scalability and flexibility; organisations of all sizes often struggle to accurately predict their need for computing capacity for 6 months or even a year in advance.

Neil Thomas, Cloud and Virtualisation Product Manager at Cable&Wireless Worldwide believes that more attention should be given to the network used to access the cloud.

“Enterprises need to be looking at a complete end-to-end picture when investigating cloud computing. This requires looking beyond the features, capability and assurance levels of the cloud solution to making sure it can be accessed quickly and securely via a next-generation network” said Neil Thomas.

“Robust and secure hosting environments need to be combined with resilient, high performing and secure next-generation networks, and both need to be ensured with stringent Service Level Agreements. This isn’t just about security – IT is about delivery of service and if applications are moved further from their end users then performance will suffer if this isn’t managed correctly.

“The best way to secure the cloud computing environment, and to ensure application performance, is to ensure that the prime access routes are via the organisation’s own internal network (Wide Area Network), not the internet. By placing services in a secure cloud environment within the Wide Area Network, and using the established methods of data separation, data becomes intrinsically safer, and performance is not only better, but can also be managed by advanced Application Performance Management networking tools.”

It is understandable that businesses are reserved about the security aspects of cloud services; however it appears that the main fear is being out of control as applications are spread over ever more complex set of heterogeneous environments and information could get lost or put in an insecure place

Craig Beddis, Regional SVP at UC4 Software said: “Surely the more complex the environment, the more important it is to ensure that data is secure and all applications are managed and under control. And the move to the cloud should be no exception to this rule; especially with issues around cloud sprawl.

“By adopting automation, software can be run to orchestrate workloads across hybrid environments, whether services are outsourced or not, which if used effectively can solve these issues. Service governance, as its natural evolution, will predictively diagnose and trigger resource provisioning at precisely the right times in line with agreed SLAs, around the clock, reducing manual resource requirements and capacity expense and limiting virtual and cloud sprawl.”

Companies are increasingly looking to cloud computing environments in order to accelerate value in business financials and reduce costs. Cloud computing is highly appealing to today’s organizations, not only because of its projected cost savings but also because of the cloud’s flexibility.

Aram Kananov said: “Cloud offers the opportunity to scale capacity up and down as demand and financial ability dictates. In short, the cloud offers a level of efficiency and flexibility unachievable through traditional IT. The risks are security and trust. There is no inherent interoperability built into the majority of clouds, offering institutions no defence against vendor lock-ins.”

Cloud is now poised for widespread adoption and will continue to be, a core part of the outsourcing sector, and one in which we expect to see significant growth.

As a model for buying services, the cloud will be transformational in 2012, but organisations have to take a pragmatic approach when considering how the transition can benefit the client base. Customers are at varying stages of cloud ‘maturity’ and there are still concerns about privacy and security from some sectors which need to be addressed through education and industry best practice.