Industry news

A group of NOA members met this week to discuss evidence that we present to the All-Party Group on Outsourcing and Shared Services. In attendance were key players in outsourcing, on both sides of the public-private sector fence. Discussion centred what can be done to enable the government to become a savvier consumer when dealing with private sector outsourcing companies.

An All-Party group consists of 20 MPs, usually 10 in Government, 6 in opposition and 4 other members of the house. An APG presents an opportunity for open conversations with MPs, leading up to a report to be presented to the relevant ministers. It is an incremental approach – an academic, research-based approach to lobbying. The NOA is at the forefront, and very proud to be involved in helping the government save money and provide better services.

There is still time to send in evidence – if you have the inside track on an outsourcing project that you think the group needs to hear about contact: stephanie.hamilton@noa.co.uk

KPOC, have announced sourcingfocus.com as a media partner for the Glocal LPO Conference in October 2011.

sourcingfocus.com, published in association with the National Outsourcing Association (NOA), was set up three years ago to provide an informative online resource for the outsourcing industry and is now the leading portal for the sourcing community with rapidly increasing traffic and 18,000 newsletter subscriptions.

sourcingfocus.com continues to break key industry news, but have further established themselves as a repository for articles and examples of best practice in outsourcing. It's readers participate in lively discussion and debate and the portal delivers up-to-date outsourcing news, in-depth analysis, features, blogs and opinion pieces from their experienced editorial team and leading industry players.

In-depth details of the conference can be found on their website.

KPOC has been providing business solutions exclusively to the LPO industry and has worked with established and aspiring LPOs to set up their ventures, overcome their complex business and strategic issues and help management make key decisions affecting top line growth of the company. For more information, please visit the company website www.kpoconsultants.com.

The Global LPO Conference, Los Angeles, USA – Buyers and Vendors Meet in the LPO industry is to be held on October 5th and 6th, 2011 at the Sheraton Downtown Hotel in Los Angeles.

General Electric has unveiled a new data centre at its Appliance Park headquarters in Louisville, Kentucky.

The new $48 million data centre has got Platinum LEED-certification by the U.S. Green Building Council.

This most efficient data center in Kentucky is equipped with high-efficiency cooling systems, high-density servers to increase computer power per square foot to cut the size of the data centre floor in half compared to its previous size.

Alan Kocsi, chief information officer, General Electric Appliances & Lighting, said that, “As GE invests in the business and creates more manufacturing jobs in the U.S., our new high-efficiency data centre will help us manage energy costs so we can compete in a global marketplace. General Electric’s new data centre will also provide the high-density computing necessary to support global business growth and significant manufacturing-revitalization efforts that will provide customers with innovative technologies, high-quality products, and better customer service”.

In a first of its kind deal, Microsoft has entered into a joint agreement with China's leading domestic Linux operating system provider to together provide cloud services across both Microsoft and Linux platforms.

The agreement with China Standard Software Company (CS2C), a government-owned Linux provider, was announced on Monday.

It's the first time Microsoft has partnered to provide cross-platform cloud services in an emerging economy, said Sandy Gupta, general manager of Microsoft's Open Solutions group.

Cognizant, a leading provider of information technology, consulting, and business process outsourcing services, today announced it has been selected by the UK Financial Services Authority (FSA) to be a key supplier as part of its Strategic Outsourcing Framework Agreement (SOFA). The FSA is a leading independent body that regulates the financial services industry in the UK and oversees more than 29,000 firms, which contribute over 6.8% of GDP, employ more than 1.1 million people, and provide services to millions of consumers.

SOFA is important to the FSA’s ability to deliver on its statutory objectives and more proactively intervene when a firm’s actions pose potential systemic risk. The agreement enables the FSA to develop relationships with key third-party suppliers, enhance the scope of services it outsources and ensure greater value for money.

As a key supplier, Cognizant will aim to help the FSA improve the reliability, scalability and flexibility of the IT systems and solutions that support the FSA’s market surveillance operations, supervisory analysis and risk management functions. Cognizant has been awarded five service areas, covering solutions consultancy, application development, application maintenance, testing, and web design and hosting and will initially support a key market surveillance application used by the FSA to monitor compliance with the Markets in Financial Instruments Directive (MiFID II).

“We are pleased to be selected as a key supplier by the FSA for a comprehensive range of services,” said Tony Virdi, Vice President of Cognizant’s Banking and Financial Services Practice for the UK and Ireland. “We are committed to leveraging our strong understanding of the financial services industry and regulatory environment in the UK and consultative engagement model to help the FSA streamline processes, minimise operating costs, enhance productivity and address the need for greater efficiency, innovation and collaboration.”

The Communications Infrastructure Upgrade (CIU) project will enable Durham to meet the challenge of continuing to provide exceptional facilities for its UK and international students while achieving significant efficiency savings to allow reinvestment.

As part of the upgrade program, Durham is introducing Siemens Enterprise Communications' IP telephony platform, OpenScape Voice, and migrating 1,500 voicemail accounts to its Xpressions voicemail system, which will offer greater workplace flexibility for Durham's academic and support staff. The new system comprises 6,500 voice licenses, underpinned by a core university-wide dual vendor data network. To provide increased capacity and greater resilience, it will offer time-saving benefits and a reduction in overall call costs through a more streamlined communications program, replacing six legacy ISDX systems and a legacy voicemail system currently used at the university. The agreement includes a five year maintenance contract.

Durham has also chosen Siemens Enterprise Communications' OpenScape Contact Center application to significantly enhance its IT helpdesk function, which will help improve staff productivity and ensure user queries are answered quickly and effectively.

"We are committed to offering staff and students the best possible facilities. As such, the university is undergoing extensive renovations – including new buildings and new technology," said Colin Hopkins, head of CIS Network Support, Durham University. "As part of this project, we opted to implement IP telephony across the entire university, to create a more efficient phone network that will ultimately support our ambitious plans to deliver outstanding service to our student base."

Synergy Health plc (Synergy) has chosen IFS, the global enterprise applications company, to supply and implement its financial management software across its entire business. IFS Applications will be rolled out in 102 sites across 10 countries from the UK to Malaysia, the US and France.

Headquartered in the UK, Synergy is a world-leading, multi-national supplier of outsourced support services to the healthcare market in Europe, Asia, and the Americas.

IFS Applications will enable Synergy to reduce overall costs and improve the efficiency of its global finance and procurement departments by providing greater financial visibility, automating reporting, enhancing integration with other applications and providing economies of scale. Synergy will also benefit from the rich functionality of IFS Applications. For example, employees will for the first time be able to compare multi-currency transactions with just one click of their mouse.

Synergy has grown rapidly in the last decade, resulting in the company running a range of disparate financial systems. Synergy chose IFS because of the functionality it offers and the deep knowledge and expertise of its consultants. Sara Lloyd, Finance Project Manager at Synergy, comments: “In terms of product functionality, IFS was definitely top of our shortlist and we liked their approach. The IFS team demonstrated a good understanding of our business and related issues.

We like the fact that IFS has the capability to implement the system in every country using its own consultants, ensuring consistency in standards. We also benefit from having just one simple contract for over 1,000 users at 102 sites.”

Paul Massey, Managing Director at IFS Europe West, said: “Synergy is a rapidly growing company that requires agile, scalable, intuitive business applications that will enable it to take advantage of its size and reach. Therefore IFS Applications is an intelligent choice. IFS has a proven track record of successful implementations within large multi-national organisations, which offers peace of mind that the system will be implemented and maintained by an experienced team of IFS consultants.”

Implementation of the system will begin in the autumn, with the first sites going live in the second quarter of 2012.

Cloud has been described as an extraordinary step change in the way IT-based services are delivered, but fundamentally, the cloud is but another form of outsourcing which will help businesses drive down costs. And it is here to stay.

In pure business terms, cloud is essentially a flexible, scalable, pay-per-use model for the way

IT services are delivered and consumed, typically through short-term contracts. With its pay-as-you- go model, cloud moves many IT costs from capital expenditure to operating expenditure; its “elastic model” means available IT capability can be flexed to mirror changing business demand; and enables consumers of IT to have much greater transparency over their costs.

But to understand what that means to the business, the benefits and potential risks of migrating to cloud services need to be carefully considered. In any discussion about the cloud, the enthusiasm of evangelists is all too often tempered by the inevitable sage words of security-conscious CIOs. This isn’t surprising. After all, we are talking about moving confidential data away from physically being under the lock and key of a datacentre that the company owns and maintains – to an outsourced third party, possibly to an unknown location on the other side of the world. Three security areas in particular merit a closer look.

Data Location

The location of the data centre is the first consideration for any CIOs thinking about moving to the cloud; the questions that ensue as to what actually happens to your data are plentiful: where exactly is it kept? What happens when you end the contract? What happens if you terminate the contract early, or are in dispute with the outsourcer – is it still your data? Can you get access to it quickly? Is the data subject to laws of that particular geographic location?

Regulatory Compliance

This latter question of geographic location pivots on the differing regulatory compliance laws that will impact your data. These demands vary from country to country; for example, here in the UK, we are subject to both the Data Protection Act as well as the Freedom of Information Act. In the USA, the Patriot Act means that the US government can access data held by an American owned company anywhere outside of North America. This means that should your sourcing partner be an American firm, with your data located in e.g. the Philippines, the US government can still access your data. Should US officers search another company’s data that is hosted on the same shared infrastructure as your own your data could also be accessed and impacted.

Recovery

A third concern when outsourcing your IT services is the back up recovery guarantees in place of your data. What happens in the event of a natural disaster? How safe is the infrastructure of the premises? Or indeed the political or economic stability of the country? What guarantees are in place to ensure recovery is swift and complete? In the event of loss, can it be recovered and stripped from everybody else’s data?

The Right Approach

These are all valid concerns. However, provided the right approach is adopted, your organisation can be confident that embracing the cloud will yield tangible gains.

Critical to the success of any cloud deployment is to understand that there is no one-size-fits-all solution. Indeed, the answer to these questions will depend on the nature of the cloud delivery model – be it public, private or a hybrid of both.

The first step is to decide what data can be migrated to the cloud and stored externally within a community or public cloud, and what data should be retained within a private or trusted cloud environment. The key is knowing what data you are allowing into the cloud and which type of cloud is suitable for that data.

Once this data split has been undertaken, the next step is for organisations to do the due diligence on the proposed cloud provider. Customers must understand that the cloud demands a more – not less – rigorous process to ascertain the right model and sourcing partner for their business needs. This means ensuring the right service level agreements are in place to address the above issues.

The Right Partner

Finally, deciding on the sourcing partner will depend on a number of factors. The Cloud Security Alliance Standards is a good place to start for anyone wanting guidance for best practice relating to the cloud.

Cloud deployment works best when it is tailored according to the customer’s needs. And the above concerns can be met in a multitude of ways.

In the case of data location, CIO’s should be able to choose between an in-country or offshore location solution or a mixture of both, according to the data split decided upon. The case for knowing exactly where your critical data resides and the conditions for accessing it, is abundantly clear. Non-essential data (e.g. website content) can be more economically placed in a public or community cloud.

Concerns regarding recovery can be allayed via a private cloud solution. In Fujitsu’s case data is secured in more than one datacentre, meaning recovery is virtually instantaneous. The private cloud ensures that this service is dedicated to your organisation which brings with it its own benefits: for example, our customers can request that their data is stored either in dedicated physical security or specific virtual arrays with no other shared access. The physical disks can be returned to the customer should that need arise; in the virtual scenario the segregated array will be overwritten and returned to the pool for reallocation.

Regulatory compliance can best be addressed by having an end-to-end solution. Because of the proliferation of companies offering various “as a service” offerings, the complexity that ensues can result in a situation whereby different data could be subject to different national laws. An outsourcing partner that provides such a service is better placed to ensure the security of your data.

A final word would be that security will always be a concern for CIOs. The issues identified above are from insurmountable, neither are the remedies prohibitively expensive, but as the cloud matures, so do the solutions that ensure companies can outsource effectively with the clear cost benefits that will surely ensue.

Five factors that determine the success or failure of a globally delivered applications project

Love it or hate it, for the past two decades the story of global delivery (or offshoring as it’s often considered), has been a mixed bag: for every success story put forward there has been a horror equivalent highlighted as well.

On one hand, more and more organisations are eagerly embracing the concept of global delivery for application projects in order to lower costs, increase efficiency and productivity. While on the other side, communication issues, management overhead and cultural incompatibility are forcing companies to re-think their global strategy. And even within organisations, some divisions will report successful project deliveries using global teams while others fail to take advantage of the same.

Application projects are no longer delivered by IT professionals all huddled up in a single office. Today, application projects and related activities make-up the bulk of IT business delivered by global teams. The breakdown of global delivery activity makes for interesting reading:

• By sector: While the private sector has led the way in embracing the Global delivery model with over 30% already doing some form of offshore, the public sector has stayed away from it with less than 1% usage, predominantly citing security and social reasons

• By geography: While USA and UK account for over 70% of global delivery business and have been in the forefront of using offshore and nearshore services, mainland Europe and Japan have been slow in adopting the same and account for less than 25%

• By domain: The largest vertical sectors using global delivery are financial services (32%), manufacturing (20%), telecom (12%) and energy (11%). However, retail (5%), health care (5%), media (3%) and supply chain are still warming up to the idea

But whether or not applications projects are delivered successfully on a global scale depends on a number of key factors. Below are the five areas organisations need to be considering if they want to implement successful applications projects globally:

1. Organisational maturity

Research4 indicates that many global projects are perceived to have failed because the benefits expected are far higher than the delivery maturity of the organisation. So, it is vital that the right expectations are set with all stakeholders. Organisational maturity is a key factor that defines the type, size and complexity of the work that can be delivered using the global delivery model. Maturity in this context also means the availability of the infrastructure (e.g. remote development centres, WAN etc.), having standard global project development practices, having staff with experience of the model and, of course, commitment from management to deal with issues. All of this will have a significant bearing on what can be delivered globally and what potential benefits can be gained.

2. The right project

Taking a blanket approach is a recipe for failure. Technically, all projects can be considered for global delivery, but, practically, not all lend themselves to offshore or nearshore development. Practical considerations likely to prevent work being carried out using global teams are often either security related (regulatory compliance, data protection and confidentiality), the business case itself not stacking up – where the cost of overheads outweigh benefits gained, or simply because the client is not comfortable with the model.

A recent report by ComputerEconomics5 confirmed that 51% of the organisations that engage with offshore use it for application development and the average amount of development work done offshore is 35%. With the evolution of cloud, there is a general expectation that the potential for using global resources on application projects will increase as the required infrastructure can easily be made available to remotely located staff.

3. The right location

Having identified a suitable project for global delivery, it is important to choose the best offshore/nearshore location that will meet the project objectives. The deciding factors for selecting your location will typically include cost effectiveness, the technical skills and numbers, the functional roles of the project and the cultural affinity, security and language requirements. The 30 Top regional locations for 2010-117 as identified by Gartner are listed below:

• Asia/Pacific: Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam.

• EMEA: Bulgaria, the Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Romania, Russia, Slovakia, South Africa, Turkey and Ukraine

• Americas: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru.

4. The optimum blend

Perhaps the greatest challenge to successfully implementing global delivery is choosing the right blend to offshore. It depends on a number of factors – the platform, the project size, the project type, the development methodology, and the process maturity. There is no one size fits all solution here. Typically, there are activities such as application and product development that can see a high offshore blend. Assessing the right blend is crucial to your company’s needs.

5. Project Management Skills

As ever, the success of rolling-out a globally delivered project lies in its management. Whether done locally or globally, the basics of project management apply in both cases. But many project managers underestimate the skills required to build a blended team: indeed it is one of the biggest reasons responsible for projects failing. Training project managers is therefore vital so that they get the expertise and skills to deliver offshore/nearshore projects. Working remotely demands a greater degree of communication and collaboration to ensure that all involved are working in tandem and are aware of all the factors that might impact their delivery.

Global delivery is not about offshoring. It’s about “doing the right things from the right places”. Global delivery is not a ‘silver bullet’ for all IT issues and needs to be applied in specific circumstances according to the criteria listed above. As ever, it is down to experience and judgement in order to apply the right global delivery model to your business.

ENDS

[1] - NASSCOM, 2009

[2] - PMP research, 2008

[3] - BCG Group 2007 and Data Monitor 2009

[4] Tom Philip, Erik Wende, Gerhard Schwabe - Identifying Early Warning Signs of Failures in Offshore Software Development Projects, 2010

[5] - IT Outsourcing statistics 2010/11, Computer Economics

Measuring employee performance – even attitude and behaviour – to keep clients on side, win new business and improve profitability

Outsourcing can bring many benefits to the client organisation, but it is a young and growing industry and, like other sectors before it, makes mistakes or takes its eye off some issues while addressing others. Indeed, there have been, and continue to be, some high profile failures – at home and overseas - that taint the industry’s reputation.

In some sectors, outsourcing ends in failure to reach the agreed objectives; the client moves to another outsourcer, yet meets with failure again. In these cases, expectations at the client end start on a high, the outsourcer oversells and subsequently underperforms and loses the business or suffers penalties.

Human error, sometimes translated as inefficient, inappropriate or ill-trained management, is often the cause. What can be done to ensure risks are reduced or eliminated as close to zero as possible?

The outsourcer may have to manage the performance and, somehow, the attitude of individual team members, of geographically dispersed work forces. They may be dispersed throughout the UK and/or overseas. The outsourcer and all its staff may be headquartered on another continent and have only a nominal presence in the UK.

The client company itself may track the outsourced company’s overall performance, much of it reliant on the performance of individuals – some of whom may be contract and freelance staff - and teams.

Appraisals

Many of you will be familiar with annual staff appraisals, although the smaller your company, the less likely you are to have them or to follow formal procedures. Formal procedures do introduce an element of objectivity into the proceedings, thereby reassuring staff with performance problems that they are not under personal attack or the victim of office politics.

Training or mentoring should iron out these problemsm but in a typical SME or large enterprise a host of other issues will be happening that will impact on the performance of individuals, the teams of which they are a part, and therefore the business itself.

Annual appraisals cannot hope to keep up with events, especially in the fast moving environment that is outsourcing. If they are paper based, the information in the appraisals has to be scanned or typed into a computer for analysis or, in the worst case, just looked at in order to gain a very basic understanding of what is going on with an individual.

Breakthrough

There has been a breakthrough with appraisals and performance management in general, and this has come with an online approach, which can cater for most, if not all, demands a company makes of its employees and contract or freelance workers.

There are three core benefits of the online approach (i) employee appraisals and performance measures can happen quickly and easily at any time, so dispensing with cumbersome [and often expensive] annual or six monthly appraisal procedures (ii) results are rapidly obtained, and analysed automatically, allowing for a quick response where required (iii) it doesn’t matter where employees [and contract staff] are physically located; they could be next door and/or 12,000 miles away. They can still be measured and their performance improved.

Looking at (i) and (ii) in a little detail - in outsourcing especially, individuals or teams may have to meet objectives or targets at short notice and in different projects. Online performance management allows for a target to be set by a manager in control of the performance measurement tool, and individual and team reaction to the target to be analysed. That way, the manager can see at a glance who [or which team] is having difficulty in reaching the target – and why.

In some cases, measurement may have to be ongoing in order to turn difficult situations around or meet a new technical or business target. Automated analysis of development plans for all staff, or just those requiring improvement, can help when combined with an analysis of their competencies and the provision of training, whether the need for improvement is acute or less urgent.

A side, but important, issue is resistance by an individual. The online tool can provide an audit trail that can be used to support, under employment law, the laying off of that individual. Another issue of importance is compliance; the online approach is a cost effective way to enforce standards compliance.

Addressing item (iii), this is a key one for the industry. There was a time when managing [and measuring the performance of] geographically dispersed individuals or teams was laborious and therefore almost self defeating, due to the amount of time and the cost involved.

It is not only performance and meeting targets [technical or business] that can be measured. Behaviour and attitude, including the ability to work well with other people, can also be measured and managed. Getting staff to pull in the same direction is not necessarily a subsidiary issue; it may be the only thing required, the sole key to improving business performance.

Web enabling the different, but allied, processes outlined above within an online tool now makes the such tools highly viable and attractive to the outsourcer, adding as they do to the evidence of proof of target attainment that the client and/or outsourcer – or both parties - may demand.

Summary

Keeping track of employee performance and attitude and behaviour has implications for the business and almost overwhelming attractions. The implications include not only much greater and more fluid business agility, but the need to support that with training, coaching or mentoring. The attractions includes improved performance and profitability, and an increased likelihood of retaining or winning business.