Industry news

The Audit Commission will outsource all its in-house local public audit work to the private sector in the next financial year, Communities Secretary Eric Pickles has confirmed.

The announcement follows the decision to disband the Audit Commission last year which will refocus audit on helping local people hold their councils to account for local spending decisions.

The Commission has already been asked to begin substantive preparations for outsourcing. The contracts, which start from 2012-13, are expected to run for three or five years giving local councils and other public bodies the time to plan for appointing their own auditors.

Global Imaging Systems, A Xerox Company, has acquired Xerographic Solutions, Inc., a Rochester, N.Y.-based Xerox sales agent/dealer. Xerographic Solutions provides managed print and network services.

Established in 1991 by former Xerox sales manager Mark Perlo, Xerographic Solutions, Inc., serves customers in Rochester, Syracuse, Buffalo, Batavia, Olean and Jamestown in N.Y., as well as in Erie and Bradford in Pa.

The acquisition furthers Global Imaging’s strategy of creating a nationwide network of locally-based providers focused on improving document management and office efficiency for small and mid-size businesses. Earlier this month, Global Imaging Systems acquired Miller Technology Solutions, Inc., of Chesapeake, Va., and previously announced acquisitions in Iowa, Illinois and Florida.

Xerographic Solutions will become part of Eastern Copy Products, a Global Imaging Systems company, headquartered in Syracuse, N.Y. Perlo will remain with the company as a general manager and senior vice president.

“This acquisition combines Xerographic Solutions’ strengths in managed print services, with Eastern Copy Products’ leadership in innovative office solutions,” said Tom Salierno, Jr., executive vice president of corporate operations for Global Imaging Systems.

The merging of the academic and other services provided by the UK’s 160 universities could lead to job losses, Unite, the largest union in the country, has warned.

Unite’s concern centres on the current talks between Lancaster and Liverpool universities which are holding preliminary discussions to explore ‘the benefits’ of closer collaboration, and follows the sharing of services by Warwick, Birmingham and Nottingham universities.

Unite’s national officer for education, Mike Robinson, called for the management at both Lancaster and Liverpool to be ‘transparent and open’ in their discussions on shared services. At present, the talks were ‘opaque and hidden from view’. Liverpool employs 8,300 staff and Lancaster 5,200.

He said: ”Unite is concerned that services could be merged with potential for job losses. We call on the senior management of both Liverpool and Lancaster universities to make clear any closer co-operation will not result in compulsory job losses.”

An interim chief executive is in place at Suffolk County Council after former boss Andrea Hill resigned.

Lucy Robinson, who has been the council's director for economy, skills and environment since 2002, has taken up the post initially for six months.

Ms Robinson was appointed on a salary of £150,000 pro rata.

Andrea Hill, 47, who was appointed in 2008, stepped down as chief executive on 4 July after coming under fire over her £218,000 salary.

The crash left customers unable to use their card accounts as well as debit or credit cards when chip-and-pin keypads went offline.

The Post Office said all 11,820 branches remained open but it brought in emergency measures to ensure pensioners and benefit claimants were able to access money.

The network’s 2,000 cash machines were unaffected but those who could not use their card accounts were able to withdraw a £20 emergency payment.

The glitch is understood to be on the Post Office’s back office systems. Supplier Fujitsu is currently testing a fix for the system, to be released shortly.

Up to 600 new Manchester jobs will be created when the global firm Aegis opens a new call centre in the Piccadilly Gardens area of the city.

The Indian company will use the new Manchester base as its European headquarters when the offices are completed before the end of 2011.

Globally, Aegis provides jobs for over 50 thousand people with offices in 10 countries worldwide.

Following on from the 600 new jobs in Manchester, Aegis will look to further expand in Europe and could potentially create an extra 3,000 jobs in the next couple of years.

Leader of Manchester City Council, Sir Richard Leese, said he was looking forward to welcoming a top company like Aegis to his city. “Winning this significant investment shows how Manchester has both the infrastructure and the workforce to attract global business to the city. It also demonstrates that we can compete on the world stage to generate much-needed jobs and investment,” said Sir Richard.

The Chief Executive Officer of Aegis was also delighted to be setting up a base in Manchester and creating so many jobs in the city. He also explained the tactics behind the future expansion of the Aegis name: “Our strategy is to ensure that people calling our centres get an excellent experience, and we think that generally, the best way to do that is to have a strong onshore presence, rather than having centres offshore.”

Researchers from Imperial College London are embarking on a programme to transform the way that our cities are used. They are investigating how digital technologies can boost the capabilities of the energy, health, transport and utility resources in our cities, so that they can run as effectively as possible.

Managing peak demand in supermarkets, a case study

A supermarket is one example of where the best use of digital technology can make something run as efficiently as possible and limit the waste of resources.

There could be a model for the best times for deliveries to arrive, so that they can avoid peak traffic congestion as well as arriving at a sensible time to meet peak customer demand for particular products.

Tracking where a delivery is in traffic could also help with planning the use of refrigerators or ovens that might be needed once that delivery arrives and make sure that power is only being used when it is required.

In addition, location based information about how many users are converging on a store could help identify the times when that store will need to have all its systems running and the times when energy use can be reduced.

Looking at the overall picture could mean resource usage is balanced in a way that generates real value for the supermarket operator, while conserving resources for other users in the city as a result.

Through the Digital City Exchange programme, funded with a £5.9m grant from Research Councils UK, the researchers intend to better the use and planning of cities by collecting appropriate data and conducting analysis at a systemic level.

Most cities have grown up without strategic planning. For example, Victorian sewers service state-of-the-art hospitals, and intelligent cars use roads with very simple and limited capabilities.

Since the beginning of the economic downturn, many CIOs have been looking at transforming their IT infrastructure as the most efficient means of driving cost savings. Cloud computing has evolved alongside the downturn at an incredibly fast pace, and it has proved to be a popular outsourcing avenue for SMBs to take, avoiding the consumption of critical internal resources. Cloud, SaaS and utility computing models mean organisations can rid themselves of their IT assets without having to acquire any expensive and burdensome hardware.

The complex mix of computing infrastructure created when adopting cloud means organisations have significant overheads in managing infrastructures and are likely to suffer serious technical issues if they fail to manage it properly. Recent cloud management research revealed that two thirds of enterprises are not adopting cloud computing because the infrastructure management is too complex.

Without doubt cloud computing is the future for both SMB and enterprise businesses however, there are still many barriers to adoption. To overcome this, businesses should deploy self-healing, self-learning cloud management systems to effectively control multiple infrastructures, including private, public or hybrid cloud with less down time and improved service levels. The correct automation tool will also allow IT teams to automatically set a range of resource thresholds, enabling easy and controlled use of the cloud. Problem identification, balancing server loads and network management and reporting are prime candidates for automation.

Once businesses wake up to the fact that up to 90% of low level IT support functions can be removed from human hands, maybe outsourcing to the cloud will be as popular amongst larger enterprises as it is amongst SMBs.

Outsourcing is a hot topic in the public sector with more and more areas like the NHS, police force and local councils all using external suppliers to improve their businesses. But with the significant cuts in central and local government funding, outsourcing strategies are coming under the spotlight.

The intense focus on cost cutting and becoming more agile over the last year and a half has forced procurement teams closer to most parts of the business than they ever have been. In addition, keeping positive relationships with suppliers has been a challenge for CPOs with limited access to cash flow due to economic uncertainty.

With this in mind, in order for the public sector to benefit and make outsourcing work effectively there are a few steps which need to be considered, such as planning, risk analysis and the biggest issue, overcoming funding barriers. Aligning an outsourcing strategy with the procurement team will no doubt solve these issues, but in turn, will almost certainly cause some friction as different perspectives and procedures clash. However, there are a few steps which can reduce these headaches on both sides of the table.

The Three-Step Approach

Re-thinking a procurement strategy to align better with supplier choice is always a disruptive process and many stakeholders outside the procurement function may question why this should happen and why they cannot choose their own suppliers. In this instance it is important to communicate how this new approach will provide greater control over suppliers and ultimately more negotiating power.

To make this change process easier and ultimately more successful, three key steps must be taken:

· The procurement department must always involve key stakeholders in the decision making process and discuss their objectives and expectations clearly before they begin to source suppliers. This will provide clarity around what is needed and ensure that the supply chain team is involved in the decision from day one

· Both parties must maintain good relationships with suppliers at all time, even when re-evaluating the supplier network. It’s critical to be open and honest as existing suppliers are likely to understand that refreshing deals can bring new energy to both sides of the equation

· All parties must clearly understand the selection matrix which procurement professionals use - whilst these may vary from organisation to organisation, there are usually standard measures and weightings which are used across all decision-making processes, so these should be considered at the outset

Once this is done, all stakeholders should hopefully realise that aligning procurement and outsourcing choices is for the greater good. Whilst both sides may need education on how the other works, there are many benefits to including procurement professionals in the decision making process, including improved business agility, better risk analysis and improved ‘financial bang for the buck’. By using an aligned model in this fashion, public sector organisations will be able to plan more effectively and overcome potential risks and problems associated with the ongoing funding barrier issues they face every day, as well as minimise the cultural friction.

As anticipated, this year’s budget evoked the typical hue and cry that often follows cuts to public spending coupled with tax rises.

We are all no doubt familiar with the decrease in corporation tax. Some of us will have debated the income tax personal allowance increase and many will certainly have a view on the rise in national insurance for employees. However the Annual Investment Allowance (AIA) is one particular budget item that seems to have escaped without much debate.

The upcoming reduction in the AIA is significant as it will restrict businesses looking to make significant capital expenditure as tax relief will be reduced, which could hinder growth.

The AIA currently stands at £100,000. As of April 2012, this will be reduced to £25,000. In real terms, this means that from April 2012, businesses making annual capital expenditure of £100,000 will lose the ability to reduce their corporation tax by up to £20,000, depending on their profit levels and the applicable rate of corporation tax.

So, whilst businesses are celebrating a reduction in corporation tax they are also likely to be hit by the AIA reduction, which shortens the timeframe in which to claim capital allowances. The phrase ‘robbing Peter to pay Paul’ springs to mind.

There is currently much debate around how government cuts will impact upon the outsourcing industry. Many view it as an opportunity for the outsourcing industry to flourish. Others believe that with the cuts will lead to reduced spend as business begin to scrutinise their overheads more then ever. Either way, the government has made much of its commitment to generating growth within the private sector so the AIA reduction, which prohibits growth, comes as a surprise.

As a provider of IT services that qualify under the AIA, such as the installation and configuration of equipment and the associated operational costs through to managed services and larger outsourcing contracts, we are telling our customers to take full advantage of the current AIA whilst it continues to exist.

Of course, herein lies another problem. Lending restrictions and limited access to finance means that businesses wishing to harness the potential of investment in IT as a tool for growth could face a number of challenges if on-going finance options remain hard to find.

Many companies are offering 0 per cent finance over two or three years, which means that by making strategic investments before April 2012, businesses can offset the effects of a reduced AIA until 2015, maximising the use of the AIA and cash flow management. But will this be enough to offset what amounts to a 75 per cent reduction in an allowance that has helped businesses grow since it was introduced?

I believe that the government’s decision is short-sighted, particularly in a climate where there is more pressure on the private sector to deliver economic growth combined with even less access to capital. More importantly, the AIA is likely to impact on the growth of many businesses – both the outsourcing companies and their clients - that rely on significant capital expenditure, which could affect overall growth of the UK’s economy.

Whilst businesses cannot influence government to reverse this decision they can make plans to limit its negative financial impact. Perhaps the first challenge is to provide this issue with exposure and get businesses thinking about how it affects them. Either way, I foresee the AIA becoming a wider topic of debate amongst the IT industry between now and April 2012.

ADA Technology Services is an IT managed services and co-sourcing specialist. For more information please visit: http://www.ada.co.uk.