Industry news

Satyam Computer Services and its former auditor PricewaterhouseCoopers (PwC) have agreed to pay a combined $17.5m (£10.7m) in fines in the US after one of India's biggest corporate scandals.

Satyam, an outsourcing company, will pay $10m for falsely reporting more than $1bn in profits over five years.

The company's chairman Ramalinga Raju admitted to the fraud in 2009.

Satyam's shares were indirectly traded on the New York Stock Exchange (NYSE) as well as in India.

The US Securities and Exchange Commission (SEC) said it had fined the Indian affiliate of PwC $7.5m, describing it as the largest American penalty against a foreign firm.

The SEC said the auditor, PW India, failed to independently verify cash balances in Satyam bank accounts.

Capgemini is Selected for New IT Outsourcing Contract at the UK Financial Services Authority

Capgemini Financial Services, a global business unit of the Capgemini Group, has been selected in the competitive bidding to supply IT outsourcing services to the UK Financial Services Authority in a framework agreement covering applications development and applications maintenance for the four-year period 2011-2014.

Under the agreement Capgemini will work with the FSA on strategic projects involving the IT applications required to support the FSA’s regulatory responsibilities. The framework agreement has been designed to give the FSA value for money and the flexibility to address the regulatory change agenda for the next four years. Capgemini will work in close collaboration with the FSA and its suppliers to help the FSA ensure that its systems remain fully attuned to regulatory reform in the UK as well as any changes that are introduced at EU level. The systems in scope will also support the transition to the new regulatory structure in the run-up to 2013 and beyond.

The agreement, known as the Strategic Outsourcing Framework Agreement (SOFA) follows a mandatory competitive bidding process under EU procurement directives. The FSA says that Capgemini was successful because of its in-depth knowledge of financial sector regulation, its collaborative ethos and its cost-effective proposals based on its Rightshore® delivery model, with the Capgemini FSA delivery teams located in the UK and India.

Gareth Lewis, Chief Information Officer at the FSA, said: ‘Capgemini have a longstanding relationship with the FSA and during this time have demonstrated their understanding of the regulatory environment. My team and I look forward to working with them over the next four years.’

Capgemini has worked with the FSA since 2006 and has successfully designed and built a number of its core systems including its Mandatory Electronic Reporting System (MER) which has simplified regulatory reporting for the financial services industry while tightening compliance for the FSA.

Andy Lees, Head of Capgemini Financial Services UK, said: 'We look forward to working with the FSA during a period of significant change for financial industry regulation in the UK as it migrates to the twin peaks model, and to helping them address the challenges and opportunities involved.'

HMV were in the news this week. The high street music retailer continues to struggle with the shift from people buying their CDs from traditional bricks and mortar retailers to buying their music via clicks suppliers, the most notable being iTunes.

The songs haven’t changed – although they don’t play much R&B on Radio 4 so I cannot guarantee that – but the way people consume them have. The supply chain has changed.

In the case of music, we have had both supply chain shifts and also technology shifts.

First off, online retailers like Amazon disrupted HMV by selling CDs online, and doing it cheaper by removing the hassle of having to visit the high street at all. It was the same old CD, just delivered in a different way.

Then Steve Jobs dramatically changed the way we consume music through technological innovation, the invention of the truly music-playing phone (iPhone), and by then connecting the device directly to the online store, removing the need for a CD or delivery vans.

Amazon disrupted HMV, Apple disrupted them both.

But the music is still the same, and we all still have ears to listen to it with – although with the use of plug-in-your-ear ear phones, I do predict a major problem in about 50,000 years time for glasses wearers, because our outer ear lobes will have been made genetically obsolete.

What’s all this got to do with cloud you may ask?

Well, firstly, Apple i-Tunes lives in the cloud. My own iPad connects through my wireless network at home, through my broadband connection and then simply finds the place to buy my music. i-Tunes is the classic disruptive application delivered because of the really big cloud called the Internet.

And, your own internal IT infrastructure is going to feel the impact of cloud at some point. The supply chain for IT is changing, not as dramatically as the music industry, but, not far off.

Today, your IT department orders some servers, probably off a company like Logicalis.

Logicalis, an IT systems integrator, then places on order with the chosen server vendor, the likes of IBM, HP and Cisco. They build them then ship them, to us. We check them and ship them to you, and install them for you. Your IT department then houses and powers them on your premises until they become old and then the cycle starts off again. The entire IT industry has been built on this model for decades.

But, in the same way you can now buy music through the internet, the ability to simply consume computing processing power is going to change the way you think about managing your internal IT supply chain. Today, with a credit card you can go and ‘buy’ applications or computing processing power off the internet. Your Sales Director can decide to move your CRM applications into the cloud – bypassing IT if they so desire.

Putting the power to consume IT into the hands of the consumers is truly a supply chain change that is worth taking note of.

HMV didn’t recognise early enough, although they are catching up quickly now, that consumers didn’t find high street browsing for a single track of music efficient or experiential enough.

The same is now true of a growing part of the IT your business uses on a daily basis.

IT supply change is happening because of the massive growth in bandwidth now available to enable resources to be accessed and consumed from anywhere. Sounds a little bit like buying a song off i-Tunes – you couldn’t do it 10 years ago because it would have taken 24 hours per song to download, now it takes seconds.

Now you can buy ever more computing resources from somewhere in the cloud and it’s only going to increase over time.

My only concern is that like my iPad, I seem to make far worse decisions about what I will listen to because I don’t really have to excerpt much energy to make it happen. Just because I can download an entire Madness album from £4.99 off i-Tunes late on a Saturday night doesn’t mean I should…

There are a number of good reasons for choosing to work with an outsourcer when it comes to managing and delivering your IT. For a start, outsourcing gives you the cost saving and access to expertise that is not always attainable in house.

Nonetheless, the outsourcing process is a two-way street. You may be able to outsource the work required, but not the responsibility. Essentially, you are responsible for both the outsourcing decision and performance.

Experienced customers tend to have stronger relationships with their outsourcing providers, and therefore are in a better position to deliver quality services through seamless collaboration with their outsourcing partners.

As such, outsourcing should not be viewed as a mere contractual arrangement; the ability to build a real partnership with your supplier will help to maximise the return on your investment considerably. In other words, don’t underestimate the human elements required to build a mutually beneficial relationship.

With more than 15 years’ experience in the IT outsourcing sector, we’ve come up with some helpfultipsto ensure that the ‘human touch’forms an integral part of your outsourcing governance.

1) Make sure that your supplier is aware of your overall strategy from the outset, and also kept completely up to date as it develops.In a successful outsourcing relationship, your suppliers should act as an extended part of your organisation to help you deliver your business strategy, and so you should treat them that way, with regular updates and a steady flow of information.

2) Build relationships with your outsourcing partner at multiple levels, meaning from directorship to account management and delivery. These mapped relationships will not only help the two organisations understand each other’sculture and values, but will also improve communications and rapport.Moreover, building a mutually understanding and supportive relationship will help to bring any problems to the surface more quickly, and also ensure that they are resolved more easily.

3) Ensure thatall of the responsibilities and dependencies related to the service delivery are made clear from the outset; everyone involved will need to understand who does what and when, as well as the dependencies between your company’s input and the ability for the outsourcer to deliver the services required. You will also need to consider the impactif any third-party vendors are involved. Any disruption on one part could disrupt the final service delivery, since these business processes may be interconnected and/or interdependent.

4) Establish regular performance reviews as well asa clear issue escalation process to make sure that the business objectives and service performance levels are being met. It’s a good idea to set a monthly performance/operational review, for example, as well as a bi-annual contractual review and an annual strategic review to ensure that your suppliers are aware of any changes in strategy, and also to cement the relationship between both companies.

Also, by planning in these regular review meetings, issues can be escalated effectively and prioritised according to their importance. For example, there may be an operational and/or tactical issue that needs addressing, or in some cases a more strategic change might be required to keep the services aligned with the strategy.

All of these points lead to the same conclusion: an outsourcer should not be viewed as ‘just anothervendor’. Instead, it should be considered as an important extension of your function or company.By building a relationship beyond the contractual setting, an outsourcer can be transformed into a trusted partner that canhelp you to achieve yourcore business objectives, on time and every time.

"It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change ..." said Charles Darwin.

Few quotes sum up more accurately the role of business intelligence (BI) as this. As the economy gains momentum and companies ready to capitalize on the rally, CEOs need to ask themselves, whether their company has adequate BI to make the right decisions and successfully respond to change? Much data and content that can influence decision making comes with a short shelf life of significance; a good BI solution should thus bring theseanalytics quickly into the intelligence process.

‘Agility’ is the new buzzword to access better intelligence for business and in keeping with this theme; new generation trends in BI seem to be as below.

• Investmentin BI for better quality solutions

BI is going to be vital as companies try to locate their competitive advantage and develop plans to leverage it. Companies already leveraging BI are looking to fine tune their software’s and tools and as competition gets fierce, smaller companies are likely to outsource BI to capitalize on the growing economy. As investments are funnelled towards BI, and demand for software and tools grows, one can only expect to see better quality tools, tailored to the needs of clients and refined to offer high quality insights. In all likelihood, BI tools will also become user friendly and intuitive so that they can be easily adopted and used quickly for faster decision making.

• Growing importance of Social content

The presence of social networks is growing. There are over 250 major social media and networking sites producing content and a growing number of companies are turning to them to harvest vital customer feedback and detect buying patterns. Social data analytics also has the potential to throw forth vital behavioral, sentiment and social graphs that can help decision making. Companies are also ensuring that their BI tools and software’s have the potential to beincorporated into enterprise business intelligence environments.

• Leveraging Mobile, Cloud and Internet TV

The presence of internet TV, smartphones and tablets is growing rapidly.A smart business should be looking at BI to grasp rapidly changing needs of their customers. With revenues tight, they will also be turning to cost effective cloud computing. Expect to find vendors widening their offering to extract transform load (ETL), Data warehouse, reporting, On-Line Analytical Processing (OLAP), advanced visualization and dashboards in one package.

• Greater collaboration

As the demand for near-real-time data with alerts to detect performance data increases, one can expect BI tools to get more sophisticated, add to this a collaborative, contextual and qualitative layer to the output of BI processes.Collaboration is not just about distributing and sharing documents, but is interactive, inclusive and non-silo’d.

There has been a growing transition from traditional report formats to end-user driven visualization, which is interactive and enhances the final output. With the popularity of infographics, lots of businesses want sophisticated yet better looking, visualizations for their data.

Outsourcing BI

As competition gets fierce, small and medium businesses may not be able to add to their overheads or cut deeper into margins, that’s when outsourcing BI becomes an attractive option. Most companies however are hesitant about outsourcing a critical activity like BI because it involves handing over huge quantities of data to an external source and also because BI relies on in-depth understanding of business requirements, usually developed in close collaboration with internal business managers. The key to successfully outsourcing BI is thus partnering with the right vendor, someone who had developed tools, has the potential to customize tools, is vastly experienced, and can bring domain rich and diverse experience to developing the best possible solution.

Case Study

How a CPG major outsourced BI and leveraged ITC Infotech’s vast experience and world class tools

An Indian CPG major wanted to implement a performance management program across its enterprise and align goals and strategies with operational objectives within the organization.ITC Infotech used its proprietary performance management model ‘Balanced Scorecard’, to develop a methodology and framework for thesolution;it also used a ‘governance’ model to implement the project for change management, IT enablement, and scorecard review scheduling.

ITC Infotech’s deliverables included:

• Strategy Maps – Pictorial representations of strategic objectives & their mutual linkages

• Balanced Scorecard – Strategic objectives linked with leading, lagging metrics, along with key strategic initiatives

• Additional scorecards – likevendor scorecard, brand portfolio, new product development

• Linkage document – to explain the purpose of linkage of strategic objectives

Client benefits of our solution

• Greater alignment to goals and strategies

• Strategy communication

• Effective model to measure business performance, identify and mitigate risk, allocate resources and funds for key strategic initiatives

• Helped identify key organizational capability and development areas

Conclusion

The maturity of BI and BI tools will continue and platforms willbecome functionally rich, mobile, collaborative, and scalable to accommodate the never ending demand for real-time ad-hoc knowledge. Smaller companies may find it hard to invest in specialized expertise, software and tools that will effectively let them leverage BI, and outsourcing, nay, partnering with the right BI vendor may prove invaluable.

In recent weeks, we’ve seen a number of initiatives from the government aimed at making it easier for organisations in the private sector looking to supply services to the public sector.

Indeed, by pledging to support growth in enterprise, and by trying its best to clear the path for private sector organisations looking to take on public sector contracts, it seems clear that the coalition has nailed its colours firmly to the outsourcing mast. But who stands to benefit?

The latest of these new initiatives came from Communities Secretary Eric Pickles who has, in recent weeks, signalled the government’s intention to scrap the ‘Two Tier’ outsourcing code for local government.

The code, which was introduced by the Labour Government in 2003, was aimed at preventing the creation of two-tier workforces by protecting employees recruited to work on outsourced public sector contracts from being appointed at lesser rates in comparison to transferred employees.

In truth, news of the code's imminent abolition comes as no real surprise to anyone, as the government’s austerity measures have dictated that the tendering for public sector must focus increasingly on cost efficiencies and quality of service, without having to worry about other considerations. It does, however, demonstrate that public sector outsourcing is on the rise.

With this in mind, perhaps the real beneficiaries of the government’s commitment to outsourcing will be outsourcing industry itself? Of course, it’s fashionable, in the present climate, to suggest, in the way Channel 4’s Dispatches has done in recent weeks, that suppliers will be rubbing their hands at the prospect of increased profits.

However, it’s nonetheless true that the outsourcing industry is buoyant at the moment, not because they are greedy fat cats, but because outsourcing is one of the few industries capable of relieving the burden to the taxpayer, by reducing costs and increasing efficiencies.

It’s also true that as the outsourcing landscape becomes more open in the wake of the government’s commitment to promoting enterprise, more and more suppliers will look for ways they can get a slice of the growing outsourcing pie, thus bringing more competition, effectiveness and innovation into the public sector. Which has to be good!

Thus, it’s no coincidence that the NOA has seen a marked increase in activity in recent months, with new members joining from local government telling us that they have been encouraged by the innovative approach suppliers are offering to this sector.

But if outsourcing really is the way forward for the public sector, then surely it’s in the best interests of everyone concerned to make sure they know how to manage an outsourcing relationship effectively?

A successful outsourcing relationship is something you need to work at and understand, and there is a risk that without a guide, public sector organisations will stumble down this road blindly. So it was no surprise to me to learn that NOA Pathway - the NOA’s training arm - has also seen an increase in interest from local government in recent weeks. Most of these have been in touch with a view to helping them understand best practice in outsourcing and to ensure that they get best value from their suppliers.

Given that outsourcing in the public sector is on the rise, as a result of the government’s recent initiatives, perhaps the question we should be asking is whether it’s time more organisations in the public sector looked at training and of course Pathway.

Mahindra Satyam, a leading global consulting and IT services provider, has announced today that it had reached a settlement with the United States Securities and Exchange Commission (“SEC”), without admitting or denying allegations of any wrongdoing, which concludes the SEC’s investigation of accounting issues as to the Company. This settlement relates to an accounting fraud perpetrated by the Company’s former management from at least 2003 through September 2008.

All of the misconduct transpired under previous management prior to the nomination and appointment by the Government of India of new directors for the Company on January 11, 2009, and prior to the strategic investment by Venturbay Consultants Private Limited, a subsidiary controlled by Tech Mahindra Limited, that was completed in July 2009.

In its press release, the SEC referred to “the unique and significant remediation efforts made after the fraud became public in 2009” and stated that Mahindra Satyam had been transformed “into a new company with new management, directors and investors and state-of-the art controls.”

Vineet Nayyar, Chairman, Mahindra Satyam, said, “We concluded that it is in the best interests of Mahindra Satyam and its shareholders to resolve this matter and put it behind us on the basis announced today. The new management of the Company are committed to the highest standards and we will never betray the trust of our investors.”

Under the terms of the settlement, the Company consented to the entry of a judgment requiring it to pay a civil penalty of $10 million, comply with the US federal securities laws, hire an independent consultant, and comply with certain undertakings.

Accenture has extended for four additional years its contract to provide RSA UK with insurance business process outsourcing (BPO) services.

Under the original contract, signed in 2003, RSA outsourced a range of front- and back-office operations to Accenture, including portions of its sales and service, claims, finance and commercial administration functions that support RSA’s direct, affinity and broker customers. The initial agreement was scheduled to expire in 2010 and was extended in 2009 for two additional years through to the end of 2012.

Under terms of the extended agreement, signed in December 2010, Accenture will continue to provide these services through to the end of 2016 whilst enabling RSA to have flexibility to meet its customer needs and explore other opportunities to support the on-line proposition. Services are delivered through Accenture’s Global Delivery Network using centers in Bangalore and Mumbai, India.

“We extended our relationship because Accenture offered us greater flexibility, enabling us to refine services in an efficient and timely manner to reflect the changing needs of our customers,” said David Pitt, Operations Director for RSA UK. “In addition, we have developed a level of mutual trust and respect over an eight-year period that gives us comfort knowing Accenture will provide the necessary support to RSA as markets and requirements evolve.”

“This contract extension is designed to continue to sharpen our focus on customer service, which remains one of RSA’s top priorities,” said Adrian Brown, CEO of RSA UK.

“We are proud of our track record working with RSA,” commented Mark Robertson, managing director of Accenture Property & Casualty Insurance Services. “The extension of this relationship, combined with the introduction of process changes and more sophisticated performance metrics, will bring more value to RSA, its customers and its brokers.”

This agreement complements a current management consulting and application development and management contract between the two companies. Under the agreement, Accenture provides development, implementation and ongoing maintenance services for RSA UK’s IT applications, including those related to customer relationship management, claims processing, commercial lines products, policy management and back-office operations in the UK and Ireland.

Accenture Property & Casualty Insurance Services, a business service within Accenture’s Financial Services operating group, serves more than 60 property and casualty insurance clients worldwide.

Microsoft Corp. and Toyota Motor Corp have announced that they have forged a strategic partnership and plan to build a global platform for TMC’s next-generation telematics services using the Windows Azure platform. Telematics is the fusing of telecommunications and information technologies in vehicles; it can encompass GPS systems, energy management and other multimedia technologies.

As part of the partnership, the two companies plan to participate in a 1 billion yen (approximately $12 million) investment in Toyota Media Service Co., a TMC subsidiary that offers digital information services to Toyota automotive customers. The two companies aim to help develop and deploy telematics applications on the Windows Azure platform, which includes Windows Azure and Microsoft SQL Azure, starting with TMC’s electric and plug-in hybrid vehicles in 2012. TMC’s goal is to establish a complete global cloud platform by 2015 that will provide affordable and advanced telematics services to Toyota automotive customers around the world.

As part of its smart-grid activities, aimed at achieving a low-carbon society through efficient energy use, TMC is conducting trials in Japan of its Toyota Smart Center pilot program, which plans to link people, automobiles and homes for integrated control of energy consumption. TMC believes that, as electric and plug-in hybrid vehicles become more popular, such systems will rely more on telematics services for achieving efficient energy management.

Microsoft has a long history of delivering platforms and services to the automotive market, including in-car infotainment systems built on the Windows Embedded Automotive platform, in-car mapping services with Bing and the Microsoft Tellme voice application, and many other consumer solutions.

“Today’s announcement of our partnership with TMC is a great example of how we continue to invest in the automotive industry and of our commitment to power the services that are important to consumers,” said Microsoft CEO Steve Ballmer. “It further validates the power of the cloud, as the Windows Azure platform will provide the enterprise-grade, scalable platform that TMC needs to deliver telematics in its automobiles worldwide.”

“This new partnership between Microsoft and Toyota is an important step in developing greater future mobility and energy management for consumers around the world. Creating these more efficient, more environmentally advanced products will be our contribution to society,” said Akio Toyoda, president of TMC. “To achieve this, it is important to develop a new link between vehicles, people and smart center energy-management systems.”

Transport for London (TfL) has revealed that it plans to save £375m over the next seven years by delaying an upgrade of its technical systems.

These plans are part of a £7.6bn cost reduction plan that TfL announced after the Comprehensive Spending Review last year.

The move will see the company moving systems to a private cloud that will service all KPMG's European users.

TfL has confirmed that it will hold back on a "technical refresh" to make up part of the £375m planned savings.

It was not confirmed what system upgrades would be postponed