Industry news

Cloud computing is clearly the latest hot topic for the IT industry. In fact, it’s hard to find a vendor or service provider that isn’t making highly positive claims about the business benefits of 'the cloud.' What’s all the hype about? Without a doubt, there are some compelling benefits of cloud computing, such as cost reduction, increased agility, and so on.

With a more traditional infrastructure, companies are normally tasked with buying, maintaining, managing and upgrading their own hardware and software. Clearly, this requires a certain amount of dedicated time and attention, as well as expense. With cloud computing, access to storage, applications and servers are provided and managed by a third party versus in-house. In all honesty, cloud doesn’t offer any new functions, but rather a new way of delivery.

Because of the way that cloud computing works, the solutions being offered by many vendors tend to be rather 'vanilla' in their specifications because of cloud providers’ “build it once, build it for many” approach. While cloud computing can be very useful for companies that use widely available software and systems, it will be less useful for companies that heavily rely on bespoke or highly customised software and systems. Also, because cloud computing can cause complex integration problems, the integration costs can sometimes outweigh the pure cost benefits.

As a result, most companies will probably end up with something of a 'hybrid' solution whereby some of their more standard applications will make use of the cloud, whilst others will be hosted in-house. In other words, cloud computing does not need to be an all-or-nothing proposition.

So how does a company know which applications are suitable for cloud computing and which are not? The truth is that it will depend on the business and the systems that are being used, but there will still be some universal questions to ask:

• How important is this system / application / data to the running of our business?

• Do we have the skills to maintain these systems in-house?

• How much are we spending on maintenance and support now, and how would that change with cloud computing?

• What are the dependencies between my existing business processes and applications and how will moving to the cloud affect these?

• What about regulatory requirements? In some cases it's required that data is stored in the UK, for example, and some cloud computing vendors may not be willing or able to guarantee this.

At the moment, most end-users aren't giving much consideration to the issue of system integration, and unfortunately most vendors downplay it. There will certainly be some integration work needed to keep your processes and multiple applications or data sources knitted together. How do you plan to increase the interoperability between different functions; for example, to enable business intelligence systems to mine data from CRM systems?

As a starting point, any decisions in this area should be driven first and foremost by your own business requirements, not by the availability of technology. Some aspects of cloud solutions are genuinely innovative and beneficial, but that doesn’t mean they are universally suitable. Unfortunately, many companies seem to think that cloud computing is a 'silver bullet' that is easy, inexpensive and secure, all at the same time. But the reality is that any form of IT is quite often just a necessary evil, and just because something is technically possible, that doesn't mean it's a good idea for every company, in every situation.

British support services company Interserve has made a cash-and-shares approach to peer Mouchel create a UK outsourcing powerhouse, trumping construction firm Costain.

Maintenance group Interserve said on Friday it had inked a "co-operation agreement" with design consultancy Mouchel and discussions over the offer were continuing.

Mouchel said on Thursday it was in advanced talks with an unnamed potential buyer, prompting a denial from Costain that it was the party involved.

Interserve is one of the UK’s foremost outsourcing and infrastructure companies, operating in the public and private sectors in the UK and internationally, offering advice, design, construction and facilities management services for society's infrastructure and providing a range of plant and equipment in specialist fields.

Goldman Sachs has invested in a British virtualisation firm in a bid to expand in the market. AppSense, a virtualisation software firm, has received £43 million from the company.

A Goldman Sachs executive will now have a direct role in the oversight of the company although AppSense said Goldman Sachs was taking a "minority stake" in the company.

Pete Perrone, managing director at the bank, will join the AppSense board of directors.

Perrone said: “With the increased mobility of the workforce and the need to be able to access information from any device, Goldman Sachs sees a clear demand for user virtualisation solutions that span multiple desktop delivery methods. AppSense’s strong customer traction, history of innovative solutions in desktop computing, and the record growth it has experienced over the past two years further solidified our decision to invest in the company."

Atos Origin, an international IT services company, has announced that it has signed a new five year deal worth more than $30 million with FirstGroup, the leading transport operator in North America and the UK.

This announcement follows the outsourcing of First's UK data centers to Atos Origin in 2010. The deal covers the consolidation of the Group's data center infrastructure in North America, which has grown through recent acquisitions and mergers.

Atos Origin will provide a range of services with varying architectural standards. It will migrate and transform First's North American data center operations into a utility based service delivery model creating a single, global way of managing and delivering a business-driven technology landscape. The five year deal is expected to deliver cost savings, minimize risk and provide the commercial, financial and technical flexibility to support First's business plans.

Craig Wallace, FirstGroup's IT Director, said: "Atos Origin delivered an excellent proposal which complements our plans to improve and standardize our IT practices. It has a strong track record in both the IT and transport sectors and is well placed therefore to deliver the IT infrastructure and support that enables us to further strengthen our business."

Paul Stewart, CEO for Atos Origin North America said: "This is an important and strategic deal for Atos Origin, which showcases our global expertise. We are absolutely committed to deliver world class service to FirstGroup and our experts in the US and the UK will work together to ensure a smooth transition. The goal is to deliver real business benefits in the short term."

Capita, who depend on the government for much of their turnover, lifted revenues and profits in the year to 31 December despite the coalition government’s austerity measures.

Pre-tax profits climbed to £364.2m from £325.1m on revenues that rose to £2.74bn from £2.69bn.

Capita, whose activities include collecting the TV license, said it is strongly positioned despite having faced a slowdown in decision making on major outsourcing contracts.

Paul Pindar, Chief Executive of Capita Group Plc, commented: "Capita delivered a good performance in 2010, with the majority of businesses across the Group producing robust results against a challenging background. A focus on optimising our operational infrastructure and on growing our offshore operation ensured that we continued to increase margins.

"In 2010, we faced a slowdown in decisions on major outsourcing contracts, lower additional spend by existing clients and reduced activity in some of our transactional trading operations due to constraints on public spending. Notwithstanding these challenges, Capita is positioned strongly for securing new business in 2011."

Dell has completed its acquisition of virtualised storage provider Compellent Technologies for $940m (£578m).

Compellent shareholders approved the acquisition at a shareholder meeting. The two firms first entered merger talks in December.

Brad Anderson, senior vice president at Dell Enterprise Product Group, says the deal will complement the firm's storage portfolio.

"Our team is committed to helping Dell transform the datacentre with open, capable, and affordable solutions that allow customers to do more with their IT dollars," added Phil Soran, president of Dell Compellent.

NOA Monthly Seminar

Cloud Computing – Sponsored by IBM

Tuesday 15th February 2011

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. If 2010 was the year of the Cloud, then 2011 looks to be no different as the market matures, and Cloud services continue to gain momentum.

The NOA Monthly Seminar on Cloud computing focused on a comparison of traditional methods versus current Cloud computing, Cloud models, risks, security, G-Cloud and case studies.

Andy Rogers, NOA Board Member and Chris Mole, IBM, chaired the event and outlined that the seminar would be based around the practicalities of Cloud along with the risks.

Chris said: “There has been a fundamental gear change regarding Cloud. Most organisations now have a ‘Cloud first’ IT policy and it is absolutely imbedded into our strategy. Although it is important to mention that Cloud will and can not solve all problems.”

John Willmott, NelsonHall, looked at why companies should move to the Cloud and focused on a comparison of Cloud computing models, Cloud’s use in private and public sectors, differences between SMEs along with the medium and large corporate enterprises use of Cloud.

Attitudes Towards Public Cloud

• While private cloud has benefits of security it tends to lose on every other measure. The scalability isn't present and the level of internal management makes it difficult to see where the benefit would lie.

• The main benefits in public cloud are very transparent - private cloud still relies too heavily on investment and administration time. There is not the same level of scalability.

• Public cloud is the only way to achieve good scalability and companies would probably struggle to find cost benefits in implementing private systems

• Buying SaaS lowers security risks when compared to with core applications in the cloud therefore public systems would meet cost and security criteria best.

Attitudes Towards Cloud Delivery: Hybrid Cloud

• To meet cost expectations, elements of public cloud are needed to provide the acquired scalability - the private cloud element, although easier to add resources to, is still less scalable but may be necessary to achieve a higher level of security.

• To ensure improved privacy, better control and still benefit from the scalability

• It looks likely NelsonHall will opt for some sort of hybrid and are less concerned about the data security for cloud based applications and more concerned about what access that application has to internal enterprise systems and the potential security gaps they may have to deal with.

Regarding the initial adopting of Cloud, John believes that SaaS will be present in several forms. “Email is likely to move that way as are desktop office suites and the specialist applications used within some sales teams and niche product support teams. We already have some SaaS in administrative and management desktops.

“Cloud is limited to applications around the periphery of the business. We think this will change through 2012 with some desktop applications, email especially being largely hosted in the cloud. Major infrastructure will remain internal until we can be certain of security risks.”

Half of organisations expect to begin to implement Cloud in production environments by end 2012. The production environment that will initially be moved to Cloud are typically those with high and variable storage environments such as contact center systems and CRM systems and those already regarded as being exposed to outside scrutiny such as Web-based and e-commerce systems.

NelsonHall Conclusions

• Despite the hype, Cloud is real

• Improving the business’ access to technology, and pay-per-use scalability are key drivers

• Hybrid cloud favored in short-term

• Initial adoption around email, collaboration, and desktop applications

• Initial production applications will be storage-intensive and web-based

• SaaS will be used for fringe functionality

Shiv Kumar, Executive Vice President, Zylog Systems Limited discussed the options and advantages of the various Cloud models and what Cloud computing can offer in its various forms.

Shiv said: “Cloud computing can provide more dynamic, resilient and cost-effective IT systems. A different user experience and business model which can offer standardised offerings, rapid provisions and flexibility on price.

As an infrastructure management and services delivery method it utilities virtualized

resources, it can be managed as a single large resource and has the ability to deliver services with elastic scaling.

Cloud Competency Focus

• Establishing cloud reference architectures and framework – Cloud/SaaS -> BPM/SOA

• Delivering cloud enabled business solutions/products pro-actively . Enterprise 2.0 SocNet, PowerCube DaaS, PowerMigrator, Business Solutions & Mobile Solutions

• Best practices to address the known challenges and limitations – Compliance and Regulatory issues

• Providing consulting and implementation services

• Address the time to market and TCO/ROI

Rob Sumroy, Head of Information Technology and Outsourcing Practices, Slaughter and May, outlined the risks associated with Cloud computing however emphasis was placed on risk being a good thing – risk is why we do business.

Risks associated with data include locality, security, confidentiality, retention / preservation, access and deletion.

Most standard Cloud contracts will carve out typical liabilities – even direct losses for standard services. Pay as you go provides no guaranteed income for service providers.

Cloud risks include service availability (service credits), warranties and indemnities, liability, governing law, jurisdiction / arbitration and variation - reserving right to vary Ts&Cs without notice to customer.

Risk Conclusions

● Risk is not inherently bad

● Greater rewards often flow from higher risk

● Challenge: to find the right level of risk in the relevant circumstances

● Cloud contracting presents altered risks and new circumstances

● Informed engagement with Cloud providers

● Strategic embracing of Cloud opportunities

Darren Argyle, IBM UK Security and Compliance Offerings Leader, IBM,said: “There is no other tech trend like Cloud that has put security in the spotlight. Like any technology, we need to take a risk based approach.”

Darren provided an overview of Cloud security and describe how to address the challenges to ensure security.

“The right security must be embedded in the Cloud. Every business today has an element of their business outsourced –Cloud risks are similar to the key outsourcing risks. If security is approached properly, it can actually be an enabler.”

Companies moving to Cloud should:

Define a Cloud strategy with security in mind

• Identify the different workloads and how they need to interact.

• Which models are appropriate based on their security and trust requirements and the systems they need to interface to?

Identify the security measures needed

• Using a framework such as the one IBM uses, the IBM Security Framework and Blueprint, allows teams to capture the measures that are needed in areas such as governance, architecture, applications and assurance.

Enabling security for the Cloud

• The upfront set of assurance measures you will want to take.

• Assessing that the applications, infrastructure and other elements meet your security requirements, as well as operational security measures.

After the break, users of Cloud provide case studies which included presentations from Mark Farrell - CSC, Adrian Steel - Royal Mail, Paul Davies – Verizon and Pete Beevers – IBM.

Copies of all the case studies and presentation slides can be found on the NOA website - http://www.noa.co.uk/

In recent times, we’ve seen remarkable progress made on public sector transparency in this country, a development which has been helped by the government’s decision last week to announce that it is launching a new website for procurement contractors looking to win public sector jobs that cost over £10,000.

The announcement is aimed at encouraging more small businesses to get involved in the procurement process, while ensuring that procurement opportunities will be available for everyone, free of charge. This will, inevitably, make government deals more transparent than ever, and will see the end of what Minister for the Cabinet Office, Francis Maude, calls ‘the procurement oligopoly’ which has seen innovative, small businesses and organisations shut out of contract processes early on, largely because of unnecessary bureaucracy.

Clearly, the government’s move is a positive one – after all, larger organisations hogging public sector contracts is not only bad for those affected, it's also bad for government, as it stifles competition, and means that they have fewer options. Public sector procurement has long been an issue for SMEs, with a huge number struggling to bid for public sector contracts due to a lack of awareness of the opportunities that are available and the red tape surrounding the application process.

Greater transparency will make public authorities more accountable, and could be an effective tool in deficit reduction, driving out waste and double spending. However, the large scale release of data will almost certainly bring with it a number of issues – not least of which are significant privacy issues and a hefty price tag. It also looks as though public sector organisations will need to transform the way they operate as a direct result of the government’s transparency campaign. Not only will they be asked to re-think their systems, processes and culture, but also the ways in which they share information in order to drive efficiency, improve public trust and increase engagement with public services.

The desire to see a more open, transparent government – driven initially by the expenses claim scandal, but subsequently filtered into other areas of policy – means that we’re certain to see more investment in this area in the months to come. There’s been a longstanding desire to see the government becoming more accountable in the way it tenders outsourcing contracts, and uses data.

SMEs are a key area for the NOA and with greater levels of transparency in place we will be able to measure the success of smaller organisations and hold the government accountable if the new initiative is deemed unsuccessful. It is this type of measurement and transparency that needs to be adopted more widely across the public sector. Will these plans result in greater transparency? Or is it all just smoke and mirrors?

Like all new initiatives, the proof will be in the pudding – but if you are an SME and would like to find out more about outsourcing, you can find out more at: www.noa.co.uk

Logica has posted financial results for 2010 which shows that they are "positioned for growth".

At £3,697 million, full year revenue inched up one per cent on an adjusted 2009 total, but revenue in the fourth quarter was up 4 per cent.

The results were ahead of analysts' predictions of £3,683m even though major public sector contracts have not been forthcoming.

In the past, Logica has been better known for its consulting work than outsourcing. But last year the group's consulting and professional services business shrank 5 per cent while outsourcing grew 10 per cent

CSC have launched Patient in Your Pocket™, a wireless application for BlackBerry® smartphones that enables on-the-go healthcare professionals to deliver quality patient care.

Patient in Your Pocket equips mobile healthcare professionals with immediate, secure access to patient information whenever and wherever care is provided.

The solution integrates with clinical systems, enabling caregivers to retrieve current and accurate patient information, update patient data and conditions while care is being given, collaborate, and conduct administrative functions such as coordinating appointment schedules – all while away from the desktop.

Patient in Your Pocket is also available in the UK and in the Middle East, and it has already proven to be valuable for mobile doctors, nurses and health workers delivering front-line care to patients,” said Mark Roman, president, Global Healthcare Group, CSC.