Industry news

Christine Hodgson has been appointed to the position of Chairman at Capgemini UK plc, part of the Capgemini Group, one of the world’s foremost providers of consulting, technology and outsourcing services. She is also a member of the Capgemini Group Management Committee and chairs the Capgemini UK Sustainability Board.

Having worked at Capgemini for 13 years, her previous roles with the company include Chief Executive Officer, Technology Services North West Europe, and Chief Financial Officer for both Capgemini UK plc and the Global Outsourcing Division, a role in which she won Finance Woman of the Year at the First Women Awards.

Prior to joining Capgemini, Christine was Corporate Development Director at Ronson Plc after working for Coopers & Lybrand where she specialised in corporate finance. She gained a first-class honours degree in Accounting and Financial Management before going on to qualify as a Chartered Accountant.

Christine sits on the Board and Finance and Risk Committee of Business in the Community, a Prince of Wales charity. She is also a Board member and Audit Committee member for MacIntyre Care, a leading charity providing services for individuals with learning disabilities. She is married and has one son.

Oracle is conducting a cloud computing road show that will hit roughly 80 cities around the world, according to its website.

Attendees will hear from experts who "will share real-world best practices, reference architectures, detailed customer case studies, and more," according to a statement. "You'll learn how to transform IT into a superior service provider with a strategy and roadmap for building, deploying, and managing an enterprise cloud."

Oracle conducted a similar tour in 2010, but this year's plans seem significantly more ambitious in scope.

The British Council is to advise government-funded bodies on how to cut costs and outsource jobs to India.

The council successfully moved its finance and IT departments to Delhi last year, creating 180 jobs there, and now wants to take its experience to the rest of the public sector which is facing severe cuts under government austerity measures.

Martin Davidson, the chief executive of the British Council, said: "Over the past two years the British Council has made itself significantly more efficient. We have maintained our international cultural and educational work for the UK at a time when our purchasing power overseas has been hit hard by the fall in the value of the pound and increased costs overseas.

"Our drive to reduce costs is also partly in preparation for reduced grant funding, currently a third of our income, following the spending review.

"The first stages of this move have been a great success, and consequently the Foreign Office and the Department for International Development, have shown an interest in our experiences. We are open to more informal sharing of our learning and, where it makes financial sense, to working closely with other parts of the public sector over the coming years."

Engineering group Costain says it has "significantly" increased its bid in a takeover proposal for outsourcing company Mouchel.

The move comes after Mouchel rejected an earlier approach last month.

Costain said its fresh approach valued Mouchel at £150m, 27.6% higher than the original bid proposal.

The deal would be "highly attractive" to shareholders of both companies, it said, but added there was still no certainty it would make a formal bid.

However, Costain chairman David Allvey said his board continued to believe that there was "a compelling strategic rationale" for combining the firms.

Government spending

Mouchel was founded in south Wales in 1897 by Frenchman Louis Mouchel. Today it has its headquarters in Woking.

Prior to the initial bid approach, Mouchel's shares had slumped last year as a result of the UK government and local authorities cutting spending on the new infrastructure developments that the company provides.

Mouchel's current operations include half-ownership of Enterprise Mouchel, which has motorway maintanence contracts with the Highways Agency and grits roads on behalf of some local authorities.

Costain was established in Liverpool in 1865, but is now based in Maidenhead. It was involved in building the Channel Tunnel and the Thames Barrier.

Source: http://www.bbc.co.uk/news/business-12125696

Outsourcing giant Capita has repalced current chief operatingf officer Simon Pilling with joint COOs. Vic Gysin and Andy Parker will take their new roles immediately.

Vic Gysin joined Capita in 2002 and is currently the divisional director for its Insurance and Investor Services division. Prior to this he headed up the Integrated Services Division, which runs many of Capita's major central government contracts.

Andy Parker joined Capita in 2001 and is currently divisional director for its ICT, Health and Business Services division. Previously he was also Senior Divisional Finance Director of all of Capita's non-regulated businesses, and has also held executive roles at Phoenix IT and Misys.

The Public Administration Select Committee (PASC) has launched a review on the government's IT strategy.

In a paper entitled Good Governance: the effective use of IT Issues and Questions, the committee invites responses to questions around the strategy so far. This has included cuts of £95m to central IT spending ,announced in the emergency budget; a moratorium on new contracts greater than £1m; steps to centralise IT procurement; and renegotiation of contracts with suppliers.

Key questions include: have past lessons from NAO and OGC reviews about unsuccessful IT programmes been learned and applied, and what role should IT play in a ‘post-bureaucratic age'?

Relevant parties should respond to the paper by noon on 21 January.

Source: http://www.computing.co.uk/ctg/news/1935576/select-committee-feedback-government-strategy#ixzz1Acxmt6YO

Borrowing gets harder as PM encourages private sector to help employment in the wake of predicted public sector cuts

Cloud computing assists upfront investment issues

Today the Prime Minister is meeting bosses of some of the biggest UK companies to discuss their plans to create employment in a bid to demonstrate a focus on economic growth rather than public sector cuts.His meeting with business leaders will focus on what more the government can do to create jobs in the private sector. But with obtaining loans at its hardest for years, smaller businesses, the life blood of the UK economy, continue to struggle to borrow to invest and create growth.

Piers Linney, joint CEO of Outsourcery said, “It is vital that UK companies are able to compete effectively and invest in technology that increases productivity and growth opportunities in order to prosper. In 2011, obtaining debt finance is still proving hard to secure despite the government’s best efforts and this means that much needed updates to infrastructure and systems can be difficult to finance. One way to reduce the upfront investment involved in running a business is to take advantage the opportunities Cloud computing offers by changing IT infrastructure capital expenditure (CAPEX)into an operating cost (OPEX) and making infrastructure investment predictable, low and most importantly affordable. UK companies are leading the world in the delivery of Cloud services.”

The Cloud computing industry

Research by the Centre of Economics and Business Research (CEBR) reports that widespread adoption of Cloud computing could give the top five EU economies a 763bn euro boost over five years and create 2.4m jobs. The report suggests that the rapid uptake of Cloud computing service offerings (will make them) progressively cheaper as economies of scale take hold and service offerings mature. The findings are backed up by analysts such as Gartner which predicts that by 2012, 20% of companies will not own their own IT assets.

Following claims by Francis Maude that the era of mega-IT contracts are over, it is my view that IT service providers of all sizes need to seriously rethink the way they approach IT projects.

Maude’s comments towards the tail end of last year were something that has needed to be said for sometime now. The problem is that saying we need ‘shorter term IT projects’ is one thing, actually putting that into practice is an entirely different proposition.

Unfortunately, here lies the problem - for too long now service providers have been claiming that they want to implement clearer Service Level Agreements (SLAs), making them smaller, off the shelf and open source where possible. However, when you scratch beneath the surface, CIOs still find themselves locked into long-term deals, with poor metrics and no room to stop the contract at any stage.

One of the reasons is that to date, CIOs have naturally been inclined to focus on risk, and the shifting risk to their outsourcer. Meanwhile, service providers have tended to be more interested in the reward, while limiting risk to themselves. To date, many CIO outsourcing contracts are too complex and SLA driven. The need to be simplified, ideally, into a two pager with the ways of working clearly outlined. This would save a lot of time and energy all round, but unfortunately the established/ingrained Legal and Finance processes and regulations would be probably make this prohibitive in the current business environment.

Unfortunately, the current CIO/service provider standoff does little to drive the right behaviours from both sides. It is my view that service providers must take a more co-operative stance, sharing risk with their customers to build confidence for a long-term relationship. Then, as outsourcing relationships mature, organisations can move to Outcome Based Agreements (OBA), where suppliers are contracted specifically to achieve business outcomes for and with the customer. But before getting to this stage, it is important to define what a risk/reward system is, and how it benefits the CIO.

Risk and reward can mean different things. It can mean introducing a system of service performance. For example, an outsourcing provider may earn a bonus if they consistently exceed service performance. Alternatively, the reward could be the ability to offset or earn back previously incurred service credits. At a more collaborative level, the incentive could include a share of the improvement achieved or a percentage of the revenue earned by the business.

As a counterpoint, the risks could include a penalty payment for underperforming - such as not completing a project at a set deadline. Successful risk-reward systems are often based on projected revenue generation or cost savings and predefined SLAs.

The most obvious way of measuring performance for the purposes of service reward is against defined SLA agreements. Incentive mechanisms could also be linked to overall industry performance.

The service provider could, for example, qualify for more reward if its performance in certain key measures, over a defined period of time, puts it in the top quartile of industry performance in that particular set of metrics.

Alternatively, the CIO may prefer to tie risk and reward to their monthly internal SLA measurements, key business events or overall customer satisfaction measures.

Critically, a risk and reward system should be aligned with the business needs of the CIO. The outsourcer, regardless of economic conditions, should be focused on offering transparent value to the customer. This is the essence of a true partnership.

There is little point in the CIO penalising a service provider for failing to meet a response-time service level in a non-critical area of the business or, conversely, rewarding a service provider for meeting a specific availability target if the target has no material impact on the end user's ability to function.

In one successful example of risk and reward, the service provider could offer to pay the CIO projected savings up front in cash. Then, the CIO could go on with reaping the rewards by exceeding the original cost savings estimate. After all, there is nothing like putting your money where your mouth is.

An example might be charging a standard price for all SAP upgrades delivered in a factory mode rather than a different price for each individual customer. Certainly it is an interesting argument and a model that service providers might prefer.

In summary, IT services, as a sector, is still immature in its approach to risk and reward and Outcome Based Agreements. However, with the industry still digesting Maude’s comments last week, it may not be long before we see risk/reward strategies bandied around the CIO’s team.

11 Outsourcing Trends to Watch in 2011

Outsourcing activity is expected to creep back in 2011, but things are hardly getting back to normal in the IT services space. The new year will be marked largely by upheaval--smaller contracts, cloud-related chaos, increased offshoring and decreased quality, for a start.

Read on for more. It's not all bad, we promise.

1. Progressive Outsourcing

The year will be marked by the inking of smaller IT services deals, many of them by first-time buyers who sat on the sidelines in 2010, say industry watchers. Providers, happy to have a foothold, will push such customers to expand the scope of their relationships over time--the old "penetrate and radiate" approach. Contract activity will "creep back throughout 2011, as the recover stutters and buyers pull the trigger on sourcing activity," says Phil Fersht, founder of outsourcing analyst firm HfS Research.

2. Diving for Dollars

Facing a slow economic recovery, IT leaders will continue to scour their existing outsourcing arrangements for savings. "There's a pot of gold in every contract, and in some cases we have found a pot worth millions," says Mark Ruckman, an independent outsourcing consulting working in conjunction with Sanda Partners. IT services customers may reconcile their invoices with their original contracts with an eye toward under-delivery or over-payment, for example, or replace contractors from large sourcing providers with IT professionals from local temp agencies.

3. Outsourcing, Meet Cloudsourcing

Even if some of the discussion of cloud-based offerings from IT service providers is largely hot air, it will continue to be a hot topic in the industry. "The emerging cloud sourcing market will cause the destruction of the outsourcing market as we know it today," predicts Ben Trowbridge, CEO of outsourcing consultancy Alsbridge. "The two markets will merge and cloud sourcing will drive the rebirth of outsourcing."

Cloud players like Amazon, Google, and Rackspace are hitting traditional service providers like IBM and HP where it hurts. "An executive of one of the current low cost leaders recently told me they're forecasting the need to be able to remain profitable while seeing the price of some of their services drop by 70 percent over the coming year," says Trowbridge.

Look for mergers and acquisitions as legacy providers fumble their way forward. Customers, too, will need help stitching together old and new. "IT is going to be coordinating an increasing portfolio of third -party applications hosted externally," says Brian Walker, managing director of EquaTerra's information technology advisory. "The theme in 2011: SaaS-to-SaaS integration."

4. Back-Door Deals Put CIOs at Risk

Many of the discussions and decisions about cloud-based offerings will be handled by business unit or function owners rather than IT, says Kamran Ozair, executive vice president and CTO at offshore outsourcer MindTree. That could pose problems down the road. "CIOs must get ahead of business users reasonable zeal for the power of focused SaaS applications that could back the enterprise into stealth architecture decisions that could be expensive to undo," says Trowbridge. "Business stakeholders want cloud, and they know smart CIOs can mitigate its risks," adds Fersht. "However, IT professionals must tool-up to deliver cloud to their business stakeholders, otherwise they risk a gap growing between business demand and IT supply."

5. The End of Customization

"Clients will be increasingly open to changing their internal processes and accepting standard 'vanilla' services in 2011," predicts Bob Mathers, principal consultant for Compass Management Consulting. "Service providers will put renewed emphasis on internal initiatives to standardize their own offerings to leverage economies of scale and stabilize profit margins." It's the stuff of benchmarking dreams, but economic conditions may turn it into a reality. Stan Lepeak, managing director of global research for outsourcing consultancy EquaTerra, also predicts more process, technology, and location standardization including platform-based solutions.

6. Prices Get Firm

Remember when you could persuade (read: bully) your provider into lower pricing? Days of auld lang syne, my friends. "Outsourcing providers have filled up their prior excess capacity and will be driving to secure higher price points," says David Rutchik, partner with outsourcing consultancy Pace Harmon. "Pounding on the table for price reduction is unlikely to be effective this year."

Customers seeking savings will have to bone up on delivery models, deal structures, and value drivers instead. And vendors will have to woo clients with performance rather than a low bid, says Peter Bendor-Samuel, CEO of outsourcing consultancy Everest Group. "As a result, we will see select players grow disproportionately, taking clients away from others."

Cloud-computing prices could also become less--well, cloudy. Pricing models will mature, predicts Dave Brown, managing director of EquaTerra's IT advisory, and buyers will better understand the specific offerings.

7. M&A: East Meets West

A merger between a major Indian IT service provider and a U.S.-based outsourcer? It could happen next year, say some industry watchers, and an Indian company may be on the buying end. Western providers have adopted the process and cost initiatives first embraced by their Eastern counterparts. Indian providers are skilling up to try to win more consulting and integration work. "The cultures are moving closer together," says Fersht of HfS Research. "2011 will see the first mega-merger between a major Indian services provider and one of the Western incumbents."

"It has long been talked about," says Joseph King, Chief Marketing Officer at MindTree. "There is no longer [cost] that CIOs can squeeze from their India partners. So for differentiation, India providers will be forced to move up the value chain."

8. China, Brazil, and Egypt Take Center Stage

"Buyers are growing more interested in offshore services delivered from locations other than India," says EquaTerra's Lepeak. And service providers will continue to shift their delivery centers to markets such as China, Brazil, and Egypt, and not simply to address issues such as wage inflation or staff attrition. They want a piece of the business in hot emerging markets. "Strong sourcing market growth will be in geographies with strong economies, led by Brazil, China, India and the Middle East," says Bendor-Samuel of Everest. "Countries with strong economies represent big markets with big demand for transformational and discretionary spend activity."

9. Protectionism Will Continue...With Limited Effect

It's practically inevitable with continued high U.S. unemployment levels that the new year will bring with it more proposals by American politicians that appear to limit the use of offshoring.

But any proposed protectionist legislation will be marked mostly by sound and fury. "Most of these measures will fail to gain traction and pass into law, and those that do will be difficult to implement and audit," says Bendor-Samuel.

The attention that such measures, successful or not, draw could put pressure on offshore companies to increase their onshore capabilities, Bendor-Samuel says. But they hardly need more impetus to do that (see prediction #7 above). Concerns about a tax on offshore call centers specifically could be an incentive to reduce call volumes through the use of more self-service and automation tools, says Compass's Mathers. But they hardly need more incentive to take more labor costs out of the outsourcing equation (see prediction #TK below).

10. Providers Embrace Mass Automation...

"It continues to become harder to turn a good profit as a third party service provider," notes EquaTerra's Lepeak. Pressure to keep costs down and rive performance up, outsourcers will rely more heavily on automation, says Rutchik of Pace Harmon, from optical character recognition to whole lights-out, employee-free delivery centers.

Providers will increasingly be slinging such automation tools as well. "Applications that reduce the labor a client is required to perform the services will be offered at lower implementation and running costs than they have in the past," says EquaTerra's Brown. "This will continue to create demand for additional opportunities and reduce the staff necessary to support critical business applications."

11. ...And Mass (Offshore) Migration

The internal corporate IT job isn't the only one expected to go the way of the dodo in coming years. IT enterprise customers arent the only Expect more vendors to make like HP and attack labor costs through layoffs and offshoring in 2011. "[HP] has emerged leaner and dramatically more price competitive, " says Bendor Samuel. "This increased competitiveness has already set off a chain reaction as competitors increasingly recognize the new competitive realities and move, in turn, to cut cost and match price." The easiest way to do that it to move large swaths of delivery personnel to lower cost locations. "This mass migration of work is and will further stretch offshore delivery capabilities, resulting in decreasing quality and communication problems," Bendor-Samuel predicts.

With the increasing presence and interaction of social networks within businesses, it is now more important than ever that companies have their finger on the pulse when it comes to what their customers think. After all, the worst thing that a company can get is a bad reputation.

Bad reputations are so easy to gain and so difficult to get rid of especially in a digital age as word of mouth spreads even quicker via the click of a mouse. The fastest way to gain and keep a bad reputation is by providing bad customer service. With the immediacy of email, internet and social networks, customer service is now at the forefront of every business.

Poor customer service can affect not only a business and its customers, but in extreme cases, an entire industry. The cold weather and snow that the UK has been experiencing recently, has already led to much speculation and worries from customers that E-tailers will be unable to keep to delivery estimates for merchandise.. News reports have been riddled with stories lamenting the poor performance of companies, and how customers have failed to receive information from customer service departments regarding their purchases.

This mass of angry consumers has encouraged companies to install and implement CRM systems that were previously untried and untested in real-world scenarios. However, businesses haven’t realised that consumers now have an easier avenue to query a business Social networks and the internet as a whole, have given customers a new means by which to question a business. As a result the increasing speed at which information can flow through these channels has inflated customer expectations and upped the stakes for providers.

However, it is fair to say that companies are now catching up with the technology and are ensuring that customer service is taken as seriously online as they are in person. Technology is transforming businesses from top to bottom in terms of how they communicate with their customers.

For instance, Salesforce.com has introduced force.com, which is a platform that enables companies to run cloud services. Alongside ServiceCloud, which configures business applications quickly, it ensures that- for instance- call centre workers are able to become self-service when it comes to interacting with clients. This easy to use process gives all kinds of businesses the freedom to interact with customers and carry out day-to-day activity seamlessly by using the web, mobile and desktop working. This integrated method ensures that now businesses have the freedom to work how they want, when they want and most importantly providing good customer service when the consumer wants.

Customer services, with an emphasis on social media should be a key element to any successful business. Just look at the recent research from Gartner which predicted that over 80% of growth in enterprise use of social networking tools will be driven by customer engagement projects, and in particular CRM software. Those businesses that use the technology as a platform for improving customer service and interaction will not only see the benefits with happier customers but also a greater return on investment.