Industry news

TUI Travel lost key booking systems after merging First Choice and Thomson, it reported in its full year results.

The two firms became TUI Travel which carried out IT integration and standardisation projects following the merger. A post-merger enterprise application integration is one of the most complex IT operations however TUI also outsourced parts of the system.

Its CFO, Paul Bowtell, resigned after revealing that the organisation had been forced to restate its 2009 financial results to £117 million due to an accounting error in the sysyems.

TUI said in its preliminary results for the year ended 30 September:

“As part of a drive for further cost savings and efficiencies, processes around the two systems were streamlined, roles were consolidated and parts of the process were transferred to an outsource provider in India.

“As a result, it is now understood that control weaknesses arose and the level of differences between the two systems grew.”

Dave West, Forrester analyst, said businesses should who use cost-cutting as a main driver for outsourcing should see TUI as a warning.

“Cost should not be a primary reason for outsourcing. This case highlights that when you focus on cost without thinking about the implications of the cost, you can have lots of problems.

“With £117 million, you could have got some great software engineers in,” he said.

“When you try these integration activities, it is very risky – it needs to be managed in-house. Outsourcing is like giving away your core competencies. The outsourcer does not know how it [the system] is supposed to work.

“It highlights that integration testing is really important to do. It tends to be done at the end, when it should be done at the start. You can’t integrate first and then get it to work.”

Google has won the first contract to move a US federal agency completely to cloud services with its Apps for Government suite.

The US General Services Administration (GSA) opened the contract to replace its in-house Lotus Notes and Domino systems.

Microsoft pitched its Office suite and IBM was also on the shortlist, but a group comprising Unisys, Google, Tempus Nova and Acumen Solutions won the $6.7m (£4.2m) contract.

"Cloud computing has a demonstrated track record of cost savings and efficiencies," said GSA chief information officer Casey Coleman.

"With this award, GSA employees will have a modern, robust email and collaboration platform that better supports our mission and our mobile workforce, and costs half as much."

The move will save the GSA around $15m (£9.5m) over the five-year contract, according to Coleman. Around 17,000 staff will use the new service as part of the first federal agency to move email entirely onto the cloud.

The announcement has caused more than a hint of sour grapes at Microsoft. Tom Rizzo, senior director of SharePoint at Microsoft, highlighted the failures, as he sees them, in Google's offering.

"It's no secret that large public sector organisations have consistently valued Microsoft's cloud offerings not only because of our deep understanding of enterprise organisations, but for their ease of use, security and privacy capabilities," he wrote in a blog post.

"Regardless of how organisations are thinking about the cloud, Microsoft provides a choice for their productivity needs: on premises, in the cloud or as a hosted solution. Google does not offer any such choice."

The news comes just at the right time for Google. The company lost a major New York cloud contract to Microsoft in October, and resorted to legal action last month after being excluded from a shortlist for other government contacts.

Google Apps for Government has a separate physical infrastructure and improved security in order to meet contract standards.

The UK government is moving to cloud services, and Google could be pitching for similar deals across the Atlantic.

Source: http://www.v3.co.uk/v3/news/2273654/google-apps-government-gsa

MITIE is refunding its suppliers tens of thousands of pounds after an investigation showed that some have been charged £10,000 for the privilege of working for the company.

Procurers of the FTSE 250 outsourcing group had previously asked for a “one-off payment of £10,000 in order to become a MITIE preferred supplier.”

The Cabinet Minister, Francis Maude, recently urged the Government’s 31 largest suppliers, including MITIE, to become more ‘transparent’ in its dealings with government and treatment of subcontractors and to ‘expand’ its use of small businesses.

The suppliers affected had previously worked for Dalkia Technical Facilities, which MITIE acquired for £130m last year.

Microsoft files lawsuit against Chinese companies for pirating software on computers

China is to inspect central and local government computers to ensure all the departments are using copyrighted software.

The government made the announcement on Tuesday, adding that the inspections will be completed before the end of October 2011. It follows a six month government campaign to crack down on intellectual property infringement in a country where pirated and counterfeit tech good such as DVDs, music, and cellphones thrive.

Coinciding with the announcement, Microsoft said it has filed a lawsuit against ten Chinese companies for selling computers pre-installed with pirated software. The U.S. company has been a major victim of such copyright violations in the country and has been working with China's government to stop them.

"Computers pre-installed with unauthorised software have always been a core problem for the software industry that must be resolved," said Microsoft China's intellectual property general manager, Yu Weidong, in a statement.

In terms of pirated software, China is one of the world's worst offenders. In 2009, about 79 percent of the software used on computers in the country was pirated, according to a report from the Business Software Alliance and IDC. The commercial value of that pirated software was US$7.5 billion, putting China second in the world behind the US, where the value of pirated software reached US$8.3 billion that year.

Along with the inspections of government computers, China also plans on establishing budget controls for the long-term procurement of software, according to a Tuesday statement from China's General Administration of Press and Publication. The government also wants to push businesses to use legitimate software.

As far back as 2000, China has made repeated moves to ensure its government bureaus are using legitimate software. In 2006, Chinese authorities issued a notice requiring all governmental departments to buy computers installed with copyrighted software. From 2007 to the end of 2009, the government spent 794 million yuan ($119 million) on purchasing copyrighted software.

"They have taken these kinds of steps before. My impression is that this time it's more comprehensive," said Christian Murck, the president of the American Chamber of Commerce in China. Murck said it was positive move, but cautioned: "It's not entirely transparent. It's conducted by the government, within the government," he added.

The Chamber also notes that litigation is becoming a more realistic option for companies to protect their intellectual property in China. "Microsoft has resorted more to using litigation than they did in the past," Murck said. "I would say the reason for that is the legal system is offering more recourse now in the face of copyright infringement. That's actually a positive development."

Beijing Sinetec Technology Co., one of the companies facing the lawsuit, said it could not comment on the situation. "We haven't received anything, so we can't respond at the moment," a company employee said.

Source: http://www.computerworlduk.com/news/it-business/3251531/china-pledges-to-check-state-computers-for-pirated-software/

The Government's largest IT suppliers have been told the era of "mega IT contracts" is over as the Cabinet Office unveiled "horrifying" public procurement practices.

Francis Maude, the Cabinet Office minister, told an audience of chief executives from 31 key government suppliers including BT, Hewlett Packard, IBM and CapGemini, that costly IT mistakes like the £12.7bn NHS national programme would not be repeated.

Instead future contracts would be cheaper, "smaller" and "off the shelf" rather than expensive, bespoke systems, he said.

"Government will no longer offer the easy margins of the past. We will open up the market to smaller suppliers and mutuals and we will expect you to partner with them as equals, not as sub-ordinates," Mr Maude said.

"The days of the mega IT contracts are over, we will need you to rethink the way you approach projects, making them smaller, off the shelf and open source where possible.

"We will expect you to be transparent in all your dealings with us and for the terms of the contracts we sign with you to go up online."

Mr Maude, who oversees £45bn of central government spending each year, revealed that some government purchases took 77 weeks from first publication to the award of a contract.

He said on average public buyers took "twice as long" to agree deals as their private sector counterparts.

"This is just wasted time and money on both sides of the equation and it is something we urgently need to address," Mr Maude said.

Government buyers had to cope with "some 6,000 pages of guidance on procurement", Mr Maude added.

"This is at the root of much of the bureaucracy, duplication and confusion in this area," he said.

The knock-on effect was that supplying the public sector was unnecessarily expensive, Mr Maude said.

"You will have had to deal with contracts where the specification changed 10 times before you were through, where your employees were manmarked by civil servants and where the individuals you were working with constantly changed," he told his audience.

"You will all have experienced procurements which seemed to go on forever, cost millions of pounds and took countless hours of your employees' time and energy. I know how frustrating this all was and I can promise you here today that we will do things differently."

The Cabinet Office has already secured £800m of in-year contract savings from its largest 19 suppliers by demanding rebates and changes to the scope of services they supply.

Serco, the FTSE 100 outsourcing giant, tried to pass on these cost savings to its largest suppliers in October by charging them an 2.5pc retrospective rebate. Following reports in The Sunday Telegraph it reversed the decision and refunded suppliers.

The Government's botched IT projects have cost taxpayers more than £26bn, it has been estimated. Four of the most notorious include:

National Programme for IT (NHS) – overran by 450pc, costing in total £12.7bn

Defence Information Infrastructure (MoD) – 30 months late, more than £180m over budget. Cost at least £7bn

Libra system (courts management for magistrates) – Fujitsu bid £146m in 1998. Final cost more than £400m

Single Payment System (for paying farmers' subsidies) – cost £350m, already "potentially obsolete"

Bindi Bhullar, director of HCL said:

“This is the clearest indication yet that the era of bloated IT contracts is coming to an end, and not before time. These unpredictable economic times will naturally lead to a new dawn of shorter term contracts where risk is shifted from the customer to the IT supplier. For example, an IT service provider may offer to pay the customer projected savings up front in cash before starting work. There is nothing like putting your money where your mouth is.”

Source: http://www.telegraph.co.uk/finance/newsbysector/supportservices/8174715/No-more-mega-IT-contracts-Government-tells-suppliers.html

The US government has revealed details of its latest IT procurement strategy, which includes the introduction of a “cloud-first” policy from 2012.

“We are reducing our data center footprint by 40 percent by 2015 and shifting the agency default approach to IT to a cloud-first policy as part of the 2012 budget process,” Jeffrey Zients, deputy director of the Office of Management and Budget, wrote in a blog post earlier this month.

Other reforms to the government’s IT procurement strategy include introducing a formal career track for “program management” and “aligning the IT acquisition process to the technology cycle”.

Zients also outlined how the Office recently cut $1.6 billion in cost from US government IT projects.

This involved cancelling two projects but also “pulling forward meaningful functionality in two other projects, “resulting in almost $230 million in budget reductions”, and decreasing the scope of three others.

In January 2010, US government CIO Vivek Kundra introduced a scheme called TechStat, in which ongoing projects are reviewed by agency heads and staff from the Office of Management and Budget, along with “input from the American people”.

“TechStat sessions enable the government to turnaround, halt or terminate IT investments that do not produce dividends for the American people,” Kundra wrote at the time.

“We’ve held dozens of TechStat review sessions,” Zients wrote this week, “resulting in faster deliverables, terminations of projects that didn’t work, and most importantly turned around projects that were in trouble.”

Wokingham Borough Council has signed what’s been described as an “innovative partnership” with Northgate Public Services.

The five year, £8.5 million, contract, will see the services company manage the Council’s ICT, and focus on a range of issues including improving customer service, reducing cost, and improving ICT governance.

A two year extension is also an option under the terms of contract.

A relationship already exists between the two organisations, and it’s claimed Northgate’s experience in local government will enable “rapid improvement while managing risk through a phased approach to transformation”.

“Transformation is integral to delivering the efficiencies that the Council has pledged to make,” commented Graham Ebers, general manager of business services at Wokingham Borough Council said. “We believe that our partnership with Northgate will not only provide us with a stable and secure platform on which to operate, but will also be pivotal in enabling our residents to get wider access to improved service delivery by maximising our use of new technologies.”

Ian Blackhurst, managing director at Northgate Public Services said local authorities and public services in general face “challenging times”.

“Now more than ever, we need to focus on delivering better services for less. How organisations manage their people, processes and cost to provide this is an essential part of any forward looking strategy,” he added. “We are delighted that our relationship with Wokingham Council has now entered this exciting new phase and we look forward to working with it in serving the residents of Wokingham with efficient and effective services.”

Source: http://www.publictechnology.net/sector/local-gov/wokingham-signs-five-year-ict-partnership

Microsoft has begun rolling out test versions of several new add-ons and services to its Azure cloud platform

The new enhancements are designed to deliver: improved remote desktop functionality; Window Server 2008 R2 Roles, which allows users to take advantage of IIS 7.5 Applocker among other features; multiple service administrators – Windows Azure now supports multiple Windows Live IDs to have administrator privileges on the same Windows Azure account; and a better developer and IT professional experience.

At the Professional Developer's Conference earlier this year, the company said it would deliver these services by the end of 2010.

However, some services that Microsoft promised would be available have yet to be released.

These include server application virtualisation, SQL Azure Reporting and SQL Azure Data Sync. Microsoft said these services will be made available this month.

Microsoft said that the new enhancements are designed to make it easier for customers to run existing Windows applications on Azure, and enable more affordable platform access.

The new functionality is now available through the Windows Azure SDK and Windows Azure Tools for Visual Studio and the new Windows Azure Management Portal.

Source: http://www.computing.co.uk/ctg/news/1929280/microsoft-releases-add-ons-azure-cloud-service

Business as usual for companies using remote working via Cloud computing

Temperatures expected to drop below -20 with severe weather warnings for the next two weeks issued by the Met Office. More and more companies are struggling to keep their offices open and it couldn’t come at a worse time as the UK economy gears up for Christmas.

Small companies hit hardest by loss of productivity

With over 4 million SMEs in the UK (97% of UK businesses) productivity will drop at a time when business is ramping up for Christmas, and the figure could exceed the £12bn loss figure reached during last January’s bad weather. SMEs are highly vulnerable in the current economy.

There is a major trend developing this winter as more companies have geared up to enable remote working for their workers as the cost of the technology has started to fall. However many small companies are still not geared up for staff to work from home, which means their productivity suffered.

Piers Linney, joint CEO of Outsourcery which services 10,000 SMEs in the UK said, “In our business work is something you do not where you go! The disruption caused by the recent snow has created immense problems for thousands of businesses across the UK with many employees not being able to make it into work. With more snow predicted, the current cold snap will only further underline how businesses need to find alternative ways to keep their company running regardless of the weather conditions. With large numbers of workers having to work away from the office in the harsh weather conditions, businesses are finding that they need more effective ways to stay in touch with important stakeholders in their businesses.”

As companies take advantage of the falling costs of remote working and growing concern of the cost of disruption to their central operations, allowing staff access to mission-critical documents and emails means they are seeing the value that providing remote access brings to their businesses.

A significant driver of remote working is Cloud computing and as it gains momentum and acceptance, SMEs now have access to professional business applications, through a subscription payment model which allows IT to be ‘rented’ from an IT specialist, on a per user per month basis - turning it from a capital expenditure to an operating cost, making affordable for all sizes of organisations, and not just the large corporations as was in the past.

Linney continued, “Many firms are recognising the value of real time communications tools such as instant messaging, presence information, voice and video conferencing, Live Meeting for group discussions and document sharing can bring to their businesses. Employers can see the availability of all their employees – whether they are talking on the phone, in a meeting or online – and contact them in most time-efficient way and the benefits are really brought into focus during the current weather conditions.”

Source: http://www.freshbusinessthinking.com/business_advice.php?AID=7429&Title=SMEs+could+take+the+biggest+hit+as+big+chill+costs+economy+%A31.2bn+per+day

It’s been another busy week in the halls of power at Westminster, with the government’s decision to slash the number of migrant workers allowed to come to the UK causing a great deal of consternation.

David Cameron recently claimed that the immigration cap would be introduced in a way which would be ‘friendly’ to businesses - but it still seems that It seems that for many businesses, there is a fear that they will now not be able to bring in the skilled staff that they need. So what does this mean for the outsourcing community?

The announcement of the cap comes in the same week that a study was released estimating that outsourcing from the UK could increase by as much as 600 per cent by the year 2020.

Assuming we believe these figures, and accepting that many industry experts are forecasting a boom in outsourcing over the coming years, then surely there’s a chance that this announcement will create a large skills gap for British businesses to fill?

Perhaps the government would be better off changing its focus to examine how it can provide some of the 3 million British people who are unemployed in this country with the skills to add value where it is needed?

Indeed, it’s clear that if the government decides not to invest in training for its workforce and as Britain becomes increasingly dependent on skilled workers, there is a real danger that there will be none available in this country to perform their roles - a situation which could be even more damaging to the economy.

There’s never been a time when this country has been more dependent on foreign workers. A number of industries are highly dependent on workers from abroad, while the government’s spending review means that many public sector organisations are looking to those with specialist outsourcing skills as a means of managing their costs and allowing them to concentrate on their core competencies. But how will all of this be possible if there is a shortage of skilled labour?

It’s clear that the Home Secretary’s plan to allow intra-company transfers (ICTs) for staff paid more than £40,000 per year brings its own problems. Will organisations really be keen to pay an employee from abroad an inflated salary for coming into the UK do a specialised job?

The quality of staff is vital to the success of any outsourcing relationship. By not allowing businesses to make the decision as to whether or not they pay for the right skills, or develop quality skills, there is a real danger that business efficiency could suffer.