Industry news

In the third part of his series of blogs on the first 100 days as a new CIO, Alex Blues, Head of IT Sourcing at PA Consulting Group, explains why CIOs must ensure all IT services are being resourced and delivered as efficiently as possible.

Once you have convinced the rest of the board to take responsibility for their own IT costs, you can’t just turn your back and think ‘job done’. It is your responsibility to ensure that you are delivering the services in the most efficient manner. The chances are you will have a mix of in-house capability, outsourced services, contractors and consultants. I am not going to talk about how you must have a sourcing strategy, that is a given, but I will talk about the more practical elements of what to do.

The current market and emphasis on value for money is a golden opportunity to get the most out of your external suppliers. The temptation, and indeed the trend, is to squeeze suppliers on rates so that you can wipe money straight off your bottom line. This might achieve short term savings and make your bottom line look good, but it is does not look at the long term opportunities.

Instead, you should use the current climate as an opportunity to talk to your suppliers and look at ways of providing a win for both parties. Be honest with them, they know their business and want to protect theirs as much as you do. Work out strategies together to cut costs and review the major cost elements of contracts and how you are getting Value for Money. You’ll be amazed at how cooperative suppliers can be when they feel part of a process.

Use consultants wisely, there is a temptation to just cut consultancy spend. What you should really be doing is identifying where consultancy can add value. To maximise value, you should look at your contracts with consultants, for example you could have a performance related and risk reward deal and share the benefits.

Next it is time to look internally at your organisation. It is tempting to come straight in and start redesigning your organisation in line with ‘best practice’. However, organisations are a living entity and they evolve to suit the circumstances. To suddenly change the organisation without looking at the circumstances will lead to failure. I am not advocating not changing, but you need to understand why things are the way they are and act accordingly.

Once the new organisation is designed, you should perform a review of capabilities in line with new roles. You must not be constrained by existing skills and people and should identify any gaps in capability. You should plan the means of filling these gaps, and consider mentoring - internally or externally – to fill these gaps. One of the best Service Delivery Managers I know learnt from an interim, supporting them as they delivered a Service Improvement Project and taking over upon completion.

In the fourth of this four part series, Alex Blues returns to discuss capital expenditure, project management and the need to be seen as more than just an IT functionary www.paconsulting.com

Listening to business or simply realising a mistake?

Sometimes there can be no greater show of strength for a man than admitting you simply got it wrong. If the Prime Minister’s recent hints that he will listen to the protests from major international firms and look to water down the planned immigration cap tell us anything, it’s that he’s not afraid to reconsider his policies. Or do they?

David Cameron’s announcement that intra-company transfers “should not be included in what we are looking at [for the immigration cap]” will almost certainly be heralded as good news for the outsourcing industry. But is it a coincidence that this news comes amidst new warnings that a forthcoming European trade treaty with India will circumnavigate the proposed cap in any case, by allowing multinational firms to transfer unlimited numbers of Indian employers to the UK?

Perhaps - perhaps not. What’s clear is that any immigration cap as initially proposed by the coalition government would have been very bad news indeed. In a worst-case scenario, it could have played a major part in ensuring that a number of industries were short of skilled workers. For instance, both the healthcare and IT sectors are hugely dependent on the influx of highly skilled workers from abroad. So perhaps the announcement of the government’s about-turn was inevitable?

Either way, it’s clear that if the government is to find a way a way to make the recently announced public sector cuts work, it will have to lean heavily on suppliers of outsourcing, many of whom are dependent on the specialist skills provided by those from other countries. In this context, it makes more sense that the government would make a U-turn on its all-inclusive attitude towards the cap - the last thing they want to be seen to be doing is throwing the baby out with the bathwater, and they will understand that they need to make full use of all resources at their disposal if the cuts are to be seen as a success.

Perhaps, then, it’s not impossible to speculate that the government has, not, in fact demonstrated the laissez-faire attitude towards its policies that many have credited them with? The proposed immigration cap as it stood was a big mistake for them - but let’s be honest, this about-turn perhaps has had very little to do with consulting the outsourcing industry for their views, and much more to do with the fact that they have realised that the government has backed itself into a corner.

Maybe this was signalled last week when the Government CIO John Suffolk, said that he had told Indian companies to “Bid, bid, bid” for government business!

Martyn Hart

The resilient Indian IT industry Wednesday lauded US President Barack Obama for terming those against outsourcing as holding onto old stereotypes and for committing to do away with protectionism.

‘Obama did a great job for our industry by terming them (anti-outsourcing lobbies) as stereotypes. I think his administration will also do a great job in terms of changing those stereotypes,’ IT industry lobby Nasscom president Som Mittal told reporters here.

For positioning India as the market for US businesses and declaring that India was no longer emerging but had emerged, the US administration’s efforts to change the stereotypes would get support of the industry, Mittal said.

‘I think we too have to do our job to change those stereotypes and ensure there is a much larger community that understands our business model that we are part of the solution rather than creating the problem itself,’ Mittal said on the margins of Nasscom’s annual Product Conclave & Expo 2010.

Expressing the industry’s satisfaction over the outsourcing issue figuring at the discussions between Obama and Prime Minister Manmohan Singh Monday, Mittal said that both the governments were committed to do away with protectionism.

Source:

http://calcuttatube.com/indian-it-industry-hails-obamas-outsourcing-stand/130296/

The Ministry of Defence has made an investment in ICT to help front line troops' medical treatment by moving to the electronic patient record (EPR) software Medway from supplier, System C.

The EPR is going to be used to support UK and NATO troops fighting in Afghanistan at its Medical Treatment Facility at Camp Bastion (the nation's main military base in Helmand Province).

Medway will also become part of the MoD’s Afghanistan pre-deployment training programme for operational medics and nurses for both the UK armed forces and our NATO partners.

The EPR deployment is being managed by systems integrator Logica, prime contractor for the project, with both it and the software house working to train up military clinicians, primarily at the Army Medical Services Training Centre near York.

Logica's going to be working to make sure Medway gets successfully integrated with existing MoD software applications so as to provide a “first class clinical platform for the management and treatment of patients”.

Bed management, clinical support tools, emergency department, intensive care, order communications, reporting, and patient administration will all be covered in the first phase of the project.

Logica already works closely in partnership with the MoD to deliver the MoD’s main Primary Healthcare application.

Source: http://www.publictechnology.net/sector/defence-fire-police/uk-armed-forces-use-system-c-epr

The outsourcing market in Bulgaria is currently estimated at EUR 100 M to EUR 150 M a year, but has the potential to go up over 10 times, according to Economy and Energy Minister, Traicho Traikov.

Traikov spoke Thursday during a conference titled "Bulgaria on the World Outsourcing and Offshore Map," at the Sheraton hotel in downtown Sofia. The event was organized by the American Chamber of Commerce in Bulgaria, the Bulgarian Investment Agency and Colliers International, gathering over 300 politicians, experts, local and international businessmen.

"Outsourcing is literally export of production; the concept of taking internal functions of a company and giving them for execution to an external company. Offshore is the moving of production and services to countries with lower labor cost and/or better investment and tax climate, Traikov explained.

The Minister announced Bulgaria ranks 1st in Europe and 13th in the world by outsourcing, citing a March research of the international research agency "ATKearney."

Traikov pointed out as main factors the country's location, qualified work force, quality education and low taxes, adding encouraging the outsourcing market is key for attracting foreign investors.

The Minister gave as example his own institution studying opportunities to give the activities related to the management of the "Competitiveness" operational program to an outside business.

"Every time I notice someone not doing their work, I tell them we will pay someone else to do it, and it is always effective," Traikov joked.

Source:

http://www.novinite.com/view_news.php?id=122067

The third sector could grow by billions of pounds a year as a result of the government’s public service reforms, charity leaders were told today.

Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations, told the organisation’s annual conference that the next five years offer opportunities for growth despite tough cuts to public budgets.

But, he added, the growth will not be universal, and many charities face ‘tough and turbulent times’, with some shrinking or closing altogether.

Bubb pointed to ‘opportunities amidst the gloom’, particularly in areas where ministers are considering setting guidelines for the proportion of services that should be outsourced.

The Comprehensive Spending Review identified areas the government considered ripe for more outsourcing, including adult social care, early years, community health services, youth services and court and tribunal services.

The third sector could grow by £2bn a year by 2015, he said, just through increased involvement in offender rehabilitation and public health.

In community health, charities only currently see about 7% of the £7bn spent a year, Bubb argued. ‘These are areas where the potential of our sector is almost entirely untapped.’

Bubb also called for the government to collect and publish more data on what it commissions from voluntary organisations, to make it easier to tell whether it succeeds in opening the market up to charities. ‘Otherwise, it will be shaping policy and spending public money in the dark.’

Source:

http://www.publicfinance.co.uk/news/2010/11/government-outsourcing-will-be-worth-billions-to-third-sector/

The "two tier code", used in public-sector outsourcing contracts, may be abolished in April 2011, Eugene Wojciechowski, partner at Shoosmiths, told delegates.

Wojciechowski, who was speaking in a session on the Tupe transfer regulations, said he had heard a rumour that the government were planning to abolish the code but had no further details as yet on how the change would be made.

The code, introduced by the previous government in 2003, is intended to protect employees recruited to work on outsourced public sector contracts from being hired at inferior rates compared to transferred employees, whose public-sector terms are preserved under Tupe. The aim was to prevent the creation of two-tier workforces.

The change will have a detrimental effect on those employees recruited to work on outsourced public-sector contracts, but will reduce the costs of the private-sector contractors taking on the work. This could ultimately be an incentive for the public sector to outsource more services, it is speculated.

Wojciechowski also said he had heard that a particularly contentious Tupe case, Alemo-Herron v Parkwood Leisure, was set to be appealed. The case, involving work outsourced from the London Borough of Lewisham, dealt with whether Tupe-transferred employees’ terms and conditions could be changed to reflect collective negotiations happening between the transferor and employee representatives after the transfer had taken place. If the employees’ claim were ultimately successful, this would be “pretty harsh on the new employer”, Wojciechowski said. The organisation would find itself covered by negotiations to which it was not a party.

On the first appeal, the EAT found in favour of the employees, but earlier this year the Court of Appeal found in the employer's favour and said only those terms in force at the time of the transfer applied. If the case is appealed again, it will go to the Supreme Court.

Source:

http://www.peoplemanagement.co.uk/pm/articles/2010/11/two-tier-code-for-public-sector-outsourcing-may-be-abolished.htm

IT firm Logica returned to modest revenue growth in the third quarter thanks to government outsourcing and banks using its services to help comply with new regulations.

Logica kept its full-year forecast for roughly stable sales and operating margin but today said it had agreed some reductions in the scope and value of government contracts.

Revenue grew 1% between July and September to £863 million and orders rose 8% to £758 million. Logica said it expected a strong fourth quarter as government outsourcing resumed and business from the Benelux countries improved.

“We are cautiously optimistic about our prospects for growth next year,” said chief financial officer Seamus Keating.

Logica shares were down 2.8% at 129.5p this morning, the weakest performers in a flat European technology index.

Logica said it expected UK revenue to grow in the fourth quarter, despite public sector cuts, and that it had seen signs of increased activity from government departments since the end of the third quarter.

The company has agreed with the Government that to continue its contracts, which span 55 government agencies. Public sector business accounts for about 10% of Logica's total sales.

But Keating said Logica was working with the Government to scale down some contracts.

Source:

http://www.thisislondon.co.uk/standard-business/article-23893965-logica-expects-growth-with-government-outsourcing.do

The National Outsourcing Association (NOA), the UK's only outsourcing trade association and the centre of excellence in outsourcing, today announced the appointment of new members to its Board of Directors after a member election.

The new members are:

Professional Services Board Member

Felicia Trewin is an outsourcing specialist working in Deloitte's Technology Integration Consulting practice since 2006, focusing on outsourcing, off-shoring and procurement advisory for a cross-industry client base. Prior to joining Deloitte, Felicia spent five years working for Microsoft's Global Outsourcing Team in both the UK and US.

Offshoring Board Member

Michael Stock has been an active member of the NOA for several years. He is employed by the BBC, currently project director for outsourcing Audience Services. His first project was to establish BBC’s first contact centre. Off-shoring has been a strong interest since 2001 producing one of the first reports and films on off-shoring, 'The Call for India'.

Suppliers Board Member

Tony Morgan is currently IBM’s Chief Innovation Officer for Strategic Outsourcing in the UK and Ireland. Since joining IBM Tony has worked exclusively within the outsourcing business in client roles. Tony’s experience includes the full lifecycle of outsourcing contracts ranging from solution development in new client engagements to Chief Architect roles on both newly signed and mature contracts.

Board Member for the North

Adrian Quayle has been on the NOA’s Board for a number of years and in February 2010 he was co-opted as the first NOA Board Member for the North and Midlands. Since then he has been actively working with NOA members and potential members to develop the NOA’s presence and activities in the Region. Adrian has organised and run successful Member Events in Manchester and Leeds. In addition Adrian took on the responsibility on behalf of the NOA Board of representing the outsourcing industry on the British Standards Institution (BSI) Committee drafting the new British Standard on Collaborative Business Relationships (BS11000).

The NOA Board Members are selected for their specific ability and willingness to contribute to the work of the NOA. Each individual is an outsourcing professional, from a variety of industry sectors each representing a different discipline from the outsourcing spectrum.

“The NOA is keen to utilise the expertise team in order to provide the best services focusing on delivering education, excellence and collaboration. We are involved in all areas of outsourcing, including: shared services, in-sourcing, ITO, & BPO and we’re confident that we have experts in each of these fields.” comments Martyn Hart, Chairman of the NOA.

He continues, “I am delighted that we have new members on board. 2011 promises to be an exciting year for us as we move forward and having new these skills will be an asset which will be highly valuable in delivering the NOA’s vision. Their leadership and support will bring additional energy and direction for our work.”

The overall direction of the NOA is established by its Board. The Board is comprised of largely c-level individuals representing outsourcing suppliers, end-users and support services from the NOA’s Membership.

Fujitsu has signed a Memorandum of Understanding with the government, following in the footsteps of fellow ICT suppliers including Microsoft, BT, Capgemini, and Atos Origin.

The Memorandums of Understanding follow meetings with Cabinet Office minister Francis Maude in July, as part of the Efficiency and Reform Group’s objective to come to fresh agreements over existing contracts, saving the government money in the process.

In a short statement, Roger Gilbert, CEO of Fujitsu UK & Ireland, said the company was “pleased” to respond to the requirements laid out by the Efficiency and Reform Group, “in a constructive and timely manner”.

“We are proud to have been providing innovative and efficient solutions to our public sector customers over many decades,” Gilbert added. “With the signing of this agreement we are looking forward to continuing our partnership with the UK Government through successfully exploiting technology to deliver ever more effective public services for the benefit of UK citizens.”

Fujitsu has had a relationship with the UK Government for more than 40 years, across some of the largest and most complex departments. According to the company statement, Fujitsu will “continue to bring its experience and expertise to enable the public sector to be more effective and save money and will continue to deliver all its existing contracts”.