Industry news

Britain's services sector activity unexpectedly gathered pace in October, but companies also cut jobs and were more subdued about the outlook for next year in the face of austerity measures.

Markit/CIPS's latest PMI services survey is likely to reinforce expectations that the Bank of England will vote not to inject more stimulus into the economy this week but leave that option open.

The headline business activity index rose to 53.2 last month from 52.8 in September, the highest reading since June and confounding forecasts for a dip to 52.5.

Improvement was led by a rise in new business, although the expectations index fell a full point and the employment index slipped back below the 50-level that separates expansion from contraction as firms braced for tough conditions ahead.

"On both output and new orders measures, rates of expansion remain soft compared to long-run averages, as companies continue to digest the true effects on the economy of the coalition government's Comprehensive Spending Review," said Paul Smith, senior economist at Markit.

"The latest data therefore suggest that the sector is set to make a below-par contribution to GDP in the coming months."

Nonetheless, BoE policymakers are also likely to be concerned by news of growing inflation pressures in the services sector, with firms ramping up their prices at the fastest pace in two years in response to increases in energy and wage costs.

Wednesday's PMI data, which covers firms that make up around 40pc of GDP, came after an unexpectedly robust survey of manufacturing activity and surprisingly weak construction PMI data this week.

On balance, the figures suggest Britain's economy made a solid start to the final quarter of this year.

However, the survey also showed that companies remain cautious about the outlook and want to see how the £83bn of spending cuts laid out by the government last month will affect people's spending decisions.

"A number of respondents reported the deferral of client spending, reflecting continued uncertainty over the impact of government spending cuts on the economy," Markit said.

"Such concerns again dominated service providers' expectations, with business confidence remaining historically subdued."

The business expectations index fell a full point from 66.2 in September.

Source: http://www.telegraph.co.uk/finance/economics/8107201/UK-services-sectors-surprise-growth-balanced-by-job-cuts-subdued-outlook.html

Outsourcing group Serco has withdrawn plans to pass on the impact of government spending cuts to its suppliers in the face of heated protests and "discussions" with central government.

The firm said it now wished to "apologise unreservedly" to its suppliers and has retracted letters asking for a rebate of 2.5% it unexpectedly demanded and non-payment of which it said could end commercial relationships. The firm had told its supply chain it needed to make the sacrifice to help pass savings back on in turn to the government.

Its finance director Andrew Jenner had written to suppliers, "I am asking you to offer us a rebate of 2.5% (exclusive of VAT) on Serco's full-year spend with you for the 2010 calendar year in the form of a credit note. Like the government, we are looking to determine who our real partners are that we can rely upon.

"Your response will no doubt indicate your commitment to our partnership, but will also be something I will seriously consider in our working relationship as Serco continues to grow."

Now Serco – whose contracts on behalf of Whitehall include running prisons, the maintenance of a number of RAF bases and the operation of London's Docklands Light Railway – says in a statement that it had been working with the Cabinet Office as part of the government's efficiency programme, which "has involved discussions with our leading suppliers".

"As a result our plans evolved and we decided not to seek or accept any contributions from our suppliers, who had recently received letters asking for rebates... As a company that values our relationships with all our supply chain partners, large and small, we deeply regret this action and apologise unreservedly to them for the concern that this has caused."

Source: http://www.publictechnology.net/sector/central-gov/serco-backs-down-plans-pass-spending-cuts-burden-suppliers

Online grocery retailer Ocado is deploying Google Apps for Business for 1,250 staff, with the aim of cutting costs and improving productivity.

Ocado said the cloud-based product suite will facilitate remote working, improve productivity and boost internal communication for head office staff and regional managers. Staff will be able to log in from any secure internet connection to access their emails, documents, calendar and other internal information.

Hosted in Google’s secure cloud, staff will have access to tools such as Google Talk and Google Docs. Ocado will also use Google Sites to develop a branded web landing page for staff. Ocado’s marketing team will be able to use this page to produce internal announcements in video form, using Google Video.

Ocado says Google Apps will reduce its IT costs - saving on servers, back-up space, support and maintenance - whilst in the longer term eradicating costly upgrades and licence fees. Ocado will also use the Postini Message Security feature included in Google Apps to replace its legacy spam filter system, leading to further cost savings.

Jon Rudoe, head of retail at Ocado, said, “At Ocado we aren’t afraid to challenge conventions and do things differently. We love the fact that Google Apps continues to innovate and develop new features and are excited about the benefits we expect to see across the business.”

Source: http://www.computerworlduk.com/news/cloud-computing/3246996/ocado-moves-into-the-cloud-with-google-apps/

Birmingham & Solihull Mental Health NHS Foundation Trust has started using a package it claims has let it save as much as 24% on price in a bid to cut technology cuts.

David Thomas, Head of Procurement at the Trust, said: “When we compiled prices for a random selection of recently bought products and compared them using this product, it demonstrated we could have saved an average of 10% on price. This more than justified the investment.”

Early use has found that on one major purchase the lowest price quoted was 3% higher than expected; use of that data allowed the Trust to save over £1,000, for instance.

The system is also reported to have shaved off 20% of the time the IT team had previously been spending manually benchmarking supplier prices.

Computer giant Dell has announced a deal to buy cloud-computing company Boomi for an undisclosed price.

Dell has been looking to acquire cloud computing technology and recently lost a bidding war with Hewlett-Packard for cloud firm 3Par, despite being the preferred bidder.

Steve Felice, president of Dell's consumer and small and medium-sized businesses division, said: “This deal will help businesses reap the full benefits of cloud computing. Twenty-six years ago we helped accelerate the move to client-server computing. Today we'll help drive a similar transformation with customers turning to the cloud to drive costs down and innovation up."

Cloud computing can allow businesses to cut data storage costs by delivering software, data storage and other services to customers via the internet and many large computer makers are looking to buy into the technology.

Bank of Ireland (BoI) has signed a five-year infrastructure deal with IBM after a previous seven-year contract with HP expired recently.

The financial terms of the deal have not been disclosed, but the contract with HP signed in April 2003 was worth $600m, according to HP's statement at the time.

There have been no significant changes to BoI’s infrastructure since then. The only addition to the new group-wide contract is the bank’s capital market’s division, which a BoI spokesperson described as “quite small in the overall scheme of things”.

The bank selected IBM for exclusive contract negotiations after protracted competitive tendering.

"The signing of this contract marks the culmination of a lengthy process, during which Bank of Ireland assessed a number of potential service providers," said Larry Kiernan, BoI’s head of group IT in a statement.The bank will continue to work with HP on handover tasks" he added.

The monetary value of the contract was not the only determining factor in choosing IBM, said a BoI spokesperson.

Certification for CHAMPS2 to be launched in November 2010 to help organisations achieve transformational change through a benefit-driven, vision-led methodology.

CHAMPS2 is designed to deliver radical change in a controlled and systematic fashion, whatever the size of organisation, and can be used alongside established project and programme management methods. In brief, it:

• Focuses on realising business benefits

• Supports the end-to-end transformational journey

• Is flexible

• Incorporates practical tools and techniques

CHAMPS2 was developed to meet the ‘modernising government’ agenda, which has a strong focus on citizen services, cultural change, and efficiency gains. In 2006, Birmingham City Council undertook the first steps of business transformation and so a joint venture was formed between the Council and Capita. Adopting a single approach to business transformation across the partnership established a common language, reduced duplication of effort, provided best practice tools and templates, minimised risks and reduced costs.

Glynn Evans, Corporate Director of Business Change for Birmingham City Council, said, “The need to change and improve the way our organisations operate has never been greater. Often incremental change is insufficient, making it essential to fundamentally rethink and redesign what an organisation does so it can succeed in a changing world. Major transformational change is a complex process, requiring clear direction, excellent planning, specialist resources and, above all, a determined commitment from the organisation.”

The CHAMPS2 method helps define a clear vision and provides a method or pathway that will help realise measurable benefits for:

• Customers – better services and products

• Employees – greater job satisfaction

• Efficiency – better use of resources, doing more for less money.

Richard Pharro, Chief Executive, APMG said, “Whenever undertaking major transformational change, irrespective of the initial cause of the change, the starting point has to be the clear vision of the difference that will be made to the organisation, and how the delivery of products and/or services will improve. The CHAMPS2 methodology is designed to do just this, systematically taking an organisation through eight defined stages from identifying the strategic need for the change, right through to realising the benefits and achieving the strategic outcome.”

A manual and online resource have been developed as reference tools for those working in transformation teams. It is also a guide to CHAMPS2 for those studying for the Foundation and Practitioner examinations accredited by APMG. These can be found on the CHAMPS2 Knowledge Centre at www.champs2.info

Potential candidates are invited to register their early interest at servicedesk@apmg-international.com ahead of the Methodology’s launch in early November.

Source: http://www.apmgroupltd.com/PressCentre/01Oct2010CHAMPS2Launch.asp

Outsourcing giant Serco apologises and retracts demand for cash rebates from its suppliers.

Serco has "apologised unreservedly" for requesting a cash rebate from suppliers to help it meet Government demands for savings on public sector projects this year.

In a statement issued today Serco said it had "retracted" the demand. The statement said: "We decided not to seek or accept any contributions from our suppliers, who had recently received letters asking for rebates. As a company that values our relationships with all our supply chain partners, large and small, we deeply regret this action and apologise unreservedly to them for the concern that this has caused. We are now communicating this to our supply chain partners and retracting the letters."

The company, which runs prisons, nuclear facilities, schools and ports for the Government, cited the Cabinet Office's drive to save £800m this year from central government contracts as the reason for its demand.

IBM's push into the government Cloud space continues this week with new Cloud Computing services aimed at both US Federal and municipal markets.

The Federal Community Cloud will be a Cloud environment for the federal government in which multiple agencies can access data and launch new services. The service is currently awaiting certification under FISMA (Federal Information Security Management Act) standards.

Some 15 agencies are said to be looking at the Federal Community Cloud, including the Department of Housing and Urban Development, the Department of Defense and the Department of Homeland Security.

A total of 1.6m public and private sector jobs will be lost by 2015-16 as a result of fiscal austerity measures, according to the Chartered Institute of Personnel and Development (CIPD).

Politicians are hoping the private sector will take up the slack in the labour market caused by the 490,000 public sector job losses predicted over the next four years in official forecasts.

But the private sector will be hit even harder than the public sector by the spending cuts and looming increase in VAT, the CIPD has warned.

It estimates that the combined direct and indirect effect of public spending cuts will lead to 650,000 private sector job losses, while the impact of VAT rising from 17.5pc to 20pc will undermine profits to claim a further 250,000 jobs.

Furthermore, the 490,000 losses forecast for the public sector appears to be an underestimate "given what most public sector managers are telling the CIPD" and excludes about 50,000 cuts likely to fall in the current financial year and 120,000 in 2015-16, the organisation said.