Industry news

To succeed in today’s unpredictable economic times, business and technology leaders need to work together closely to cut out inefficiencies, reduce fixed operating expenses, and free up assets to invest in innovation. Unfortunately, years of mergers, acquisitions, and ad hoc growth have been acting as a barrier to this process, by saddling organisations with an overload of IT systems, software and data that squeezes the life out of IT resources.

As a result, traditional enterprise desktop environments are undergoing scrutiny because of the growing costs for support and maintenance, compounded by the necessity for frequent security patches and endless software upgrades. At the same time, end-user desktops have become increasingly difficult to manage as the explosion of remote workers continues to transform the client computing landscape. A recent analyst study from Forrester Research supports this view, indicating that within three years, there will be over one billion remote workers worldwide.

These users require immediate access to sophisticated organisational systems, from a diverse range of client devices. In addition, IT departments must contend with time-consuming client management tasks such as deploying and patching images and managing hardware transitions. They must also support the needs of all employees while diligently maintaining security policies. This is becoming increasingly challenging now that the majority of the workforce has stepped beyond the corporate environment.

In light of these demands and today’s budget constraints, many organisations are now exploring the possibility of outsourcing their virtual client technology. This approach helps simplify operations and get client assets under control through a fundamental change in perspective. If carried out correctly, it can replace managing physical desktops and hardware devices in various locations. Furthermore, it should also enable administrator access to data, settings, applications, operating systems, and IT policies that are uniquely associated with each user. This information, referred to as the user’s digital identity, resides in a central location on the network and allows individuals to access and work with their data from any supported device.

However, for this model to work effectively, an outsourcing provider must also have equivalent access to a company’s desktop environment. All applications, including custom or legacy applications, need to be tested and working at the service provider’s facility. This is not an easy task if the applications need to run on a different IT infrastructure. Unfortunately, the difficulty of application integration is often overlooked when businesses outsource their virtual client models. This is because the majority of businesses have custom or legacy applications that are critical to the business but not easily integrated into other IT environments. After all, not all IT departments are the same. Businesses can also incur unforeseen costs and delays trying to get these applications working with server-based computing technologies.

Simultaneously, and crucially, the organisation needs to establish the same level of security for the outsourcing provider that it maintains on the corporate network. Sending corporate desktop assets outside the protection of the corporate infrastructure, and in many cases outside of the country can have severe repercussions if customer data or company IP is compromised. Instead of maintaining entire PCs in the field with their own operating system, applications and configurations, virtualised PCs can be maintained in the corporate IT data center where individual user desktops can be more easily supported and securely managed. End users can then access their virtual desktop PCs from anywhere, from any system, with online access.

To conclude, organisations will only be able to outsource virtual client technologies successfully if they manage to strike the right relationship with their service provider and do not compromise their security or applications, which are fundamental to the running of the business. Only then will they be able to reap the rewards of outsourcing virtual client technologies, such as reduction unforeseen maintenance costs, improved service level agreements, and crucially, no delays when trying to get business critical applications working alongside server-based computing technologies.

The new site is located in the innovation centre of Hursely and will allow the companies’ associates to use cloud computing for their own offerings as well as providing the sales and marketing skills they need to be able to take full advantage of the technology.

Partners are able to access new IBM cloud technologies at the site to develop and test new cloud services, and work with industry experts to build a go-to-market plan. For example, partners can explore a range of cloud computing models and become cloud builders, application, technology and infrastructure providers, and cloud resellers and aggregators, depending on their individual business.

The companies can access the lab from any of the supplier's network of 38 Innovation Centers worldwide and work remotely with the cloud specialists at the Hursley site.

Pressure is mounting on support services group Serco after rivals distanced themselves from its “brutal” handling of suppliers on public sector projects.

The company has been ordered to explain itself by the Cabinet Office after pledging not to squeeze suppliers to deliver some of the £800m of savings the Government is demanding from the industry.

Despite the assurance, Serco – which runs prisons, nuclear facilities and ports for the Coalition – has demanded a blanket 2.5pc cash rebate from suppliers and threatened them with the loss of future contracts.

Capita, G4S, Carillion and Compass Group yesterday all sought to reassure their suppliers that they had no plans to make similar demands, leaving Serco isolated.

The Coalition is seeking at least £800m of savings from contracts with 19 leading Government outsourcers, including Serco, Capita and G4S, in 2010.

Serco’s chief executive, Chris Hyman, had agreed with Cabinet Office minister Francis Maude, who is leading the Government’s efficiency drive, that the savings it presented would not come from suppliers’ payments.

However, a letter sent by Serco finance director Andrew, made clear that the company’s call for cash was directly related to the Government’s demand for contract savings this year.

A survey by BDO has shown that overly-complex regulation in the UK is causing international companies to look elsewhere.

Executives from 10 countries were surveyed and the results showed that only 28pc of businesses that expanded into the UK said it made their company more successful. The UK came last of nine countries in the category.

Kim Hayward, international liaison partner at BDO in the UK, said: "We may be kidding ourselves, thinking the UK is an easy place to do business. These findings reveal the opposite, with complex regulation cited as barriers to investment."

This comes as a blow to the coalition government who are hoping that inward investment will carry the country back to health.

Only 5pc of the businesses surveyed said Britain would be one of the countries they would target for international expansion in the next couple of years, compared to 32pc for China and 20pc for India.

Police ICT teams join forces

Bedfordshire and Hertfordshire police forces are to set up a joint ICT department, which will initially save the two forces a total of £350,000 per year – a figure expected to rise to around £1.7m within five years.

The two forces already run a number of successful collaborative departments, including major crime, firearms support and dog units.

Peter Conniff, chair of Bedfordshire police authority, said: "In light of the recent Comprehensive Spending Review and the need for both forces to address significant budget shortfalls, the financial efficiencies that will be generated by these further joint ventures are to be welcomed.

Stuart Nagler, chairman of Hertfordshire Police Authority, said: “Collaboration on key areas of administration and infrastructure, such as ICT and Pensions Administration, will bring huge benefits over and above the financial savings which are imperative at this time.

Data Shows European Outsourcing Market Remains Slow Despite Sharp Rise in Restructuring Activity

TPI’s Index, which looks at the state of the outsourcing industry, has published figures for the months of July through to September and shows that global total contract wins are at their lowest level for a decade, despite a significant increase in restructuring contracts.

The 3Q EMEA TPI Index, measures commercial outsourcing contracts valued at €20 million or more, showed that 57 contracts were awarded in EMEA in the third quarter, valued at just over €5B in TVC, a decline of eight percent quarter on quarter and 10 percent year on year. Globally, TVC fell by more than 20 percent both quarter on quarter and year on year to €11.3B.

In EMEA, the historically smaller Nordics and Netherlands markets provided pockets of strength as a result of a number of large scale restructurings signed in the first nine months of the year. The U.K. and Germany continue to show a decline in outsourcing awards, having only awarded half of the TCV year to date compared to the same period in 2009. However, Germany is expected to see a substantial increase in outsourcing activity by the end of the year.

Restructuring activity resumed the fast pace set at the beginning of 2010. In the third quarter the number of restructuring contracts increased by 80 percent quarter on quarter and almost 500 percent year on year. Meanwhile, new scope in EMEA is down by 45 percent quarter on quarter and 57 percent year on year. Globally, new scope TVC is down 20 percent making it the lowest result in more than a decade.

Duncan Aitchison, President and Partner of TPI EMEA, said: “We anticipate continued restructuring activity in the Region in the coming months as a natural force in a maturing market. Noting the number of contracts up for renewal, we expect 2011 to once again experience significant restructuring activity, although probably not as high as 2010. The prospect for large scale new scope awards in EMEA, however, is both far less predictable and more influenced by the continuing uncertainties in the global & regional economic outlook. ”

Total contract value for business process outsourcing (BPO) year to date totalled €4.3B in EMEA, an increase of 19 percent compared to the first three quarters last year and largely driven by the award of a few, larger contracts. Within BPO, most activity in EMEA is centred on Financial Services Operations Outsourcing, which has performed fairly consistently for the past three years. Industry-specific BPO is relatively strong in the region while the more traditional BPO areas such as Human Resources, Finance & Accounting and Contact Centre outsourcing remaining slow.

IT and business services provider Steria will deliver a major agile system development project to Statnett. The contract is valued at 12 million euros (NOK 100 million) and involves delivery of a community-critical system for ensuring the responsiveness of the national power grid.

Peer Olav Østli, Group ICT Director, Statnett, said: "We needed to change several of the core components in our IT systems. One of these changes involves the replacement of the national grid's regulatory and market system (LARM), which is used to secure the balance of energy supply and demand to millions of homes and businesses. We received several good tenders, but Steria's offer set itself apart positively very early in the process. We feel confident that we have selected a strong partner with whom we will work closely in the coming years."

The project will deliver a new platform which will replace the current system and modules, ensure effective system support for the end-users at the national grid, and enable Statnett to implement the changes to market systems more quickly and easily.

Lene Melfald, Director of System Development at Steria Norway said: "The first Steria team is already in place at Statnett's premises to prepare and plan phases of the implementation. The Elaboration phase will continue the next month and the project will be stepped up with the next group in the Construction phase starting end of November."

The organisation responsible for decommissioning the UK's ageing nuclear power stations has kicked off a 12-month procurement for IT services covering everything from servers and desktops to networks, security and storage technology.

The Nuclear Decommissioning Authority (NDA), which is responsible for sites including Sellafield and Dounreay, has invited outsourcing suppliers or consortia to bid for the work, with the aim of selecting a shortlist of up to four potential providers to compete for the contract.

The tender notice on the Official Journal of the European Union lists the range of services required, which includes servers, desktops, voice and data networking, security, storage, helpdesk services, printing, videoconferencing, applications and testing.

The authority will hold a supplier day for potential providers on 3 November 2010 to provide further information to interested bidders.

The procurement project is being led by Sellafield as a collaborative project that also includes the Civil Nuclear Constabulary and the National Nuclear Laboratory.

Mouchel, the outsourcing company, saw its shares drop 30 per cent yesterday after it scrapped its dividend and reported a sizeable full-year loss.

Mouchel experienced a sharp drop in demand due to the change of government in May. The company specialises in developing infrastructure for councils and government agencies and has been affected as departments cut down their spending and scaled down projects.

In response, the company rolled out a restructuring programme, taking the number of job cuts since 2009 to 2,000 and creating a larger-than-expected one-off cost of £45.2m.

The company is hoping that the Coalition Government's Comprehensive Spending Review, will create a new demand for outsourcing businesses in the hope of saving costs. The group also offers consultancy services and is also aiming to expand in new areas such as the health sector and police and educational centres, in an attempt to attract new clients and contracts.

Richard Cuthbert, CEO of Mouchel, said: "Mouchel believes that pressure on the public sector to reduce costs will lead to greater demand for private sector support."

The group said it had an order book of £1.8bn, and has put in proposals for £2.2bn for additional business.

A ground-breaking report examining the "internet economy" states it contributes £100bn to Britain’s GDP.

The Connected Kingdom report, published on Thursday, also says that the internet is responsible for 250,000 UK jobs and predicts it will grow to account for 10pc of UK GDP by 2015.

Experts believe the internet now wields a bigger influence of the British economy than construction, transport or utilities.

The report, commissioned by Google, found that Britons spend a higher proportion of their money online than any other country in the nations of the Organisation of Economic Co-operation and Development (OECD).

Mr Zwillenberg said online shopping accounted for about half of the headline £100bn figure. In 2001 consumers spent just £2bn online and he added that cash spent on online goods and tickets would also be counted among the retail and transport sectors' contribution to the economy. Mr Zwillenberg said online businesses have become so skilled at selling overseas that the UK is now a net exporter of goods and services with £2.80 exported for every £1 imported.

Matt Brittin, managing director of Google UK, said: "We all know how the internet has changed the way people access information and communicate.

"Now for the first time we can see how its adoption by British business has become a major contributor to UK GDP, and that the internet is a central pillar of the UK's economy. The sector has come of age, and with great prospects for further growth, will be vital to the UK's future prosperity."