Industry news

In the second of a two part series, Mike Henley, outsourcing expert at PA Consulting Group, having discussed the large scale changes afoot in the legal industry, assesses how a firm should go about flexing with the industry.

These dynamics are driving market changes which are fundamental and are likely to be permanent. As a consequence, firms who do not emerge from the recession in the winner’s enclosure will find it very difficult to recover from that position. Therefore the decisions being taken now by law firm management and partners will determine the long term destiny of their firm.

If we are truly in a period where several dynamics are converging to force the fundamental and systemic re-shaping of the legal market and therefore the law firm model, the response must be revolution, not evolution, and all embracing, not marginal. Therefore the single most important issue [right here, right now] for a law firm is not only identifying the right strategy or solution; it is establishing whether the firm is capable of grasping and understanding the scale of the change required and, even if it is, that it has the skills, resources and collective will to manage and deliver change of that scope and complexity.

This is a difficult issue for many firms. The law firm model has been with us for a long time, largely unchanged. Most lawyers have been going about their business of helping and advising clients in much the same way for most if not all of their professional careers. What are contemplated here are changes at an organisational level which will depend for their success upon the willingness and ability of each individual within that organisation to embrace that change sincerely and with true commitment.

That means partners (every single one of them without exception) have to accept and lead fundamental change in the way they interact with clients, deliver services, manage their people and are remunerated. The key challenge for senior management is to mobilise and motivate able and opinionated partners and lawyers, when the consequences for those individuals are likely to involve turning their professional lives upside down.

Further the new landscape is unlikely to be a fixed, stable target; rather like most other market places it will be constantly evolving picture. The risk therefore is that in adopting specific solutions a firm will find that if and when it has delivered its plans, the market has moved on. Therefore the change dynamic within the business needs to be a constant, embedding agility and continual renewal to meet the evolving and changing features of the market, and it’s competitive dynamics.

What is required is nothing less than transformation, at an organisational and an individual level. It is only when a firm has got to grips with the ability of its people to change truly and wholeheartedly, and continue to accept change as part of business as usual, that it will have created an environment in which it can confidently predict that any solutions it decides upon will in fact be implemented and adopted on a sustained basis. Without that environment it will not matter how good any strategy or solution is; the chances are it will fail.

Accenture (ACN) and National Australia Group Europe (NAGE), a subsidiary of National Australia Bank, have signed an application development and management agreement that extends their existing contract for an additional three years to 2015.

Accenture will continue to provide application development and management services for a number of the bank’s key enterprise and customer applications. The contract, which extends a similar agreement signed by the two companies in 2007, is designed to help NAGE achieve a more flexible and scalable IT function by increasing its use of Accenture’s Global Delivery Network.

“The extended agreement reflects Accenture’s role as a strategic business partner to National Australia Group Europe,” said Debbie Crosbie, CIO, National Australia Group Europe. “Our decision to continue to partner with Accenture is based upon the strength of our relationship to date, the quality of service provided and Accenture’s ability to help us deliver responsive, flexible and efficient IT service to our customers.”

“By keeping customers at the center of its business and keeping services in step with changing market needs, NAGE has positioned itself for the future,” said Sushil Saluja, Managing Director of Accenture’s Financial Services group in the U.K. “We are delighted with the extension of our relationship and look forward to continuing to help the bank increase efficiencies, manage costs and deliver a high quality service to its customers.”

Capgemini, one of the world’s foremost providers of consulting, technology, and outsourcing services, announced it has been selected as one of the leading Oracle Fusion Applications Global Solution Integration Ramp-Up partners, and is ready to implement and support Oracle Fusion Applications on a global basis.

For the past 15 months Capgemini has worked with Oracle to test its Oracle Fusion Applications as part of a development-led program with participation from six countries namely the United States, China, the Netherlands, France, the UK and India.

Capgemini investment in Oracle Fusion Applications includes in-depth Structured Product Training, including Functional Business Applications and Technical Foundation Architecture focused on application co-existence, integration, customization and deployment best practices. Working directly with Oracle Fusions Applications Product Development, Capgemini has also been involved in embedded product training and strategy initiatives focused on gaining deep hands-on product knowledge and expertise. Teams across the globe have performed extensive business process flow validation, user experience and quality assurance testing of the entire suite of products.

Oracle Fusion Applications, offer 100% open standards-based business applications that provide a new standard for the way businesses innovate, use and adopt technology. Delivered as a complete suite of modular applications, they help to evolve business to a new level of performance across various business functionalities including: financial management, HR, CRM, supply chain and portfolio management, procurement, governance, risk and compliance. The new applications will help speed up transactions, reduce inefficiencies, provide business strategic insight, reduce costs and maximize sales.

Capgemini will integrate Oracle Fusion Applications into its global solutions offering in 2011 and will include Oracle Fusion Applications in centres of excellence around the world to deliver and showcase these innovative applications.

Capgemini is announcing at Oracle OpenWorld the launch of ‘Oracle Fusion Lifecycle’, a new approach to leverage the full potential of the Oracle Fusion Application platform by providing managed services based on subscription pricing and built around a flexible business menucard and a tailored roadmap.

Andy Mulholland, Capgemini Group CTO, who will speak on Oracle Fusion Applications at Oracle OpenWorld in San Francisco (19-23 September) said: “Being a key Oracle Fusion Applications Global Ramp-up partner is strategic to our vision of collaborating with clients to offer outstanding service. We have been investing early and heavily in this technology and have been working closely with Oracle in this ramp-up preparatory stage. As experts in current Oracle applications our in-depth knowledge gained through testing will be invaluable in helping our clients evolve their IT strategy and transition from existing applications to Fusion applications.”

The taxman's IT director has lifted the lid on how the HM Revenue & Customs (HMRC) plans to squeeze more than £1bn of savings out of one of the UK's largest outsourcing contracts.

Mark Hall is overseeing the HMRC's Aspire (Acquiring Strategic Partners for the Inland Revenue) deal, the £750m per year contract led by Capgemini that provides the department with nearly all of its IT services and supplies.

The contract supports a vast IT estate, comprised of 600-plus computer systems, 8,000 servers, 80,000 desktop PCs and 7,500 laptops. The sizeable collection of computers underpin the government's ability to administer the UK's massive taxation system: the department last year collected £435bn in revenue and handles about 200 million calls and processes PAYE (Pay As You Earn) returns for 55 million employers each year.

At the core of the contract is a drive to reduce the number of computer systems used within the department from more than 600 to just 13 - fuelled by both the need to save money and to simplify and streamline its core systems. The systems were criticised for their fragmented nature by the former chairman of PricewaterhouseCoopers Kieran Poynter in his report into the department's loss of 25 million child benefit records in 2007.

"We had a challenging set of legacy systems and, with the cost of running those increasing every year, every pound that we spent on running them was a pound we could not spend on investment," Hall told the GovNet Efficiency through Service Delivery Partnerships conference in London yesterday.

One of the upshots of this consolidation of IT infrastructure has been that the 12 systems that were used to calculate how much PAYE tax a person should pay have been replaced by a single system called the National Insurance PAYE System (NPS).

The NPS allows HMRC staff to check a single customer record on one system - rather than different records on 12 systems as was previously the case - meaning it has become much easier for HMRC staff to spot when people are paying the wrong rate of tax.

This year was the first when the HMRC used the NPS to carry out its annual check on whether people are paying the right amount of tax - leading to a significant increase in the number of errors discovered, with 4.3 million people found to be paying too much and 1.4 million too little.

By ditching unnecessary systems, HMRC is working towards the contract's other main aim, cutting the cost of running HMRC's IT infrastructure.

Since Capgemini was awarded the Aspire contract in 2004 it has reduced the running costs of running the department's IT estate by £152m, and by the time the contract expires in 2017 the aim is that for it to have saved £1.2bn.

Savings are also being achieved by reductions to what HMRC pays its suppliers - with the HMRC maximising cost reductions by getting its supplier to reinvest money saved into new efficiency measures.

"Instead of taking the... saving we reinvest the pound and we achieve another two or three pound worth of saving," said Hall.

"The investment will lead us to achieve the £161m [HMRC's annual savings target from 2011/12] and to move forward with the decommissioning of our systems.

"We are transforming our IT estate with zero investment cost - recently we have updated our PC estate at no additional cost," he said.

Managing Aspire is no simple task, and it takes more than just setting "20,000 key performance indicators" to keep the contract's 240 software, hardware and IT services suppliers on track for the duration of the 13-year long contract, Hall said.

Most important, he added, has been recognising that HMRC's relationship with its suppliers needs to transcend the normal client-vendor dynamic, which means ensuring that both the suppliers and HMRC share the same goals and are rewarded for the same outcomes.

"It has to be about joint outcomes; it has to be about teams that are aligned and it has to be about both organisations taking the share of risk and reward," he said.

Cognizant (CTSH), a leading provider of consulting, technology, and business process outsourcing services, announced it has been selected by Oracle Applications Product Development to participate in Oracle Fusion Applications integration and migration co-development projects. The announcement was made at Oracle Open World 2010, San Francisco.

Oracle selected Cognizant to co-develop customer relationship management (CRM) software tools to enable the seamless, secure and rapid integration and migration of critical customer data from Oracle’s Siebel CRM to Oracle Fusion CRM applications. Cognizant is also assisting in Oracle Fusion CRM application testing, and Cognizant teams worldwide are undergoing extensive training in Oracle Fusion applications and technology, including its architecture and data model.

“Cognizant is a next-generation solutions partner with years of industry-specific business consulting and enterprise software experience, helping large global companies improve their customer-centric processes. By tailoring Siebel CRM applications to support those processes, Cognizant will allow Oracle Fusion CRM customers to move beyond mere sales automation by improving sales effectiveness and productivity,” said Steve Miranda, Senior Vice President, Oracle Application Development. “In addition, Cognizant will help ensure cost-effective, high-quality implementations across the entire Oracle Fusion Applications suite through its proven global delivery model and methodologies.”

As a Co-Development Partner in Oracle Fusion Applications Co-Development projects, Cognizant has demonstrated the highest levels of functional application domain and technological architecture expertise. It has invested in co-development efforts that typically span nine to 24 months, working closely with Oracle Product Development to deliver next-generation functional and technical integration for Oracle Fusion Applications.

“We are committed to working with Oracle and our clients to support the open technology foundation of Oracle Fusion Applications, which helps ensure their integration, security, and extensibility. We have gained deep experience with these applications prior to their release, and we look forward to participating in early-adoption client engagements, delivering co-existing and upgradable service offerings and best practices implementations,” said Peter Grambs, Senior Vice President, Customer Solutions Practice at Cognizant.

Convergys Corporation (CVG), a global leader in relationship management, announced today that its channel partner, IP Integration, (IPI) a leading UK systems integrator located in Reading, has signed a contract for Convergys solutions with NHS Professionals (NHSP).

Already an IPI client, NHSP will now use Convergys Intelligent Interaction Solutions, including Intervoice [R] Voice Portal, Intervoice Advanced Notification Gateway, and speech recognition, as well as IPI’s Classify ME call classification application, within its Service Center.

NHSP is the largest provider of managed flexible services to the National Health Service in England with around 50,000 nurses, doctors, administration and clerical, and other healthcare professionals signed to its bank; placing approximately 2 million shifts a year and providing reliable flexible workers to around 80 NHS Trusts all across England. NHSP was looking for solutions to help it drive improved efficiencies within its Service Center operation.

With the solutions from IPI and Convergys, NHSP expects to save over one million minutes of customer service agent time annually through inbound and outbound call automation. The solutions enable NHSP to deliver proactive outbound communications regarding available shifts, which help drive flexible worker loyalty. Finally, the Convergys solutions help NHSP deliver high customer satisfaction through a user-friendly, intuitive interface and application that recognizes callers easily. NHSP expects to see a return on its investment in the solutions within one year.

“IPI and Convergys stood head and shoulders above the competition during the selection process for our IVR project,” said Phil Bartlett, NHSP Telephony Services Manager. “They invested time understanding our business, challenges, and objectives and always placed our customer’s needs front and centre of any recommendations. Their approach allowed us to address immediate business requirements, while setting the foundation for a strategic self-service roadmap.”

“Partnering with Convergys has provided IPI with a competitive differentiator within the higher end of the UK contact centre marketplace,” said John Bacon, IPI’s Account Executive. “After raising interest at one of our customer seminars, Convergys worked directly with IPI to help us identify a great speech opportunity with one of our key strategic accounts. By combining Convergys’ applications and speech expertise along with IPI’s specialist development team CTI Labs, we were jointly able to develop that opportunity from initial concept through to reality. Convergys’ pragmatic and flexible approach to indirect partnerships makes it our preferred choice for complex speech self-service applications.”

“IPI has been a value added reseller of Convergys solutions for two years, and is starting to make a significant impact in the market place. IPI is a great example of the value that a focused reseller like this can bring to Convergys in the UK,” said Mike Betzer, President, Relationship Technology Management, Convergys. “We look forward to creating a sustainable, long-term partnership with IPI, supporting it in its business pursuits, and reaffirming why Convergys is its vendor of choice for speech self-service applications.”

Hewlett-Packard Co. and Oracle Corp. said they resolved litigation over the appointment of Mark Hurd as a president of Oracle and reaffirmed the long-term partnership between the two companies.

“HP and Oracle have been important partners for more than 20 years and are committed to working together to provide exceptional products and service to our customers,” Cathie Lesjak, HP’s interim chief executive officer, said today in a statement.

Hurd was sued Sept. 7 by HP, which tried to block his move. The company said working as a president at Oracle would make it “impossible” for him to avoid using or disclosing HP’s trade secrets and confidential information. Hurd will adhere to his obligations to protect HP’s confidential information while fulfilling his responsibilities at Oracle, the companies said.

As part of the resolution of the legal dispute, Hurd and HP agreed to modify terms of his separation agreement from HP, including waiving his rights to 330,177 performance-based restricted stock units granted in January 2008, HP said in a regulatory filing. Hurd also waived his rights to 15,853 restricted stock units granted in December 2009, HP said.

The settlement is unlikely to affect HP’s stock price or limit Oracle’s ability to compete with HP, said Aaron Rakers, an analyst at Stifel Nicolaus & Co. in St. Louis.

‘Neutral’ Affect

“At face value when I look at it, it’s more of a neutral on the stock,” said Rakers, who recommends buying HP shares and doesn’t own any himself. “Everyone is waiting for the naming of the next CEO.”

Legal experts have said that HP would be unlikely to prohibit Hurd’s move because California’s courts favor letting employees move freely. The theory that trade secrets will inevitably be disclosed “won’t work in California as a reason to prevent someone from taking a job,” Mark Lemley, a professor at Stanford Law School who specializes in intellectual property, said in an interview earlier this month.

HP gained 36 cents to $39.75 in extended trading after rising 25 cents to $39.39 at 4 p.m. on the New York Stock Exchange. The stock has dropped 15 percent since Hurd resigned on Aug. 6.

India's top mobile phone firm, Bharti Airtel, said Friday it had chosen United States computer giant IBM to supply information technology services to upgrade its 16 new African networks.

Bharti Airtel, the world's fifth-largest mobile phone company, completed the purchase of Kuwait's Zain's African cellular operations for 10.7 billion dollars in June. The deal included the assumption of a $1.7 billion debt.

The move marks the first significant step by Bharti Airtel to replicate its business model in sub-Saharan Africa, where it aims to nearly triple the current number subscribers to 100 million by 2012-2013.

"There are huge opportunities throughout Africa to transform how people communicate," Bharti Airtel chairman Sunil Bharti Mittal said when announcing the African partnership.

The decade-long joint venture with IBM will allow Bharti Airtel to "deliver innovative and affordable 2G and 3G mobile services across the (African) continent," the New Dehli-based company said in a statement.

Under the agreement, IBM will manage the computing technology, customer and other services underpinning Bharti Airtel's mobile communications network, spanning 16 countries including Nigeria, Uganda and Kenya.

Bharti gave no financial details but analysts have pegged the deal's value at between one and 1.5 billion dollars.

The African venture continues a partnership that began in 2004 when Bharti tapped IBM to run the information technology systems for its Indian network.

Since then, Bharti has seen its growth explode to over 150 million subscribers, becoming India's leading mobile provider.

Bharti said details of the venture are expected to be finalized by the year’s end, adding that IBM also views Africa as the next big emerging growth market as it diversifies revenues.

The African partnership is "a logical extension" for Bharti as it tackles the competition in Africa, said Romal Shetty, executive director of Indian telecoms at global consultancy KPMG.

"It's key to Bharti's success in Africa, there's a huge amount of knowledge IBM has about Bharti and it's logical for Bharti to take them to Africa," he said.

Bharti is facing a tough challenge from MTN, Africa's largest cellular operator, which "has very strong branding across Africa," added Shetty.

The Indian company said it hoped to duplicate in Africa the Indian success of its relationship with IBM, "by lowering the barrier to entry for the people of Africa to own a mobile device."

According to global consultancy Deloitte, only 40 percent of Africans have a mobile phone but demand is growing by 25 percent annually.

Bharti, which pioneered low-cost telecoms in India, hopes to cut Zain's high cost base and win subscribers – and get subscribers to talk by offering lower tariffs.

Bharti is famous for its so-called "minutes factory" business plan – the low-cost, high-volume model that has made it such a success.

"We have achieved great success together in India, and now we are bringing that model to Africa," IBM chief executive officer Samuel Palmisano said.

"By building a 21st-century telecommunications infrastructure for the continent... we expect to help spark transformation," he said.

Amazon Web Services (AWS) now fully certifies and supports a number of applications on Elastic Compute Cloud (EC2) when they are run using Oracle VM virtualisation, the companies announced at Oracle OpenWorld on Sunday. The software covered is Oracle E-Business Suite, PeopleSoft Enterprise, Siebel CRM, Fusion Middleware, Database and (Oracle) Linux.

"Customers may use their existing Oracle licences on Amazon EC2 at no additional licence cost, or they may acquire new licences from Oracle," the companies said in a statement.

Computing resources can be provisioned from EC2 on an as-needed basis. This means that when running Oracle applications in the environment, customers will be able to "add or shed resources as needed, paying only for resources used", said Charlie Bell, head of utility computing services at AWS, in a statement.

Oracle and AWS said they plan to publish Amazon Machine Images (AMIs) based on underlying Oracle VM templates of some of Oracle's software. An AMI is a template used to store a map of application information to allow it to run within EC2. The new AMIs should help businesses cut implementation times for applications on EC2 "from weeks or days to minutes", Oracle said in a statement.

Those who use the AMIs will be able to take advantage of EC2 Load Balancing, Auto-Scaling and Reserved Instance pricing, along with other AWS-specific cloud technologies.

Initial AMIs will comprise of Oracle Linux, Oracle Database, Oracle E-Business Suite and aspects of the Fusion Middleware technologies, including WebLogic Server and Business Process Management. Future AMIs will include PeopleSoft Enterprise, Siebel CRM and Oracle's JD Edwards applications. Dates and prices were not available at the time of writing.

Even as the political rhetoric over offshoring picks up in the US, UK’s top back office provider Capita has decided to use India as an offshoring base for its new IT business. Capita recently diversified from its traditional back-office business into IT, and a top official from the UK firm said it would hire people in India for IT application development and maintenance work.

The Capita group is one of the largest BPO providers to the UK life and pensions industry, and its IT facilities in India will be used to provide testing services and to support technology platforms for life and pensions clients. “We have been expanding our IT capability quite significantly and have made three-to-four acquisitions in IT,” said Simon Pilling, COO, Capita. IT skills are key to Capita’s growth and Samad Masood, an analyst with technology researcher Ovum, said in a recent report that many of the firm’s wins involve using IT as a key part of service delivery.

“Capita needs to build IT capability and expertise fast. IT skills are increasingly important in winning BPO deals, not least because many BPO deals require service providers to integrate, modernise or web-enable clients’ existing software platforms... On top of this, leading IT services companies such as IBM, Accenture, Capgemini, Atos Origin and Capgemini (to name but a few) are increasingly using their IT expertise to encroach on Capita’s BPO turf,” said Mr Masood.

Capita intends to employ around 300-400 people, representing around 10% of its workforce in IT across Pune and Mumbai by the year-end. It has hired, Manpreet Singh, a former senior vice-president with the Vertex group, to head the IT operations.

The UK government, which is the key customer for Capita is also expected to outsource more business.

“There was a slowdown in the build up to the general elections but we expect opportunities to open up now. There are good messages coming out of the coalition government, and I expect significant changes over the next two-to-three years,” said Mr Pilling.

UK prime minister David Cameron’s coalition government has said it will cut down spends on big projects, including some awarded to Indian outsourcers such as Tata Consultancy Services. But the pitch outsourcing companies like Capita are making to the UK government is that by outsourcing administrative tasks, the government can significantly reduce expenditure and focus on the task of governance.