Industry news

Tata Consultancy Services, the leading IT services, business solutions and outsourcing firm, today announced that the company had entered into a significant multi-year agreement with SUPERVALU INC. for a full services engagement.

SUPERVALU is one of the largest grocery retailers in North America. The engagement with TCS is transformational in nature and will drive operational efficiencies for the firm through the integration of IT, BPO and infrastructure services. As a part of this engagement, more than 600 SUPERVALU India associates will become a part of TCS.

“For SUPERVALU, this move will allow us to improve operations, freeing up funds to invest more aggressively in our customers. It will also allow us to move more quickly toward business solutions,” said Wayne Shurts, SUPERVALU’s chief information officer. “We have many talented associates in SUPERVALU India, and an added benefit of the deal is that they will continue to play a key role in the future success of the company.”

“The engagement with SUPERVALU reinforces our leadership as the long-term IT partner best equipped to help global corporations transform their businesses using our full services capabilities and domain knowledge. We are delighted to work with SUPERVALU and help them strengthen their leadership position in the market place,” said N Chandrasekaran, TCS’ CEO and MD.

The retail industry unit contributed 12.3% of the firm’s total revenues in 2009-10. The industry unit works with leading retailers globally.

Capgemini UK plc signed a Memorandum of Understanding (MOU) with the Cabinet Office which builds on its outstanding track record of engagement and delivery to HMG. All existing contracts remain and continue to be delivered as planned. Capgemini has also presented a range of new business opportunities to enable the commitment of savings to HMG.

In addition, Capgemini has also put together an extensive menu of new innovative proposals, which would further improve the efficiency of HMG.

Paul Hermelin, Capgemini CEO said: “I am pleased to have agreed this MOU with Francis Maude, Minister for the Cabinet Office. This signing continues our transformational journey with HM Government and enables us to bring the full capability of the Capgemini Group for the benefit of the UK Public Sector. I look forward to working together over the coming months and years to help the UK Government achieve their wider reforms”.

Pierre-Yves Cros, Capgemini’s UK Country Board Chairman said “Capgemini has responded to the request to help Government meet their short term challenge and we have also put forward cross-government solutions, which will help achieve an efficient joined-up government in future”.

Economic fluctuations and business uncertainty, accelerated service globalization, and increasing competition of IT services are major factors that could force businesses to move further toward low-cost IT, according to Gartner, Inc.

Gartner defines low-cost IT as the delivery of managed IT services (infrastructure, application, business process services) designed and implemented to minimize IT price — per-user/unit per-month (PUPM) — while maximizing the number of client organizations and users that adopt the services.

“The price of IT will continue to drive decision making,” said Claudio Da Rold, vice president and distinguished analyst at Gartner. “As credit markets in the U.S. and Europe remain challenging, end-user organizations are reducing costs by sourcing IT services from emerging countries and lower cost providers. Cost cutting, restructuring and the move toward offshore outsourcing continue to increase while growth in emerging countries accelerates, widening the gap between high-growth areas* and stagnant economies**, and low and high-cost IT providers. This trend could drive a prolonged reduction in the unit cost of IT services, significantly affecting the IT services market by 2013.”

The industrialization of IT services*** is also enabling a greater orientation toward outcome-based and pay-per-use services. Early offerings like infrastructure utilities or cloud e-mail show that providers can deliver one-to-many services at price points that are one third of in-house/traditional costs, due to the right combination of industrialized one-to-many services, offshore outsourcing and technologies such as virtualization and automation.

Gartner analysts said that based on the proliferation of advertising 'IT as a service' as a pricing model, business buyers would force traditional providers to switch to PUPM pricing models by 2012.

“If the scenario of low-cost IT accelerates in the next few years, we foresee a growing number of delivery models that could cut the cost of IT by a third or more. This could lead to the emergence of viable low-cost IT providers,” said Frank Ridder, research vice president at Gartner.

In such a scenario, the IT services market could sustain a year-on-year reduction of 10 percent to 25 percent in the average market unit price PUPM for three to five years. A yearly reduction of 10 percent to 25 percent in IT services costs, affecting 30 percent of the market, could cause the overall, average market price to decline by 5 percent to 10 percent yearly. This worst case scenario reduction would equal the revenue of two to four of the largest IT service providers. “This reduction is possible because, in 2009, we saw the IT services market shrink 4 percent, with a market loss of $42 billion, with outsourcing prices plummeting,” Mr. Ridder said. “Such extensive reductions in price and market size would stall growth in the overall IT services market by 2013.”

“Organizations must invest in scenario planning and risk management,” Mr. Da Rold said. “About two or three times a year — depending on dynamics in their business environment — they need to assess their multisourcing environment against risks, including changing service pricing, regulatory changes and providers' viability. They also need to consider leveraging new IT services options depending on their compatibility with their corporate risk profile, and add business value through risk mitigation and business continuity planning.”

Additional information is available in the Gartner report “Uncertainty and Low Prices Could Stall the Growth of the IT Services Industry Market by 2013." The report is available on Gartner’s website at http://www.gartner.com/resId=1419615.

More detailed analysis on outsourcing is available in Gartner's Future of Outsourcing and IT Services Special Report at http://www.gartner.com/technology/research/future-of-outsourcing-it-services/report/index.jsp. The Special Report provides links to research notes that cover various aspects of outsourcing and IT services. This report provides insight and actionable advice for IT services buyers, providers and investors to achieve more successful future outcomes.

Additional information on the future of outsourcing will be discussed at the Gartner Outsourcing and Vendor Management Summit 2010 taking place September 14-16 in Orlando, and the Gartner Outsourcing & IT Services Summit 2010 held in London, September 20-21. This is the only event that comprehensive view of the entire outsourcing market — infrastructure, application and business process outsourcing, global delivery and the use of offshore providers, as well as issues and trends about new delivery models, such as SaaS.

The Telegraph Media Group (TMG) has chosen software provider Cordys to manage its cloud services and applications to allow "rapid mashup" of its business processes.

The publisher of The Daily Telegraph, the TMG, uses multiple software as a service (SaaS) and Google cloud applications, such as Salesforce.com, Amazon Web Services and Google Mail. Cordys' Process Factory software will give TMG the ability to create processes and applications quickly in the cloud across all of its SaaS applications at lower costs, said the company.

Toby Wright, TMG CTO, said, "With our previous structure, a significant percentage of our IT budget and resource was allocated to maintenance and support. By making greater use of cloud platforms for back-office IT and revenue-generating products and services, we are now on target to reach our goal of having the majority of our resource focused on technology and business transformation projects."

Peter Karsten, vice-president sales UK at Cordys, said, "The Software as a Service (SaaS) model we have developed enables business users to build and run their own MashApps by simply combining standard business applications such as Google apps and commercially available services, with web services from anywhere, with the same levels of security as traditional platform implementations."

TMG will use the Cordys Process Factory to integrate and build new cloud applications. Salesforce.com integration will also be used to allow enterprise access to customer data.

The Ministry of Defence has extended its network and communications contract with BT by three years to 2015, through the Defence Fixed Telecommunications Service (DFTS) Agreement.

The DFTS Agreement, signed in July 1997, began by transforming the 19 separate telecommunication networks, serving the Royal Navy, the British Army, The Royal Air Force and the MOD itself, into a single multi-service platform.

BT said the extension will involve a transformation programme. BT will manage a number of implementation projects, including an upgrade to the network over which the service is provided. According to BT, this will improve application and security performance.

The DFTS is one of BT's largest contracts, with around 750 full-time staff involved. The contract extension is expected to be worth £640m in revenue to BT over the course of the contract.

The network covers 2,000 sites, interconnecting more than 230,000 users across the UK, Germany, and Cyprus. It carries 750,000 calls every day, and transfers 43 million e-mails a year to and from its dedicated network to external users.

Novell has launched its Cloud Manager, which it claims will allow users to avoid vendor lock-in and securely manage cloud computing applications in private clouds.

The latest product from Novell's WorkloadIQ range, Novell Cloud Manager, simplifies and automates business processes to provide the benefits of cloud computing without the security and compliance risks of public clouds, said the firm.

"Customers want to be able to manage cloud environments securely as a seamless extension of their existing data centre, and they are looking for solutions that avoid vendor lock-in and interoperate across a broad range of technology stacks," said Jim Ebzery, senior vice-president at Novell.

Ryan Klose, CIO of Premium Wine Brands for Pernod Ricard, said the company will use Novell Cloud Manager to simplify its IT service provisioning by combining physical resources with its virtual infrastructure within a private cloud.

Novell Cloud Manager supports hypervisors and operating systems including VMware, vSphere, Microsoft Hyper-V, Microsoft Windows Server and SUSE Linux Enterprise Server.

BMC Software also launched its cloud management tool, BMC Control-M 7, to automate IT workloads in real time across applications as well as physical, virtual and cloud platforms.

CGI Group Inc. and Alberta Employment and Immigration (AEI) today announced the signing of a four-year, multi-million dollar agreement. Building on a previous eight-year contract, under this new agreement, CGI will provide maintenance support to 90 of AEI’s mainframe, client server and web-based applications, as well as the development of new applications to meet AEI’s diverse business needs.

The Ministry of Employment and Immigration contributes to the long-term sustainability of the economy by ensuring Alberta has a skilled workforce, productive and safe workplaces, and by helping to improve the well-being of Albertans.

“Alberta Employment and Immigration provides vital services to Albertans and having reliable technology supporting these services needs to be a given,” said Doug McCuaig, President, CGI, Canada. “Building on our long-term partnership, we’re thrilled to have been selected to continue to support AEI moving forward.”

A company that makes a cloud management system is getting a $14 million investment from Intel and others, which it will use to hire new employees. Adaptive Computing intends to use this money to add "dozens" of people to its staff, which now number around 75 employees, said Michael Jackson, COO and president of the firm.

The nine-year-old, privately held company began as Cluster Resources (before changing its name last year to Adaptive Computing), focusing on high performance computing systems, but has since adapted its Moab workload technologies to manage cloud environments.

"This is a space everybody wants to be in right now," said Glenn O'Donnell, an analyst at Forrester Research. He said a variety of firms "are all trying to bring solutions to the market that can help enterprises build their own cloud."

The promise is to enable enterprises to build their own infrastructure as a service cloud internally - something akin to an internal Amazon "EC2 type service," O'Donnell said. Where Adaptive differs is in its ability to provide application automation, as well as infrastructure automation, all in a cloud environment. "[Adaptive] is taking this whole discussion up a level," O'Donnell said.

Jackson said the company's tools work as a manager of management systems, and intended to interface with variety of provisioning management technologies, as well as connecting storage, network and virtualisation management. The system can also look into the future to link performance to service level agreement agreements, or a desire for green computing and other requirements.

Adaptive has been profitable since its founding. Its growth has been entirely from customer revenue, said Jackson. But he said the demand for its products was outstripping its ability to grow the company with "organic revenues." The investment will be used to hire people who help deliver its services, Jackson said.

Paul Burns, an analyst at Neovise, said the overall cloud management tool space is fairly immature and experiencing a lot of new firms, "but I think we're going to start to see some acquisitions." Investors in Adaptive include Intel Capital, Tudor Ventures and Epic Ventures. Intel Capital says it has invested more than $9.5 billion in over 1,000 companies in the last two decades.

Intel's reach continues to expand, most recently with the purchase of McAfee for $7.86 billion. Cloud environments tend to built in mostly x86 environments, which may explain Intel's interest in investing in a company developing of the tools market for this platform.

GROHE, the leading international manufacturer of sanitary fittings, and Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, have signed an agreement for IT infrastructure outsourcing. The multi-million Euro contract between GROHE AG and Capgemini Outsourcing Services GmbH spans a period of five years, and means that some 20 employees of GROHE will transfer to Capgemini. The future services will cover GROHE sites in Brazil, Canada, Germany, the Czech Republic, Hungary, India, Portugal, Singapore and Thailand, for which Capgemini will leverage its global Rightshore® network consisting of onshore, nearshore and offshore centres.

“With its Remote Infrastructure Management capabilities and strong presence in Germany, Capgemini is the ideal partner for a cost optimised IT process management,” says Chief Process Officer Michael Staade of GROHE. Oliver Schwarz, Head of Outsourcing Services Capgemini in the region Germany, Austria and Switzerland, also underlines this aspect in establishing a solid basis for the future collaboration: “For GROHE, we will be able to leverage our global Infrastructure Transformation Services to sustainably optimise the company’s IT services processes. We look forward to taking over this assignment for our new client.”

With a market share of about 8%, GROHE AG is Europe’s largest and one of the worldwide leading manufacturer of sanitary fittings. As a global brand for sanitary products and systems, GROHE is setting benchmarks in this segment in terms of quality, technology and design. The company has some 5,000 employees and generated annual revenues of about EUR 826m in 2009. GROHE maintains three production sites in Germany (Hemer, Lahr, Porta Westfalica) as well as in Canada, Portugal, and Thailand. The company is represented in more than 130 countries.

HP and ArcSight Inc. today announced that they have signed a definitive agreement for HP to acquire ArcSight, a leading security and compliance management company, for $43.50 per share, or an enterprise value of $1.5 billion.

The combination of HP and ArcSight will improve security, reduce risk and facilitate compliance at a lower cost for customers. ArcSight’s superior technology is highly complementary to HP’s existing security portfolio of hardware, software and services.

Today’s successful enterprises must provide their employees, partners and customers with more access to applications, services and information. This access and connectivity exposes enterprises to escalating threats, increasing complexity and regulatory challenges. Together, HP and ArcSight will be well-positioned to secure even the most demanding environments by delivering:

Broader visibility: A comprehensive view of all events across IT operations, security and compliance

Deeper context: The ability to detect threats and risks by correlating both activity and state changes in real time

Better continuity: A constant feedback loop between build, manage and monitor to ensure that enterprises remain secure

“From a security perspective, the perimeter of today’s enterprise is porous, putting enormous pressure on clients’ risk and compliance systems,” said Bill Veghte, executive vice president, Software and Solutions, HP. “The combination of HP and ArcSight will provide clients with the ability to fortify their applications, proactively monitor events and respond to threats.”

“HP’s acquisition of ArcSight will enable the creation of a new type of security solution, one that serves the modern enterprise,” said Tom Reilly, president and chief executive officer, ArcSight. “By combining ArcSight’s Enterprise Threat and Risk Management Platform with HP’s breadth of application development and operations management solutions, HP will be able to offer an integrated security platform that delivers broader visibility, deeper context and faster remediation of enterprise-wide security and risk-related events. In a world where perimeter security is no longer enough, businesses need this holistic approach to securing their networks, applications and sensitive data.”

The acquisition will be conducted by means of a cash tender offer for all of ArcSight’s outstanding shares of common stock. The closing of the acquisition, which is subject to customary closing conditions, is expected to occur by the end of the calendar year.

Investor and analyst conference call

HP will host a conference call for financial analysts and stockholders today at 5:30 a.m. PT to discuss its proposal to acquire ArcSight.

The call, hosted by Bill Veghte, will be accessible at www.hp.com/investor/home.