Industry news

Baltimore Gas and Electric (BGE), a subsidiary of Constellation Energy (CEG), has teamed with Accenture (ACN) and Oracle to implement a smart meter network for its 1.2 million customers. The planned implementation is part of BGE’s smart grid initiative that aims to reduce peak electricity demand, increase customer service and enhance operational performance.

Smart grid will provide customers with detailed information regarding energy consumption and cost, and will deliver data that will enable BGE to enhance the performance of its distribution network. Combined with BGE’s energy efficiency and demand response initiatives, smart grid will help the state of Maryland, under EmPOWER Maryland, achieve its goal of a 15 percent reduction in total system demand by 2015.

“BGE is pleased to partner with both Accenture and Oracle - two premier companies - that will enable us to deliver the significant transformational benefits of smart grid to each of our 1.2 million customers,” said Kenneth W. DeFontes, president and chief executive officer of BGE. “Those benefits include at least $2.5 billion worth of savings for BGE customers over the life of the project, as well as major new enhancements in customer service and reliability. Accenture’s experience in intelligent networks and Oracle’s in software, positions BGE to make those transformational benefits a reality.”

Accenture will provide systems integration services including the design, build and management of a customer web portal, meter data management system, advanced metering infrastructure (AMI), and integration related to BGE’s customer care and billing and outage management systems. Accenture also will provide project management support through planning, execution, field deployment and change management activities.

BGE’s smart meter network will leverage Oracle’s utilities meter data management system to help manage and analyze high volumes of meter data more effectively while providing customers with detailed energy usage data, which is expected to result in decreased peak energy consumption and electric bills. BGE also plans to integrate the meter data management system with its existing Oracle utilities network (outage) management system to enhance outage management processes with near real-time outage and restoration verification capabilities.

Stu Solomon, senior executive in Accenture’s Utilities industry group, said, “BGE, as an industry leader, is committed to transforming its business and network to better serve its customers, strengthen its workforce, and comply with regulatory requirements. The U.S. Department of Energy, through the Smart Grid program, has granted BGE a unique opportunity to further enhance its infrastructure so that its customers can benefit from enhanced reliability, reduced costs, and greater control of their home energy usage. Accenture is committed to helping BGE leverage the power of intelligent networks and build a grid of the future so that utility customers in Central Maryland can realize the benefits envisioned by BGE and regulatory authorities.”

Stephan Scholl, senior vice president and general manager for Oracle Utilities said, “We’re pleased to team with Accenture to deliver tangible business value to BGE and its smart grid initiatives. BGE’s investment in several Oracle Utilities products validates the comprehensive smart grid choice we offer to the industry.”

As part of its implementation of smart grid, BGE plans to be one of the first utilities in the nation to offer smart energy pricing, whereby customers can earn rebates for reducing electricity usage during peak times of the day. In 2008 and 2009 respectively, BGE, with the support of Accenture, conducted two smart energy pricing pilots during which participating households reduced peak energy consumption ranging from 22 percent to 37 percent. BGE estimates reduction in energy usage will ease the need for future power generation plants and other capacity upgrades which will reduce costs for BGE and its customers.

BT has won a five-year contract with Debenhams to transform the high street retailer’s data network and upgrade it onto BT’s next generation, high-speed 21CN software-driven network.

BT Global Services, BT’s networked IT services division, will upgrade Debenhams’ computer networks that connect 159 stores across the UK and Ireland, distribution centres and data centres. The network, which transmits sales and stock order details from Debenhams’ stores to its head office and supply chain centres around the UK, will be up to 16 times faster, allowing the retailer to roll-out new computer applications, communicate faster and gain longer term business benefits from this new strategic technology platform.

As well as upgrading the retailer’s wide area network (WAN) using high-speed 'Ethernet in the first mile' technology, BT will also provide new network management tools, which will monitor systems to help ensure that links to Debenhams’ tills, supply chain systems and transactional database are always running. It will also identify any areas of the computer network that are performing poorly, so that they can be fixed quickly.

Steve Kircher, IT director, at Debenhams, said: “It’s a fundamental requirement for retailers to have IT systems that are always available – transmitting vital sales, transactions and information around the business.

“By future-proofing and closely monitoring our IT networks, Debenhams will not only be able to communicate faster and more efficiently, we will also be able to stay ahead of competition and be ready to roll-out new applications in line with business requirements.”

In addition, Debenhams will use the managed security monitoring service, BT Counterpane, drawing on BT’s highly-trained security experts and sophisticated surveillance technology to stay ahead of any software vulnerabilities, threats and malicious attacks the company may face.

Diane McAuliffe, director of retail & professional services, BT Global Services, said: “We’re thrilled that Debenhams has chosen BT. This is a landmark project that will transform Debenhams’ business critical IT systems, which we hope will allow them to steal a march on the competition, future-proof systems for the coming years, whilst delivering cost savings to the business.”

BT will overhaul the network at Debenhams stores, warehouses and data centres over the coming months to ensure that the new systems are all in place ahead of the busy Christmas trading period.

BT will also deploy its Application Optimisation Service, using a combination of physical and virtual engines, which will allow Debenhams to monitor and see how individual applications are performing on the network and prioritise certain ones to maximise performance.

Debenhams is a long-term customer of BT, with the telecoms and IT services company already providing telephony services and the retailer’s previous IP Clear network.

Lockheed Martin has won a role on a new $2.8 billion, seven-year indefinite delivery, indefinite quantity (IDIQ) contract to provide information technology solutions to the Social Security Administration (SSA).

The Information Technology Support Services Contract (ITSSC) encompasses a complete range of services related to SSA’s major systems modernization initiatives. Over the seven-year contract period, Lockheed Martin will receive ITSSC task orders to provide support in the areas of Design, Development, Testing, and Maintenance; and Data Base Administration, Imaging, and Document Management.

Lockheed Martin has been supporting SSA since 1989, when it began work under the agency’s Software Support Services Contract.

“Over the course of this decades-long partnership, we’ve seen the SSA not just modernize, but truly revolutionize how it delivers vital services to our nation’s citizens,” said Michael Leff, Director, Lockheed Martin Health Information Management Solutions. “Lockheed Martin is proud to continue serving as a partner in the ongoing transformation of an agency that supports the health and economic well-being of millions of Americans.”

The ITSSC continues work Lockheed Martin is currently performing under the SSA’s Agency Wide Support Services Contract. Recent achievements under the AWSSC include integrating electronic medical records into SSA processes and leveraging the Nationwide Health Information Network; developing new, web-based self-service tools that enable more timely service delivery; and applying Enterprise Architecture strategies to drive agency efficiencies.

IT departments are more satisfied with the services offered by IT service providers - but not hugely more satisifed - a major research project published in November will reveal.

The survey, which assesses UK IT departments' satisfaction levels with IT service providers, is expected show that businesses believe that service providers have improved their quality of service over the past year.

But preliminary results suggest that as service providers offer better value for money, IT departments are becoming more demanding of higher quality and competitive prices.

"They are becoming more demanding: for a service provider to score well, and a user to be satisfied, they have to do more than they did a few years ago, so the bar is being raised, " said Stan Lepeak, director of global research.

EquaTerra's 2010 UK Service Provider Performance and Satisfaction Study will assess the views of over 200 organisations on their service providers, and the trends in organisaitons' outsourcing plans.

"Satisfaction levels are going up year by year but not by a lot, because buyers are getting more demanding," said Lepeak.

"While buyers desire things like transformation and innovation, the real focus is getting the most for the pound invested. They are not cutting suppliers any slack. That is going to continue for some time," he said.

As prices have fallen, organisations that signed outsourcing deals four or five years ago are finding themselves at a disadvantage.

"We are seeing some buyers stuck with deals that they are not happy with, but changing providers is not easy to do. Its easier said than done to re-price it or go with another provider," said Lepeak.

The research is expected to show that organisations rate service providers lower for flexibility and innovation than for cost and quality. But this reflects the priorities of the buyers.

"To some extent buyers who are dissatisfied with cost levels should realise that if you are always pushing on cost, you are going to have an impact on innovation," said Lepeak.

Despite protectionist pressures, the trend is for businesses to continue to push more work off shore to India or central Europe, early findings from Equaterra suggest.

Property firm Frogmore has implemented a virtualised IT infrastructure with information management company Bluesource.

Bluesource has consolidated Frogmore's existing server hardware into specified VMWare virtualised servers. The company's system data was copied and replicated to an external tier-one datacentre.

Frogmore is also in the process of migrating its traditional PC users to virtual desktops using VMware View. The company's IT environment is fully managed by Bluesource, delivered remotely from its datacentre in London.

Sandie May, administration manager at Frogmore, said, "Bluesource helped us to build a process and recovery plan, and ensured that it was regularly tested. We had experienced a power outage which could have been very damaging to our business. But Bluesource was able to react immediately."

Ventrica is the name of a new 134 seat outsourcer that plans to shake up the market for providing high quality, professional customer contact on behalf of medium to large enterprises. The company is the brainchild of well-known industry entrepreneur Dino Forte, who was previously a co-founder of Converso Contact Centres. Having already secured new business from a global software specialist and an international cosmetics group, Ventrica is looking to attract further household names to its customer base.

Managing Director and founder of Ventrica, Dino Forte says, “There is a massive untapped demand for high calibre customer contact that demonstrates both professionalism and substantial attention to detail. However, whether it’s for lead generation or managing service enquiries, many organisations can’t justify the resources or technology infrastructure in-house to support this type of activity. Ventrica aims to plug a gap in the market by offering smaller scale, ‘niche’ customer contact services such as B2B lead generation, that focus on the quality rather than the quantity of conversations. Larger outsourcers can provide this same level of excellence, but they typically only consider very high volume work.”

“We have invested substantially in both the contact centre environment as well as the latest multi-media technology so we can deliver a premium service that matches many of the bigger players in the industry. We won’t just be managing calls though, we will also be handling other types of customer communication such as web enquiries, web chat, SMS and so on.”

A range of career opportunities are now available including customer service representatives, telemarketers, service delivery managers and IT. There will also be vacancies for those with multi-lingual skills.

World-famous travel and leisure company Thomas Cook Group plc has signed a contract with Capgemini for the radical modernisation of a core IT system in the UK. The programme is designed to significantly increase Thomas Cook UK & Ireland’s efficiency and flexibility, and transform services to its millions of UK customers. By streamlining its IT, Thomas Cook also aims to boost its ability to satisfy evolving customer tastes and preferences, and increase its responsiveness to changes in the travel and leisure marketplace.

The Capgemini development will allow Thomas Cook UK & Ireland to replace a number of its existing IT systems by deploying new technology able to support the end-to-end management of all aspects of tour and travel management from booking through to delivery. A radically updated reservation and management system will enable Thomas Cook UK & Ireland to market and distribute both custom-designed and traditional package holidays via multiple channels including websites, call centres and travel agents. The IT development programme also aims to facilitate rapid integration with external IT systems from third party providers such as hotel groups, airlines and car hire companies.

Mark Foy, Programme Director at Thomas Cook Group plc, said: ‘People booking holidays need the freedom and flexibility that today’s choice of booking channels gives them, but they also appreciate the traditional values of service, security and expertise that Thomas Cook can provide. The new Capgemini developments will enable us to offer our customers the best of both worlds, marking an important new chapter in the ongoing development of the holiday industry.’

He added that there are further possibilities for collaboration between Thomas Cook Group plc and Capgemini in the future involving markets and customers in other parts of the Group including Continental Europe and the fast-growing markets for tourism in countries such as India and China.

The new partnership will drive the next phase of Thomas Cook’s GLOBE programme that was announced in 2006. The new project will focus on Thomas Cook Group plc’s activities in the UK market, its largest business segment.

Thomas Cook Group plc selected Capgemini as prime contractor for the project following a review of competitive proposals. It says that Capgemini was selected because of its attractive commercial proposition, its commitment to collaborative working and its leadership in ‘agile’ software development, a technique which enables rapid and iterative fine-tuning of IT systems to business needs as the development process proceeds. Other important factors were Capgemini’s ability to offer excellent quality and value through its Rightshore® delivery model, and its first-class references from existing clients.

The 70-strong Capgemini team of experts from the UK, Germany and India will be based at Thomas Cook’s offices in Peterborough and at Capgemini Accelerated Development Centres in Birmingham and Manchester, UK and Mumbai, India. The updated systems are expected to centre on largely custom-designed software but will also include an Oracle database and IBM Websphere components. As well as serving the holiday-making public, the systems will also be accessed by Thomas Cook UK & Ireland people in Thomas Cook head offices, stores and call centres. Capgemini is starting development work on the programme immediately. The first Release within the programme is scheduled for Q4 2010 with final completion within three years.

Ian Fairclough, Programme Director at Capgemini UK, said: ‘The Thomas Cook Group plc is a world-class name in travel and tourism and we are proud to be entrusted with this crucial project – one which, we believe, will transform the face of tourism and open up many exciting new opportunities for holiday-makers from the UK.’

Buyers and suppliers are increasingly drawn to the benefits that a pricing model such as output-based pricing can bring. The move to control costs has seen many buyers transition their existing input-based model into an output-based model while some buyers are turning to new suppliers or setting up entirely new outsourcing relationships that are based on output-based pricing.

Here, SQS Software Quality Systems, the largest independent provider of software testing and managed testing services, outlines the motivations behind moving to output based pricing, benefits and challenges that must be overcome, including the mechanisms needed to handle demand variation and improved SLAs.

Over the last few years, as the cost impact of poor quality software products and applications has risen, the need for specialisation in testing has been accepted within the IT industry. Outsourcing and off-shoring of testing has become the norm. However, there is room for improvement in the way outsourced testing is implemented today.

While outsourcing has delivered cost reductions and flexible access to skilled technical resources, many companies today are seeking outsourcing providers that will work with them as true partners taking greater ownership of the outsourced work and delivering results rather than bodies and processes.

The incentive model in most engagements can be an issue and common head-count based pricing models work against the concept of partnership. So, is there a viable commercial model that encourages long-lasting effective partnership without compromising quality? Possibly the best answer to this is output-based pricing.

Benefits of output-based pricing

The biggest benefit of pricing on the basis of output is obvious – the customers pay only for what is delivered. But this mechanism brings about a complete change of mind-set in both the customer and the vendor.

Output-based pricing shifts risk away from the customer. In head-count based pricing, the risk is predominantly with the customer, as the vendor is paid for resources used on the project at a pre-determined rate. There are of course SLAs to cover the risk, but on the ground it is extremely difficult to design and execute these SLAs. In an output-based pricing mechanism, the SLA is built-in.

There is a more subtle, but extremely important benefit that output-based pricing provides. The head-count driven vendor has no interest in increasing efficiency – the way to grow business is to increase head-count, not decrease it. Conversely, in output-based pricing, the vendor is incentivised to increase efficiency.

The vendor tries to increase output with the same team-size, or even reduce the team-size by using automation and improving processes. Customers benefit too, as vendors can offer year-on–year benefits, increasing their units of delivery per unit of cost.

Truly, a win-win for both parties, which is very difficult, if not impossible to achieve in a head-count based engagement.

The requirements of output-based pricing

An initial calibration phase is critical for output-based pricing engagements. During this phase both parties agree on a unit of testing deliverable (at SQS, they are known as Quality Points), and on the rate for each unit.

To maximise benefits, the engagement needs to be planned over multiple years, giving the vendor the confidence to plan and invest in building efficiency in the service offered. By signing up for multiple years, customers get year-on-year efficiency benefits.

Of course, reviews must be planned to track performance and ensure that the output-based pricing is in line with the objectives of the outsourcing.

Example of output-based pricing, as applied to Test Automation

It turns out that Test Automation is an area where output-based pricing can be applied successfully. In this paradigm, the rate card only mentions prices for test cases delivered, executed and maintained. To be able to prepare the rate card, in the initial calibration phase a sizeable number of test cases of representative size and complexity are taken up for automation and delivered.

The output-based rates are calibrated based on the efforts taken on the automated test cases as well as release plans of the application under test. The engagement is necessarily over multiple years covering many releases and thus repeated executions of the test automation suite.

With the delivery responsibility completely with the vendor, backed by output-based pricing for guaranteeing the delivery, this mechanism delivers on the promise of a truly managed testing service.

Author: Gireendra Kasmalkar, SQS India

Gireendra is the MD and CEO of SQS India. Gireendra had founded VeriSoft, one of India’s leading independent testing companies. VeriSoft was acquired in July 2008 by SQS Software Quality Systems AG, the global leader in independent testing. SQS is headquartered in Germany, has operations in 15 countries and is listed on the London Stock Exchange.

Through SQS Managed Testing Services, businesses only pay for what is tested, have access to a global delivery team and work with a pure-play independent testing consultancy, so benefitting from a clear division between implementation and testing teams.

Gireendra is a Mechanical engineer from the Indian Institute of Technology, Mumbai, India (1987) and University of South Carolina, USA, (1989).

Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, today announced the results of the second annual Capgemini Executive Outsourcing Survey, which found that Latin America is the third most popular outsourcing destination, with 25 percent of responding companies currently outsourcing to this region. While still perceived by many respondents to be an “emerging” outsourcing destination, this survey revealed that Latin America is not far behind legacy outsourcing destination China, which is ranked second at 27 percent, while India leads with 60 percent of companies outsourcing to this country.

The survey, commissioned by Capgemini and conducted online by Harris Interactive, among 300 senior executives at Fortune 1000 companies also identified the top reasons for executives to select Latin America as part of their outsourcing strategy. More than two-thirds (69 percent) of surveyed executives cited cost of labour as the top reason why their company might outsource to Latin America, while other attributes reported included technology and infrastructure capabilities (49 percent), skilled labor (48 percent), and economic stability (44 percent). These attributes are aligned with the key reasons why companies choose to outsource in general suggesting that outsourcing to Latin America will continue to expand.

Other reasons cited as important for selecting Latin America for outsourcing include its proximity to the U.S., time zone alignment and accent neutrality. These attributes are all unique to this region when compared to other outsourcing locations such as China and India.

The Executive Outsourcing Survey findings also revealed that almost half (45 percent) of executives who do not currently outsource to Latin America say their company would be interested in considering the region as a resource for outsourcing in the future.

In addition to uncovering Latin America as a leading outsourcing destination, the survey highlighted the region’s increasing value to the global economy. An overwhelming majority of executives (89 percent) believe that Latin America is an emerging market that will become increasingly important to U.S. businesses, and that there are advantages to doing business in Latin America (83 percent). Further, more than half (56 percent) of executives believe doing business in Latin America is becoming easier than doing business in other parts of the world.

“As the economy rebounds, companies are looking to use outsourcing more strategically as a tool to increase efficiency, yield significant cost savings and drive growth; this includes considering locations beyond India,” said David Poole, Vice President and Head of Americas Business Process Outsourcing, Capgemini. “The expansion of Capgemini’s outsourcing services in Latin America, and our work with Unilever, Coca-Cola Enterprises and other clients in the region underscores our understanding of our clients’ needs and ability to provide the right global delivery model for multinational businesses.”

Other survey highlights include:

The top five factors listed by executives in choosing an outsourcing destination are labor costs (79 percent), technology & infrastructure capabilities (62 percent), skilled labor (61 percent), language proficiency (49 percent) and economic stability (44 percent);

Less important factors listed by executives in choosing an outsourcing location are tax benefits (26 percent) and proximity to the U.S. (3 percent);

Forty-one percent of executives outsourcing to Latin America cited language proficiency as a key reason;

Forty percent of executives cited the average education of the Latin American workforce as a key factor in their decision to outsource in Latin America.

Capgemini’s Business Process Outsourcing organisation applies unique business insight, business intelligence tools and deep domain knowledge to help clients transform business operations. As part of its global delivery model, Capgemini has eight outsourcing centers throughout Latin America, including Argentina, Brazil, Chile and Guatemala.

For more information regarding the Capgemini Executive Outsourcing Survey and to download a summary of the results, please visit http://apps.us.capgemini.com/harrissurve y

Survey Methodology

This Executive Outsourcing Survey was conducted online within the United States by Harris Interactive on behalf of Capgemini between April 6 and April 16, 2010, among 300 senior executives at Fortune 1000 companies. Company revenue and number of employees were weighted where necessary to bring them into line with their actual proportions in the larger universe of Fortune 1000 companies.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with no response, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

The Norwegian Competition Authority has granted approval to EDB Business Partner to acquire rival ErgoGroup in a move that will have a huge impact on the IT services market in the Nordic region.

Besides consolidating EDB's position as the leading supplier in Norway, it will also leapfrog HP and Logica to become the third largest SITS provider to the Nordic region, according to the latest rankings from Pierre Audoin Consultants (PAC).

The acquisition of ErgoGroup fulfils a number of EDB's strategic aims: expanding its presence in Sweden, boosting presence in the public sector, raising its penetration of the SME market and taking it a step closer to its long-standing goal of becoming the leading Nordic SITS provider.

However, PAC believes that the new EDB ErgoGroup AS faces three big challenges. The group will be heavily reliant on Norway, the smallest Nordic SITS market with only a limited number of large client organisations. Both companies have been building their presence in the largest Nordic market, Sweden, with EDB acquiring Spring Consulting and ErgoGroup buying BEKK. A good first step for the combined group would be to look to support the Swedish operations of existing Norwegian clients.

The second challenge for EDB ErgoGroup AS must be to increase its global delivery capabilities. Local rivals such as Tieto and Logica have placed the growth of offshore resources and the industrialisation of processes at the centre of their plans. If EDB ErgoGroup wishes to remain price competitive it needs to address this issue.

The final challenge is to address the SME market. ErgoGroup has been very successful in this area, supported by a strong local presence. However, EDB has tended to focus on large enterprises. It is essential that the ErgoGroup culture is preserved through the integration, or the combined group risks alienating companies in the SME market, which is becoming an increasingly important battleground. An important factor here is that ErgoGroup MD Terje Mjøs will lead the new company which will provide a point of continuity for SMEs, for whom a local interface with suppliers is an important concern.