Industry news

Public sector organisations are leading the way in outsourcing software applications and IT infrastructure to third-party providers, but cost savings are not always the biggest draw.

The Nursing and Midwifery Council (NMC) announced last week that it will outsource its core applications and IT infrastructure to Business Systems Group (BSG) in a deal worth £5.2m over five years.

Elsewhere, Bridgend County Borough Council has renegotiated a deal to host its COA Solutions e5 financial accounting system with hosting company 2e2, saving an estimated £488,000 over the course of the five-year agreement. But this was compared with the cost of the previous outsourcing contract, rather than in-house provision.

The NMC had a large outsourcing contract with EDS, which ended in 2002, but has kept applications and services in-house since then. It will move 50 servers from one of its own datacentres into a BSG facility also in London, as well as the storage area network and all the applications those servers host. The NMC will keep a separate datacentre operational for disaster recovery purposes.

Jolyon Ingham, interim head of ICT for NMC, said actual cost savings compared with in-house provision were negligible – it was the attraction of moving responsibility for IT provision and disaster recovery to a third party, leaving the NMC to focus on providing core services, that won the argument.

“Cost savings are pretty cost neutral. We had a small team of four guys that has been transferred to BSG. But we also used consultants and contractors and it had become very expensive to continue to manage the infrastructure ourselves,” he said.

“When we come to refresh the hardware in two to three years’ time, we will look to buy services rather than make a capital [infrastructure] investment. Infrastructure is more of a commodity these days, and we recognise this.”

All NMC’s software apps will be hosted by BSG, including its OpenAccounts fin ancial management system. The deal also covers systems monitoring and technical design services provided by BSG, as well as support for the NMC’s Exchange email system, its Cisco CallManager IP telephony system and, later, Citrix desktops after a scheduled move to thin client PCs as part of the agreement.

“Being a public body, we are subject to the Data Protection Act (DPA) and so data confidentiality forms a large part of the BSG contract,” he added.

Bridgend County Borough Council is also required to store its data in the UK to comply with DPA and privacy regulations, although it is not subject to Financial Services Authority rules. All its accounting and general purchase ledger information will reside on 2e2 servers going forward.

Although it has had a similar outsourcing agreement with 2e2 going back to 2002, it has recently switched platforms.

“We have been using COA Solutions e5 financial accounting system for a long time now, but this is a move to a completely new delivery platform from the old Unix-based one,” said Steve Durbin, Bridgend council’s group manager for applications delivery.

The e5 software is delivered to up to 300 users who regularly log in and download changes to the Java-based application, which is cached on local PCs. Legacy users of other systems will be brought on board over the next 12 months, as well as users of the council’s purchasing system.

While cost savings played their part in the decision to retain 2e2 during the tender process, Durbin revealed it would still have been cheaper to opt for in-house software provision. Rather, it is the flexibility, reduced management overhead and ease of future scalability that swung the argument, with 2e2 going the extra distance to retain the business.

“They [2e2] would have cost a little more than an in-sourcing solution, [but] it saves us all the hard work and means the accounting department is given a fixed cost for IT,” he said.

Research company Gartner has estimated that the value of enterprise software delivered globally via the software-as-a-service model will exceed $8.5bn (£5.5bn) in 2010, a 14.1 per cent increase over 2009, as a broader range of applications and Web 2.0 integration prove more tempting.

Bridgend is currently considering switching other in-house applications and services to a hosted model, most notably security and threat management.

Source: http://www.computing.co.uk/computing/analysis/2269289/why-outsourcing-worth-cost#ixzz0z1G23inx

The Indian IT sector on Wednesday termed the Ohio state’s bill to ban outsourcing of its IT projects discriminative and counter-productive to the US government thrust on reducing public deficit.

“Ohio’s ban on outsourcing can only be viewed as counter-productive to the US government thrust on reducing public deficit and possibly lead to an increased tax burden on its citizens,” the industry’s representative body Nasscom said in a statement.

Noting that the move came at a time when the November elections to the US Congress and Ohio governorship were drawing closer, Nasscom president Som Mittal said that more such electoral rhetoric could be expected in the next few months.

“We are taking up the issue with the US officials concerned later this month. We will also seek the support of the union minister for Industry and Commerce Anand Sharma, who will be in the US at the same time,” Mittal said.

Endorsing Nasscom’s stand against the controversial move, Indian IT bellwether Infosys Technologies expressed concern at the banning of offshoring of IT services by the Ohio government.

“We are concerned with the news from the US over banning offshore outsourcing by the Ohio government departments,” Infosys chief executive Kris Gopalakrishnan said in a statement here.

The company, however, hoped that its initiative in the public services sector would not be affected as it is focused on creating a domestic delivery centre in the US.

“Though the public sector in the US represents a small fraction in the overall demand for off-shored services, it is focus areas in the future for the Indian IT industry, as governments world over are seeing the benefits of employing IT in public services,” Mittal asserted.

Nasscom is also studying the legality of such a bill being passed by the Ohio state government though international trade is a federal subject.

“It is imperative that the focus on free trade remains strong, but instances like Republican senator Schumer’s Borders Security Bill and the Ohio state ban on outsourcing only reinforce our stand on discrimination,” Mittal pointed out.

Since India was opening up not only in IT, but also in other areas for global firms, Nasscom has decided to work with key stakeholders to minimise the impact of such discrimination by highlighting the benefits of IT with international governments.

Source:http://smetimes.tradeindia.com/smetimes/news/industry/2010/Sep/09/it-sector-terms-ohio-s-outsourcing-ban-discriminative61987.html

BPO services provider Firstsource Solutions Ltd said it signed a five-year outsourcing agreement with Axis Bank Ltd.

Firstsource, as a part of the agreement, will offer customer contact services (voice, email & web chat) to retail customers of Axis Bank.

Services to Axis Bank retail customers will be across the fixed, savings and current account category while credit card services will be to its platinum, corporate, regular and travel card customers.

Firstsource will provide these services from its centres in Mumbai and Chennai in 11 Indian languages. Firstsource currently derives 24% of its revenues from the banking, financial services and insurance (BFSI) vertical, said the company in a statement.

On Tuesday, Firstsource shares declined 0.9% to Rs26, while Axis Bank shares rose 0.2% to Rs1,398 on the Bombay Stock Exchange. The benchmark Sensex gained 0.5% to 18,645 points.

Source:-http://www.moneylife.in/article/8/8926.html

Mahindra Satyam has launched a single-window ‘Art-to-Part’ engagement model for partners in Aerospace and Defence. This 3600 partnership model covers both design and manufacturing areas to provide a seamless engagement experience for partners, covering the complete product development lifecycle including after-market services.

The new proposition leverages synergies within the Mahindra Group, drawing on the skill sets and experience from Mahindra Aerospace and Mahindra Defence, which specialise in aerospace manufacturing and defence systems. Mahindra Satyam, which works with 5 of the top 8 global Aerospace and defense organisations, provides end-to-end product engineering capability, covering aero-structures, avionics, wiring design, systems design, manufacturing engineering and consortium-led manufacturing projects, for both civil and military sectors.

Mahindra Satyam’s single ‘interface’ model provides a continuity of service to minimise recurring costs, improve time to market, and maintain research and development at reduced costs and reduced risk. The business model is built around creating significant value for partners by taking end-to-end responsibility of mission critical systems and sub-systems. This not only provides cost and time-based arbitrage but also means that Mahindra Satyam will share the ‘risk’ with its partners.

Gaurav Gupta, Associate Vice President Strategic Partnerships, Aerospace and Defence said: “Clients in this market sector increasingly require partners which can deliver an entire solution as opposed to a particular, discrete service. Mahindra Satyam can draw upon a wealth of expertise from within the Mahindra Group in this sector to offer a complete 3600 relationship. We are creating various Centres of Excellence, not just in Aerospace, but also in Defence including Land and Air. This market looks set to boom in the next two to five years with India predicted to spend Billions both on ‘Buy’ and ‘Make’ programmes. We also created the ‘Technology Advisory Council’ for Aerospace and Defence, A&D, constituted by key recognised leaders from the A&D industry, Academia and Mahindra Satyam, which is a unique step towards creating technology-based innovation, developing new engineering and design talent, and building a blueprint for tomorrow.”

He continues: “As a large scale integrator we will support our global partners in developing their commercial interests in India, as a home market. Our ability to impact costs for both recurring and non-recurring parts of a programme enables our partners to fulfil their offset obligations more effectively. Our aim over the next 12 months is to build on our existing relationships, and create new partnership opportunities through our ecosystem for design and consortium based manufacturing. Of course, risk arbitration will drive innovative commercial modelling in this sector and is the key to building large, strategic partnerships.”

Chancellor George Osborne’s predicted cuts of 25% in Public Sector expenditure will have huge impact on all of the UK’s businesses - many of which count the Public Sector as a major client. As they all wait in trepidation for the 1st October announcement when swingeing cuts – predicted to be the biggest in a generation - are expected to be announced, there is re-focus on how to lessen the impact by increasing efficiencies and reducing costs still further.

In a week where another catastrophic IT disaster hit the headlines (the Tax Office this time) costing six million taxpayers hundreds, and the government itself, billions of pounds, critics argue that it is time for the government to seriously revise its IT tendering system to prevent a catalogue of IT failures and non-delivery. The current system is weighted towards large IT companies (Tier I) who charge a premium for their services because of their recognised names. It is clear the Government needs to focus on credited Tier II suppliers who are viable and offer better value for money, saving millions in the process, while the savings can be used to bolster front line services.

Chris Papa managing director for communications specialist company Qubic said, “Tax payers deserve a better deal than the millions they are paying for successive over runs, over budgets and disasters that occur on a regular basis. Historically, the bigger suppliers have taken the lion’s share of Public Sector contracts partly because of the tendering requirements, and partly because of the fear factor as there existed a perception that ‘bigger’ provided a measure of security. However over the years there have been some very high profile failures and there has been a lot of publicity where suppliers have been taken to court because of failure to deliver on time and on budget.”

He continued, “In today’s tough economic environment smaller companies and Cloud computing have driven wholesale change, and as public sector departments look for specialisation as well as savings, this has opened the door to smaller suppliers which typically are specialists, can move fast and have a more favourable price strategy – a now critical consideration.”

One Public Sector department which has seen the benefits of new technology provided by a smaller supplier is the Ashmolean Museum in Oxford which has used PC Power Down technology from the Qubic Group to reduce the costs of running its 200 workstations needed to meet the increasing number of public-facing ICT initiatives (eg gallery touch screens), needs of staff and academic researchers.

Dr Jonathan Moffett of the Ashmolean Museum said, “Computers were frequently left on day and night and even over the weekends and understanding that a single PC can waste as much as £50 per year and be responsible for a quarter tonne of C02 if left on is quite shocking. Typically in an educational establishment or public space it is often unclear who should be switching off equipment and we needed something that would address this issue.”

While this year’s research from Gartner predicts that the widespread adoption of Cloud computing is now here, more forward-thinking companies are looking at the next generation of Cloud computing which takes a more holistic approach to all IT and communications factors and promises to supply further increases in efficiencies and cost savings through the true integration of computers and telephony, enhancing collaboration and communication and providing savings in time, effort and costs.

Cloud computing has barely permeated the consciousness of the business world when the next development in this technology is making waves. Cloud technology has gained wide spread adoption over the past year as the recession has caused pressure on businesses to cut costs and seek greater efficiencies in an effort to remain competitive. Additionally, the impact caused by the way Cloud computing is paid for has turned the IT industry on its head and changed IT expenditure from a CAPEX to an OPEX cost, a factor highly attractive while the banks continue to resist all attempts to increase lending to businesses and debt finance is tough to obtain.

This should not come as a surprise to government officials as the 2004 Gershon Report*, which warned of the needs for savage cuts, sounded warning bells years ago - which apparently fell on deaf ears. It highlighted that radical changes were needed, and was focussed on achieving greater efficiency across the whole of the Public Sector in a continuous drive for improved public service delivery.

More than half of European organisations plan to increase their use of outsourcing this year, according to Gartner, even though overall spending may not rise.The analyst group found 53 percent of organisations said they would outsource more in 2010, with 40 percent of organisations planning to boost spending on external IT services.

There is a growing trend for some organisations to outsource the majority of their IT, a Gartner survey revealed.

The percentage of organisations spending 50 percent to more than 75 percent of their IT spending on external service providers is on the rise, the analyst house noted.

“However, the results also showed that the pressure on capital and IT operating expenditure is still strong, and European organisations expect providers to deliver further cost reductions,” said Claudio Da Rold, vice president and analyst at Gartner.

“Although 40 percent of respondents said that they will increase the external share of their budget, only 24 percent said that they will increase the budget for providers, and almost a quarter of organisations still expect that their IT services budget will continue to decrease in 2010.”

Gartner has found evidence that outsourcing is increasingly attractive to smaller organisations. It found that almost 15 percent of organisations with IT budgets of less than €1 million (£830,000) expressed interest in outsourcing, up from barely six percent in 2009.

"Organisations can see that managed services and cloud computing financial models allow them to achieve their goals whilst reducing capital expenditure, said Nathan Marke, CTO of IT services company 2e2.

He highlighted the way infrastructure as a service and platform as a service offerings could allow organisations to re-platform legacy applications and sweat their assets for longer.

However, Gartner suggested that after several years of rapidly increasing interest in software as a service (SaaS), cloud computing and infrastructure utility (IU) delivery models, demand for these “industrialised services” delivery models may have peaked.

Gartner found cost control is the major consideration in outsourcing decisions but end users also increasingly require access to resources and capabilities, flexibility and scalability. “This more complex set of business requirements is not easy to address," said Da Rold.

An online survey was conducted among 206 organisations in Europe during in the first quarter of 2010. The survey was directed at individuals who were involved in decision making on outsourcing and IT services in 2010.

Source: ComputerWorldUK

IT services company Atos Origin, has set up offices in Egypt and the Gulf Cooperation Council countries, in order to best serve its customers and to take into account cultural and geographical differences.

The company said that having operations in the area will enable them to capitalise on the predicted growth in IT investment over the next few years in the region.

Atos Origin has appointed Samir El Awadi CEO for the region, who will report to Francis Meston, executive vice president for Systems integration.

Prior to this appointment Samir, 55, has held a number of senior positions in Atos Origin.

Most recently, he was vice president for Sales at Atos Origin in the Netherlands.

Other roles include: sector director for the Pharma & Healthcare market; global account director for Akzo Nobel and senior management consultant for the Philips global account.

He is a member of the board of the Dutch/Egyptian business and diplomatic community; a member of the jury board of the International Sales Management Association in the Netherlands; a member of the advisory board of Vacansoleil international cycling team and a former commercial director of the year (2008).

Atos Origin senior executive vice president Charles Dehelly said that the company has an ambitious growth plan and setting up operations in Egypt and the Gulf Cooperation Council countries is a clear example.

"Samir's international sales experience and his extensive political and cultural knowledge of the region and its markets will be a considerable asset to accelerate growth in this strategic and growing market," Dehelly said.

A start-up company founded and funded by ex-Staffware CTO and board member Jon Pyke will officially launch tomorrow, promising to help companies migrate IBM Lotus Notes and other applications to the cloud, CBR has learned.

The firm's technology promises to enable companies to automatically migrate their Lotus Notes databases and collaboration processes into more generic processes hosted in the cloud, in a common format that could be hosted on the likes of Amazon, Google or salesforce.com's cloud platforms, Pyke told CBR ahead of the firm's launch tomorrow.

The name CIMtrek was inspired by the tag-line 'Collaborate in Motion'.

Pyke, who left Staffware after it was sold to Tibco and went on to start business process management (BPM) cloud firm The Process Factory and then worked at Cordys as chief strategy officer, believes the firm could tap into a huge market of installed Lotus users who are looking for a roadmap that takes them into the cloud - and potentially away from the IBM Lotus maintenance contract.

"The Process Factory idea was sound but is not quite what the world needs most urgently," Pyke told CBR. "Lotus Notes gave people an environment where they could share information, process workflows, build applications and collaborate, but there's nowhere for those users to go to get to the 21st Century. If anybody is going to seize the desktop it will have to offer an alternative to Notes."

"There are 160 million IBM Lotus users worldwide, and at least 6,000 Lotus Notes customers in the UK," Pyke said. "This is a massive opportunity for CIMtrek and for companies looking to migrate from Notes."

The CIMtrek application, developed by a team of developers working for Pyke in the UK, will identify business processes and data dependencies in existing Lotus Notes installations. Using a proprietary schema, based on the XML standard, it will then transpose those process flows and dependencies to a hosted platform, such as Amazon, Azure or Google.

The CIMtrek tool will start by discovering what Notes users are actually using the tool for in the enterprise, then go through an analysis and categorisation phase before enabling migration to another platform. It is able to take the key ingredients of an existing IBM Lotus Notes installation and 'squirt' that in an XML-like format to another platform that is hosted. "It will save 70- to 80% of the existing cost of maintenance just by doing that," Pyke claimed.

Finally, the technology enables up to all of those previous functions that were handled in a client-server Lotus Notes environment to be developed and executed in the cloud, in the CIMtrek execution environment.

Pyke suggested that the technology will be offered on a subscription basis according to the number of clients being migrated and the complexity of the discovery phase. While the company plans to start with the migration of IBM Lotus Notes users, Pyke said that there is no technical reason the same technology could not be used to help migrate the likes of Microsoft's Groupwise or SharePoint, Siebel CRM applications and more.

The government has received a mixed response to cost-cutting demands from its top IT suppliers, but is on track to make hundreds of millions of initial savings.

In July government Minister Francis Maude conducted the first of a series of meetings with the CEOs of the government's top IT suppliers (see panel below) to discuss ways of cutting costs. He later met them individually.

Reports this week said the government is to make £800m savings as a result of the talks. Although the Cabinet Office said this figure did not come from the government - which has not completed the negotiation process - it said it would soon announce a figure.

"The savings will run into the hundreds of millions but it is too early to say," said a Cabinet Office spokeswoman.

A source close to the negotiations between the government and its main IT suppliers has revealed a mixed response from suppliers.

He said suppliers offering IT standardisation to remove costs, and asking the government to make it easier to deal with them, are getting a positive response. But some suppliers are offering price reductions in return for contract extensions. These are going down less well, he added.

"Those that talk in the language of standardisation and the removal of hurdles dealing with government are going down better," he said. "Suppliers offering small savings like price reductions are the ones that have gone down badly."

If suppliers are to meet tough government targets for cuts in contract costs, there will need to be a sea change. Standardisation of technology across departments will give suppliers confidence to invest in cost-cutting technology, in the knowledge they can win multiple clients across the public sector.

To make this work, government would have to endorse a central figure to authorise departments to invest in chosen technologies, rather than the current federated decision-making that goes on across government. Currently each department or organisation will demand different contracts and services when most processes are actually the same. This figure could be someone like government CIO John Suffolk or former government CIO and Accenture UK managing director Ian Watmore, who is now chief operating officer of the efficiency and reform group.

The CIO is ideally positioned to set out a government-wide IT standardisation strategy and drive its adoption. But the role needs to be given more authority to enforce change.

Lee Ayling, managing director at sourcing consultancy Equaterra, said the government needs to do things differently if is to make real savings. "The key thing is about the sustainability of taking costs out. If you just reduce prices costs will creep in down the line."

He said standardisation and more centralised decision making are the way forward. "I am constantly surprised when advising different government departments because they buy different IT when there is so much commonality," he added.

But he warned that attempts to centralise decision-making in the past have been ineffective.

If the government cannot put in place control from the centre, it will struggle to get departments to buy in. For example, a recent Audit Commission report revealed that, despite the availability of shared services platforms and cloud computing, only about 25% of chief constables believe any more savings can be made in the back office.

The report said that police forces need to do more. "A lack of ambition for back-office savings is a barrier to achieving value for money," it said.

Each police authority traditionally has its own back-office processes such as HR and payroll. This means there is significant overlap across police authorities. There are 23,100 staff involved with the back office at the 40-plus police forces in England and Wales.

Suppliers such as Capgemini and Steria have created platforms to enable different police authorities to share back-office functions. Cleveland Police Authority recently became the first customer of Steria's shared service for police forces. It promises £50m savings over 10 years for Cleveland Police alone. As more authorities join the savings will get bigger.

Sam Kingston UK head at T-Systems said if there is no central control and standardisation "the technology map could be a mile wide and an inch thick," will causes cost and management problems.

Source: ComputerWeekly.com

Councils have saved £230m by using the latest technology to better manage services, according to a report from the Local Government Association.

Town halls are using mobile, web-mapping and satellite technology to make refuse collection more efficient, tell people at bus stops where the next bus is and when it will arrive, and keep them informed about roadworks and planning applications.

Recent innovations also include iPhone applications that allow citizens to point their phone at a pub, restaurant or take-away and receive its hygiene rating.

There are also apps that enable citizens to send photographs of fly-tipping and vandalism, enabling councils to deal with it quickly.

Councillor David Parsons, chairman of the Local Government Association’s Improvement Board, said in the report: “Whether it’s bin men working more efficiently, fewer phone calls to inquiry centres or reducing parking ticket machine maintenance costs, making the most of modern technology and data sharing has resulted in huge cash savings across the country.

“It is estimated such technology and information sharing could potentially save councils up to £372m by 2014/15,” he said.

Examples of applications cited by the LGA as delivering cost savings and softer benefits include:

• A free iPod app from Derbyshire Dales, Telford and Wrekin and Huntingdonshire District and Merton councils that checks an eatery’s food hygiene rating, from zero to five stars, as ruled by council environmental health officers.

• Gloucestershire County Council released an iPhone app last year that allows car owners to chose when and where they want to park and to pay for a ticket remotely. The new, solar-powered pay machines also alert staff if there’s a fault, reducing maintenance costs.

• Lancashire County Council launched an app for people to send it photographs of bus shelter vandalism, while Lewisham Council has a similar program relating to fly-tipping that runs on iPhone, BlackBerry, Windows Phone and Android.

• Bus users in Blackburn can now receive up-to-the minute information on the whereabouts of buses following the launch of a pilot project by Blackburn with Darwen Council. The system, which runs on solar power and utilises satellite technology, gives out real time information, on screen and audio, on a specific service at various bus stops.

• South Tyneside Council used location-based information to create the 'My South Tyneside' web page. It includes a property search facility for finding schools, libraries and other local facilities, and an email alert about local news, community events, how residents can get involved and changes like planning applications and road works.

• Daventry District Council used location-based technology to improve refuse collection routes through better planning. This resulted in £223,000 savings from reduced mileage, less overtime, smaller vehicles and fewer rounds.

• Nottingham City Council, working with the local NHS, police, districts and the county council has created an online Local Information System providing access to comprehensive, up-to-date information related to local neighbourhoods, which staff both inside and outside the participating organisations can use to quickly find information they require. The council estimates that it saves up to £460,000 a year.

Source: Computing.co.uk