Industry news

There has been a flurry of major acquisitions in the technology sector in recent weeks, both in the UK and on the other side of the Atlantic. HP gazumped Dell to land storage firm 3PAR, while also bagging security companies Fortify and most recently ArcSight.

Intel, meanwhile, agreed to buy security giant McAfee, and bought Infineon’s wireless solutions business. Not to be outdone, IBM acquired both marketing software firm Unica and document and data capture specialist Datacap last month.

In the UK technology sector, this year has already beaten 2009 for takeovers, clocking up £2.9bn in deals compared with last year’s £1.1bn, according to the Financial Times.

But why are companies so keen to spend millions, and sometimes billions, on acquisitions, and why now?

Desire to acquire

Deepak Jain, senior vice president and global head of technology infrastructure services at IT services firm Wipro believes that the best time to acquire is, counter-intuitively, when you don’t need to.

“We spoke to a large financial institution that deals with mergers and acquisitions, and its view was that you should always acquire when you don’t need to,” he said. “That’s the time when you’ll pay the right price. If you’re desperate and have to push the deal through today, you’ll pay more.”

Part of the reason for the sudden glut of acquisitions could be that some organisations are suddenly finding themselves flushed with cash, following last year’s often precautionary belt-tightening.

For some organisations, acquisition is a publicly stated part of their strategy. This is certainly the case with HP, which has spent more than £5bn growing its software business in this way. According to Ian May, vice president of HP software and solutions, the software business currently earns about half of that figure per year, and the aim is to double that over the next five years, partly through further acquisitions.

So why do large organisations such as HP pursue this strategy?

“You acquire companies for three reasons,” May said. “You either want the customer base, the clever people, or the technology – or a combination of those. At the moment, there are a lot of acquisitions because people want the technology.

“Acquiring a firm for its technology is often much more cost effective than developing it in-house where the time to market would be too great and you may have missed the opportunity,” he added.

May argued that when technology was more proprietary, firms would be acquired for their customer base, as it was the only way to break into a new market since replacing a system with something entirely new was often very difficult. Today, organisations are seeking to fill the gaps in their portfolios.

Wipro’s Jain said that acquiring a company for its people, and specifically their skills, is also a valid strategy.

“We acquired cMango a few years back for its expertise in BMC software. It was the skills and knowledge base of their staff that interested us. I can build skills [in my staff], but it could take one to two years. If you want to serve your customers’ needs today, the best way is to acquire.”

Building the empire

The recent acquisitions made by major vendors such as HP, IBM and Intel also suggest that these suppliers are keen to become one-stop shops for their customers, with storage and security high on the agenda.

Amichai Shulman is CTO at Imperva, a data security firm. He explained that large infrastructure providers such as HP and IBM have realised that security needs to be integrated into their offering.

“We’re seeing companies such as HP, IBM and Intel acquiring and adding more and more security solutions into their portfolio. They understand that security is part of what makes IT tick,” he said.

However, Jain explained that it is not always necessary to acquire in order to build up your organisation’s offering.

“Look at Cisco,” he said. “The company found it better to create a new model, one of coalition rather than acquisition. Now it can offer additional services to acquire a larger customer share.”

Whatever the reason or method behind the acquisition, one area where IT leaders agree is that it greatly aids time to market.

“We have always found that our acquisitions have given us an advantage,” said Jain. “If we had tried to build the business on our own, it would have taken longer.”

Source: http://www.computing.co.uk/computing/analysis/2270048/why-companies-getting#ixzz10j4HTAhY

Suffolk County Council's decision to slash its £1.1 billion budget by 30% by outsourcing almost all its services has caused controversy, with unions warning that the plan will put a number of jobs at risk.

The decision is seen as one that could open the door for other councils to use outsourcing, turning local authorities from providers of public services, to enabling councils that commission others to carry out services.

Dave Prentis, Unison general secretary, said: ??"This is not the way to run council services. There will be no democratic accountability. It is a disgrace that the council has not asked the public, or council workers, what they think.

"Leaving vital services like child protection, home care and support for young people to the vagaries of the market is very dangerous. Services will be sold off to the lowest bidder, starting a race to the bottom. People using local services, and those working to provide them, will pay the price. ??Unison will be working with the local community to challenge these damaging plans."

But Martyn Hart, chairman of the National Outsourcing Association (NOA), said: "There are a number of reasons why councils and other public-sector bodies would wish to outsource - and it's important to note that they are not all linked to cost savings. Outsourcing can help to provide new and different skills, increase the capacity of the workforce, and help to deliver outcomes quicker and more efficiently.

"Indeed, the actual cost savings made can depend on a number of different variables, such as exactly what is being outsourced, what state the services were in before the contracts start, as well as what the council's expectations are.

"Typically, cost savings in the public sector are usually made over a longer period of time, but given a stable set of services at a reasonable pricing level there is the possibility that suppliers can provide cost savings from day one. However, it's worth pointing out that if it's a slick process already, and the public sector organisation is looking to outsource, they may not save as much, they might even consider offering it as a shared service.

"My advice for other councils looking to adopt this model would be to conduct a thorough examination of your core competencies and your ability to perform all the tasks you have. If you find that you not good at a non-core task then outsourcing is an obvious choice.

"Public-sector organisations that are interested in how others have tackled outsourcing, shared services and even in-sourcing should contact the NOA to attend our public sector austerity seminar on Thursday 30 September."

Source: http://www.hrmagazine.co.uk/channel/news/article/1030879/Suffolk-County-Councils-plan-outsource-services-dangerous-says-unions/

Sitel will provide John Lewis with technical support for all electricals customers across the UK, from its contact centre in Exeter.

The deal will mean customers will get ‘added flexibility of solving technical queries from home’ as the high street giant looks to enhance its support service.

Sitel’s Exeter centre will field phone and email support enquires from John Lewis electrical and technology customers and will provide technical support and administration.


John Lewis will benefit from a bespoke CRM system created and managed by outsourcer to centralise all new customer purchasing and after-sales information. As a result, if a customer contacts the new technical support centre or visits a John Lewis shop, the customer experience should run smoothly with staff being able to access and update on progress with any product.

Lesley Ballantyne, director of operational development, retail operations at John Lewis said: “In searching for a contact centre provider, it was critical that we find a partner that could make the John Lewis brand come to life in an outsourced environment. It was our highest priority that there be no change to the perception of customer service or brand experience despite moving the operation off-site.

“We’re confident this partnership will give greater flexibility for our customers whilst retaining our high customer service standards.”

Sitel has experience working with other international blue chip firms in the electronics market. Tim Schuh, general manager, Northern EMEA at Sitel. “We feel strongly that we can not only deliver the best possible aftercare experience to John Lewis electricals customers, but we can do so in a way that is cost productive for the company.”

Source: http://www.callcentre.co.uk/ccf-news-content/full/john-lewis-to-outsource-customer-care-with-sitel;jsessionid=32CEED8F522EE06CA84F1FF015F2A647

A county council has agreed to slash its £1.1bn budget by 30% by outsourcing almost all its services. The decision by Suffolk County Council could be seen as model for other councils to follow.

Under the New Strategic Direction almost all council services will be offloaded to social enterprises or companies over the next few years. Unions have warned the plan puts a huge number of the council's 27,000 jobs at risk. The aim is to turn the authority from one which provides public services itself, to an enabling council which commissions other to carry out the services. It could eventually see the council's workforce slimmed down to just a few hundred people who would manage the contracts.

Council leader Jeremy Pembroke said: "This decision was made with consideration to the financial deficit in the public sector and the coalition government's priority to reduce the deficit and the size of the state.

"The coalition requires lesser government and a bigger society and Suffolk County Council has responded to this change.

"Now that full council has debated the issue and agreed with the future model for the county council, we can begin to talk with the people of Suffolk so they can be involved in the shaping of services for the future."

Local councils across the country are trying to find way to save billions as part of the coalition government's drive to cut the deficit. Some councils are considering sharing services.

The plan by the Conservative-controlled county would be the first time a local authority would ended up providing virtually no services directly itself and will be watched closely by other councils looking to make savings.

The union Unison had written to every councillor asking them to think about the impact that scaling back would have on people and the services they rely on.

Unison's Steve Warner said morale was low among members working for the council and they were very concerned about the future of services in the county, particularly those affecting the very young, older people and those with learning disabilities.

He said: "Those are the services that we are worried about. We're worried that the councillors will have less control over those services and that the people of Suffolk will find that those services are less accountable to them."

Some services could be outsourced later this year with others in three phases starting in April 2011.

In a new report (India and China: which will be the outsourcing powerhouse in the 21st century?), the independent technology analyst claims that even though the industry itself continues to grow, India’s share of the market is in decline and China is already providing substantial competition as the world’s outsourcing powerhouse in terms of footprint, awareness and capability.

“Both countries are often touted as the low cost delivery location of choice, with many non-domestic vendors investing millions of dollars to set up operations in multiple locations in both countries”, said Jens Butler, Principal Analyst. “Add to this China and India’s growing influence as global centers of political and economic power, and it appears to be a two horse race to the finish”.

However, according to Ovum, each market must be considered as a delivery location on an individual contractual demand basis rather than as a broad brushstroke, as each has socio-, political- and economic-competitive and comparative advantages.

Stability and governmental influence will play a key future role, with China’s five year plans and the associated federal infrastructure investment and India’s province-led support for its home-grown free-market organisations. And the focus on such investment and direction will need to continue, as there are a host of up-and-coming alternatives to these current “magnets” of the services delivery world (such as the Philippines, South Africa and Latin America). “These locations may not compete from a pure scale perspective, but they may well continue to extract market share from both, just as China as continues to take share from India”, concludes Butler, based in Sydney.

Napatech has taken its first steps into the Indian market with a Value Added Reseller (VAR) agreement with Rahi Systems. Rahi will become the first local Indian supplier of Napatech intelligent real-time network analysis adapters for OEM customers. Napatech will be exhibiting together with Rahi Systems at Interop Mumbai 2010 from the 28th to the 30th of September.

“We are excited about the opportunities we see developing in the Indian market”, said Erik Norup, President, Napatech Inc. “India is a well established IT market with world-class players who, we believe, can benefit from Napatech’s technology. Together with Rahi Systems, we can show how cost-effective, high-performance systems can be built for high-speed network monitoring and analysis.”

Rahi Systems, which is headquartered in California, with operations in India, will provide Napatech’s range of 1G and 10G Ethernet adapters to Indian OEM customers who require a system integration partner for development of high-performance network monitoring and analysis systems and for in-line security solutions. Rahi Systems has in-depth knowledge of Napatech technology, as well as expertise in building high-performance network appliances.

“We look forward to bringing Napatech’s products and technology to the Indian market, where there is a growing appreciation for the value of network monitoring and analysis appliances as a tool in planning, managing, securing and optimizing IP networks”, said Tarun Raisoni, Founder and CEO of Rahi Systems.

Visit Napatech and Rahi Systems at Interop Mumbai 2010 at stand #59.

The Black Book of Outsourcing’s 2010 survey* results are published this month and they’ll make unhappy reading for the big name global players.

The 2010 survey, which drew on feedback from more than 6,500 outsourcing customers’ with experience of more than 30,000 services, identifies a demand and respect for niche specialist providers.

Eamonn Kennedy, research director at Datamonitor, led the research programme between April and August 2010. He said: “Whilst feedback on the big names, such as IBM and HP, has been generally positive, the companies that have excelled and delighted in the services they provide have been smaller players.”

One possible reason for this is that the nature of large scale outsourcing is more complex and therefore more predisposed to a lower level of average satisfaction.

“Smaller outsourcing providers have been pushing their specialist knowledge and deep client understanding as their unique selling point for some time now, claiming that specialists provide a better service. While all outsourcers talk up their ability to specialise, this survey suggests that smaller players are best positioned to deliver on that promise”, adds Eamonn

This is reinforced by the global top 50 list of outsourcers published by Black Book of Outsourcing. Six of the top 10 providers are either specialist legal process or financial research outsourcers. American Discovery, which comes top of the list of global outsourced service providers by company satisfaction ratings, is a provider of legal process outsourcing (LPO) providing corporations and law firms with increased quality controls and cost efficiencies.

Eamonn concludes: “The high score for customer satisfaction amongst knowledge based outsourcing providers can be attributed to the focused nature of their work and the fact that they arguably work for clients with the strictest professional requirements”

*The 2010 Black Book of Outsourcing study, focused on customer satisfaction in the global IT and business process outsourcing industry, has concluded after three months in the field.

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.”