Industry news

These are some of the findings from From Cost to Value, a report published by KPMG International.

The report, which surveyed 450 CIOs suggests that the new, post credit crisis, CIO agenda is dominated by securing value for money but that it also wants to focus on using IT to help transform the business in terms of innovation and productivity.

Outsourcing as a whole appears to have fallen some way from the top of the CIO agenda suggesting outsourcing is just business as usual to a typical CIO.

Other findings revealed that in the move towards a value-driven agenda, 81% of respondents feel that getting value from their IT must be their top priority.

Cost optimisation trailed in a distant second (58%), but ahead of portfolio management (51%) – although it could be argued that both of these could be seen as sub-sets of the overall theme of extracting value from IT investments.

Similarly, the survey found that while in a hangover from the recession, financial sector CIOs are still heavily focused on operational IT concerns while manufacturing CIOs are looking towards innovation and transformation.

Consulting, technology and outsourcing services specialist Capgemini, has acquired Strategic Systems Solutions (SSS), a global IT services and business process outsourcing firm (BPO) focused on the financial services industry.

This acquisition is set to strengthen Capgemini’s capabilities and presence in the capital markets, while expanding its client base to comprise some of the largest and better recognised financial institutions in the world.

In addition this acquisition will provide Capgemini added strength in the Asia-Pacific region with IT and BPO platforms in China and the Philippines and will reinforce its presence in Singapore.

Prior to the completion of this acquisition, Capgemini owned 49% of SSS, and now Capgemini will fully integrate SSS with its existing capital markets unit in the Financial Services Global Business Unit.

Founded in 1995 and headquartered in the UK, SSS employs 670 professionals across the United Kingdom, United States, Singapore, China and the Philippines.

Global telco Ericsson has signed a five-year agreement with Tata Consultancy Services (TCS) to deliver application maintenance and development services for Ericsson’s internal IT operations.

TCS will offer the IT enabled services through its global network delivery model GNDMTM, a single global service standard, which is recognised as the benchmark of excellence in software development.

TCS has been investing heavily in localising its Nordic operations, expanding its services portfolio and aggressively adding new clients.

Indeed, this is the second time this week TCS is awarded an outsourcing contract by a Nordic company.

Earlier this week Telenor announced it had selected TCS and Capgemini for the modernisation of its IT application portfolio; a project worth between NOK 400-500m (€50-63m).

Outsourcing specialist Cognizant has acquired Galileo Performance, a Paris-based provider of information technology (IT) testing consulting services.

Galileo will expand and complement Cognizant’s fast-growing global testing practice, currently among the world’s largest with more than 10,000 testing professionals, while strengthening Cognizant’s existing business presence in France.

The company supports French companies in the optimisation and extension of business performance through IT system measurement, management and testing.

Outsourced testing services have been growing significantly, not only for their value in lowering the cost of quality assurance and software maintenance, but also for ensuring tighter alignment of IT with business objectives, greater operational effectiveness, and improved governance and risk mitigation.

Media reports have indicated that several private equity firms are in the run for a minority stake in Dubai’s payment processing business Network International, owned by local bank Emirates NBD.

Bids have been tendered by TPG, Abraaj Capital, the Emirates Investment Authority and Silverlake and are now being considered by the bank, which is thought to be looking for between $1bn and $1.5bn.

Royal Bank of Scotland’s (RBS) payment processing business, WorldPay has also elicited the attention of buyout houses.

TPG and Clayton, Dublier & Rice were said to have attempted to place a joint bid, however failure to agree on it has left the Advent International and Bain consortium as top runner for the deal, which is expected to reach a hefty £2.5bn price tag.

The majority of companies (60%) around the world are hosting up to 50% of their applications in a cloud environment, according to the 2010-2011 World Quality Report, produced as part of ongoing collaboration between Capgemini Group and HP Software & Solutions.

Along with an increase in applications deployed in the cloud, organisations are also deploying agile IT delivery in their applications and infrastructure as they look to streamline operations.

The report also reveals the effects of the economic downturn on enterprise software development and quality assurance.

It finds that new projects are being initiated but IT investments are shifting from a daily operational focus towards building new applications that bring competitive advantage for business.

The shift has seen both developers and testers come under increased pressure to provide greater efficiency, more consistent quality assurance methodology and better reuse of automated software.

Organisations are increasingly turning to agile and cloud based delivery methods to modernise their applications.

Benefits cited include cost reduction (50%), increased agility (33%) and improved time to market (14%) for cloud computing. Time to market (37%), quality of application (26%), resource utilisation (23%) and cost savings (14%) were cited as the main benefits of agile IT delivery.

As requirements for IT delivery change, the report finds that the requirements for future quality assurance engineers are changing as well.

Testers of tomorrow will work in smaller teams that are expected to deliver executable code within 4 to 6 weeks. Tight deadlines and smaller teams are likely to lead to a future where members of quality assurance teams will possess robust quality assurance (31%) and business domain (22%) skills, database knowledge (14%) and scripting skills (10%).

Norway’s telco Telenor has awarader Tata Consultancy Services (TCS) a multi-year outsourcing contract beating EDB and Accenture.

The contract comprises application maintenance and development services and will involve a modernization of Telenor’s application portfolio across its OSS, fixed, mobile, data warehouse and accounting system domains.

This second generation outsourcing initiative will allow Telenor to improve its operational efficiency, refresh its IT stack and will become more agile to respond to its customers changing needs.

The centre will be located in Kyiv, adding to those already established in Singapore and Prague.

EPAM Systems, one of the largest software engineering services providers in Eastern Europe, will build and operate Ukraine's most advanced and secure IT facility, with a team of up to 500 IT professionals in Kyiv by the end of 2012.

The investment will enable BarCap to further diversify its workforce locations allowing the firm to grow globally by 800 IT professionals this year alone with continued growth anticipated over the coming years.

Through EPAM, Barclays Capital will make an initial capital investment of more than US$2m in the highest standard of technology infrastructure from Hewlett Packard, Cisco and Microsoft among others.

Logica will provide a Cloud and green IT based solution allowing Skandia’s IT systems to adapt to changes in business demands.

The private cloud based Infrastructure Management (IM) project contract will run over three years, with the option of a two-year extension.

The Infrastructure management (IM) outsourcing solution consists of services that include clustered data-centers and maintenance of 950 servers including a 24/7 Remote Infrastructure Management service.

Skandia Informationsteknologi is a company within the Skandia group that provides IM related services and application management for the entire group.

With the Logica solution, Skandia Informationsteknologi will better its service with an improvement in overall efficiency and effectiveness.

The solution that provides capacity on demand (COD), a purchasing option allowing companies to receive equipment with more computer processing, storage, or other capacity than the company needs at the time of purchase, and has that extra capacity remain unused and unpaid for until the company actually requires it.

It will also enhance Skandia’s position as an environmentally aware company by delivering a significant green IT result.

The police and shared services are not words often seen together in the same sentence, but Cleveland police authority has just announced a £175m shared services contract with Steria – beating off rivals CapGemini and Reliance.

The deal covers the police control room, community justice, and other back-office functions and aims to deliver £50m in cash savings over the life of the 10-year contract.

There has been some shared service activity in various police authorities before, but it’s mainly confined to the sharing of procurement with local councils or back office functions such as human resources. This deal is interesting because it’s the actual control room that is being taken over by a private contractor.

And though some purists might argue that uniformed officers should control a police control room, there are many who now argue that the police should be focused on making a difference in the community – the office-based tasks are better served by a specialist contractor. The kind of services being taken on by Steria in Cleveland include call handling, support for the preparation of criminal case files, and shared business services covering finance, HR, payroll, commissioning and fleet management. It’s a comprehensive outsource of non-core activities allowing the bobbies to get back on the beat.

Steria will be moving into the control room at Cleveland police headquarters. There is no question of tasks being remotely outsourced to a remote location. Chairman of Cleveland Police Authority, David McCluckie said: “It is important to stress that this is a genuine partnership - Steria will work with us in providing services, but the control of responding to calls from the public will remain firmly with the Force - and the control room will remain at our Force headquarters.”

Naturally Steria are pleased with the deal. It confirms their status as a key player in the British public sector, with five years experience now of partnering with the Department of Health to deliver NHS back-office services. John Torrie, CEO of Steria UK, commented: “We feel proud to have been selected by Cleveland Police and we are looking forward to working in a true partnership with them to deliver ever better services to the citizens of Cleveland”.

Why is this deal important? It shows that the British police are ready to modernise and explore shared services in a way that allows them to reduce costs to the taxpayer and also improve policing services. The public doesn’t want uniformed officers shuffling paper in Force headquarters so this is the kind of outsourcing that not only helps the client, but should be popular with the public too.

As the ConDem coalition seeks to make further cuts in the public sector, this kind of deal should be where the politicians look for inspiration. Many British police forces are ripe for modernisation and if a deal like this can be hammered out in Cleveland with a demonstrable saving of £50m in cash and an improvement in public service then it won’t be long before others are looking at this as an example of best practice in sourcing and shared services.

Mark Kobayashi-Hillary is Offshoring Director at the National Outsourcing Association.

www.noa.co.uk

www.markhillary.com