Industry news

In the race to deliver 'green outsourcing', are providers doing enough show customers robust evidence of their green credentials? The answer, according to the 2009 Green Outsourcing Survey from Black Book Research, is a resounding 'No'.

"The outsourcing industry is saturated with "green speak", of which the majority is deemed [to be] just hype by user CIOs and vendor sales people," say the report's authors. "Both vendors and users continue in a stage of confusion about where and when they should invest their time and money."

One metric that is starting to play a part in discussions between providers and prospective customers is Power Usage Effectiveness (PUE). First proposed by The Green Grid, an industry forum of IT vendors and end-user customers, back in 2007, PUE is today a widely accepted form of measuring data-centre efficiency. In April 2010, it was announced that government agencies in the US, Europe and Japan are all planning to adopt and use PUE.

A PUE calculation analyses the relationship between 'Total Facility Power' (TFP) and 'IT Equipment Power' (IEP). By dividing TFP (the energy consumed by power components, cooling elements and other infrastructure such as lighting) by IEP (the energy that powers servers, storage devices and networking equipment), IT teams arrive at their facility's PUE score. A PUE score of 3, for example, indicates that data centre energy consumption is three times greater than the energy necessary to power its IT equipment. Ideally, PUE should be less than 2 to 1; the closer to 1 to 1, the better.

PUE is a useful benchmarking tool for measuring and monitoring efficiency improvements in an individual facility, says Andy Hayes, sales manager at Keysource, a company that designs and builds new, energy-efficient data centres and improves existing ones to optimise their energy consumption. Energy assessments, based on calculating PUE, have played an increasingly important part in engagements in recent years, he says, as the cost of electricity has risen. In a recent project for Yorkshire Water, for example, Keysource calculated the PUE score for the company's facility to be 2.3. In other words, only 43 percent of the total facility power was being used to power IT equipment. After incorporating Keysource's recommendations for better cooling and airflow management, the PUE score had improved to 1.7 - meaning that 59 percent of TFP is now consumed by IT. That improvement in PUE score also resulted in a potential annual saving of up to £70,000 per year.

But PUE is far from ideal as a means for outsourcing customers to compare one data centre facility to another, says Daniel Lowe, managing director of managed hosting company UKSolutions. "A highly available infrastructure is typically going to have a poorer PUE because of the overheads involved in building in resilience, but that supplier may offer better uptime guarantees to its customers," he argues. That's not to say that UKSOlutions isn't interested in making its facilities as energy-efficient as possible - the company has already done much work on cold-aisle containment, using blanking panels to fill gaps between machines, and repositioning cables to keep them cool, he says. But he just doesn't see PUE scores as an effective way for the company to market itself as 'green'.

Perhaps a more blended approach is needed? Glenn Fitzgerald, lead architect and data centre expert at Fujitsu, certainly thinks so. Fitzgerald was a key figure in the development, design and building of a new Fujitsu data centre, London North, which opened in 2008 in Stevenage. Its PUE rating is 1.6 when fully loaded compared, but it is also the first in Europe to be independently certified to the Uptime Institute's international Tier III standard, which measures availability as well. "Resilience and energy efficiency are equally important dimensions of data-centre quality for our customers, which is why we ensure we can provide good measurements in both areas," says Fitzgerald. Once London North reaches its full capacity, he says, Fujitsu is planning a new data centre that uses wind and wave power alongside National Grid power.

Even representatives of the Green Grid advise against relying on PUE as a means to compare the efficiency of one data-centre facililty against that of another. "It's a relational metric," explains Vic Smith, chairman of the Green Grid's EMEA Technical Working Group. "It provides a way for companies to measure their own progress in using energy more efficiently, to map their journey between a PUE of X to a PUE of Y, but not to compare facilities. That's not how it was ever intended to be used."

Sourcingfocus.com's advice to would-be outsourcing clients? Ask your IT outsourcing provider about what PUE score they achieve in their data centre facilities - it can't hurt and it will show them that you're in touch with Green IT issues. Ask them what measures they've taken to improve their score and the results they've seen as a result.

But also ask them for stats on reliability and availability, too. After all, few companies are so environmentally-friendly that they're ready to sacrifice the resilience of vital business processes on the altar of meeting carbon reduction targets.

Most organisations today are pretty aware of the problem of 'e-waste'. Dealing with it in a responsible manner is high on their list of corporate social responsibility (CSR) objectives. And for many organisations, the best way to do this is to outsource the process to professional, third-party specialists who will wipe any data held on equipment, prepare the kit for reuse elsewhere or strip it down for recycling.

But how do you know these companies will do what they promise with your old computer equipment? How do you know that they won't just tip your unwanted PCs into a shipping container and sell it abroad to the highest bidder?

That may sound far-fetched - but according to Tony Roberts, CEO of Computer Aid International, a charity that provides quality, professionally refurbished computers to projects in developing countries, the problem of e-waste 'rogue traders' is real.

“UK companies are unwittingly handing over their unwanted IT equipment to unscrupulous illegal traders who are shipping untested and un-wiped e-waste, for profit, to developing countries," he says. "These traders do not declare the contents of their shipments as hazardous e-waste, but falsely claim consignments consist entirely of electrical equipment destined for productive reuse in developing countries."

It's a scandal and most businesses will want no association with this toxic trade. But how can they be sure that their company's reuse and recycling partner is legitimate?

Fortunately, Tony Roberts and his team are so concerned about they problem of e-waste cowboys that they've produced Your Guide to Choosing an IT Disposal Partner in order to help companies sort the good guys from the bad. This includes seven questions that companies must ask of prospective providers, examples of the kinds of documentation they need to ask to see, and further ways of checking prospective recyclers' responses. It's thoroughly recommended reading for any company that really cares about e-waste.

Demand for IT services will not show a major rebound in the next 12 months as a result of the slow recovery projected for European economies, according to recent research from IT market research company IDC.

Though demand is likely to remain flat in 2010, say the company's analysts, 2.2 percent growth is anticipated for 2011. Overall, the Western European IT services market is expected to grow at a compound annual growth rate of 3.4 percent between 2010 and 2014.

In 2010, however, improving business sentiment won't result in a swift turnaround in fortunes for the IT services market. "IT budgets have stabilised, and in some cases show some growth, but strong price pressure will limit the market’s recovery capacity in the short term," say IDC analysts. A willingness among companies to offshore work will continue to drive project prices down, for example, while virtualisation will put pressure on the value of contracts and partly offset market growth throughout the forecast period.

In the short term, projects driven by cost concerns will remain a high priority. "We expect the ‘growth agenda’ to return slowly, bringing investments in business intelligence and industry-specific solutions, as well as the global rollout/integration of applications, when these solutions can support business growth, towards the end of the year,” said Laura Converso, research manager at IDC European Software and Services.

In geographic terms, the Nordics, Germany and the UK are predicted to outperform the European average throughout 2010. Growth in France is expected to be in line with the European average, while Benelux, Italy and Spain will continue to perform below the market average over 2010.

Mahindra Satyam has announced that it has successfully completed the key integration testing phase for its online event management system (EMS) for the 2010 FIFA World Cup.

This system will be responsible for coordinating and providing information for all of the FIFA officials, volunteers, event support staff and world press, as well as handling logistical issues involving transportation.

It has already undergone rigorous testing at the 2009 FIFA Confederations Cup and multiple other FIFA competitions, to fine tune it for optimal performance at this summer’s tournament in South Africa.

In this latest phase, the EMS was tested to ensure that it works well with other systems within the World Cup infrastructure and can handle large volumes of concurrent users. Its security, speed and efficiency at communicating with other communications systems, including other applications within the local data centre, were also analysed. The testing phase took over 10 days to complete.

Commenting on the challenges involved, Dilbah Gill, head of sports at Mahindra Satyam, said: “We have invested around three hundred man-years of effort in developing, testing and refining this web-based event management system for one of sport’s largest international showcase events. It has required us to call upon a vast range of our company’s core skill sets and, on top of that, it’s the first major sporting event of this magnitude to take place in a developing country."

The fact that the integration tests all went ahead smoothly, he added, "is a testament to the quality of the work that has been carried out on this project over the last few years.”

Indian outsourcing companies should create ombudsman roles and put in place 'whistleblower' policies so that employees can report concerns about how the business is being run. Those are just two of the recommendations that India's NASSCOM (National Association of Software and Service Companies) is making in a report released today.

The NASSCOM Corporate Government Report outlines best practices that aim to establish high standards of probity and corporate governance within the Indian IT services and business process outsourcing (BPO) industries. It has been produced by NASSCOM's Corporate Governance and Ethics Committee, established last year against the backdrop of the Satyam scandal and chaired by Infosys founder, non-executive chairman and 'chief mentor', NR Narayana Murthy.

Among the key areas the report focuses on is company structure, and in particular, the independence of non-executive directors from a company's executive management.

The report also recommends that companies adopt a 'code of conduct' with customers, in areas such as data security and intellectual property protection, and also with employees, including promoting learning, equal opportunities and appropriate grievance handling.

Commenting on the report, NR Narayana Murthy said, "The IT-BPO sector goes beyond just regulatory compliance and involves robus governance practices and ethical behaviour, which not only hinges on the functioning of the board, but also on how various, interconnected building blocks of the ecosystem work together. I am convinced that, with these guidelines, the Indian IT-BPO industry will become the flag bearer for the best practices in corporate governance across sectors."

Patni Computer Systems today announced that it has been awarded a multi-million dollar, five-year contract to provide policy administration services to Universal American, a leading US health insurance company.

As part of the deal, Patni is to acquire CHCS Services, a wholly owned subsidiary of Universal American. The acquisition creates a new hub for Patni in Pensacola, Florida and establishes a new line of business for the company as a Third-Party Administrator (or TPA) in the insurance and healthcare sectors.

Commenting on the development, Patni CEO Jeya Kumar said, "This represents the largest win in the company's history and this strategic acquisition of CHCS Services, Inc is a strong validation of Patni's differentiated micro-vertical strategy. This move takes on dual significance for Patni in terms of growing our global Life and Healthcare Insurance business as well as establishing us as a TPA."

In addition to its new, Pensacola-based hub, Patni's onshore delivery capabilities in North America also include centres in Bloomington, Illinois and El Paso, Texas, as well as a nearshore centre in Mexico.

Wipro, Tech Mahindra, IBM and HP are among the companies rumoured to be in negotiations with Telecom Corp of New Zealand for an outsourcing contract potentially worth up to $1 billion, according to reports in India's Economic Times.

"We are in early stages of reviewing our partnership arrangements and as such have asked several vendors to present us with options to review," a Telecom Corp spokesperson told the paper.

The deal is set to replace a $1.5 million IT infrastructure management contract signed with EDS (now owned by HP) in 1999, which expires this year.

According to outsourcing advisory firm TPI, 2010 will be a big year for contract renewals and renegotiations. Analysts at the firm expect between $10 billion and $12 billion in annual contract value due to expire this year to be renegotiated.

Mobile Telesystems (MTS) has become the first Russian mobile phone operator to outsource its core network operations to a specialist provider.

The company has chosen Nokia Siemens Networks (NSN) to handle the daily operation and maintenance of its entire mobile network across central Russia as part of a five-year managed services deal. Under the terms of the contract, MTS will transfer around 250 employees to NSN.

“Entering into a managed service agreement with Nokia Siemens Networks will allow MTS to substantially optimize network operations and increase efficiency while keeping service experience high for our customer base," commented Aleksander Popovsky, director of MTS Russia.

While the deal represents Russia's first full operation and maintenance managed services contract, it's an increasingly popular approach among mobile operators elsewhere in the world. NSN currently handles 240 managed services contracts in mobile and fixed networks, servicing more than 300 million subscribers. In March last year, it announced it would assume responsibility for Orange's mobile network operations in the UK, which serves 15.9 million customers.

“While managed services projects have already proved their efficiency worldwide, in Russia the experience of such project implementation will be unique and innovative," said Popovsky. "That is why we'll attentively follow up the progress in its development under local conditions. In the future, this will allow us to make the decision on introducing this approach to other regions.”

The Cloud Industry Forum, an organisation established with the aim of promoting trust, security and transparency within the sector, has launched its draft Code of Practice for public consultation.

CIF members met in March to agree the final content of the draft Code, with the goal of introducing a system of certification for cloud providers in the UK. Work on the Code began in October 2009 and CIF is now asking "end users, providers and other stakeholders" to participate in the consultation process by downloading the draft CoP and providing feedback.

"We firmly believe that the market needs a credible and certifiable Code of Practice that provides transparency of Cloud services such that consumers can have clarity and confidence in their choice of provider," said Andy Burton, Chairman of CIF and CEO of web hosting company Fasthosts. 


“Organisations seeking to use Cloud services need a straightforward form of certification or ‘Code of Practice’ for potential suppliers that will accurately define the services offered, standards of operation and security,” he added.

To register an interest in being a participant in CIF, or to download a copy of the CIF Code of Practice, visit www.cloudindustryforum.org

IT services provider 2e2 is to aquire systems integration company Morse for 51p per share, in a deal announced at the London Stock Exchange today.

The newly combined company plans to offer managed services, hosting, unified communications, data management, security, business application solutions and cloud computing services.

"There is an excellent fit between the two companies. [The deal] consolidates 2e2's position as one of the UK's leading vendor-independent IT services providers," said 2e2's non-executive chairman Eric Priestley. He added that he expects significant benefits to come from "cost synergies" and cross-selling opportunities within the enlarged customer base.

Private equity-backed 2e2 is strongest in the UK public sector. Earlier this month, it announced a three-year, £4.3 million deal to build and support a new ICT infrastructure for the London Borough of Waltham Forest. Morse's strongest vertical, meanwhile, is financial services.

The deal values Morse at close to £70 million.