Industry news

Two years ago, I thought a cloud was something that appeared when you least wanted it to and obliterated the sun. Now, everyone is talking about The Cloud – private clouds, public clouds and so on. All in all, clouds are changing the way that computing happens.

So when late last year I heard another new term - the 'Intelligent Client' - I started to consider whether that expression, too, will become common parlance throughout the industry within the next year.

I first thought that I would like to know what an ‘Unintelligent Client’ is (no jokes, please!).

But then I heard people talking about more about it, and even about ‘thin’ and ‘thick’ intelligent clients. In recent weeks, I have even had a number of clients asking me about what an intelligent client is, whether should they become one, and how?

So what is this all about?

For years, we have heard about retained organisations – the small division of the outsourced function that remains within the client business, acting as an interface between client and supplier to ensure a high level of service. We have also heard about the need among organisations that have a range of suppliers to have a retained organisation structured correctly for best mutual effect.

The term 'Intelligent Client', which seems to be coming out of the public sector more than the private sector, suggests that, if we are to be optimal providers, and deliver the correct level of services to our customers and clients and be effective in receiving services, then we shouldn’t have separate retained organisations for HR, Finance and IT, and perhaps other functions, too. What we should be doing is taking a much more holistic look at how we shape our organisation.

So the Intelligent Client is very much a vision of a new organisational structure.

It requires an appreciation of what core competencies are needed internally to service the new structure; to what level they currently exist in the company; and what organisational designs (or re-designs) are required to ensure that these competencies can be exercised to the fullest extent, but with the lowest overheads.

Perhaps the most important questions to ask, and to ensure are answered before embarking on this course of action, are how will the new intelligent client manage each supplier, provide the necessary subject matter expertise and manage clients and customers?

So I am interested to gather feedback as to whether people are hearing this term being used, and if it is being widely realised as a concept. Will ‘Intelligent Client’ be as pervasive a term by the end of 2010 as cloud computing has been at its start?

The UK’s premier member body for outsourcing, the National Outsourcing Association (NOA) has opened its seventh annual awards for entry.

Companies that believe they have undertaken outstanding work, surpassed results or shown a constant focus on sourcing best practice, are encouraged to submit their entries by the 9th of July 2010.

The awards, which consist of 16 categories, range from BPO contract of the year, through to offshoring location are anticipated to prove even more popular this year, with more entries than ever expected as the outsourcing industry continues to boom.

The awards winners will be announced later on in the year at a gala dinner ceremony at the exclusive Park Plaza Riverbank hotel on the 21st of October.

Martyn Hart, Chairman of the NOA, commented,

“Over the last six years, the NOAAs have become a landmark in the acceptance of outsourcing as an essential business practice and recognise the efforts of companies or people who have shown excellence in the field of outsourcing.”

He continued, “These awards are a great way for industry professionals to come together and celebrate success in outsourcing. Outsourcing has remained relatively steady during 2009 despite the recession and this positive performance should be acknowledged. Looking forward, 2010 promises to be an interesting year, with the predicted uptick in the private sector set against inevitable cost cutting throughout the public sector. Though nothing is set in stone, it remains clear that following best practice will continue to increase the possibility of outsourcing success, whether for business enhancement or business necessity.”

Outsourcing has established itself as a strategic management practice that leading companies around the globe are increasingly using for high-value, knowledge-based processes, according to survey results from the International Association of Outsourcing Professionals (IAOP).

Released today, the results of the IAOP global membership surveys conducted with support from Accenture over the past 18 months, show outsourcing is a thriving competitive industry that is being used strategically with increased C-suite decision making. The industry is also rapidly adopting technology such as cloud computing and Software as a Service (SaaS) according to responses from the association’s members.

“Increasingly, companies are outsourcing to do more than cut costs but to add value, increase business flexibility and prepare for future growth,” said IAOP Chairman Michael Corbett. “Companies that are using outsourcing are poised to emerge from the current economic crisis stronger.”

The estimated $6 trillion* global outsourcing industry also expects continued growth. A January 2010 poll of members showed 56 per cent of respondents planned to increase outsourcing activities in the future, up from 47 per cent who answered a September 2009 poll.

Some of the key findings include:

 Outsourcing Becomes More Strategic: Strategic issues are playing an important role in outsourcing decisions at most companies. In January, about 50 per cent of respondents indicated that greater business flexibility and preparing the company for future growth have become more important reasons for them to use outsourcing.

 C-Suite Driving Decisions: Outsourcing decisions are being made at higher senior executive levels, the results show. Two-thirds of respondents indicated in January 2010 that senior executives were increasingly involved in outsourcing versus only 13 per cent who said that senior executives were less involved.

 Smarter, Skilled Profession: Knowledge-based outsourcing is becoming more important to companies and the industry is filling this demand. In both the fall of 2009 and January 2010, 40-plus per cent of respondents indicated that the outsourcing at their organizations was increasingly focused on knowledge-based activities compared to less than 30 per cent who said they were increasing the outsourcing of lower-skill level positions.

 Rapid Technology Adoption: Cloud computing and SaaS are being examined by 88 per cent of outsourcing customers surveyed in January and 66 per cent of providers are exploring these technologies for the delivery of services to their customers.

 Bundling Services: This January, 45 per cent of survey participants stated that their company was more focused on bundling services with fewer outsourcing services providers versus 18 per cent who indicated that they were doing more multi-sourcing.

Jetstar Airways, an Australian low-cost airline and arm of Qantas, has signed an application development and BPO deal with Zensar Technologies.

Through the deal, Jetstar hopes to 'improve overall IT quality across its business, to achieve quantifiable operational and financial improvements and enhance the delivery of services to its customers'.

Zensar VP of Sales, J. Parthasarathi said, “Customers are increasingly focusing on consolidation, cost optimization and value-added services, while at Zensar we bring the best practices to build a strong delivery ecosystem that goes beyond typical customer-vendor relationships – our relationship with Jetstar is built on these principles and we intend to partner with Jetstar in addressing customer requirements for business continuity in the future."

Airbus has selected CSC as the prime contractor to develop and support the aerospace giant’s ‘Value Chain Visibility’ (VCV) and Auto-ID program.

CSC will take responsibility for coordinating the implementation of all Auto-ID and RFID projects and will work with all previously selected Airbus Auto-ID suppliers to ensure overall delivery of the Airbus VCV & Auto-ID projects.

Electrolux IT Solutions, a subsidiary of Electrolux, has signed a multi-year contract with Accenture for application development and management services.

Under the contract, Accenture will develop and manage a portion of Electrolux’s existing enterprise applications including JD Edwards, Cognos, and Lotus Notes to help accelerate its current information technology (IT) transformation program.

The contract has been put in place to enhance operational efficiency, reduce technology costs, and better anticipate and meet future business demands.

“The decision to outsource the development and support for JD Edwards, Cognos, and Lotus Notes will ensure the availability of skills and resources to fulfill future delivery requirements,” said Bertil Norberg, CIO at Electrolux.

The services will be delivered to Electrolux in 22 countries through Accenture’s ‘Global Delivery Network’ including delivery centers in India, with local service management in Sweden, Germany, the United States, Brazil, Thailand, Australia and China.

UK travel giant, TUI Travel has announced it has signed a five-year network infrastructure outsourcing contract with Deutsche Telekom’s corporate customer arm T-Systems.

Under the agreement, which is reported to be worth £88.2m, (€100m) T-Systems will provide integrated voice, data and mobile services to all TUI’s major brands. The deal which will cover the mainstream travel sector will provide support to 25,000 staff in 2,370 travel agency shops and 73 other offices across the UK, Ireland, Germany, France, Belgium, the Netherlands and Switzerland.

The deal is hoped to help modernise the company’s telecommunications and reduce costs. The deal will also allow TUI to reduce the number of suppliers it uses for voice and data services.

“We selected T-Systems to integrate and enhance our telecommunications services as they have the technological and global expertise to manage a project of this scope and size. This project will transform our communication capabilities, enable greater collaboration between TUI colleagues, deliver better customer service and provide significant cost savings,” Jim Mann, chief information officer at TUI Travel comments.

The UK leisure company, Center Parcs is planning on reducing its number of call centre jobs as a result of its recent centre centralisation.

The company which employees call centre agents across its four sites in, Nottinghamshire, Elveden Suffolk, Wiltshire and Cumbria, has decided to centralise its call centre facilities to one main site, its head offices in Newark.

The move is said to come as call volumes decline and online booking increases, with 70 per cent of all bookings now made online.

Whilst it is expected that approximately 20 jobs will be cut, Center Parcs is trying to find jobs for the remaining workers, according to Call Centre Focus.

“The decision has been taken as a result of the declining call volumes following the increase in online bookings. A small number of employees have been affected at our four sites, “Center Parcs commented.

Once again, the controversial food giant Kraft has hit the outsourcing headlines this week with the announcement of its recent procurement deal with Capgemini.

After recently buying the nation’s favorite chocolate-maker, Cadburys, Kraft has appointed the global consultancy to provide strategic sourcing and spend management to the company’s various purchasing categories.

This week also saw some very positive industry research from both Gartner, and the National Outsourcing Association (NOA).

The NOA published its quarterly Outsourcing Confidence Index suggesting that more than half of outsourcing end-users are more confident in the use of outsourcing in supporting their business objectives than they were in 2009.

While the financial services sector was found to be the most positive about outsourcing in 2010, the services sector also showed mighty confidence with 61 per cent, whilst the retail sector was somewhat less confident with 55 per cent.

A high 60 per cent of users intended to outsource services not previously outsourced this year, whilst 56 per cent of those already outsourcing planned to increase the scope of existing contracts.

Gartner adds to this research fuelled enthusiasm with its report. Yes you have guessed it, once again IT spending is set to rise even further, 5.3 per cent to be precise within 2010.

With worldwide IT spending predicted to reach $3.4 trillion during 2010, and IT services forecast to rise by 5.7 per cent from 2009, the outsourcing world is looking rosy.

However before we all get too excited about these upturns in activity and confidence, 78 per cent still felt supplier outsourcing capability has not improved over the past 12 months, meaning “suppliers still have some work to do”, according as Martyn Hart, Chairman of the NOA.

And finally to end on a positive note, Thomson and First Choice owner, TUI Travel has announced its five-year, £88.2m network infrastructure outsourcing agreement with Deutsche Telekom’s corporate customer arm T-Systems.

The agreement will see T-Systems provide integrated voice, data and mobile services to all TUI’s major brands.

NorthWestern Energy, a large US-based energy provider, has signed a multi-year contract with Vertex to consolidate, upgrade, and host NorthWestern Energy’s Customer Information Systems (CIS).

Under the new contract Vertex will work to upgrade and consolidate the company’s existing customer databases into one hosted platform.

NorthWestern Energy provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 661,000 customers in Montana, Wyoming, South Dakota and Nebraska. With Vertex’s new system, the company expects to streamline and gain efficiencies within contact centre and billing operations while reducing costs. The company will also be providing enhanced customer care through better online customer self-service functionality.

“Our new, single website will provide enhanced self-service features, including streamlined logon and customer navigation, simplified payment options, and an easy way for customers to self enrol in programs such as eBill and EZ Pay,” said Bobbi Schroeppel, VP of customer care.