Industry news

  • 6 May 2010 12:00 AM | Anonymous

    Computer hardware, software and services giant IBM this week announced it has acquired Cast Iron Systems. The move is expected to give the company the technology and experience it requires to connect customers' cloud-based and in-house applications.

    IBM expects the global cloud computing market to grow at a compounded annual rate of 28 percent from $47 billion in 2008 to $126 billion by 2012. 

    But a key challenge that businesses face in successfully adopting cloud delivery models is integrating the disparate systems already running in their data centers with new, cloud-based applications. 

    In the past, this involved time-consuming and resource-draining coding work. By contrast, Cast Iron Systems will offer IBM customers a platform to integrate cloud applications using a physical appliance, a virtual appliance or a cloud service, and from providers including Salesforce.com, Amazon, NetSuite, ADP, SAP and JD Edwards, according to the company release.

    “The integration challenges Cast Iron Systems is tackling are crucial to clients who are looking to adopt alternative delivery models to manage their businesses,” said Craig Hayman, general manager, IBM WebSphere.  “The combination of IBM and Cast Iron Systems will make it easy for clients to integrate business applications, no matter where those applications reside.  This will give clients greater agility and as a result, better business outcomes,” he said.  

  • 6 May 2010 12:00 AM | Anonymous

    Enterprise applications represent some 40 percent to 60 percent of corporate IT budgets, but have yet to be significantly outsourced, according to a London Business School report released yesterday and commissioned by Fujitsu.

    In part, say the report's authors, that's because many companies still have to get to grips with 'best practice' when it comes to handing enterprise applications over to third-party providers, which differs subtly but fundamentally from approaches commonly used in other areas of outsourcing: "The results of our survey show that while most of the lessons from other forms of IT outsourcing apply, applications outsourcing must be treated with extra are. Unlike infrastructure - a data center, for example - business applications are inextricably tied to the way a business functions."

    As a result, while there are significant cost savings to be achieved, the costs of getting application outsourcing wrong can be very high, too - and potentially damaging to an organisation's ability to do business, according to John Hanley, managing director of the applications division at Fujitsu UK and Ireland

    Chief among the study’s findings and recommendations are the following points:

    • Competitive advantage drives outsourcing direction and decision-making – decision-makers must have a clear understanding about what constitutes ‘competitive advantage’ for their business and be able to segment their applications portfolio accordingly.

    • CIOs who are successful at application outsourcing have a deep business knowledge about their organisations, good board relationships and develop business performance (not just IT- or finance-based) measures for assessing outcomes.

    • The ability to manage internal stakeholders effectively is essential – in particular, collaboration between heads of IT and heads of finance is vital. The finance department needs to be involved as early as possible in the outsourcing discussion.

    • Strike a balance in the type of applications outsourced – failure to do so will affect flexibility and agility.

    • Enable continuous management – the way application outsourcing is implemented and managed must be continuously reviewed, and should be adapted as the business landscape changes.

    “Whilst these findings are by no means an exhaustive list, the recommendations – and the corresponding report – should provide guidance and insight to CIOs planning to review their approach to application outsourcing," said Hanley. A full copy can be download here.

    In April, Fujitsu UK & Ireland appointed Hanley head of its applications division and announced an ambitious three-year plan to double revenues from this part of its business by 2013.

  • 5 May 2010 12:00 AM | Anonymous

    HCL Technologies has announced that it has signed a five-year $500 million deal with pharmaceutical giant MSD (also known as Merck & Co).

    HCL will build on its existing relationship with MSD, dating back to 2004, to offer the company software-led information technology solutions, remote infrastructure management, engineering and business and knowledge process services.

    Under the terms of the deal, Merck will leverage HCL's near-shore delivery network in the US, comprising an operations centre in Raleigh, North Carolina and its global data centre delivery ecosystem, supported by global partner footprints. In all, HCL will deliver services to MSD out of 20 worldwide locations, including in the US, Poland, China and Brazil. The company plans to expand its team in North Carolina, relying on local hires to staff projects.

    “For five years, MSD has leveraged HCL’s extensive expertise in life sciences and healthcare to streamline operational efficiencies and consolidate its IT portfolio,” said Richard Branton, vice president of application services for MSD. "As we continue to leverage global delivery services to meet our business imperatives, we have chosen HCL as our strategic partner for its depth of technology and pharmaceutical domain experience, coupled with its flexibility to engage and a commitment to deliver.”

    "This is a landmark win for HCL, and we are proud that our growing leadership in pharmaceutical and healthcare, coupled with our previous delivery for MSD, has positioned HCL as a strategic partner for MSD,” said Shami Khorana, president of HCL Americas.  “We are committed to creating transformational value for MSD in this engagement and we look forward to playing a key role in the organization’s growth across global markets."

    The life sciences division contributed 7.5 per cent to HCL’s revenue in the third quarter ended March 31.

  • 5 May 2010 12:00 AM | Anonymous

    Business outcomes are increasingly being written into outsourcing agreements as companies respond to the recession, according to analysts at IT market research company Gartner.

    The IT services market declined last year as a result of businesses changing strategies amid recession, says the company. Worldwide spending on IT services declined 5.3 percent to $763 billion in 2009, compared with $805 billion in 2008.

    In the wake of economic turmoil, suppliers and end-customers are increasingly drafting outsourcing agreements with a defined business outcome. According to the Gartner research, suppliers that focused on the business outcome did better than average last year.

    "The economic uncertainties and the crisis in industry have had negative implications on the worldwide consulting market in 2009, and many providers' revenue growth rates were negatively impacted. However, business outcome-focused providers of consulting services with established business relationships were often successful in growing their market share better than the market average," says Gartner.

  • 30 Apr 2010 12:00 AM | Anonymous

    Up to $37.5 billion worth of long-running IT contracts are set to expire in the next six months, creating a significant opportunity for IT providers that are quick to spot customer opportunities and understand their needs and motivations.

    Ovum’s research examined over 20 business sectors and identified over 500 IT contracts due to expire before September 2010.

    The biggest opportunities, according to Ovum research director Ian Charlesworth, will be in the financial services, energy and communications industries. These are followed by government and not-for-profit organisations, and the aerospace and defence sector.

    Charlesworth advised IT providers to focus on contracts coming up for renewal, take the time to understand specific sector needs, and carefully target their approach.

    "With hundreds of contracts ranging in value from $1m to $1bn potentially coming onto the market in the next few months, business development teams can quickly gain competitive advantage in a difficult market by knowing who is going to be spending and why," he said.

  • 30 Apr 2010 12:00 AM | Anonymous

    3663 First for Foodservice, the UK's leading distributor to the foodservice sector, has signed a five-year IT managed service contract with Fujitsu.

    Part of the Bidvest Group, 3663 handles some 23,000 orders a day, offering next-day delivery to restaurants, cafes, canteens and other food outlets, via its fleet of over 1,000 temperature-controlled lorries.

    “3663 operates under extremely tight deadlines and having reliable IT systems with high availability rates is critical to successfully processing and fulfilling orders, as well as managing the supply chain," said Anne Stokes, business unit director for retail, transportation, manufacturing and services at Fujitsu UK & Ireland. "In this economic climate, they also require flexibility in their IT systems, with continued service improvement and support, which will enable them to implement change in a cost-effective way.”

    Under the terms of the agreement, Fujitsu will provide 3663 First for Foodservice a full IT managed service including hosting all systems, managing servers and desktops and providing helpdesk and process support.

  • 29 Apr 2010 12:00 AM | Anonymous

    Sweden, France and Germany were the strongest outsourcing markets outside of the US during the first quarter of 2010, surpassing the UK for the first time, according to outsourcing advisory firm TPI.

    The TPI Index, which measures commercial outsourcing contracts valued at €20 million or more, recorded just of €7 billion in total contract value (TCV) during the first three months of 2010, up 7 percent over the corresponding 2009 period.

    Sweden more than doubled its full-year 209 TCV with one single mega-deal, which accounted for more than 14 percent of the global market's TCV for the quarter.

    France, meanwhile saw almost €2 billion in TCV awarded, making it the world's third largest marketing in the first quarter of 2010, again due largely to a mega-deal, in this case awarded by French railways company SNCF.

    But while Germany exceeded €1 billion in TCV during 1Q2010, the country also experienced a drop in global market share. And the UK, historically Europe's strongest and most mature outsourcing market, saw a decline of almost 50 percent year-over-year, to less than €800 million.

    “Even though this is only one quarter’s results, it does appear that the key countries contributing to Europe’s outsourcing performance are shifting to the less mature Continental markets,” said Duncan Aitchison, Partner and President of TPI for EMEA.

    By industry sector, the Travel, Transportation and Hospitality vertical accounted for one of only two increases in the quarter. With a TCV of €2.7 billion, it nearly quadrupled year-over-year due to the mega-deal awarded by SNCF in France, making it the number one industry vertical in the quarter. The Financial Services sector came in second with a TCV of €2.4 billion, a decline of 23 percent. The Business Services sector increased its TCV by 400 percent to €500 million, also due to a mega-deal, tying it for fourth place with the Telecom and Media sector. Manufacturing TCV fell 29 percent year-on-year.

    “Looking forward, the number of contracts coming up for renewal has increased year-over-year and we believe these will continue to flow into the industry pipeline throughout the coming months,” Aitchison said. “In later quarters, we expect to see the market continue to recover at a slow and uneven pace, with a steady flow of new opportunities and an increase in new scope activity in the industry pipeline.”

  • 29 Apr 2010 12:00 AM | Anonymous

    IBM has signed a $130 million, five-year agreement with the Greater Toronto Airports Authority (GTAA), which runs the city's Toronto Pearson International Airport.

    Under the terms of the deal, IBM will assume responsibility for ticket kiosks, passenger and baggage check-in and aircraft gates at Canada's busiest airport, which handles over 30.4 million passengers per year.

    Toronto Pearson is one of the world's largest airports to run on a "common use equipment" model, whereby airport resources - such as check-in counters and boarding gates - can be accessed and utilised by any of the 60 airlines that the airport serves.

    In future, IBM's technology will enable these airlines will be billed directly by IBM for access to these resources on a per usage basis, replacing the traditional bundle of landing fees and terminal charges currently calculated and billed by GTAA.

    "Moving technology support and billing to IBM allows the GTAA to focus on what they do best - running Canada's largest airport and ensuring safe travel for passengers, while maximizing savings for the airlines and the GTAA," said Saad Toma, general manager, Global Technology Services, IBM Canada.

  • 29 Apr 2010 12:00 AM | Anonymous

    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.

  • 28 Apr 2010 12:00 AM | Anonymous

    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.

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