Industry news

Yesterday, Capgemini announced that it is to make a "major investment" in its Business Information Management (BIM) service line, including the hiring of an additional 3,000 consultants and the creation of a Centre of Excellence in India, staffed with 1,000 specialists.

I was interested to find out more and was able to track down Paul Nannetti, the newly announced general manager of Capgemini's global BIM service line, just as he was about to board a plane.

I started out by asking him a little bit about the BIM service line and his new role. He explained that this is the area of Capgemini that assists clients in managing their information lifecycle - the capture, cleansing, analysis and presentation of data, both structured and unstructured, so that business can measure their performance against internal goals and to decide on new strategies. In other words, it's a set of services that tend to fall under the umbrella term 'Business Intelligence'.

While this is a new role for Nannetti, he's been at Capgemini for 15 years. Most recently, he has spent two years working at group level on the company's industrialisation strategy - the way it turns experiences from individual projects into a recognisable 'product' that can be offered to other clients - and on introducing remote offshore delivery centres in India. Prior to that, he was head of consulting in continental Europe for two years. He's also ran the company's Nordic business, its global life sciences practice and its European CRM practice.

So why has Capgemini decided to increase its focus on and investment in BIM right now? "This is a very hot area right now," he told me. "Our technology partners are investing heavily to develop new solutions in this area. Our clients have many challenges in this space, but see many opportunities in conquering them, too."

Nannetti gave me four reasons why companies might hand their BIM processes to Capgemini:

1. They want to tap into the expertise of consultants who have delivered BI in a range of different companies and industries. "These consultants know what works and what doesn't," he said.

2. They require help in navigating the complex and crowded market for BI tools. "We have strong relationships with all the major suppliers in this areas and many of the less major ones - but we bring an objective, technology-agnostic perspective to the decision.

3. They need someone to help with the "translation work" between business people and IT people - so that the information requirements of the business are fully met by the systems and technologies at its disposal.

4. They want to take advantage of the cost efficiencies available by offshoring some of the work involved in BIM.

But is business intelligence work a suitable candidate for outsourcing, I asked. After all, most companies still prefer to outsource tasks that they believe are not core differentiators for them - what could be more core than managing performance and identifying new opportunities?

Nannetti explained that, in many cases, companies will look to Capgemini to take over a significant portion of the IT work; the development, implementation and running of systems; and the production of reports. "But the design of reports and the interpretation of the information they contain certainly needs to be in the hands of business analysis specialists and these will often be in-house personnel," he said.

The India-based Centre of Excellence won't be a single location. It will primarily be based in Mumbai, but work for financial services companies will be carried out in Pune. Staff in these locations will also be supported by staff in Chennai, Hyderabad and Bangalore.

By Dr Roger Newman, head of UK Manufacturing and Digital Convergence Relationship Management at Mahindra Satyam

Recessions drive change and force companies and countries to be more aggressive in order to survive. Each recession is different in terms of cause and response but one thing for sure is that significant changes will occur .The first recession I lived through was back in the 1970’s. I started work in the year when the UK was working to a 3 day week due to the Oil shocks and rampant union activity. At the time a three day week seems like a pretty reasonable start to my working life! However the subsequent years witnessed a dramatic restructuring of the UK’s industrial and services base, one that equipped it to survive and prosper in an ever competitive global market.

The last economic decline in 2001/2002 was caused by overvalued online-based companies, leading to the infamous dotcom boom coming to an abrupt end. As a result, businesses started to offshore IT services to lower-cost destinations to cut costs. This gave real impetus to the Offshoring boom. According to a recent report by analyst house Gartner ‘Gartner on Outsourcing’, today’s economic crisis could drive a similar trend in the way IT services are delivered. There is no doubting that this current economic downturn has driven new ways of providing and pricing IT outsourcing much like the bursting of the dotcom bubble increased the take-up of offshore services.

Although some cautious organisations remain wary of outsourcing following this recession, strong evidence suggests that companies that invest in outsourcing now will benefit when the market finally beings to pick up. For example, businesses will be able to use IT and business processing outsourcing as transformational catalysts to address operational issues and most importantly, cut costs. Additionally, their retained professionals will improve their focus on core business, i.e., strategic, issues. Furthermore, for organisation’s still feeling the after effects of the global economic slump, outsourcing can still help improve the balance sheet; raise cash by selling existing assets and operations to suppliers, and eliminate many operational costs.

So what will be the main changes driven by the current recession? My belief is that the current recession will just accelerate some trends that were already present i.e.

a) Pricing based on outcomes with a trend towards companies outsourcing the compete process, not just the underlying IT.

b) Consolidation of suppliers. Companies will shrink the number of suppliers they have providing the survivors with a bigger share of the budget in return for aggressive outcome based pricing.

c) As a result of the above we will see a reduction in the number of IT service providers. There will be a consolidation into a few large companies who can provide the full range of IT services and some smaller providers of niche technologies or Industry specific solutions.

HM Revenue & Customs (HMRC), the UK's tax authority, has agreed to channel all core external IT spend through it's contract with Capgemini. Capgemini will manage the contract via it's subsidiary, Capgemini UK plc, with major subcontractors Fujitsu and Accenture. The contract agreement follows a previous five-year contract and will run until 2017.

As part of the agreement a transformation program has been established that will see investment in modern, more flexible, technologies to better meet the needs of HMRC’s integrated organisation and drive cost savings, which will be realised from financial year 2011/12. Under the revised agreement, Capgemini, Fujitsu and Accenture have committed to save £110 million a year for HMRC, in addition to the £70 million per annum savings committed in 2007.

Lesley Strathie, Chief Executive, Permanent Secretary for HMRC said: “HMRC and Capgemini have worked together to achieve outstanding savings for the Department. This is just one of the ways HMRC will be reducing operating costs and it signals the intent to bring IT costs down as announced in the 2009 Budget."

A Fortune Top ten telecommunications company has signed a contract renewal with Convergys Corporation to provide tier one technical support for it's video offering. Over 1,400 full-time employees, including onshore, offshore, and agents working from home, will service the two-year, $71 million contract.

Jim Boyce, Convergys President, Global Business Units commented: “Convergys knows this client, its business, and the products it sells, thanks to a mutually beneficial relationship that spans many years."

Lloyds TSB, Barclays and HSBC have signed a five-year outsourcing contract extension with Unisys Corporation. The overall value of the new deal is estimated to be more than £315 million.

Unisys' UK joint venture subsidiary, Intelligent Processing Solutions Limited (iPSL), will manage the contract. iPSL provides outsourced cheque and credit clearing services for major banks in the UK. Lloyds TSB, Barclays and HSBC are all shareholders in the joint venture, along with majority shareholder Unisys.

Royston Hoggarth, chairman of iPSL, said, “By using a centralised, shared-services model that delivers significant economies of scale, iPSL enables our client banks to process payments with greater cost-efficiency than they could achieve individually. iPSL's combination of secure infrastructure and banking processes positions it well in coming years to help client banks in other closely related markets such as Account Servicing, including Imaging and Archiving and Regulatory Support.”

The U.S. Department of Homeland Security has signed a contract with CSC to provide information technology infrastructure and cyber support to the National Protection and Programs Directorate's Office of Cyber Security and Communications.

Under the terms of the contract, CSC will provide program management and system integration services to the Office of Cyber Security and Communications. The contract will support government-wide cyberspace security initiatives.

Anyone involved with software development projects knows they have a very high rate of failure. According to the Standish Group’s 2009 Chaos Report, which tracks IT software project success rates, less than a third of surveyed IT software projects undertaken in the past two years were rated successful, meaning they came in on time, on budget and with required features. 44 percent were challenged, meaning they were late, over budget, or lacked required features, and 24 percent failed completely, meaning they were cancelled or never used.

As if the risk of failure wasn’t great enough for in-house projects, many of today’s software projects are outsourced to overseas partners as a way to cut costs, speed time to market, and focus an organization’s internal resources on what it does best.

When handled intelligently, outsourcing can be a very successful way to build new software quickly and inexpensively. However, when companies outsource solely as a way to cut costs, they invite failure. Why is this? Because there’s much more to successful software development than low cost, technical expertise and intelligent processes. Perhaps more than most undertakings, successful software development depends on people.

Software development remains a predominantly collaborative, creative endeavor requiring just the right mix of hard skills, such as software programming, architecture, and engineering, and soft skills, such as communication, collaboration, and project management. When teams are separated by oceans, the value of both soft and hard skills is magnified.

That’s why if you intend to outsource a development project, it’s preferable to seek out a development partner that goes beyond typical mainstream certifications. Ideally your partner should provide its own structured, effective system for training and developing its employees with the education, certifications, and experience they need to acquire the most advanced hard and soft skills.

Hard Skills

Hard skills are about more than the requisite Java or .NET skills and certifications. A growing number of today’s development projects require expertise and experience in complex software architecture and engineering. Resulting applications must be able to scale appropriately to meet a client’s shifting and often unpredictable needs in the Internet age.

A company with very mature IT operations and in-house expertise can outsource successfully to just about any competent overseas partner. However, many IT departments will not succeed without the benefit of equal partners who come with the education, experience, and confidence to ask the right architectural questions, point out missing or conflicting requirements, and suggest improvements in the process or solution that benefit usability, functionality, scalability or security.

Project Management

Software development projects often have complex requirements with many dependencies, and involve multiple players with different agendas and interests. Changes in requirements are frequent and unforeseen issues can suddenly arise at any phase of the process.

Achieving success at low cost requires project managers who not only have the requisite PMI or related certifications, but also the project management experience on projects of similar size and complexity to your own to handle these issues. A truly skilled, experienced project manager will discover, correct, and prevent project flaws and weaknesses early in the development process and help to guarantee high quality consistent results on time and on budget. Good project managers can also identify process improvements that will get your project out the door more quickly, saving significant time and expense.

Soft Skills

Software development is by definition a collaborative process between technical people who are often not completely familiar with the business units and processes they’re working to improve and business users who often don’t understand the possibilities, and impossibilities of the technical solutions under development.

Both sides have to be able to communicate with, understand and trust each other in order to produce a solution that is usable, adds value, and enhances a company’s competitive advantage.

• Cultural compatibility – Aside from the expertise required to collaborate and question aspects of a project when necessary, project success may also depend also on partners from a culture that considers such questioning acceptable.

• Communication Skills – As one outsourcing company CEO put it, development partners need to have a good feel for the type, frequency and detail of communication the client needs to be able to sleep well at night. They need to have a level of comfort bringing up problems and issues to higher-level managers at both the client and outsourcing ends of the project.

Start at the Macro Level

So how do you decide on an outsourcing firm with the right level of hard and soft skills to take on your development project? Cost is an obvious factor to consider, but it may be better to begin by choosing the area of the world that offers the right skill set for your particular project.

For example, India can be a perfect, low-cost source for typical mainstream Web development projects that don’t require a heavy technical, mathematical, scientific background or the use of emerging platforms and technologies. India’s outsourcing firms tend to have large numbers of competent professionals certified in database development and programming in a variety of programming languages at low cost. Language compatibility is not a problem if English is your native language. Other emerging areas with this type of competence are China and Latin America.

For more complex projects you may want a mix of programming skills, technical proficiency, cultural compatibility and communications skills. Eastern European countries such as Russia and Ukraine are known to have large pools of technically proficient development professionals trained at the regions’ internationally respected technical and scientific universities and other educational institutions. Most have become proficient in English by the time they graduate, and certification levels in a variety of programming and development skills are equivalent to those of India and other major competitors. Keep in mind that, while they are significantly more competitive than in Western Europe and North America, salaries of Eastern European developers tend to be a little higher than in India.

Eastern European outsourcing firms have a positive reputation for their solutions-oriented approach to complex projects and cultural compatibility with North American and Eastern European clients. Project management skills and certifications are growing but still somewhat patchy compared with Western Europe and North America, so it’s important to investigate a potential outsourcing partner’s project management competence if you choose a vendor in this region.

Do Your Homework

Once you have chosen your general region, the next step is to investigate some outsourcing firms to determine which ones can offer the type and level of expertise you require. Can the company provide the requisite technical experience in the type of project you’re undertaking, and will they allow you to speak with a few references to confirm that expertise and understand how they work with their clients? Is their staff made up primarily of coders or do they have more technical and architectural education and experience? What was the attrition rate on the projects they were involved in? Did the vendor tend to have to replace team members frequently?

It helps to ask for resumes and conduct interviews with those who would be likely to be involved in your projects. Ask for as many as you can get and interview as many players as you can, as some companies will provide resumes for a few highly qualified project leaders and major players, but provide significantly less experienced people for much of the rest of the team. You want to avoid having your project serve as your partner’s internal training vehicle.

As you speak with prospective partners, see if you can gauge their communication skills and listen carefully to the types of questions they ask. It will become clear whether they have the complex problem-solving capabilities you need and will truly add value to the project. Consider whether your prospective provider can offer the right people in the right roles to complement your team and ask how they handle communications with the client.

Aside from external certifications in programming techniques and languages, ask questions about any additional certifications provided internally and how the company trains and promotes its employees. Does the company go above and beyond external certifications, enriching employees with additional training and internal certifications, and does it make a point of giving them experience with a variety of projects? Find out what internal certifications and training vehicles they have and what level of certified employees they will provide for your project. Are their certifications based on real-world experience and accomplishments or simply course or text book learning?

What type of development process, such as agile, waterfall, or scrum, do they specialize in, and does that process match your requirements? More importantly do they have the experience and knowhow to conduct an agile project, which requires a lot of close communication, as a remote participant? Ask questions about their engagement process and how they take early steps to ensure that all project requirements are understood.

Any software project is a risky undertaking. Depending on the provider you choose, outsourcing a development project can either heighten or reduce your risks. The key is to choose the company that can provide the right people with the right hard and soft skills for the job. When it comes to software development success, people make the difference.

Lack of broadband Internet access is depriving many developing countries of the chance to build up economy-boosting outsourcing sectors, according to the 2009 Information Economy report launched last week by UNCTAD - the United Nations Conference on Trade and Development.

The report presents a fascinating - if somewhat depressing - view of the worldwide digital divide. For example, companies and consumers in developed countries are 200 times more likely to have access to broadband in developed countries than in the poorest Least Developed Countries (LDCs). And the cost of broadband access varies widely - but if you're in Burkina Faso, the Central African Republic or Swaziland, expect to pay upwards of $1,300 per month.

"The narrowing of the digital divide remains a key development challenge," UNCTAD Deputy Secretary-General Petko Draganov said at the launch of the report. "What is known as the broadband gap for example is becoming a serious handicap for companies in many poor countries."

On a positive note, however, it's clear that the situation is due to change soon in many African countries. I recently came across research from market analyst company Pyramid Research that discusses how twelve new undersea cables planned for launch between the third quarter of 2009 and mid-2011 will do much to address Africa's great unmet demand for broadband services.

By tying many African states into the the submarine backbone that carries 95% of today's voice and internet traffic, these cables will remove the continent's heavy reliance on expensive satellite links and boost total broadband adoption in Africa by a compound annual growth rate of 28% from 2009 to 2013. By 2011, Pyramid Research analyst Dearbhla McHenry estimates that the number of African states without broadband access will fall from 19 to one.

U. S. General Services Administration (GSA) has signed a five-year IT outsourcing contract with CGI Federal, a wholly-owned U.S. operating subsidiary of CGI Group Inc. The contract has an estimated value of US$32 million and will see CGI data centre hosting and providing application management support to GSA's Integrated Financial System.

As part of this contract CGI will provide hosting services for Pegasys, GSA’s financial management shared service for federal agencies. CGI will also manage a billing and accounts programme which supports more than 5,500 geographically dispersed users and 4,000 external customers across the United States.

Middlesex University has signed a five-year contract with IBM to upgrade and manage its IT infrastructure and provide disaster recovery services. The contract is part of Middlesex University’s enhanced efficiency goals and future IT strategy.

Under the agreement, IBM will implement a hosted, virtualised server and storage environment and provide emergency back-up from a further IBM data centre, enabling a robust disaster recovery system.

The University will also see a reduction in the power and space requirements of its on campus machine rooms, helping it to meet government energy saving targets. By using a variety of virtualisation systems the University will reduce the number of machines from around 250 to 25 at the primary data centre. Electricity usage will be cut by 40 percent, from around 47 kW/hour to 27 kW/hour and physical space requirements from approximately 1,000 square feet to 400 square feet.

Steve Knight, Deputy Vice-Chancellor at Middlesex University, explained, “We need a system that allows flexibility according to our changing requirements and this solution does just that. We were looking for a platform solution to compliment our longer term plans to achieve a dynamic infrastructure. In IBM we have a found a partner who shares our technology vision and can help us achieve our strategic goals.”

Paula Vickers, Pro Vice-Chancellor and Director of Computing and Communication Systems Service at Middlesex, said, “We needed to upgrade our existing hardware and were looking for a solution that offered reliable, modern, scalable infrastructure to underpin the University’s business systems and activities. A key requirement was a solution that also helped reduce our carbon footprint through the deployment of modern, energy-saving hardware.”