Industry news

All organisations are reining in their expenditure and focusing on the bottom line. During the current economic climate, the public sector is particularly prone to hefty cutbacks and ambitious saving targets. The UK Government announced in the autumn of last year that the public sector needed to make £35bn of savings by 2011. This created a mammoth task for those organisations. How can public bodies, such as the NHS, deliver services, as well as meet their savings targets?

Shared services has been a streamlining strategy implemented by the private sector for some time. It is a relatively simple concept. Essentially, you take away non-core functions and wrap them up into a single specialist service. This service can then be used by a group of organisations, rather than each organisation having their own in-house team. The bodies involved can benefit from economies of scale, greater efficiency and cost savings. Many would agree that streamlining repetitive back office processes, such as invoice processing and purchase orders, in order to release funds for core activity, is a wise business strategy.

This strategy is now being put into effect within public sector organisations. The NHS, in particular, has wholly embraced the concept and as a result partnered with service provider, Steria, to form the NHS Shared Business Services. sourcingfocus.com spoke with John Nielsen, Managing Director of NHS Shared Business services (SBS), to get an idea of how the initiative works.

Mr Nielsen summarised the aim of the NHS SBS, “The NHS Shared Business Services is a unique 50-50 joint venture between Steria and the Department of Health and aims to deliver savings and value so that more can be invested into frontline services.”

A venture that aims to save money must come as welcome news after growing concern over the way the NHS seems to continuously leak vast sums of money. In fact, the NAO predicts that this shared services strategy will reap savings of £250 million over 11 years.

The NHS strategy focuses primarily on providing financial and accounting support and, more recently, payroll. These processes have been traditionally done in-house at each individual NHS trust, creating a vast duplication of roles throughout the organisation. The costs associated with training and maintaining each F&A team would have been extensive. By buying in a service, the various trusts would be benefiting from long-term cost savings and, as Mr Nielson points out, expertise and technology. “It is not just about direct [cash] savings; we are able to provide better technology and expertise. Over the last three years, we have had 86% of our clients recommend us. We process, on average, 4 million invoices a year and have handled over £26bn in payments on behalf of the NHS.”

So, not only are there cost savings associated with sharing services, but perhaps more importantly, there are real benefits to service. It appears that shared services could be the NHS’ savior; however, there have been some recent chinks in the shiny shared services armor within other areas of the public sector.

The Department for Transport was accused of “stupendous incompetence” by the House of Commons Public Accounts Committee (PAC) for its HR shared service centre in Swansea. The service centre was rushed through to completion in order to meet deadlines and, as a result, experienced severe systems failure. This systems failure led to huge delays in services, as the IT needed reworking, which resulted in a bill of £81m, £24m above the projected savings the centre would have brought in the first place.

What is the key ingredient that makes the NHS SBS successful and avoid catastrophes such as the one mentioned above? Mr Nielson puts a large proportion of the success down to the “high quality group of people” that make up the SBS board. Consisting of senior representatives from NHS Trusts, Department of Health, and Steria, the board obviously has a wealth of experience and knowledge, which has resulted in an effective entity. The NHS SBS also benefits from the “rigor of a commercial company” (it is set up as a standalone profit-making entity), which will also push those involved to ensure client recommendations and a high quality of service. As it has no financial support from the government, if NHS SBS does not provide adequate services then they wont be able to survive, the NHS Trusts will simply not use them.

So what next for shared services in the public sector? Mr Nielson believes that the NHS SBS model can be replicated over a variety of other public sector services, the police and councils to name a couple. Of course, with the massive duplication of roles throughout the public sector, it is easy to see why shared services strategies would be of benefit.

What lies ahead for the NHS SBS? Mr Nielson summarises, “We want to expand our service line, incorporating more back office processes and ultimately provide a bigger impact.” If the NHS SBS continues to be successful, expands its range of services and delivers substantial savings, as well as enhancing processes, then it would not be far-fetched to think that, in a few years, we will find private organisations purchasing services from NHS SBS or other public sector shared services providers.

Research released by the University of Strathclyde has revealed gaps in Scottish contact centre data security. The research, published in the International Journal of Electronic Security and Digital Forensics, found that agents at such centres commonly receive suspicious phone calls while others report having been offered money in exchange for private customer information.

The survey, conducted by a student at the university, across 45 workers in call centres throughout Glasgow, found numerous possible outlets for sensitive data. Some of the findings included:

11 per cent of employees allowed customers access to accounts without covering appropriate security questions.

22 per cent worked with people they thought were suspicious.

6 per cent of employees had been offered money in exchange for information.

However, commenting on the security question statistic one respondent added, “Oh it’s [the percentage] higher than that – definitely. It sounds really daft but sometimes you forget to ask the security questions… everybody’s done it; it’s human nature to forget these things.”

The report also found failings in computer policies, such as log-ins being given out of staff that have previously left and lax password security. Physical security was also questioned with breaches being reported in the use of pen and paper and mobile phones within the contact centres.

Dr George Weir, who oversaw the study spoke to sourcingfocus.com and said he was surprised by the call centre failings but did not think it was just a Scottish problem.

“I was surprised by the results, perhaps naively. However, I don’t think these results are specific failings within Scotland; problems like these could occur across any call centres.”

He added, “Unfortunately, many contact centre agents are unaware of the risks and are untrained in how to deal with them. There are also usually processes in place but not always a big focus on following them.”

However, in the wake of the report the UK's Call Centre Association, which aims to promote standards of practice in customer call centres, has now added a section to its "Global Standard" on the issue of fraud prevention. The researchers also point out that the Scottish Business Crime Centre has published a Good Practice Guide on fraud prevention in contact centres.

Banco Santander has chosen Accenture to support the bank’s global operations in a two year deal worth 100m Euros.

In the first phase of the operation, Accenture will provide systems integration services to support Santander’s acquisition of Banco Real in Brazil; Royal Bank of Scotland’s European consumer finance unit; and the integration of Abbey National and Alliance & Leicester (A&L) into Santander Group in the United Kingdom. As part of its engagement in the United Kingdom, Accenture is also overseeing change management.

Mr. José Mª Fuster, general technology and operations manager of Grupo Santander, commented, “Thanks to this agreement, we can significantly strengthen our execution capabilities to continue implementing our strategic systems vision, which has made us the most efficient global bank in the world.”

Affiliated Computer Services, the US-based BP/ITO provider, has acquired Caribbean-based BPO provider, e-Services Group International, for US $85 million, including the assumption of the company’s existing liabilities.

The acquisition nets ACS and its clients an additional 4,000 English-speaking staff based in Jamaica and St. Lucia. The company also hopes the deal will enhance ACS’s ability to handle complex business functions from a location convenient to the Americas and Europe.

Tom Blodgett, Executive VP and Group President of ACS Business Process Solutions, “The veteran management and talented employees of e-Services will continue to provide high quality service to e-Services’ global customers. The acquisition also allows ACS to expand in a location that gives clients access to cost competitive customer care and BPO services.”

Thalys International, a major European rail company, has extended its contract with Atos Worldline, part of Atos Origin Group, to continue the development of its multi-channel customer services system, the Cybelys loyalty program. Under the terms of the agreement Atos will work to extend ticketless ticketing to all Thalys rail customers.

As global prime contractor for the project, Atos Worldline developed and now operates the Cybelys prgramme. The ticketless system works by employing dedicated wireless PDA and anti-fraud technologies. Conductors are equipped with on-train PDAs to check passenger identity and travel data against information in the reservations system. The paperless ticketing information is transmitted via contact or contactless identity cards and partner cards.

The ticketless system enables travel to any Thalys destination without a paper ticket. Travelers also receive email and SMS alerts in the event of disruptions in the train service schedule. The system enables Thalys International to address emerging sustainable development issues, while increasing customer satisfaction.

“Following the tremendous success of our first paperless tickets, we decided to partner again with Atos Worldline to take this strategic initiative to a new level,” commented Laurent Lenoir of Thalys. “The solutions developed by Atos Worldline further sharpen the image of Thalys as an innovator and trailblazer.”

Introduced in 2003, the Cybelys loyalty program supported trials of the first paperless rail transport service in Europe.

Prices of IT services in outsourcing are anticipated to shrink by 5 percent to 20 percent during 2009 and 2010, according to Gartner. The analyst house said IT outsourcing prices are likely to decrease during the next two years due to the uncertain economic climate, IT budget constraints and general market consciousness.

Gartner said that this fall in prices will occur due to increasing competition in the market between traditional and new providers as more providers compete aggressively to keep revenue growth on target, while ensuring margins. Furthermore, cost-focused buying behaviors in the current economic phase will be a key factor behind the reductions for IT infrastructure outsourcing services from 2009 to 2010, with a great variability based on each single deal.

“Regardless of the relative strength of outsourcing during a recession, many clients are reporting intense discussion with their vendors and renegotiation of contracts for Terms and Conditions (T&Cs) Service Level Agreements (SLAs), fees, volumes and low-cost offshore delivery locations,” said Claudio Da Rold, vice president and distinguished analyst at Gartner. “These items are under scrutiny to identify satisfactory concessions to further reduce the cost of services on a case-by-case basis.”

Mr. Da Rold added that Indian offshore providers have been coming under significant pressure for pricing reductions due to the Mumbai terrorist attack, the scandal at Satyam, rupee exchange rate fluctuations, and continued wage inflation and attrition levels.

North Somerset Council has selected IT consultancy, Kainos, to implement its electronic document and records management system (EDRMS). The first project is underway in Adult Social Services & Housing and expected to go live in the next few months.

Kainos was awarded the contract following a market tender which attracted a number of supplier responses. The deal was sealed after North Somerset Council held reference discussions with Havant Council, another user of Kainos’ services.

Barrimore England-Davis, EDRM Project Manager at North Somerset Council commented, “Kainos’s track record implementing EDRM solutions in other councils was very comforting to North Somerset. Havant spoke very highly of their experience.”

North Somerset has already made significant headway tackling the EDRM demands of its Adult Social Services and Housing department. This department relies entirely on paper files but a recent white paper that indicated the benefits of handling electronic rather than paper files, provided the necessary impetus to help this department to ‘go electronic’. The EDRM system links closely with the department’s patient care system and all new correspondence coming into the department will be scanned, indexed and stored electronically.

Barrimore explains, “EDRM will make a great difference to the speed and accuracy with which we find information. The cost of maintaining and supporting documents in filing cabinets is simply staggering when you account for floor space, management, retrieval, heat, light & storage. These are some of the very tangible savings that we expect to realise through the broader implementation of electronic document and records management technology across departments.”

Barrimore and the implementation team have their sights set on a number of departments that will benefit from EDRM technology across the council.

According to KPMG, the recession is expected to prompt a fresh "rush" of employers seeking to outsource services to new locations such as Sofia and Cairo rather than to traditional centres such as Bangalore and Chennai.

But what about the UK? It is incredible to see that companies are off-shoring their outsourced services while the UK is suffering from a declining economy, high unemployment and a lack of jobs. As in the US, the UK government should provide a tax incentive for companies that near-shore their outsourced services rather than sending money and jobs abroad.

Outsourcing has always and continues to provide an appropriate means of reducing cost and employing expert or specialist skills whilst allowing an organisation to concentrate on its core business. But the cost/benefit analysis of offshore versus near-shore outsourcing has changed dramatically in recent years, and in particular since the onset of the global financial crisis.

Now, a business may receive the same or a similar quote from an outsourced services provider in India and one in Inverness. This is due to rising inflation in other countries and the cost of a local liaison to front-end the agreement where there is a disparity in time zones, language and business practices.

Even where offshore outsourcing wins on price, this is rendered insignificant by the risks to communication and security that are involved. In the last two years, undersea cables have been damaged at least twice in shipping or geological incidents, resulting in significant degradation to communications and the time-critical transfer of important data.

And, businesses take for granted the regulation and trustworthiness of the UK business market by comparison with most other parts of the world. The UK is a very compliant society whereas large scale fraud has been widely publicised in the US through the escapades of Enron and recently Bernard Madoff. Astonishingly, the Indian commercial world has been rocked by the recent $1bn fraud at Satyam – India’s fourth largest IT outsourcing company.

We must come back to the much publicised quote, “British jobs for British workers”. Every £ spent in the UK rolls through the economy generating tax revenues at every turn. Every £ spent on an Indian Graduate is a loss to the UK exchequer and most importantly is a waste of the “Education, Education, Education” we have all been paying for since 1997. If businesses can reduce costs to stay in business, whilst keeping that work within the UK economy, my argument is that ministers at the Department of Business, Enterprise & Regulatory Reform (BERR) need to wake up to the notion of a commission or incentive and provide some direction and encouragement before it is too late.

News that up to a quarter of all government databases may be illegal comes as little surprise.

A report by the Joseph Rowntree Reform Trust claims that as many as 25% of all Whitehall databases are probably in contravention of European privacy, human rights and data protection laws and should either be scrapped or redesigned.

The Trust funds political campaigns in the UK that promote democratic reforms and social justice.

It considered 46 Whitehall databases and found that a quarter of them are “almost certainly illegal” under human rights or data protection laws.

“The collection and sharing of sensitive personal data may be disproportionate, or done without our consent, or without a proper legal basis; or there may be other major privacy or operational problems,” explained the report.

Those singled out in this category are:

• The National DNA database, which holds approximately four million records, including those of nearly 40,000 children, and has already been condemned by the European Court of Human Rights. The Trust says that over half a million of its records are of innocent people who have not been convicted or cautioned for any offence and who have no pending legal proceedings against them;

• The National Identity Register, which will store biographical information, biometric data and administrative data linked to the use of an ID card;

• ContactPoint, the national index of all children in England. It will hold biographical and contact information for each child and record their relationship with public services, including a note on whether any sensitive service is working with the child;

• the NHS Detailed Care Record, which will hold GP and hospital records in remote servers controlled by the government, but to which many care providers can add their own comments, “wikipedia-style”, says the report, without proper control or accountability;

• The Secondary Uses Service, which holds summaries of hospital and other treatment in a central system to support NHS administration and research;

• The electronic Common Assessment Framework, which holds an assessment of a child’s welfare needs. It can include sensitive and subjective information, and is too widely disseminated;

• ONSET, a Home Office system that gathers information from many sources and seeks – extraordinarily – to predict which children will offend in the future. This suggests an emerging programme for a highly interventionist state;

• The Audit Commission’s National Fraud Initiative, which collects sensitive information from many different sources and, under the Serious and Organised Crime Act 2007, is absolved from any breaches of confidentiality;

• The communications database and other aspects of the Interception Modernisation Programme, which will hold everyone’s communication traffic data such as itemised phone bills, email headers and mobile phone location history;

• The Prüm Framework, which allows law enforcement information to be shared between EU member states without proper data protection.

But perhaps the most interesting of the Whitehall programmes to be condemned by the Trust is the Department for Work and Pensions' cross-departmental data sharing programme, which involves sharing large amounts of personal information between government departments and the private sector.

Just listing these initiatives in the light of the inexorable 'mission creep' of such projects (either by design or incompetence) is enough to give serious pause for thought.

Factor in the increased sharing of data across borough and county borders in the name of citizen relationship management and you can begin to see the big picture: an imminent future in which the state can intervene in people's everyday and private lives to an extraordinary degree, all in the name of efficiency and security.

Twenty-nine other databases are listed as being problematic and potentially illegal. The Trust recommends that these be scaled back and should offer people increased opportunities to opt out.

The findings suggest that the widespread extension of surveillance and data-gathering about British citizens may be exploiting the Internet's ability to move more swiftly than legislation, and a culture of datasharing by stealth is being allowed to become the norm.

However you look at it, the Trust is suggesting that a large majority of the government's IT programme is, or may be, illegal and of questionable value.

If “the innocent have nothing to fear”, as legend has it, then what of those innocent people whose data is incorrect, corrupt, or has been tampered with, stolen, or lost? Or retained on these databases despite there being no apparent reason for them being there?

The outsourcing industry will increasingly be called in to underpin these programmes. We should be wary of where all this is heading; the possible legal and social implications of the relentless, multibillion-pound pursuit of modernity, and the more mundane repercussions of a future government putting a red pen through this wasteful and dangerous campaign.

SABMiller has awarded a five year, $120m deal to BT, who will deliver network and telecommunications services for the brewing giant, across the Latin American and European regions.

BT will provide and manage the company’s communications and networked IT Services needs in Latin America as well as global connectivity services into North America, South Africa, and Hong Kong.

SABMiller is one of the world’s largest brewers with brewing interests and distribution agreements across six continents.

The deal was concluded by BT Business with support from BT Global Services. Bill Murphy, Managing Director, BT Business, said, “SABMiller is a growing global brand that reaches the lives of hundreds of millions of people worldwide. BT aims to help SABMiller achieve its goals by ensuring that the company’s communications are amongst the best in the world.”