Industry news

The Securities and Exchange Commission (SEC), the US financial regulatory body, has awarded Lockheed Martin an Infrastructure Support Services contract. Awarded under the another all-encompassing government procurement deal, the contract has a base value of US$33 million, rising to US$122 million if all program options are exercised over six years. Lockheed Martin hopes for significant performance improvements from the integration and streamlining of the SEC’s IT.

The company will provide transition, program management, managed network, end user computing, service desk and pre-production and other infrastructure services.

Lockheed Martin will deliver on the deal from the SEC Washington, D.C. headquarters and SEC Operations Center in Alexandria, Va., with an additional 11 remote sites being supported from these two locations.

There is a CIO at a major UK retailer who, I suspect, is not untypical of many. He tells the tale of how, once upon a time, he used Oracle as his database provider, JD Edwards for his back-office enterprise resource planning (ERP), PeopleSoft for his human resources and talent management, Hyperion for his business intelligence and analytics and Siebel for his customer relationship management (CRM). Now he just uses Oracle!

That's not because he's taken a decision to standardise on the Oracle software stack. In fact in some cases – such as his CRM selection – he deliberately chose not use Oracle. But Oracle had other ideas. After more than two decades of growing his company through a combination of ruthlessly aggressive selling and in-house development of new technology, Oracle CEO Larry Ellison decided five years ago that the way to win market share in the 21st century was to go out and buy yourself some extra slices.

So over the past five years, Oracle has spent a cool $34 billion on 50 software company acquisitions, including PeopleSoft (and with it JD Edwards), Hyperion and Siebel, as well as number of more tactical acquisitions to flesh out its portfolio and enable it to address some vertical markets, such as the insurance sector or the telco market – in which Oracle now has arguably the most complete 'industry-specific' offering among the enterprise software giants.

Of course it's just tough luck if you didn't want to be an Oracle customer, but Oracle argues that what it's been doing actually mirrors the sourcing decisions being taken by client companies anyway. “Many large customers have been in the process of consolidating suppliers,” suggests Sergio Giacoletto, the man in charge of Oracle in Europe, Middle East and Africa. “So we have been consolidating the industry at the same time as European multinationals have been trying to consolidate their suppliers. That means the expansion of our own offerings is sitting very well with our customers.”

He has a point – up to a point. Certainly the 43,000 Oracle customers who descended on San Francisco this week for the Oracle OpenWorld conference showed no sign of obvious discontent. Rival vendors gleefully predicted following every significant acquisition by Oracle that there would be mass defections by the customers, fearful of falling into Ellison's clutches, but in reality they never came.

Now it might be argued that the enormity of ripping out an enterprise software implementation and starting again was simply too daunting for most customers, but the harsh reality for the rest of the market is that in most cases being under the Oracle umbrella has probably secured the long term existence of their chosen products rather than threatened it. Siebel, PeopleSoft and JD Edwards have all had upgrades and continued support – and a commitment to carry on supporting them forever.

Of course, forever is a long way off – and it's inevitable that as Oracle rolls out a next generation of software the pressure will mount for customers to migrate onwards and upwards – but the truth is Oracle is getting pretty good at managing acquisitions and keeping customers happy.

There was much love and group hugs all round for the latest members of the Oracle family this week, the BEA Systems customers who were the latest major acquisition by Oracle. BEA is a great example of the new world order in the software game. For years the firm was undermined and haunted by takeover rumours and predictions of its imminent demise; now it has clear long term future as a central component of a wider IT architecture.

Indeed, there wasn't a murmur of discontent to be heard from the BEA camp this week as the customers tucked into their conference party beers and danced to Elvis Costello (corporate dollars, anyone?) and UB40 (ditto!).

Later in the week Hewlett Packard CEO Mark Hurd is due to address the OpenWorld conference where he'll be talking about the new HP now that the EDS takeover has been formalised. The previous HP regime managed to be make a complete pig's ear out of the takeover of Compaq.

While Hurd might seem more obviously in control than his predecessor, he could do himself no harm by grabbing a few minutes with Ellison and his sidekicks – the smooth-as-silk Charles Phillips and the inestimable behind-the-scenes operator Safra Catz – and pick their brains on how to complete a successful transition without scaring your customers.

Those of us in the sourcing ‘business’ know that outsourcing is all about companies making decisions about where to source, or procure, services. When we talk about the subject, we tend to think of it in isolation. It’s a business strategy and there are well-established guidelines for deciding when to outsource, when to offshore, when to call in consultants – and when not to. But, in my new book I’ve strayed off the typical path worn down by outsourcing commentators and into a world inhabited by sheepdogs and terriers.

Just take a step back from the typical outsourcing debate for a moment and consider how companies are functioning today. Companies can source services, and even entire departments or functions, from the best of breed operators anywhere in the world. The Internet has created a robust pipeline that allows almost free data and voice transmission without boundaries. Yet, there is an opposite phenomena too – increased migration.

People are increasingly willing and able to travel for work. The EU already allows a free movement of labour, but most developed countries are on the prowl for new talent to plug skills gaps and are using points-based methods of securing that talent, wherever it may come from.

So, people are more capable of moving to the work and work is more capable of moving to the people. It’s a more fluid work of work out there and companies are increasingly structured in a way that reflects this. There is less of an ‘HQ’ culture and more of a loose global collective or federation, all interconnected and moving in the same direction, but not necessarily with all those actors being employees of the same company – or being employed by anyone at all!

Academics have written about this extensively. Business guru Charles Handy predicted all this in the 1980s and sociologist Manuel Castells wrote three volumes on what he called the ‘Network Society’ – so what’s new?

Well, the difference now is the sheer presence of this phenomenon in all our lives. It is now a reality for all of us. None of us in any walk of life can avoid globalisation any longer. The recent troubles in banks all over the world demonstrates how closely linked they have become and how a butterfly flapping its wings in one country can destroy a bank in another.

So how could I write something new on the subject that would add to the debate? Well, I decided that there was plenty of theoretical material already out there. I wanted to write something short, punchy, and different – so it would in fact serve to spark off more debate about how jobs, education, taxes, migration, and outsourcing are all interlinked.

So I came up with ‘Who Moved My Job?’ It was just published this month. The book is about three English sheepdogs: Winston, Charlie, and Blair, who find their idyllic life on Manor farm disrupted by the arrival of lower-cost foreign herding dogs. They embark on an adventure that changes their lives forever. Mozi, Pandit, and Lech (from China, India, and Poland) are trained in local herding methods by the English dogs and soon establish their dominance on the farm – even working longer hours without complaint. The three Border Collies embark on an adventure where they are forced to discover a new career, enduring life in Battersea Dogs Home, living rough in a London cemetery, and the nagging doubt that perhaps they can’t adjust to the fast-moving world outside the jobs they know and love.

The book has been fun to produce, but is clearly an experiment for me because it is so different to most of the books commenting on outsourcing. A new detailed academic study of the issues might get more recognition within ivy-clad university walls, but what is going to stimulate more debate and understanding in the media and with the general public – the people really affected by these changes?

Bring on the dogs!

Mark Kobayashi-Hillary is the author of ‘Who Moved My Job?’ and is Offshoring Director of the National Outsourcing Association.

www.whomovedmyjob.com

HP has signed a five-year technology infrastructure agreement with Syngenta, a world-leading agribusiness.

Under the terms of the agreement, HP will use its ‘Adaptive Infrastructure’ as a service solution to transform Syngenta’s current infrastructure-based services into subscription-delivered services.

Martin Walker, global chief information officer, Syngenta, commented, “We chose HP ‘Adaptive Infrastructure’ as a Service so we can achieve faster infrastructure and application modernization with reduced risk and cost.”

Financial details have not yet been released.

The UK’s leading energy solutions provider, IMServ, has won an £11m contract with outsourcing company Logica, for operation of the British Electricity Balancing and Settlement Systems for ELEXON.

As the central IT services provider to Elexon, Logica’s key role is to consolidate the operation and hosting of the Balancing and Settlement Code; making the services more cost effective and efficient to manage.

The five year contract places IMServ as Logica’s key partner in the operation of Central Services for wholesale electricity settlement for England, Scotland and Wales.

Steve Brown, Managing Director at IMServ, commented: “We are delighted to be forming a partnership with Logica once again to perform this crucial role for the electricity industry. Through our expertise in the collection and aggregation of electricity data and our core infrastructure we look forward to working with Logica to provide a high performing service.”

Chancellor of the Exchequer Alisatair Darling used his speech at the Labour Party Conference in Manchester this afternoon to give centre stage to the challenges of globalisation: the risks from high oil prices and the credit crunch on the one hand, and the advantages of increased employment and wealth for the UK on the other.

In a solid speech, he said the secret of navigating the “unprecedented global challenges” of this downturn was “effective regulation”, rather than either "light or heavy-handed regulation", coupled with international cooperation. One government alone cannot deal with the challenges, he said.

The Chancellor – never a darling of the unions – brushed aside criticism that he is pandering to the unions on tighter financial regulations, saying that it is clear to all but the Tories that the City needs more effective control.

This will be addressed in a new banking bill in a fortnight, he said – a bill that will be analysed to see how strict those recommendations actually are.

The Prime Minister himself has contributed to an unfettered banking culture, and the Government is unlikely to over-regulate the shrinking, less competitive banking sector that remains the engine of the service economy.

Despite a few verbless sentences that recall the Blair age, the Chancellor's speech received what can best be described as a polite standing ovation, rather than an ecstatic one: one could imagine the tottering edifice of government balanced on delegates' shoulders.

That said, it's becoming clear that the extraordinary events of the past week – US nationalisations, plus record stockmarket falls and bounces – have given the Brown government an opportunity to throw new light on its earlier, much-criticised decisions, such as the nationalisation of Northern Rock. Put in the context of recent US events, that decision now seems prescient and stabilising, rather than muddled and mishandled as it was seen at the time.

It is also an opportunity to put some clear water between Labour and the Tories: the public would support signs of the Government intervening strongly in the City – something that David Cameron would be reluctant to advocate.

BT has signed a $660 million contract amendment with HP to extend the transformation of its technology.

The contract extends the companies current agreement for the next 7.5 years, whereby HP will continue to provide IT services.

David Butcher, managing director, service introduction, BT Operate, commented, “This contract renewal offers BT competitively priced services across a number of key areas of our IT infrastructure. HP is a key partner for BT and this deal will create the platform for accelerated innovation and delivery of services for our customers.”

Francesco Serafini, senior vice president and managing director, EMEA at HP added, “HP will support the management and transformation of the BT technology environment into an increasingly agile, cost-effective infrastructure designed to deliver what their business requires.”

Singapore Airlines Cargo has chosen Tata Consultancy Services (TCS) to service its cargo revenue accounting back office processes in a five-year multi million dollar contract.

Mr. Girija Pande, regional director for TCS Asia Pacific commented, “Singapore Airlines and TCS have always enjoyed a long lasting relationship which can be termed more as a partnership in progress rather than a customer service provider relationship.”

Trans Adriatic Pipeline AG (TAP) has commissioned T-Systems to develop and operate its entire information and communication technology. The contract will run for three years and will be operated from datacentres in Switzerland.

The IT services market in the United Arab Emirates (UAE) has been growing substantially faster than expected, as demand shifts from infrastructural investment to more strategic projects, according to a recent IDC study.

IT services spending in UAE increased 41 percent year on year in 2007 to nearly US $791 million. In coming years, IDC expects spending to continue to expand rapidly, fueled by a strong economy, a maturing IT market, skilled-labour shortages, increased foreign investment, and the increasing complexity of IT and its impact on operational management across all economic sectors. This is supported by the fact that IT services providers in the region have been investing heavily to expand both their services teams and offerings.

"Organisations in the UAE are facing a myriad of challenges that are heavily impacting their investments in IT services," said Margaret Adam, research manager, IT Services, IDC MEA. "The desire to accelerate revenue growth and rapidly take advantage of the opportunities in the region, as well as compliance and regulatory pressures and a drive for cost effectiveness, all fuel growth in the UAE IT services industry."

While 2006 saw infrastructure-related services, such as hardware and software installation and support, making up the largest portion of the IT services market, the situation changed in 2007 when systems integration services took the lead, constituting 19 percent of the market. It was followed by hardware support and installation (15.7 percent) and software support and installation (12.8 percent). The combined outsourcing category comprised 18.1 percent of the IT services market in UAE last year.

"The more sophisticated service areas such as systems integration, application customisation, and outsourcing were the fastest growing in 2007," said Adam. "Year-on-year growth of around 50 percent in these categories testifies to a maturing IT services market and a shift towards more strategic IT decision making."

The top 3 players in the UAE IT services market in 2006 — MDS, Emirates Computers, and Injazat Data Systems — were also the leaders in 2007. Combined, they accounted for more than a quarter of total revenues.

On the demand side, the combined government sector, with 26.7 percent of total services spending, was the largest customer for IT services, followed by the financial sector with 16.7 percent. The third-largest sector, with an 8.6 percent market share, was the combined agriculture, construction, and mining vertical.

IDC predicts that spending on IT services in UAE will continue to grow by an annual average of 23.9 percent over the next five years to reach $2.3 billion in 2012.