Industry news

Energy secretary Ed Davey has given French energy giant EDF the go-ahead to begin the construction of two new nuclear power stations.

The Stations which will be built and run by EDF in Somerset on the site of an existing plant, represent a key part of the UK’s future energy strategy, providing power to an average of 5 million homes.

The new stations are expected to create between 20,000 and 25,000 construction jobs and 900 full-time jobs on completion of the two stations.

Ed Davey said: “It's vital to get investment in new infrastructure to get the economy moving".

Discussions are still underway regarding government subsidies for energy produced and how station waste will be stored and contained.

UK government sets nuclear energy caps

G4S partners appear to be struggling to fulfil a £122 million contract to provide housing for asylum seekers, according to a leaked letter from immigration executive Stephen Small.

The contract to deliver housing for 9,000 asylum seekers was secured by the security giant in March 2012.

The letter seen by the Daily Telegraph detailed fears by G4S’ partners regarding the viability of the contract with one of the partners having already pulled out of the contract.

The letter by Stephen Small said: “It has become evident over the last few months that a number of our accommodation partners are finding it increasingly difficult to manage aspects of this contract.”

The letter comes after the Home Office expressed fears last September surrounding the ability of the security firm to deliver the contract.

G4S Appoints New Directors

With the announcement of the budget mere hours away, George Osborne is expected to announce measures to stimulate industry growth and help middle and working classes.

Expectations surrounding the budget include the announcement of a tax-free allowance of £10,000 and the creation of new capital spending projects designed to stimulate the economy with £2.5 billion in funding.

There is speculation that the budget will also seek to help SMEs on top of the government’s current focus on SME procurement.

The budget will also see a 1 percent Whitehall budget cut over two years, as the government attempts to prevent the UK from entering into a triple-dip recession.

@sourcingfocus will be live tweeting on the 2013 budget today, to be delivered by the Chancellor of the Exchequer at 12.30pm

UK loses AAA credit rating

BT leaves competition behind for UK broadband project as final competitor exits

BT has been left as the last participant of the EU funded Broadband Delivery UK (BDUK) project after the last remaining competitor Fujitsu withdraws.

Fujitsu have claimed that added requirements have prevented it from having any chance of winning contracts in the bidding process.

Fujitsu was one of the companies that has been apparently blacklisted by the government according to claims made by the Financial Times.

The Department for Culture, Media and Sport (DCMS), which has the goal of making the UK’s broadband infrastructure the best in Europe by 2015, is now faced with only one major supplier with the removal of all other competition.

A spokesman for the Japense based company said: “various conditions surrounding the BDUK process, which we have discussed with the DCMS, effectively rule Fujitsu out of the competition for new areas”, the spokesman added: “Our focus now is very much on urban and city opportunities.”

BT has secured a further two BDUK contracts this week with multi-million broadband roll out projects in both Kent and Northamptonshire.

BT increase Scottish broadband coverage

Hewlett-Packard may pursue a claim of up to £2.7 billion ($4.2 billion) according to an economist expected to be called by HP.

Jonathan Orszag, economist at consulting firm Compass Lexecon, said the figure would represent the difference in revenue for HP, before and after the announcement by Oracle that it would no longer port software to HP’s Itanium business in March 2011.

Orszang said that the move to discontinue Itanium by Oracle would continue to impact HP’s business through to at least 2020, with revenue relating to Itanium falling throughout this period.

Orszag said during an evidentiary hearing, that Itanium customers were being put off: “They don't want to have the risk associated with some fight, or some delay, or some issue".

Oracle’s attorneys questioned Orszag’s comments, including the view that HP’s business had not been impacted by other factors, such as the phase out of the Itanium platform by HP, which had become public knowledge.

Oracle to appeal against $306 million corporate-theft settlement

Maria Nash has taken legal action against Barnet Council, claiming that it failed to consult council residents.

The court action includes a claim that the council failed to carry out a proper assessment of the plan to outsource BPO services to Capita under the Equality Act.

The 10 year £320 million outsourcing contract to Capita is expected to save as much as £125 million over the course of the contract, generating savings of £1 million a month, with the move to create savings following severe budget cuts.

The contract which has been originally set to begin in April 2013 has now been postponed following the legal action.

Councillor Daniel Thomas, deputy leader and cabinet member for resources and performance, said: "I can only reiterate that governments, both centrally and locally, have to make some difficult decisions and that while it is right these decisions should be open to scrutiny, it is ultimately the taxpayer who bears the financial brunt of these legal challenges."

Barnet Council saved by Capita

2012 represented a poor year for IT outsourcing with contract numbers falling to levels not seen since 2002 with reduced activity in the market resulting from global economic uncertainty.

In a report by analyst firm Ovum, IT outsourcing activity in the last 3 months fell well below the levels seen in 2011, with reduced contract value alongside fewer contracts available for tender.

According to the analysts, the value of IT outsourcing in the fourth quarter of 2012 fell by 34 percent compared to the previous year.

The services sector saw the largest decline, with the number of deals up for tender failing by around 50 percent, with major markets including both North America and Europe seeing dramatic slumps.

Ovum analyst Ed Thomas, said: “public sector activity has reduced as many governments come under pressure to cut public spending in the face of high debt levels, leading to a general reluctance to get involved in large-scale IT services deals.”

Ryanair has placed an order for £10.3 billion worth of aircraft from Boeing, with 175 planes set to increase the budget airlines fleet by over a third.

The fleet increase comes as Ryanair seeks to raise passenger numbers to over 100 million per year by 2018.

For Boeing the deal is welcome news, following damage stemming from the Dreamliner 787’s battery complications which resulted in the entire 787 fleet being grounded, and the success of competitor airline Airbus, who received an order for $24 billion worth of planes by a Indonesian airline on Monday.

Ryanair CE Michael O'Leary said of the deal: "Hopefully it will help refocus people's minds on the fact that Boeing continues to deliver great aircraft and is growing strongly, rather than a minor issue on the 787."

Ryanair’s proposed takeover of Aer Lingus shot down by competition watchdog

Firstly, it’s important to understand that though people say ‘4G’ as singular, it actually refers to a number of different types of technology, with different implementations, in different areas, to differing levels of capability. The term ‘4G’ hides a wide variety of highly complicated technologies.

Though there’s plenty of excitement around 4G, it’s not without its challenges. Fixed line is still the critical issue for businesses and the greatest contributor to business productivity. The main problem is that there are clear issues around ubiquity and reliability for 4G, as even now, 3G has issues. Until 4G truly has universal availability, it won’t be able to compete with fixed line. There needs to be a good level of reliability and penetration for businesses to run with 4G, and this will improve over time. 3G still has some way to go, but we need to continuously push technologies forward to ensure they advance.

The way to deal with this requirement is to implement a technology that makes up for challenges with connectivity, ensuring that data is distributed smartly. Everyone talks about the best case scenario with connectivity, but usually things are very different. It’s important that the experience is seamless.

This is not to say that 4G isn’t a great connectivity solution in the future. 4G can allow for very fast data rates without laying any cables, so if there’s a stable connection it can provide great bandwidth and capacity at a cheaper cost. Additionally there’s the potential for businesses to access capacities that otherwise wouldn’t be available. But we’re still not there yet. Bear in mind, 4G will only have been rolled out in 16 UK cities before the end of the year.

However, there won’t really be any disadvantage for businesses in cities that receive 4G later than others, purely because their offices will presumably have good fixed-line capacity. But on top of that, though increased bandwidth can lead to new business models and ways of working, at the moment the big issues with bandwidth are around video, which is not necessarily a big business driver.

Another thing we have forgotten with fixed line is that this technology is improving too. How much do some businesses need to work on the move? More often than not, when you need more bandwidth and you’re sat in an office, fixed line is the way to go.

Pervasive networking is the nirvana – allowing users to link into the best available network technology at any given time. It’s hard for one technology to provide all of the connectivity, so we need more creative technologies to enable pervasive networking. It would be ideal if the government could step in to help facilitate innovation and drive this forward.

In the meantime, smart data distribution is the key to ensuring businesses can maximise the value they extract from their data, regardless of their connectivity capability.

The future of the cloud: not quite soaring, definitely not disappearing

As financial institutions continue to focus on reducing risk exposure in the retail banking industry, many executives are turning to business process outsourcing providers (BPO) that can optimise systems and processes to improve performance, reduce risk and increase compliance. Jim Muir, director of AutoRek, the data reconciliation firm, highlights five key factors that organisations should consider when approaching BPO.

“According to the latest Country Risk survey from Euromoney, the risks faced by British banks have increased in the past 12 months, highlighting the struggles that the financial industry is facing. Throughout 2012, fundamental failings surrounding operational supervision, audit supervision and breaches of authority have dominated the headlines. As a result, the Financial Services Authority (FSA) has announced that it handed out a record-breaking £312 million in fines over the last year as it held businesses accountable for compliance failings that risked client and investor money.

As we move into 2013, there will be even more focus on holding senior managers liable for neglecting to institute simple financial controls. In addition, financial institutions will continue to be overloaded by an array of new directives from Europe and other regulations from elsewhere designed to improve the behaviour of the financial industry and create the perception of an efficient and viable market.

As more businesses focus on rectifying the failings of the financial industry, finance executives will become responsible for introducing basic measures that reduce risk exposure and help to position the UK as an efficient and viable market for customers. In order to optimise systems and improve compliance, many will turn to BPO providers that specialise in managing specific business functions and have experience of implementing straightforward controls. To help guarantee success from BPO programmes, we urge finance executives to consider the following five factors.

1.

Define business requirements from the start. As the financial industry recovers and starts to expand, thinking about longer term business requirements from the start of the outsourcing process will make sure that organisations choose a BPO provider that can flex requirements to meet changing business needs over time. It will also ensure that organisations see a return-on-investment and experience the benefits of outsourcing including enhanced flexibility, improved business processes and reduced costs for completing simple processes.

2.

Adopt a strategic approach by selecting BPO advisors who understand financial services. The finance executive’s priorities are increasingly revolving around adopting robust control-and-risk frameworks that meet the latest compliance requirements. Those expert BPO providers that have a strong financial services’ CFO advisory focus will understand the executives need to balance short term cost reduction with stability and an enhanced controls framework. As a result, those BPO firms who understand the regulatory landscape are better able to bring granular expertise and sympathy for the CFO’s mandate so that they can recommend the best solutions and methodology to adopt. A BPO provider with an excellent and demonstrable financial services pedigree is a must.

3.

Implement best practice before “the lift and shift”. Examine what smaller process improvements can be made before implementing plans to transfer work to new teams and locations through outsourcing specialists. Straightforward factors such as automated controls, regular reconciliations, record keeping and the segregation of duties can form the basis of control frameworks and help ensure that any anomalies or suspicious activities are identified, escalated and resolved in a timely manner. It will also ensure that best practice can be built into the new service, reducing the risk of process failure and lessening the dependency on personal expertise (not to mention lowering the baseline cost from the inception of the deal).

4.

Think about the end result including the customer experience. Due to the nature of financial organisations, businesses will often be operating in a high volume trading environment which means that finance functions need to scale-up and automate their ability to gather a holistic view of data from across any internal or external source. Only then can BPO providers focus on adding value by resolving problematic transactions, helping to manage risk effectively, and providing up-to-date management information. In addition, BPO providers need to achieve the end result without impacting customer propositions or affecting the customer experience.

5.

Remain agile. Using BPO will ultimately require a cultural change within the business. Many outsourcing teams are located across multiple locations so businesses need to encourage greater collaboration across the company by introducing tools and technologies that encourage collaboration and ensure key stakeholders are kept updated on progress. Integrating BPO into the business means that organisations can create a ‘one team’ mentality that ensures the organisation can operate across multiple locations to improve business operations and maintain competitive advantage. An inflexible legalistic arrangement between the “business” and their BPO partner can increase tensions and heighten the risk of the business replicating or cannibalising the outsourced processes “inside” to achieve greater co-operation.”

The need for Special Source