Industry news

Committee of Public Accounts (PAC) has criticised the failings of the Ministry of Justice (MoJ) in procuring translation services from Applied Language Solutions (ALS).

The MoJ were reported to have failed to have heeded advice from interpreters and trade bodies as well as failing to effectively assess service level requirements.

Labour MP Margaret Hodge, Chairman of PAC, said: “The ministry had been warned that ALS was too small to shoulder a contract worth more than £1 million, but went ahead and handed them an annual £42 million contract covering the whole country.”

Over the years, innovation has become a more important requirement in outsourcing relationships. According to a recent Forrester Forrsights Services survey, 87% of IT executives and technology decision-makers say innovation will affect their company's spending in 2012. But innovation is still a challenge in existing outsourcing relationships. Many customers underestimate their own role in getting innovation from outsourcing relationships by failing to consider how the length of a contract and their own internal processes and organisation can affect innovation in their outsourcing model.

Customers must contract for innovation. This requires a regular review of innovation strategy and projects, which cannot be effectively managed within short-term contracts. With this in mind, innovation should ideally be pursued within the context of a long-term (around five years or more) supplier relationship. Short term contracts often significantly reduce the level of innovation achievable, as they cannot always be crafted to include essentials such as performance targets, compensations for incremental advancements or a clear roadmap to achieve radical innovative results.

Innovation may not be appropriate in the first term contract with a supplier as they are still learning about the business and gaining a return on investment. Realistically, the first term should be about driving efficiencies and improving service, because innovation opportunities will often present themselves during the second and third terms if the contract is re-let and initial costs have been recovered. This is why short-term contracts can be so untenable and insufficient for true innovation.

The ultimate choice of supplier should be influenced by their ability to meet the competing sourcing objectives. Not all suppliers are as mature as others in terms of innovation capability. Governance mechanisms, including forums and objectives around innovation should be discussed and agreed within the contract. Specific innovation provisions and targets should be agreed rather than a general innovation statement of intent. It is also possible to consider establishing a joint innovation fund with both parties contributing a pre-determined sum to cover the cost of proof of concepts, but this should be looked at carefully to ensure it drives the appropriate innovative behaviour.

What underpins all of this is organisation. In Part one, we looked at the importance of a workable strategy and constant communication. Once this, along with a decent-length contract is in place, the organisational approach will come into its own in terms of importance. A high level of innovation ambition means a high level of organisation. Relationships with suppliers need to be collaborative, and attention should be paid to building the right supplier relationships. This should be based on mutual trust and teamwork – a transactional or adversarial relationship will not deliver.

It is important to drive open communications with suppliers and ensure that business issues and opportunities are effectively and regularly communicated. Business representatives should be involved with IT and the vendor management community in looking at innovation initiatives – suppliers should be encouraged to engage directly with businesses and stakeholders in order to drive out innovation opportunities. Time should be spent ensuring that objectives are aligned and personal compensation plans do not drive the wrong behaviour.

Innovation in outsourcing is not a pipe dream. With commitment from both supplier and customer, a healthy contract and strict governance, there is no reason why both parties cannot benefit from ensuring that the innovation objectives and obligations are met.

The Welsh government will introduce a new procurement policy aimed at benefiting local communities and increasing SME participation.

The new policy will see the advertisement of contracts worth more than £25,000 on the sell2wales portal in order to attract SME applications.

Upon the announcement of the policy Welsh finance minister Jane Hutt said: “Over the past year, we have seen that good procurement can drive efficiencies and, at the same time, bring about local community and economic benefits. Public leaders must not settle for adequate procurement activity. In Wales, we already have some of the best practice available and we all must strive to achieve excellence in our procurement to get the maximum benefit from every penny we spend.”

71 percent of CIO’s surveyed are frustrated by mainframe outsourcing according to research carried out by Compuware in a survey of CIOs globally.

Frustration was caused by dissatisfaction with hidden costs, quality of services and skills shortages. A lack of uniformity and standardisation in contracts was also cited as being a hindrance.

The survey also showed that mainframe usage is increasing by 21 percent year-on-year, with the issues raised by CIOs in the survey expected to become increasingly common.

Indian IT firms are increasingly migrating to smaller cities in a bid to reduce costs.

With India IT outsourcing firms facing increasing costs and with margins under increasing pressure with rising costs in the country small cities such as Indore are becoming popular locations for IT firms.

Western businesses are spending less due to the impact of the global recession on markets while rival markets to India such as Mexico and the Philippines are increasing their market share.

EE have announced the roll-out of 4G in 17 new locations in the New Year, locations are to include cities including Bradford, Coventry, Leicester and Reading.

March is the final date for 4G deployment but the 17 locations can expect to receive the new service before this deadline date.

EE is moving to expand its network infrastructure with the construction of further connections and the roll out of cabling.

Applications for start-up funding have been opened by Telefónica at its London Academy, allowing users to submit projects to the start-up initiative.

The start-up funding program named the Wayra start-up initiative provides funding to successful applicants throughout the world.

Along with funding successful entries also receive mentoring, technical support, and access to a network of similar start-up businesses.

Academy director of Wayra UK, Ashley Stockwell said: “The support we can provide is significant, not only in terms of mentoring and a place to work, but most importantly through the opportunity to work alongside other like-minded entrepreneurs.”

The global IT market saw a reduction in contract value to the lowest amount in nine years according to analyst firm Ovum.

Contract value fell to an 11- year low in the public sector with the July-September period coming in at $18.9 billion, a 33 percent drop from the same time last year.

Ovum analyst Ed Thomas said: “the global economic crisis continues to impact the performance of the IT services industry”.

Huawei the Chinese telecommunications manufacturing giant has signed a contract with £120 million to provide management services over a five year period to phone company Three.

The contract comes after Huawei announced plans to invest £2 billion within the UK market over the next five years.

Huawei have reportedly faced criticism by the European Commission in undercutting European telecommunications firms through extremely low rates.

As well as being criticised for expansion into European markets Huawei are also currently being investigated by the Parliamentary Intelligence and Security Committee regarding the companies security risk.

The National Audit Office (NAO) has voiced its concern on the NHS’s ability to meet savings targets of £20 billion by 2015.

The NAO reported that £5.9 billion in savings had already been achieved but that these savings had been in easy areas.

Future savings are expected to be harder to achieve and a survey carried out on primary care trusts by the NAO reported that services to patients were already being restricted.