Industry news

Liam Maxwell, the deputy government CIO, has pledged to enhance and streamline the G-Cloud accreditation process.

Areas including the security accreditation process will be enhanced in early 2013 in order to decrease procurement times and increase the ease-of-access for public sector suppliers. The G-Cloud has gained a reputation for being overly complicated, with few suppliers achieving accreditation.

Maxwell said: One of the things I’m taking most seriously is the view that it takes so long to accredit. I give you a commitment, probably in about two or three months, we will have a more streamlined, more effective, accreditation scheme, which helps people get there.”

The event entitled ‘How UK outsourcing must lead the way’, part of the The Global Strategic Hub series of briefings, was created to provide a venue for the discussion and exchange of views, including detailed case studies, on how the UK has the opportunity to achieve global leadership in outsourcing.

The UK is a strategic hub for outsourcing deals, with IT and BPO outsourcing contracts accounting for $33.7 billion USD in the second quarter of 2012 with 12 percent of contracts in the UK. The session opened with an introduction from Adrian Quayle, NOA Board Member for the UK regions regarding recent developments in the UK outsourcing market.

The benefits of outsourcing to the UK were highlighted by Khawar Ali, Vice President of Europe for Aegis, who focused on the attractiveness of a developed infrastructure for businesses looking to outsource services to the UK from the perspective of a supplier. Mr Ali also detailed how the UK’s links with other European countries and the European Union had provided Aegis with strong links to business in markets that had been previously inaccessible within a European market worth $16.3 trillion.

The UK has a long established history in the outsourcing industry with developed capabilities and a strong infrastructure, including the ability to scale, trusted contract legal frameworks, rapid time to market and a move to deliver corporate responsibility becoming common practice within the nation. The UK also offers an increasingly larger choice of service providers with global reach.

Recent UK infrastructure developments have included a governmental focus on broadband connectivity and speed, with Boris Johnson’s promise to give London ”the greatest 4G network in the world”, alongside a series of high-level investments in superfast broadband.

Along with a highly developed infrastructure, the UK offers other benefits that are common to a highly developed country including high levels of education leading to a talented sustainable employee pool. Kevin Devoy, Head of Procurement at British Gas described how the UK provided complex customer care and that areas including telemarketing had high performance from within the UK due to the workforce’s ability to handle complex calls. Back office services, HR and accounting services where public perception is not relevant and the local knowledge and highly educated contact centres of the UK are not required are provided in India.

The UK has a proven track record for contact centres with 25 percent of European centres based within the UK, with the last three years seeing significant development in this area including the establishment or growth of over 150 centres owned by international companies.

The government have moved to update subject curriculums to reflect the needs of businesses including the recently revamped IT GSCE curriculum. The development of skills in areas such as the contact centre industry has been supported by government recognized programs such as the ‘UK Contact Centre Career and Skills Framework’.

Capgemini are involved with a fresher’s course aimed at increasing the skill sets of UK students and moving the outsourcing industry forward. Speaker Anthony Belcher Fresher, Senior Capability Lead (SCL) for Capgemini’s Application Outsourcing (AO) division describing how the programme had resulted in increasing results after just 39 apprentices.

Stability has also been an attractive quality of outsourcing within the UK. Businesses enjoy a low risk stable environment with standardised regulation, which allows for increased ease of setup for new businesses. The UK’s position as a technology innovator and move to become a European leader are areas that have enhanced the nations outsourcing capabilities, with industries such as BPO heavily driven by technological innovation. Simon Gamlin and Rachel Ferguson of Eversheds LLP detailed how English contract law is popular in other counties globally such as Russia and the US.

In recent years the range of outsourced services has evolved with a re-focus in how they are delivered. Development of services has included a movement from customer satisfaction to customer experience, the use of technology as a driver rather than as a supporter and a customer centric approach rather than process centric. Mr Ali concluded that the UK could further enhance its position within the outsourcing market in attracting new business investment through the employment and development of low-cost locations.

Kevin Devoy in discussing the outsourcing strategy of British Gas’ parent firm Centrica, stated that ideally the “perfect strategy would not to outsource anything”, and that Centrica’s current business model consisted of employing the services that they do best in house and employ specialists in areas that it did not.

The increasing challenges of regulation are becoming an obstacle in developing the UK to lead the way in outsourcing. Mr Devoy described how increasing regulation from the likes of the FSA and OFCOM had become a growing issue for businesses and represented a negative for those looking to outsource to the UK. Businesses need to be aware of the legal implications such as the enforcement of UK business law such as TUPE aside from the growing regulatory considerations.

The speaker focus group put forward ways in which the UK could increase its position as an outsourcing leader and attract further investment from those looking to outsource. Chris Halward Programmes Director for NOA Pathway, who is involved with the NOA in developing new standards, detailed how the UK needs to better publicise its skill set, increase standardisation levels further and educate businesses in the workings of the FSA. The panel discussed how customers were looking for fast and cheap services while Simon Gamlin and Rachel Ferguson of Eversheds LLP described how increasing offshore costs had increased the rate of inshoring with many 1st generation contracts. The UK has the opportunity to take advantage of the increasing costs of overseas outsourcing.

This regional seminar discussed how to develop the benefits of collaborative sourcing partnerships and deliver tangible value. Adrian Quayle, NOA Board member for the UK Regions, introduced the event along with the agenda which included topics such as relationship management approach – leave the contract to one side, improving communications between supplier and consumer, building trust – no holds barred truth sessions, reporting and measuring success and fostering a culture of mutual continuous improvement.

Glen Bertram, IBM, and Steve Saunders, Telefonica, presented their case study along the theme of ‘In it for the long term’ involving the outsourcing of infrastructure and 50 applications over a twelve year period. The current collaboration includes:

- Annual alignment of Telefonica UK’s business objectives with IBM’s delivery targets

- Agreement on the priority of maintaining the quality of production service through proactive monitoring and rigorous change management

- A shared, integrated and maintained program plan that enables visibility across all projects; reviewed jointly, in regular governance forums where dependencies are easily identified and conflicts quickly resolved

- Co-location of Telefonica UK’s governance team with the IBM delivery team to facilitate the development of close working relationships and a common understanding of business priorities and delivery challenges

- A commercial model incorporating gain-share to incentivise both organisations to reap the rewards of beating agreed targets

- Joint continuous improvement initiatives

Both Glen and Steve offered some top tips on lessons learnt through their collaboration so far. Be open and honest, share key information – good and bad, align objectives, adapt, invest in developing relationships, be one team (O2 IT + IBM) to the business, objective governance and measurement and remember results count.

Perran Jervis, Partner, TLT LLP, offered a legal perspective on sourcing partnerships incorporating creating partnerships through trust, leaving the contract to one side and incorporate principles in the contract such as effective governance protocols and effective performance management.

Perran said: “Transparency is key for governance to work at the outset and during the course of the relationship. Communication should be a dialogue with consistent auditing, reviewing and reporting throughout.

“A solid information protocol should also establish information types and distinguish levels of access to various types of information. Clarify should also be provided on how information is transferred, how information is held, how information is published, how information may be used, how confidentiality is maintained and how requests for freedom of information are dealt with.”

Perran emphasised the importance of a bespoke governance structure and dealing with multi-sourcing issues such as a multi-party OLA / Co-operation agreement, shared responsibility/accountability, customer enforcement, confidentiality / information sharing and unified change management process.

Perran said: “Performance management is also vitally important. Establish service levels which identify end-user's expectations, reflect key business objectives, assess risks and impact of failure, establish ability / capacity to manage performance and measure service received and Service Level Agreements and Key Performance Indicators (SLAs/KPIs).

Paul outlined the importance of incentivisation with the aim of not penalising and offered the following tips:

• Relative Performance Levels (RPLs)

- Effective competition amongst contractors

- Establish a minimum level of service

- SLAs become the standard not a notional target

- Benchmarking (functionality and cost)

- Reward co-operation

• Avoid the mismatch in expectation

- Rigid service levels

- Unrealistic prescribed damages

- Contractor will perceive service levels and KPIs as the target

Paul concluded: “Contract structure should also be flexible and contain regular and relevant reporting. Constant monitoring and measurement of performance data is needed by both parties and effective incentives to collaborate in order to achieve project objective.”

Tim Leaver, Chief Procurement Officer, and Lorna Baker, Senior Procurement Manager, presented the Land Registry’s approach to relationship management. 70 per cent of Land Registry annual spend is covered by longer term contracts (indirects e.g. ICT, estates, FM). Contract / supplier management is hugely important and in these days of austerity - suppliers are key to “getting more for less”.

Lorna gained a valuable insight into the views and opinions of suppliers during her NOA Diploma research which may not have been quite such an open and honest dialogue outside the security of the research process. She built a network of professionals working on both sides of the outsourcing relationship who are keen to see Outsourcing deliver strategic improvement to their organisations’ and work together to demonstrate that Outsourcing, when done well, can deliver cost savings, efficiency and innovation to the benefit of the entire industry.

Why do relationships break down?

• A failure in communication at any one of the points of the cycle will result in damage to the relationship which will be fundamental enough to impact on all the other aspects

• Key personnel do not have to be senior personnel, but the people who can have most influence on behaviours. Often these are people who are considered to be in ‘lower’ grades or positions

• It is easier to look outwards at the supplier that is failing than looking inwards at how the customer is contributing or even causing failure

• Once face-saving behaviour has started, a complete breakdown in trust will result, and without the desire and capability to improve trust and relationships, staff may need to be removed (on both sides)

• Awareness of organisational culture is important

Transferable Lessons from Academic Theory to Day-to-day Work

• We should be aware of the views and opinions of our suppliers about us as a customer. Not just by listening to the formal feedback, but by taking on constructive feedback and working with them to improve how we work

• We should be honest with ourselves and others about our skills and abilities

• When we outsource we are often changing the roles of the contract management team significantly. A great IT programmer may require training to gain the skills required to act as a contract manager

• We must not micro-manage the contract out of habit. While we have a responsibility to work with suppliers and monitor what they do, we have outsourced for a reason and they must be empowered to deliver in accordance with their expertise

• We must not be afraid to challenge when necessary, although this should be done professionally and not be antagonistic or aggressive or it will create face-saving behaviour

• We should not be complacent when things are going well for us. We need to ensure that things are continuously improving and that delivery of the goods, works or services is aspirational - to be better every time

Land Registry’s Outcomes

• Significant improvement in relationships

• Charter or JSI provides ‘non contractual’ focus

• Follow up important

- Ensure actions completed

- Track relationship through normal performance management

• Nip any recurrence in the bud

Sourcing Partnerships Breakout Sessions

The seminar concluded with a choice of interactive sessions where attendees were encouraged to participate and share experiences and best practice. A choice selection of the key outcomes is listed below.

How do you structure a sourcing partnership at the start to encourage collaborative working?

• Governance

• Protection

• Support

• Operation input into negotiation and procurement process

• Recognise importance of culture

• Provide suitable management for customer

• Dealing with TUPE / retaining reemployment of existing staff. Avoid duplication

• Calibration with the customer business project team first – then the supplier

• As far as possible, define collaborative behaviour for both parties

• Educate your own staff

• Include the objectives in the contract

When issues arise after the partnership has started, how do you get them back on track?

• Acknowledge there is a problem and communicate feedback!

• The work to be done and capability to deliver

- The agreement may not have been the right one

- Locked in

- Not commercially fair or sustainable

- ‘Bitten off more than able to chew’

• Beliefs and behaviour

- Fear of exposing the issue

- What we can and can’t say

• Risk

- Different appetites for risk

• Implementing expectations

- Managing expectations of quality

- Reality of whether a contract can be delivered

- Disengaging business customers due to outsourcing

• Impact whether problem is not solved

- Loss of value

- Loss of reputation

- Risk

• Long term attitude to fixing problem

- Accountability

- Agree way forward and the end goal

• How to measure progress

- How you will jointly govern

- Have one version of the truth

- Involve the senior sponsors

- Relax boundaries

- Support decision

- Break assumptions about what can be done

- Show commitment

• Create a reasonable plan

- Which is understood

- Can commit to

- Will step change items

- Capable of delivering

For the full set of slides from this event, please visit www.noa.co.uk

BP has been banned from pitching for future US federal contracts as a repercussion of the Gulf of Mexico oil spill.

The suspension comes from the Environmental Protection Agency (EPA), who have temporarily banned the energy giant from bidding for gas and oil exploration licenses and fuel contracts to government departments.

The ban will not be lifted until BP can demonstrate that: “it meets federal business standards", said the EPA.

The ban could see significant damage to the company’s reputation, investment plans and shareholder profits, and had not been predicted by the company, with general counsel Rupert Bondy saying that there had been: "no indication that any agency would move to suspend or debar us".

The MoD has awarded a contract to IBM to reduce the costs of its property portfolio worth £24 billion through efficiency services.

IBM will provide services to MoD’s 4,000 sites across different countries including the delivery of smarter building software over 2013.

Dave Bartlett, vice president of Smarter Physical Infrastructure at IBM, said: “IBM’s analytics and smarter buildings software will help provide a new level of intelligence to how the MOD is managing its global real estate portfolio.”

The Irish Government has backed the creation of a data centre aimed at cloud computing with an investment of €5 million. The site known as the Irish Centre for Cloud Computing and Commerce (IC4) has the support of IT giants including Microsoft, Fujitsu, Intel and IBM.

The IC4 site, designed to promote cloud innovation, is based at Dublin City University and is expected to promote and develop the Irish cloud market.

The site is also expected to create jobs from the development of the industry, with cross-research alongside IT companies designed to: “turn good research ideas into good jobs in the Irish economy", stated the government.

BYOD adoption is increasing in high-growth markets due to a ‘live-to-work’ ethos, according to Ovum.

The analyst giant said that the trend was being driven by a lower rate of mobile technology provision from within companies.

Research conducted across 17 markets found that 57.1 percent of full-time employees practiced some form of BYOD.

Ovum analyst Richard Absalom said: “Employees in high-growth economies are demonstrating a more flexible attitude to working hours, and are happy to use their own devices for work”.

Oldham Council is expecting to save £2 million through an early payment system.

The system delivered by Oxygen Finance has been piloted since mid-2012 and generates savings through early payment in exchange for cash return.

The system ensures a return of a minimum of one percent back from every early payment. The £2 million saving is expected to be generated over a four-year period.

CEO of Oldham Council, Charlie Parker stated that: “Our work with Oxygen to implement the early payment programme is helping Oldham Council to make significant savings over the next few years.”

Oldham Council is expecting to save £2 million through an early payment system.

The system delivered by Oxygen Finance has been piloted since mid-2012 and generates savings through early payment in exchange for cash return.

The system ensures a return of a minimum of one percent back from every early payment. The £2 million saving is expected to be generated over a four-year period.

CEO of Oldham Council, Charlie Parker stated that: “Our work with Oxygen to implement the early payment programme is helping Oldham Council to make significant savings over the next few years.”

Google has moved to increase its cloud market in Europe through the expansion of infrastructure-as-a-service (IaaS) infrastructure and the reduction of cloud storage costs.

Cloud storage costs have been cut by 20 percent with Google’s IaaS offering now undercutting the price of Amazon’s S3 storage cloud.

Google has moved to comply with European Union data compliance regulation and establish sites in within the EU in order to create close links to the European market, provide physical access to the company and ensure compliance with data regulation.