Industry news

Low PC sales in emerging markets and global recession have seen Intel lower their third-quarter revenue forecast by around $1 billion.

Previous forecast had seen predicted forecasts of up to $14.8 billion, the new forecast has dropped to $12.9 billion.

While Intel has seen reduced predicted sales, the computer giant has fared better than other major IT businesses in Japan and Europe.

Bloomberg has said that Microsoft may announce a 15 percent increase in its quarterly dividend as investments and cash shot to a total of $63 billion.

Heather Bellini, an analyst at Goldman Sachs Group Inc, detailed in research notes, that: “given that operating income only grew 3 percent in fiscal 2012 versus 12 percent in fiscal 2011, we also would expect the dividend increase to moderate from the 25 percent increase.”

Overall Microsoft shares have risen 18 percent during this year, however increased investor pay-outs are limited by liable tax on overseas investments.

The Bank of England has moved to expand the Prudential Regulatory Authority (PRA), which serves to monitor the financial sector.

145 IT staff are to be hired in order to increase the development and capability of the organisation.

The move ties with the PRA’s focus in developing the level of IT operations and expertise within all financial services.

Evaluating how your outsourcer or managed service provider is performing in real terms is an area that’s surprisingly overlooked by an increasing number of organisations today. It can be easy to adopt an ‘out of sight, out of mind’ attitude to your service provider, secure in the knowledge that you have KPIs in place to keep them in check, but how do end-users know whether or not they are really getting what they have paid for? Of course, service level agreements (SLAs) are one of the key elements any buyer evaluates when signing up to a service, and can provide a good yardstick for performance management – but exactly how reliable are they?

Of course, end-users will always be keen to clarify what they’ll be getting from their supplier before they enter into a new agreement, but it’s also true that an increasing number of SLAs have ended up becoming a stick with which to beat service providers up with when things go wrong. Perhaps the inevitable consequence of this is that many agreements are now based on best endeavours rather than actual, attainable service levels, which may be much better than what is being promised.

With this in mind, I believe that, from the end-user perspective, there’s a strong case for arguing that using SLAs as penalty mechanisms is something that needs to be re-thought, and that a more collaborative approach is required. In today’s market we need to get closer as suppliers and buyers to work together to set more realistic targets which more closely recognise the levels of service that are actually being provided. On the supplier side, it’s clear that service providers need to start putting their money where their mouth is and sign up to more rigorous measures of performance.

So how can we realistically allow suppliers and buyers to work together to set up SLAs which accurately reflect what both sides need? There are a number of steps that end-users can take to ensure that both parties are satisfied, and that when the project comes to an end, there are no unpleasant surprises.

First and foremost, it’s important for end-users to do their research in order to understand what performance indicators are available and what is reasonable to expect. It's no exaggeration to say that it’s impossible to even start the SLA process without knowing or appreciating what is measurable. For instance, some SLAs are based on a variety of factors, and there can be no way of knowing what suppliers should be charging for, and how that matches to your budget unless you have properly researched it beforehand.

Although there are plenty of different measurements available, it's important to remember that it’s unfeasible to try and have SLAs for every single aspect of a service in place. Instead, end-users should pick the performance indicators that are most relevant and important to their business needs. For example, when it comes to managing network services, for some companies capacity is of paramount importance whilst for others the big issue is latency. Select the ones that are most appropriate and make these the most important items in the agreement.

For both the end-user and the service provider it’s important that the performance indicators selected for SLAs are accurately measurable and simple to understand. It’s also important for end-users to ensure that these thresholds are well below their minimum requirements. For example, if network latency is a key concern and a minimum level of, say, 40ms is required then it’s important to make sure the SLA is well under that figure – although still within the realms of possibility. Basically, make it realistic and keep it straightforward.

Finally, always remember that SLAs are a safety net, but not a cure-all. Having an SLA in place can't guarantee that you won't have problems, but it can give a measure of recourse in the event of a failure that exceeds these predetermined agreements. With this in mind, it's imperative that end-users understand what compensation they are entitled to and that it's equivalent to the damage caused in the event that SLAs are breached. For instance, if an outage for one hour cost your business £10,000, the SLA needs to adequately reflect this overall cost to the business, rather than just the impact to the network.

Perhaps above all, it’s important to remember that although SLAs are not a solution to end-users, they also needn’t be used as a stick to beat suppliers with. Only by working together to identify mutually achievable targets and outcomes, with regular communication on both sides will you achieve success. Having robust SLAs in place might not be a guarantee of a successful partnership, but can be an excellent first step towards achieving your aims!

The UK government has begun to classify outsourcers involved in public sector contracts, with those classified as ‘high risk’ effectively blacklisted from contracts. This comes Nick Buckles is expected to appear in front of the Commons’ home affairs committee today, in order to explain the failure of G4S in delivering on the Olympic security contract.

The enactment of the blacklist comes as economic pressures have forced the public sector to seek better efficiencies. Cabinet Office minister Francis Maude has sought to secure better value from all future government contracts.

Already two IT companies have been written off from tendering for future public sector contracts. Fujitsu was classified as ‘high risk’ after a £900 million terminated contract to provide electronic patient records according to Financial Times sources.

The drive for private sector style attention to contracts and the willingness to ban poor outsourcing firms has been headed by Bill Crothers, formerly of Accenture and now chief procurement officer.

With the government prepared to blacklist outsourcers such as G4S who fail to deliver on contracts, today’s meeting will be closely monitored due to the public interest in the case and the multiple contracts that G4S is involved in. The company is a major supplier to the government, involved in contracts including police services, prison services and welfare services.

Keith Vaz, chair of the home affairs committee, said: “G4S admitted to the committee earlier this summer that they had presided over a humiliating shambles at the Olympics,” “It’s important that we look at their record across the board when awarding new contracts.”

Give the multiple contracts that G4S is currently involved in, and the contracts it has tendered for, It would be surprising for the company to be fully blacklisted, perhaps and smaller penalty or a period of greater oversight is a more realistic outcome to Whitehall’s investigation.

Taking a multi-vendor approach to IT solutions is a double-edged sword. True, it can drive down the cost of operations, but with this comes a host of complex management issues. The cost benefits of sourcing multiple suppliers can easily be accounted for, but IT managers may find it difficult to account for the time and resources lost due to inefficient use of management tools.

The growing use of services provisioned from cloud providers is driving the need to constantly adapt and enhance the way IT is managed, and increasing the need to focus on what is a challenge facing more and more businesses. That is, that operators of datacentre environments, both dedicated and cloud, and those of data networks often utilise a large variety of non-connecting management tools across the services provided.

The net result of this is an inconsistent and disjointed view of service operations, leading to sub-optimal application delivery and challenges in management and the speedy diagnosis and resolution of incidents. Perhaps the biggest problem, however, is that multiple disparate tools hamper the use of end-to-end automation which might be considered the silver bullet to the optimisation of an IT operation, offering as it does have the ability to reduce the cost, error and inconsistency associated with manual activities.

One might argue that the current trend to move away from monolithic outsourcing arrangements across network and datacentre operations would exacerbate this situation – adding more suppliers to the mix. In reality though, even those providers offering services across multiple domains are rarely using consistent tools and practices across them. Fundamentally, whether sourced together or separately, the network and datacentre layers are an intrinsic and inter-reliant part of IT service delivery.

By using consistent operational support (OSS) and business support (BSS) processes and tools organisations can provide a true service related view. Forward thinking organisations are considering this to be an important part of the service governance role which is increasingly becoming the function of the IT department of the future.

Service delivery is a largely overlooked issue in many businesses. Organisations can’t afford to have their productivity levels decline, especially when there are solutions available which easily prevent this occurring. It’s a fact that greater efficiencies can be leveraged through the use of managed service providers whose use of shared assets and knowledge will be of benefit to their customers. Businesses should look to those who use automation and shared services to deliver the greatest efficiencies, while focusing on the use of end to end management tools across all facets of in-sourced and out-sourced services to consistently govern the delivery of functionality to the business.

The recent trend for localised outsourcing includes hiring local employees which eliminate language barriers and cultural difference.

You don’t have to go to the big city to find a bargain, a better product, better service and overall cheaper package can sometimes be found on your doorstep, localised outsourcing can provide all of these advantages and is coming to be seen as an increasingly attractive option.

With businesses facing rising costs with uncertain global economic stability, localised outsourcing has become a new cost saving measure that is seeing increased up-take. The UK government has moved to publicise and invest in SMEs, with the promotion of SMEs as suppliers being a key part of the government’s strategy, in seeking to move the economy out from recession.

Many popular offshore outsourcing destinations are becoming increasingly expensive, even outsourcing within the same country can present logistical difficulties. Local outsourcing can present efficiencies and levels of accessibility that even in a digital are simply not available elsewhere.

Often multi-national or global companies will seek to seek efficiencies and employ local services around different sites. A hybrid approach is becoming increasingly popular, with big business adopting the advantages of both local and distant outsourcing.

Adrian Guttridge, Head of Business Process Outsourcing, EMEA, HP Enterprise Services, said “When it comes to locaslised outsourcing, HP certainly takes the middle road and implements the hybrid model of onshoring v offshoring.” Guttridge detailed that: “Individual customers may have specific reasons for wishing to keep certain services onshore – such as data-protection and security – but it is more than likely that for other services, location choices will depend largely on the vendor’s judgment that conditions are suitable.”

Localised outsourcing can sometimes be difficult to employ effectively. Popular areas for outsourced overseas services can often include countries with developing economies. Political pressures and conflicts can be a risk of localised outsourcing. “Social and political unrest, particularly in many developing markets, has demonstrated the geopolitical risk of locating business services abroad.” said Guttridge.

Global business can employ localised services around sites in multiple geographic locations. While this can allow for increased efficiency, lowering procurement costs, and taking advantage of local resources, such as; educated workforce, low cost labour and rapid transport times, the employment of localised services can give rise to cultural differences. These can sometimes be an obstacle if not effectively planned for. The director at Charterhouse, David Fincham, said: "Fundamental dissimilarities in culture that exist from one nation to another. These differences can have a significant bearing on how procurement does business and builds relationships with suppliers."

David Fincham, identified that: "Centralised procurement can arguably lead to a more consistent and compelling message while leveraging economies of scale, however, these benefits hinge on the relationship between central decision-makers and local markets."

Difficulties regarding cultural differences can be avoided through forward planning and an understanding of cultural backgrounds. Having a project manager or workers within the team who have a link to the cultural environment in proximity to an outsourcing project can help to ease transition and create strong links, which in turn increases the efficiency of localised outsourcing.

"Some multinationals’ quest for a smooth, singular global model is inadvertently creating kinks in their own supply chain. Yet, it doesn’t have to be this way. If only local managers were involved and engaged from the beginning, global category managers would find that they could avoid weeks of ineffectual negotiations with their colleagues and agency suppliers," said Fincham.

Global business can employ localised services around sites in multiple geographic locations. While this can allow for increased efficiency, lowering procurement costs, and taking advantage of local resources, such as; educated workforce, low cost labour and rapid transport times, the employment of localised services can give rise to cultural differences. These can sometimes be an obstacle if not effectively planned for. The director at Charterhouse, David Fincham, said: "Fundamental dissimilarities in culture that exist from one nation to another. These differences can have a significant bearing on how procurement does business and builds relationships with suppliers."

Adrian Guttridge described how HP had faced difficulties in using localised businesses, due to the complexity of the UK government procurement process, which can be highly complex to up and coming organisations. The very nature of the government procurement service, shows recognition of the value of localised services and outsourcing opportunities to UK investment.

Big businesses such as HP have moved to take advantage of localised outsourcing within the UK, with Adrian Guttridge detailing how: “HP are set on adding a further 150 SMEs to its supply chain and increasing spend with them by 50 percent by the end of next year. It is also appointing an SME Champion who will bring even closer alignment between the goals of HP and the needs of that local community, a task which spans providing better advice and support, improving our procurement process”.

Localised outsourcing can present difficulties and has clear limitations, however the employment of a hybrid model allows businesses to take full advantage of the efficiencies on offer. The benefits of localised outsourcing to businesses are being recognised by governments, with the UK government moving to enhance the procurement process. With planning, users can avoid potential risk and gain the likes of cost savings, overall efficiency, detailed oversight, with the rapid delivery of services.

General Motors is looking to insource IT services by hiring 10,000 IT workers worldwide over the next five years.

The car manufacturer is looking to end its use of outsourcers, which it had previously used to run its global IT infrastructure.

GM CIO, Randy Mott, commented: “We plan to rebalance the employment model over the next three years so that the majority of our IT work is done by GM employees focused on extending new capabilities that further enable our business”.

Swiss based management consulting firm Lodestone, has been purchased for $349 million by Infosys. The move will increase Infosys’ workforce, adding 750 consultants to its rosters.

The move comes as the Indian based software company seeks to expand into other markets including consulting.

The acquisition will also help to increase the company’s customer base, adding 200 consulting customers to the company.

Ryanair’s bid to buy a 24.9 percent stake of Stansted airport could be stopped by the European Competition Commission.

The Competition Commission had indicated in an earlier investigation over BAA’s market dominance, that airlines should only be allowed to hold a tiny percentage of any airport that was later sold.

A challenge from the European Competition Commission would be the second time that the airline has been investigated, with a probe initiated after Ryanair’s bid for Aer Lingus.