Industry news

Spending through the G-Cloud public sector procurement service fell in July, in what suppliers hope is a temporary summer slump.

Spending fell from £459,730 in June and £555,187 in April to under £100,000 with just £98,182 being spent through the service in July.

While the service saw reduced spending during last month, the G-Cloud continues to provide contracts to SMEs, with 75 percent of the spend going the small and medium businesses.

Cisco systems have reported sales of $11.7 billion for this year’s quarterly results, with a 4 percent rise year on year.

Despite economic uncertainty within Europe the company has posted $8 billion in net income for the full year.

Cisco Chairman and CEO John Chambers, said “There is no question that our industry and our world are evolving quickly and Cisco is squarely at the center of major technology market transitions - cloud, mobile, visual, virtual and social."

Staffordshire County Council has said that it expects to save £370,000 per year through back office consolidation and updating printer technology.

The council is looking to create the cost savings by moving to efficient housing and centralising printing services within one location. The council will also employ modern printer systems from Ricoh, allowing for fewer actual printers to be employed, while delivering the same work volume.

Ian Parry, cabinet member for finance and transformation at Staffordshire County Council, said: “There are far less printers which are more easily managed and maintained. We are instilling a culture where excessive or needless printing is frowned upon and managers can monitor printing within their team.”

The latest release of Gartner’s yearly Hype Cycle has placed cloud computing within the ‘Peak of inflated Expectations’ bracket, marking the technologies position as a over-hyped service.

The Hype Cycle is designed to inform readers of the latest developments and positions of technology and trends. While the cloud was identified as a weakening service, both Big Data and NFC payment technology have been seen as rising new trends.

The reports detailed that: “Cloud computing is still a visible and hyped term, but, at this point, it has clearly passed the Peak of Inflated Expectations. There are signs of fatigue and signs of disillusionment.”

The trend of outsourcing services in the media and broadcast world has been no less significant than in other industry sectors. The impact though, if it goes wrong, can be publicly visible with an immediacy and scale unlike that of any other business. The closer the outsourcing of a service to the programme making activity or means of distribution; the greater the risk to the output and audience impact if there is a problem. Yet still organisations get it wrong. This has resulted in some managers questioning if such a service should remain a contracted operation. It is if course the wrong question. Successful outsourcing is possible providing proper consideration is given to how it is done and clarity of what is to be achieved. Whilst much of my experience has been in the media and broadcast field the issues are no less relevant to other sectors.

Service Profile

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Being clear about the service profile of what you are outsourcing, a commodity service or something more complex is key. Contracts that establish a framework to manage bespoke or multi-service arrangements with differing service profiles as a commodity are destined to fail or at least result in a very unhappy audience or bunch of users! It needs to be addressed at the outset as it will drive all aspects of the tender, contract, performance levels, contract management structure and ultimately price.

Core Business or Peripheral

Another way of looking at this issue is the extent to which the service being outsourced is core to the business and therefore more critical if something goes wrong, or more peripheral with less impact in the event of a problem.

The diagram (figure 2) shows broadcast related activities and the extent to which they are core business services or not, and the impact in the event of a failure. Whilst some of the terminology may be broadcast specific, those activities around the top right hand quadrant, are those most closely associated with the technologies and services upon which programme making and the play-out and distribution (the means of getting content to audiences) depend; the ones that will bring blank screens or “dead-air” if they stop.

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Figure 2 : Core Business or Peripheral

In the same way that bespoke or more complex services need a different approach to the way they are defined, measured and managed; those that are closer to the core business need to be defined in a way that is materially different to the performance measurement approach of commodity services. How this is done will largely depend on the approach the buyer wants to take; whether a partnership output based approach is preferred or a more contractual and prescriptive approach.

Prescription V Partnership

An outwardly simple concept, but in practice many organisations aspire to a partnership relationship with their supplier then set out to manage in a contractually adversarial way. The latter is often the result of poorly written contracts and customers who do not have the capability, confidence and expertise to manage an effective partnership relationship. The words do not match the deeds.

This approach is a choice for the client. Broadcasters tend to be a cautious bunch as their brand is built on their reputation for content quality and reliability. If the choice is one of partnership, then the approach and culture has to match the aspiration. Teams on both sides of the contract need to have a shared set of goals and commitment to making it work. Managers or individuals left behind in the client who are not committed to making outsourcing work can be a destructive barrier to success.

Sitting down and working through problems in a shared way, rather than chucking them over the fence is vital to building trust. Client and supplier should have a shared understanding of each other’s business objectives. The relationship needs engagement from the board down to the day to day contract management contacts. The client should be sharing their strategy and plans for at least one to two years ahead. This is particularly important in broadcasting and the media world where technology, ways of working and the means of reaching audiences are changing faster than in most other industries. The supplier needs to understand the potential impact of the changes on the way they provide services and be able to develop and agree a road-map with the client that matches technology replacement and upgrades to the clients’ strategic goals.

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Innovation

Many promises are made as part of the process of contracting out, reduced cost, better career prospects for staff, access to capital, leveraging the supplier’s global capability and so on. Perhaps the most overhyped phrase is the opportunity to deliver innovation. Something all in the high tech world are seduced by, in yet it is one of the most difficult to deliver. Contracts often have aspirational clauses that talk about innovation with little description about what it means, how it will be delivered, or more importantly measured. It then becomes a huge source of frustration to both sides. Shared strategies, road-maps and investment plans can help. The only way I have seen success is where gain share arrangements and invest-to-save incentives encourage both sides to push for change.

As dependency on IT systems and services increases, so too does the threat of system flaws of incorrect maintenance. Recent months have seen multiple examples of highly expensive failures from flaws within IT infrastructure. The need for establishing best practice for IT stability is painfully evident.

Recent public data protection failings while often the fault of human error, have been exacerbated by poorly implemented technology.

When technology is used on a daily process by global companies, often involving huge amounts of revenue, failures can have a huge impact.

Examples such as the recent technical failures of the Nasdaq stock exchange during the floatation of Facebook shares demonstrate the impact of IT glitches. The technical issues saw the potential loss of millions in business and Nasdaq have had to offer as much as $40 million in compensation to investors after trading was delayed by half an hour.

Last week saw two incidents of IT failures that resulted in million pound losses in both cases. Manganese Bronze Holdings who specialise in making London black cabs lost £3.9 million in profits from IT accounting errors.

The company said that system errors had “led to the over-statement of stock and under-statement of liabilities in the financial statements of previous years.” The company declined to mention the supplier of the IT system responsible for the fault. The announcement of the IT failure saw the company’s stock crash by 36 percent.

Accidental trades made by Knight Capital were revealed to be caused by dormant software which activated when a new system was installed. The fault resulted in a $440 million loss for the trading firm. Bloomberg reported that “once triggered on August 1, the dormant system started multiplying stock trades by one thousand."

As financial systems become more dependent on IT services it is vital that these services are maintained properly. While technology advancements occur rapidly, rapid upgrading can cause instability as demonstrated by the losses sustained from Knight Capital’s implementation of new software.

The establishment of clear guidelines and best practice guides for safely employing and upgrading technology is vital to achieving security and stability. With the recent examples of large scale losses resulting from failed technology industry guidelines now have an added urgency.

Dilip Allam, client services director at Mastek, explains how organisations can implement successful outsourcing schemes, even when teams are based in different locations.

With the explosion of cloud computing and Software as a Service (SaaS), it has never been easier for organisations to outsource business processes to other countries in order to take advantage of a large talent pool, cut costs and increase efficiency. Many businesses, however, are still reluctant to implement offshoring projects like these, since there is a misconception that the project won’t work if the team isn’t in one location.

To change this out-dated view of offshoring and implement more agile ways of working, firms need to develop a framework that incorporates an on-going cycle of ‘identify, plan, develop and deliver’.

As a first step, organisations need to identify exactly what they are looking to achieve. By understanding their key business objectives, it is possible to design a methodology that can meet these specific requirements very quickly. Secondly, agile offshoring will require a cultural change within the business in order to encourage greater collaboration with any offsite teams. For example, by training key stakeholders on the various tools and technologies that enable a flexible approach to IT projects, it is possible to ensure that the business can see the progress being made abroad much more easily and in real time.

Tools like audio, video, instant messenger or desktop sharing via a high-speed link are already making it possible to increase communication between the onshore/offshore teams. These regular updates also have the added benefit of ensuring that any change in requirements can be easily communicated on a continuing basis, and can help to ensure that everyone is happy with the end result.

Finally, organisations can boost engagement with offshoring staff and create a single homogenous team by using the same development tools, code repository and increment goals in every location, regardless of where the project team is located. This synchronous way of working means that offshore teams can be set up as an extension of the onshore team.

In today’s business world, the reality is that project teams are located across multiple locations and geographies, but that doesn’t need to be a problem. By adopting a more agile approach to outsourcing, this model can provide a viable and productive way of meeting many different business objectives. In fact, by adopting a more strategic and cyclical approach to offshoring, businesses can ensure they are taking advantage of growing trends in globalisation and maintaining competitive advantage. As such, by adopting a more agile approach to outsourcing, we expect that more organisations will be able to enhance their IT implementation, boost innovation in development models, and create greater communication between different teams.

The Public Service Network (PSN) has announced new service providers for the public sector procurement service.

The new service providers include Telefónica UK, and Level 3 Communications, offering service including security monitoring, call centre services and local area networks.

David Shields, managing director of Government Procurement Services, said: “PSN not only has the potential to save the public sector a significant amount of money, it will also bring real benefits to government organisations, enabling access to new services and a more collaborative way of working”.

Texas Memory Systems (TMC) is set to be purchased by IBM, in order to enhance the technology giants offering and acquiring technology licensed by TMC.

Brian Truskowski, general manager of systems storage and networking at IBM, said: “The TMS strategy and solution set align well with our smarter computing approach to information technology, by helping clients realise increased performance and efficiencies at lower costs”.

So far both sides have yet to comment on the position of TMC in the purchase, if whether the company will be absorbed completely into IBM, or if it will remain and a stand-alone department.

Students taking IT based courses have fallen in number, with students taking the 2012 ICT A-level exams falling to 11,088 compared to figures of 11,960 in 2011.

ICT Grades also failed to improve significantly, while female student numbers fell by nearly 400 compared to figures in 2011.

The figures will be disappointing to the government and IT industry which are trying to increase the UK IT industry, who have been attempting to increase the uptake of IT courses.