Industry news

After already being seen to be as the favourites, iCity have now been confirmed as the preferred bidder media centre developer.

Olympics media center to turn into cloud centre

The tech firm produced a bidding programme to development the Olympic media centre site into a datacentre. The tendering process had seen a runner-up pull out of the process, citing a process skewed towards iCity.

The iCity contract would see the creation of a datacentre, digital educational facilities and media studios, with a expected 6,500 jobs created.

Gavin Poole, CEO of iCity, said: “iCity will provide a sustainable legacy for the local community through the creation of thousands of jobs, apprenticeships and training opportunities".

Mobile payments via smart phones and tablets increased by 356 percent from the same time last year, according to a IMRG Capgemini report.

The report detailed a total spend of £34.9 billion by British shoppers during the first six months of 2012.

Richard Lym, economist at the British Retail Consortium, said, “Most retailers would agree the pace of technology is moving at a frightening pace, and they are having trouble keeping up as we move forward".

The head of retail consulting and technology at Capgemini, Chris Webster, said: “Mobile commerce is still the big story here, with average order values comparable to the full website”.

BP has selected ICT provider T-Systems to migrate existing Microsoft Exchange servers onto a private cloud service.

T-Systems will also be involved in upgrading the servers in there new location in a German based data centre. The transition will see the movement of over 100,000 mailboxes while providing smart phone access.

The new cloud based system will provide services to over 83,000 employees and the contract will cover a 5 year period.

Intel has completed the purchase of Whamcloud, a supplier of Lustre, an open source file system, in order to increase its high-performance-computing offering.

Lustre is used by many of the fastest supercomputers in the world, an area which Intel dominates, with 74 percent of 500 of the world’s supercomputers currently employing Intel processors.

Intel is currently focusing on increasing computing power by three times as much as current supercomputing powers.

In other news Intel has reported that it expects to see lower than anticipated growth for 2012, as mobile devices drew sales away from computer and laptop sales.

Procserve has received a award from the Department for Work and Pension (DWP) marking innovation in eMarketplace's improved access to contracts for small businesses while providing efficiency savings.

Working with the Department, Procserve’s development of its “Low Value Procurement (LVP)” solution allowed to shorten the time it takes to deliver vital training to DWP’s customers, significantly boosting the opportunity for a swift return to work and reducing the number of benefit claims.

The solution is designed especially to lower the barriers for small and medium sized enterprises (SMEs) to bid for the business of delivering this training provision and therefore represents an important “Win-Win” in two crucial areas.

The cloud-based platform allows the department to buy goods and services from a pre-approved group of suppliers through a centralised eMarketplace, which makes it easier and more efficient for both buyers and suppliers, supporting Government’s drive towards 25% of the value of public sector contracts being fulfilled by SMEs.

Nigel Clifford, CEO of Procserve, commented: “By embracing eEnablement in the approach to its business, DWP is leading the way and reaping major benefits."

Professional Services Special Interest Group

10th July 2012

The cross over between lawyers & consultants - how best to work together to get the optimum outcome for the client?

The objective of the meeting was to provide greater awareness of the respective value that can be delivered by lawyers and consultants on outsourcing engagements, and how this can be best utilised in future client engagements.

Marcel Horst, Excelsource, introduced this session with some thoughts on why and how lawyers and consultants could improve their work together. Client needs and trends were identified along with suggestions on how to improve engagement without compromising impartiality.

To aid discussion, Marcel suggested the attendees begin by looking at definitions of the two roles to discuss cross-over and the complexity between both roles and subsequent responsibilities.

Definitions

Consultants: Provide expert subject matter expertise, influences but have no direct authority to implement change, on a temporary basis offer more than what can be done in house.

Lawyers: Clarify rules of governance, licensed, protect the client’s interests, clarify and document all terms of the customer – supplier transaction, seek a best outcome to minimise risks and costs.

Protecting the client was iterated as one of the lawyer’s key roles and could be used in future role definitions.

Client Needs

The group then looked at the relationships between lawyers and consultants from the perspective of the client’s needs.

Paul O’Hare (legal director of the NOA, and partner at Kemp Little): “Relationship problems between lawyers and consultants can occur due to areas of overlap. It is important that activities are clear and transparent before any collaborative work.”

From a lawyer

- Turn a proposed transaction into a clear set of terms

- Help to negotiate the best outcome for the client

- Reduce client business risks by way of contract

- Bring together different company needs into one contract - commercial, operational, HR, and legal

- Clarify scope of retained and supplier deliverables - When the legal or consulting work involves outsourcing, the work retained by the client and the work to be delivered by the supplier needs to be clear or clarified (not clarity) This can sometimes be a challenge

- Comfort and a second opinion

- Independent perspective

From a consultant

- Subject matter expertise not available internally

- Broader industry perspective and benchmarks

- Past experience of services under consideration

- Speed of delivery and effecting change

- Independent perspective

- Temporary resource

Dominic Drydon, Olswang, agreed: “Chemistry is vital in lawyer / consultant relationships. Sometimes consultants have preconceived ideas about who should be doing what. Clarity on roles and responsibilities are vital and a client should take the lead on this. Standardisation between all three parties is equally important and can eradicate any confusion.”

Challenges and Trends

Marcel Horst provided a list of challenges and trends which led to a discussion about how the collaboration could be improved.

- Standardisation and Commoditisation

- Globalisation

- Flexibility

- Agility

- Cost pressure

- Changes in Legal Services Act liberalising the market creating competition

- KPO

- Divide and conquer

- Engagement is often mis-timed

- Improve definition

- Clarify roles and responsibilities

- Focus on business objectives

- Perception (hidden) costs

- Contracts vs. schedules

Mark Taylor said: “Schedules vs. contracts seems to be a common problem especially for documents which are in play internally and externally. The client should be made aware early on in the process that sometimes the schedules which are received are not detailed enough to work along with the terms and conditions.”

Paul O’Hare commented that business stakeholders should have a voice in the selection and choices of legal counsel. Mark Taylor agreed: “The chemistry with internal stakeholders is vital. Stakeholders need to be on board from the word go.”

From the discussion the following practical steps (how lawyers and consultants can work better together) were highlighted:

- Get the chemistry right early on

- Define the rules of engagement

- Seek to reduce the likelihood of not sharing information such as commercial detail between consultant and lawyer

- Analyse the opportunity

- Seek to reduce any barriers to communication within the client organisation

- Earlier engagement

- Assess key drivers and agree lead

- Share knowledge

- Packaging of advisory solutions

- Try it out

- Create a guide of how to create schedules

Paul O’Hare concluded: “Is there a risk that we are being too traditional in our roles? Could someone bring in a more integrated package that bridges the gap between lawyers and consultants? With the liberalisation of the legal market as a result of the introduction of the Legal Services Act, and other structural changes in the legal market, the emergence of organisations that can offer both legal and consultancy services as an integrated package is an increasing possibility.”

Adrian Quayle, NOA Board Member, said: “I think a good practical step from this forum is to try and look at roles and definitions in the services consultants and lawyers perform. Using a life-cycle as a guide to identity leads could be a possible way which these responsibilities can be identified.”

The full set of slides from this event can be found here.

In recent days news surrounding the Olympics has moved to the crisis surrounding G4S, London 2012 Organising Committee (Locog) and the Home Office, as news of security shortages emerge.

Recent headlines on the crisis include the likes of ‘G4S boss admits 'humiliating shambles' from the Telegraph, ‘Sorry is the easiest word for G4S - but it isn't enough’ from the Daily Mail and ‘Olympic failure leaves G4S in tatters, admits CEO’ from CBN news.

Yesterday Chief executive of G4S Nick Buckles said that he regretted ever taking on the Olympic contract. In many cases the headlines accurately describe the position of a company that has failed to deliver on such a public contract, a failure that has been seen by a worldwide audience.

While many developments and opinions have been released, news outlets have often failed to clarify the underlying causes which have led to the crisis.

G4S originally won the contract to provide security staff to Locog at the start of 2011 based on their ability to provide a highly competitive price in comparison to other offers. The contact originally required G4S to provide 2,000 security staff for the Olympics however G4S were called on to increase this number to 10,400 in December of last year.

The changes in the staffing numbers required by Locog in December are key to understanding the failure of G4S to provide sufficient numbers. For even a giant private company such as G4S, going from a target of 2,000 to 10,400 in a space of four months was going to present a significant challenge. Not only did the company have to increase recruitment by around 400 percent but Security Industry Authority applications (SIA) had to be processed for a further 8,400 trainees. This is further compounded as the government is responsible for the accreditation process, "One cannot start work until they have completed that. It's a bottleneck", said an analyst taking to the BBC.

The Public Accounts Committee in March, only four months away from the start of the Olympics, detailed that it was very concerned about the request for increased staff by Locog, saying that G4S faced a “significant challenge to recruit, train and coordinate all the security guards in time for the Games". The chair of the Public Accounts Committee, MP Margaret Hodge, said it was: "staggering that the original estimates were so wrong".

The result of crisis and the development of the story appear to revolve around failures on both sides, stemming largely in part from the late stage negotiation of further workers that G4S were unable to meet, failures in communication between the supplier and consumer and technical issues.

IT systems responsible for G4S failings

An analyst who wished to remain anonymous, commented to the BBC that “the government knew that the company would not hire people months off from the Games, that it would ramp it up much closer to the time they were needed," as this is standard practice for any company. This practice of delayed hiring however will struggle to cope when the contact requirements change in close proximity to the event.

Nevertheless the increase was accepted and payments were increased to G4S, who regally provide staffing numbers in the many thousands for other large programmes. Ian Horseman-Sewell, G4S's account manager for the Games, said to Reuters at the start of July that G4S could potentially run an event in Australia at the same time as providing staff over the Olympics.

While G4S have stated that they will pay for the resulting increase in military staff to fill gaps in their security provision and that they are likely to lose millions from failing to complete the contract, the public perception of the failure, which has been seen by a global audience and has seen shares fall, will damage the company the most.

Surrey police look to end privatisation after G4S Olympic failure

Currently G4S is being heavily criticised from within the Government. G4S chief executive Nick Buckles has faced a parliamentary hearing in which the failure was branded by a MP as “a humiliating shambles”. G4S have currently stayed on the defensive, taking criticism without attempt to point blame at Locog or Whitehall. There is a twofold reason for this; one is that G4S is partly culpable for the failure. Two is that G4S has gained many large contracts from the government and hopes to do so in the future. At this stage damage limitation does not include attacking a large client for its role in the failure, who may still be laying proverbial golden egg contracts for G4S in the future.

Teresa May is seeing that while many services can be successfully sourced to contractors, there is a need for direct communication from both supplier and buyer. The risk of a project cannot be outsourced. The failure of the Olympic security contract is one that will be felt heavily by both sides.

For G4S the disaster is not so much the failure to deliver on the contract, but more damage that the debacle has done to its reputation. Caroline De La Soeujeole, an analyst at Seymour Pierce who covers G4S, said she did not think G4S would suffer financially, saying to BBC News:"I don't think profits at the year-end will be significantly affected by this news" because a relatively small amount of G4S’s revenues are involved in the project.

While the story is still developing, it is clear is that both sides are now regretting the signing of contract. The contract is damaging for both sides, a perfect example of what can happen to contracts which fail to establish communication and effective management from both supplier and buyer.

A number of people have asked whether I have any sympathy for G4S given the current security shenanigans at the London Olympics? Some – yes. And for others too.

There are three parties involved: Government, the organisers: LOCOG, and G4S. Oh – and the IOC (International Olympic Committee) of course. Each time the Olympics and Paralympics are awarded by the IOC to a host city, that city then sets about building an entire operation, in this case LOCOG, from the ground up. From scratch. Learning and evolving in a relatively short period of time and under constant scrutiny.

Whilst growing and evolving, LOCOG also has to plan the events and award contracts. Contracting for live events is really quite different from contracting anything else. You know you need certain services but can’t accurately specify them until close to the event – way beyond needing the contract in place. Requirements evolve constantly. Yes you can learn from history – but this only gets you so far and every event is different. A degree of experienced clairvoyance is required to predict what lies ahead.

Having both contracted and been tasked with doing the unprecedented, I know first hand what it’s like on both sides. If you are attempting something as unprecedented as this security operation in the UK against such a fluid backdrop as I’ve outlined, normal contracting protocols go out of the window. As this G4S situation proves – a contract is little practical use to anyone at the eleventh hour. You need a balance of competency and process, coupled with great relationships.

Being unprecedented, both organiser and supplier are learning. As such, full specifications and responsibilities are nigh on impossible to accurately or usefully detail in any contract. This therefore demands an open, partnership-like approach. With the strict governance LOCOG and G4S operate under and most likely penalty-rich, robust contracts, it’s conceivable that the security problems may have been hidden for too long for fear of reprisals. Contractors failing or struggling is not uncommon. How you deal with it is key.

Another consideration when doing anything unprecedented is to assume the contractor will fail and have a backup plan. A doomsday view perhaps, and I admit not a view held by everyone, but to consider and hope all will go to plan is a flawed theory. I cannot believe LOCOG and the Government did not have a plan B. What’s been most alarming to me over the past couple of days is the level of surprise plan B seems to have been met with. Was the drafting in of police and military personnel really such a surprise? Or is it that if this had been revealed previously, there would have been public outcry? I am not sure we’ll ever know.

The perfect security storm has hit then. What next? And could it have been avoided? Criticisms are easy to dish out, but given none of us know the real facts, I’ll not be dishing any out. A few considerations though:

Should LOCOG have split the contract? Possibly, yes. I think concerns made by some observers that this would have made the coordination more difficult are less of a concern – but would the public sympathise with the fact this would have inevitably cost more? I doubt it.

Should the Government have tasked the military and police with the whole security job from the outset, which I am sure they would have done brilliantly? Possibly, but would the public sympathise with diverting such a huge amount of resource away from their day jobs? I doubt it.

Should G4S be in the situation they’re in? No. But G4S are not working alone. They are, regardless of contracts, working in partnership with LOCOG and the Government. G4S clearly seem to have some serious internal problems but they are also dealing with evolving specifications and constantly moving goal posts from their partners (and client). This is normal. Not ideal – but normal. G4S may have perhaps been naive to treat this contract like they do any other.

Working with a (temporary) organisation like LOCOG on a temporary event isn’t like working on normal jobs. You need to understand not just what you are contracted to do, but everything you are not contracted to do but are going to be held responsible for regardless. It’s that clairvoyance again. A lesson I learnt a long time ago and one G4S is seemingly learning very publicly now.

The government, LOCOG and G4S need to work together for the final push. It is these final moments where everyone will really earn their salaries. The G4S Chief Executive, Nick Buckles sat through a fairly horrific Select Committee hearing yesterday taking the heat. He had no choice admittedly. I think those questioning him need to look at the bigger picture though. Fault lies with all parties but what does the blame game actually achieve at this eleventh hour? It certainly won’t help that final push.

G4S will go on to learn from this, as will the Government, though LOCOG will cease to exist in a few months time. The games will be a success and everyone is working hard. The challenge is unprecedented though, and many would struggle in the same circumstances. The problems have been relatively minor in the grand scheme of things and having been where LOCOG and G4S are – I’ve some sympathy for both.

Recently, Barclays received a record fine of £290 million from the Financial Services Authority and US-based Commodity Futures Trading Commission (CFTC). This signals the punitive impact of Trans-Atlantic regulations and the intent of authorities to crack down on irresponsibility. In the last decade, the Western banking industry has had its reputation dented with several scandals, evidenced by catastrophes such as Enron and the last banking recession in 2007.

With more stories on bankers’ bonuses, poor governance is coming to public attention; governments can no longer adopt a ‘laissez-faire’ approach and Governments have a responsibility to look after their citizens because failures have severe consequences. As industry-changing fines are levied to ill-prepared banks, they must look into effective risk management solutions.

According to research from the American Banker, 80% of transactions from US-based bank transactions are processed in the UK, further supporting the need for Trans-Atlantic laws and governing bodies fit enough to enforce them. Banks with have multi-national subsidiaries, such as Barclays, have to be proactive in complying with local regulations, after all, shareholders or taxpayers depend on their money being responsibly managed.

Regulators are becoming more visible and stringent towards corporate malpractice. Governing bodies from both sides of the Atlantic are forming alliances to increase communication and resolve issues relating to compliance of cross-border laws. An example of this would be the partnering of the Federal Deposit Insurance Corporation (FDIC) and Bank of England in 2010.

However, banks must want to instigate internal change and adopt a new mindset aligned to a culture of compliance. New banking regulations will impact the day-to-day work. Containing risks may require increased manpower to implement new processes quickly - especially at banks with a workforce of thousands. To protect the bank, the cost of hiring new staff to monitor and implement controls will increase. These new staff could potential slow down business pace and reaction times as they come to terms with the new environment and require training in the early stages. Using Risk Management technology to quickly disseminate new practices provides a less intrusive method to deal with compliance.

In the past month, the failure of banking technology shared headlines with the failure of compliance. Events at RBS show how a lack of communication can create information black spots leading to the failure of technology, much to the embarrassment of the Chief Executive, who has refused to accept a bonus again this year.

Perhaps the proven failure to manage employees’ compliance - partly linked to technologies they were using - shows buyers are realising some technologies are not up to scratch. Solely using email as a communication can bring issues in risk tracking and monitoring critical information. The malpractice environment when Barclays manipulated LIBOR seems widespread, breaches were communicated through emails and openly spoken about, but they were not flagged.

Instead, hosted solutions such as Cloud-based risk solutions provide risk managers working across the global network of a bank the ability to comply with global regulations. The single platform provides a common view of all compliance activities across entire groups, giving risk managers and the boardroom a complete view of business operations.

Consider the use of embedded enterprise social tools such as Chatter instead of email to encourage peer review of responsible practices. All social data is available to management, and significantly, stored against the data it refers to e.g. a financial transaction. The cloud provides scalability and speed which large banks crave when discussing implementation of new technology.

There will be more penalties given to banks in months to come as authorities clean up corporate behaviour. For banks to find a way to negotiate risk, they must first look at how corporate risk is governed internally in its entirety, from the risk manager up to the boardroom.

It has certainly been a high profile couple of weeks for outsourcing.

Headlines such as ‘outsourcing: can it ever work?’ and 'humiliated' G4S to claim millions’ have really put outsourcing under the spotlight and negative press coverage has simply snowballed.

As the G4S story unravels hourly it seems not only were there critical flaws in the governance plan, change management, and the IT infrastructure but the partnership between the Government and G4S seemed doomed from the start due to an ineffective communications strategy.

What Theresa May is learning is that you cannot simply outsource risk. You can outsource the management but the issue will still be there and governance is a key part of that.

The issue of increasing a workforce from 2000 to 10,000 in a short time period is a huge undertaking and would require some serious change control from any organisation. It certainly raises the question as to what governance G4S and the Government had in place and if an effective plan along with the right people were involved in any way?

On a day to day basis, outsourcing relationships are a great success and provide knowledge, cost benefits, expertise and efficiencies to organisations of all sizes across the world. It is a shame that such a prominent failure has tainted the industry at a time when the public sector needs to make heavy cuts while keeping as many services as possible for us – the taxpayers.

Until the dust settles, G4S need to take their punishment and the Government should reflect on how they communicate with and manage their suppliers. Sharing best practice and our industry’s successes is the way forward. Not only to combat some of the negative press but to share the wealth of knowledge we have amassed and prove the value that outsourcing adds at both enterprise and national level.

The NOA’s Outsourcing Works Campaign aims to do just this and set the record straight through an upcoming research project that will unequivocally prove the benefits that outsourcing brings to the UK economy.

So hopefully some good news on the way – just remember don’t blame outsourcing for this Olympic debacle, one swallow does not make a summer..