Industry news

Cloud Technology can be argued to be the merger and rebranding of a number of predecessor concepts enabled by technological developments in the IT industry. These include:-Outsourcing, Managed Services Provision, ASP, Virtualisation, Centralisation, DC Co-location, Standardisation, ITIL and Best Practice, Web Technologies, Server Based Computing, Fibre Optics, IAAS and SAAS to name but a few.

The concept of Cloud Computing embodies all of these contributing commercial and technical models, but it also goes a little further - primarily because it focuses on the interoperability and remote delivery of IT systems which are owned and operated by different parties, located in different geographies, and provided on different commercial bases.

Capital Support is the dominant provider of Cloud Computing services in the London hedge fund and private equity niche. More than just being a Cloud infrastructure provider, our focus on and high level of affinity with this sector gives us cause to consider “What will the next developments in Cloud mean to us, to our service offerings and to our clients?”

The arguments in favour of a move to the Cloud for both new entries and seasoned fund managers have already been espoused– and the momentum in this discussion between CTO and CEO has changed over the past few years from “Why should we move to the Cloud?” to “Why haven’t we moved to the Cloud?”

The Opex v. Capex cost model, scalability and flexibility, service availability, business continuity, risk mitigation, data protection and overall IT service quality benefits have been widely discussed.

An ever increasing level of focus on the IT implications of regulatory compliance and investor due diligence has already driven our focus to be providing enterprise quality IT on a personalised basis. Cloud Computing is already the predominant force for architectural change operating in this space and these drivers will continue to have (as they have for several years already) an increasing impact on business strategy, process improvement and product development by cloud providers for some time.

But, where does “The Cloud” go from here?

Well, for the customers of niche cloud providers the cloud is going to become more customised and “value added”. While some cloud providers will continue to focus on offering robust but generic infrastructure services to a diverse client base, others (like Capital Support) will embrace the affinity with their niche client base and focus on providing better and more specialised solutions for them. Their focus will be on converting the knowledge gleaned from servicing the specific demands from clients to bridge the gap and provide added value to a specialised client base.

Looking ahead, service providers are now investing in developing their Cloud and related support services to provide better understanding and support for their client’s specific needs. This involves integrating their private Cloud offerings with other providers’ public and private Cloud environments, and engineering “Hybrid Cloud” solutions to enable clients to blend their various service acquisition models. These firms are also consolidating to provide higher value solutions with specialist software, infrastructure and market data vendors like Tradar, Advent Geneva, Sophis, Framework, Bloomberg and Digiterre for the hedge fund and private equity industries.

This is the process for selecting new partners. The company must be clear about its objectives from the outset. These will only be broad statements of intent which will be crystallised and reconciled with the selected partner. It is likely that the potential partners will already be known because the field will not be large and those companies capable of meeting your strategic objectives will be even fewer. Factors to be considered include known capabilities, reputation, market strength and culture.

Any nominations should be balanced against internal strengths and weaknesses, focusing on finding complementary skills, resources and capabilities. An understanding of the potential capability to work together to meet joint objectives is more important than hard evidence of past achievements.

From a commercial perspective successful relationships need the right mix of stability and flexibility. They require a base of rules and procedures that reflect obligations and expectations, yet at the same time there must be mechanisms to support change and reflect shifting internal and external conditions. A record of all decisions, actions and achievements from this phase must be kept in the Enterprise Relationship Management Plan (ERMP) for each potential relationship.

Here is a checklist of actions that you would follow when selecting a new partner:

• Decide if you need a collaborative relationship

• Gather a team with the right skills and knowledge

• Open an ERMP in order to record all major decisions

• Define your objectives

• Shortlist likely partners considering:

- Complementary capabilities

- Reputation

- Market strength

- Culture

• Meet likely partners and reconcile objectives

• Make choice considering:

- Price and performance

- Culture

- Attitude to relationship management

- Risks

• Draft a contract suitable for a collaborative relationship and place a copy into the ERMP

• Draft Exit Arrangements

• Review the way in which you have handled the Decision Phase in order to learn from the experience

Finally when you have completed this phase whether you have chosen a partner or not, review the process to understand what went well and what didn’t. Ensure that these lessons are learned for the future. You may have selected a partner but in the process you should also have made contacts with other organisations. The ERMP you raised for each should not be discarded because there is potential for future relationships with them and the ‘due diligence’ could thus be shorter.

The operations phase is about all the mechanics of managing a collaborative relationship throughout its productive life to ensure that it is efficient, effective and that there is continuous performance improvement. Operational oversight will involve working very closely with the partner organisation to meet joint objectives on a day to day basis. It also involves instigating activities that make continuous improvement happen including process innovation and learning from experience and, provides the ability to exploit new opportunities that the joint business opens up.

As the relationship grows its objectives and the supporting contracts/SLAs will need to be reviewed. The effectiveness of the collaboration will be increased by ensuring that relationship responsibilities such as operational processes, risk, resourcing and performance span both organisations. All these activities will be co-ordinated and managed by the Relationship Managers (RMs) jointly at their monthly meeting.

In addition it is important to create a clear understanding at all levels of those aspects of the joint business that affect the bottom line and the ability to create value. This will be provided by a performance measurement system that is optimised specifically for relationship management. A prime example is SCCI’s PartnerLink which enables key performance drivers of innovation (Creativity), alignment and investment (Stability), open dialogue (Communication), operations (Reliability) and building commitment (Value), to be measured and understood across the enterprise. It should also give you a view of the softer aspects of a relationship such as Trust, Commitment and Long-Term Orientation that have a motivational impact on operational performance.

A record of all decisions, actions and achievements from this phase must be kept in the Enterprise Relationship Management Plan (ERMP) for each relationship. This documentation is used to jointly keep track of policy and practice. It will include static information such as the objectives, contract/agreement(s), organisational and management arrangements and contact details, and dynamic information such as changes to contract schedules, regularly updated plans, performance and continuous improvement records, minutes of management meetings including actions, and copies of communications such as newsletters.

Here is a checklist of actions that should be used to manage the operations phase:

At the very least a monthly, formal operational meeting chaired jointly by the RMs, would address the following:

• Review performance targets in last period and issue statistics

• Review work/orders in progress

• Review forecasted work, sales and orders in next period

• Review resourcing

• Facilitate the Sharing of Intellectual Property (IP)

• Consider and solve problems

• Review and update the joint risk register

• Agree updates to the ERMP

As a result of fall out from the operational meeting the following may need to be considered separately/less frequently:

• Actively seek out, initiate and manage process improvements

• Review and update the commercial agreement

• Review value proposition and joint objectives

• Review future plans

• Review industry and technology updates

• Identify new business opportunities to refer to senior management

• Identify policy issues to refer to senior management

• Review and update Exit Arrangements

• Involve other supply chain partners

• Agree updates to the ERMP from these meetings

On Wednesday 27th June, the European outsourcing Industry gathered together for the Annual European Outsourcing Association Awards - the premier awards ceremony that celebrates pan-European outsourcing best practice. The event took place at the prestigious Law Society in Central London.

Following a comedy set from host Hal Cruttenden, the ceremony got underway…

The winners were:

BPO Contract of the Year: arvato and Microsoft

The BPO partnership covers global contract-to-invoice processes for four major lines of Microsoft’s business that together represent 90% of the company’s revenues, or more than $60billion in FY2011. With unique scale and complexity, the global BPO contract serves customers in 152 countries from six locations worldwide (Dublin, Reno, Fargo, Monterrey, Singapore, Manila). It employs 1,100 people dealing with more than 4,000 individual processes in 15 languages.

IT Outsourcing Project of the Year: Luxoft and Hotwire Inc

This was a closely contented category, however the Luxoft and Hotwire entry illustrated a lean and agile international case study, whereby the service provider was truly embedded with their customer and its future growth. It clearly demonstrated best practice and was deemed of an exceptional standard.

Outsourcing Service Provider of the Year: BDO

BDO have invested in quality and in-country services, enabling its customers to confidently move from a diverse international multiple suppliers to one international (but working locally) supplier, which allows SMEs to operate as if international. The judges felt this was an impressive pan-European solution and the depth is demonstrated not just by the financial results but by the wide range of customers BDO provides these services to. The support provided, particularly to SMEs, is very encouraging in the current economic climate.

Outsourcing Advisory of the Year: Proservartner

The entry from Proservartner was extremely high quality. It is clear that Proservartner have found a unique method to combine their social objectives with a powerful corporate proposition. The case studies were unique, detailed and illustrated a focus on quick returns on investments, whilst ensuring the delivery of excellence. Proservartner manage to combine a focus on thought leadership with a drive to demonstrate value for their clients - and risk significant fees based on this delivery.

Offshoring Destination of the Year: Morocco – MedZ Sourcing

After careful consideration the judges felt there were two leading submissions; from South Africa and Morocco–MedZ Sourcing. However there can be only one winner and the award went to Morocco by a narrow margin. Morocco’s strong points include: a wide range of services, a stable political environment, and leading brand testimonials, combined with geographic, cultural and linguistic proximity for European companies.

Outsourcing End-User of the Year: Merck

Merck Shared Business Services’ submission covers a $56million agreement running over 5 years and spanning over 50 countries. Merck consolidated its outsourcing agreements from 8 suppliers to one (Genpact) to deliver finance and accounts services and IT and HR helpdesk services. Over 5 years the agreement will deliver $15m in net savings from the consolidation plus 30% operational expense savings over the term. A benefit sharing agreement is helping keep things on track for both parties.

Award for Innovation in Outsourcing: Genpact - Smart Enterprise Process

Genpact has developed the first scientific, methodology, Smart Enterprise Processes (SEPSM), for managing business processes; SEP can deliver 2–5X the business impact compared with traditional approaches. This service offers a truly innovative business insight and is a great example of targeted analytics. The judges felt that Genpact provided an excellent submission in a very strong category.

Award for Corporate Social Responsibility: SPi Global

SPi Global has achieved an ambitious goal of generating 20,300 employee volunteer hours to help youth by holding simultaneous CSR programmes within 24 hours across the company’s global locations. They also have an innovative way of contribution by gain share to the benefit of their clients, their staff and the charities they support.

With all targets exceeded, the judges selected this submission as the winner due to its excellent objective, implementation and the fact it has clearly helped so many.

Award for Best Multi-sourcing Project of the Year: Centrica - British Gas

The judges felt the Centrica/British Gas submission was extremely detailed and very convincing. It demonstrated a true partnership between four big players in the IT outsourcing arena, plus spanned across several countries.

European Outsourcing Association Chairman and EOA Awards Co-host, Martyn Hart said: “Outsourcing professionals really are the pillars of the European business community these days– all of us here have a great responsibility towards the communities in which we work, the tax payers who fund public sector expenditure, those that work within the private sector and everyone who consumes the services. We have a responsibility to everyone in our communities, to get Outsourcing and shared services right. Which is why these awards are so important; they celebrate best practice, they celebrate getting it right. These awards are a major initiative toward making outsourcing and shared services consistently successful. Congratulations to all of the deserved winners.”

BT has had a contract to provide cyber security and defence for global IT systems to the Ministry of Defence extended for another 7 years.

The contract builds upon an existing contract to enhance and secure MoD IT systems. The MoD has faced increasing attacks upon computer services with an increase of more than double from 2009 to 2010.

The details of the contract were not disclosed by BT who cited security reasons, but Neil Rogers, president of global government at BT Global Services, commented that: "The service has already delivered a range of benefits, not just in terms of security, but also financial and operational efficiencies”.

Vodafone and 3 are close to merging their combined telecommunications infrastructure in Ireland.

If the merger goes ahead it would create the largest network in Ireland, with significant network coverage and the market share to influence prices.

The move reflects a deal signed recently between O2 and Vodafone regarding UK infrastructure in which infrastructure is shared while retail services remain separated.

The government programme to deploy super-fast broadband to rural areas is expected to fail in meeting the deadline of 90 percent coverage by 2015, according a report from the Country, Land & Business Association (CLA).

The report also detailed that the plan to provide 2Mbs broadband speeds to every UK home and business was also under threat of failure.

The report raised concerns surrounding the employment of fibre optic cables and low funding. CLA president Harry Cotterell said:"We recognise that delivering this type of infrastructure is not easy but it is unlikely the government will meet these objectives”.

Volkswagen commented today that they were in the final stages of finalising the acquisition of Porsche.

The deal is expected to be finalised by August 1st and will see Porsche integrated into the Volkswagen brand.

The deal will involve the payment of £3.5 billion for a 50.1 percent stake of Porsche and one Volkswagen share to holding company Porsche SE which already holds stakes in Volkswagen and shares executives with the company.

A survey published by PC Advisor has shown that Google’s Android smartphone OS is twice as popular as Apple’s iPhone OS.

The survey ranked Andoid popularity at 49 percent while Apple was 26 percent, RIM 6 percent and Windows Phone at 17 percent respectively, which attracted comment considering that Microsoft only holds a limited stake in the smartphone market.

The survey indicates that Android is rapidly outperforming other OS models, even the likes of Apple, while Microsoft appear to be gaining traction with their new OS.

Uefa has outsourced its IT infrastructure to telecoms provider Interoute as the footballing body moves to modernise systems.

The move has seen the creation of a private cloud system by Interoute in order to manage the body’s critical systems.

The advancement of digital technology with the increased demand placed on Uefa from broadcasters and the need to provide Uefa’s own service have increased the need to increase efficiencies within IT services.