Industry news

Analyst firm Forrester have reported that the economic downturn and the uncertainty surrounding the Euro will likely see IT growth halt in Europe this year.

IT spending will revolve around the fate of the Euro, seeing no increase in growth for spending if Europe avoids a downfall triggered by the collapse of the Euro, to a rapid reduction in spend should the Euro collapse.

Forrester analyst Andrew Bartels commented: “The most likely result is either near-zero growth or economic recession in 2012, depending on the country."

David Taylor-Smith, UK chief of global security firm G4S, has predicted that private security services will have an increased role in the coming years, as police services increase privatisation.

David said that he expected to see an increased number of deals similar to the planned programs of West Midlands and Surrey services, which would see police services carried out by private contractors such as G4S.

In an interview published today with the Guardian, David Taylor-Smith said “we would never try to take away core policing functions from the police but for a number of years it has been absolutely clear as day to us– that the configuration of the police in the UK is just simply not as effective and as efficient as it could be."

Airbus is considering moving energy intensive high performance computing centres from France and Germany to Northern Europe.

Airbus CIO Guus Dekkers has commented that increasing energy costs in France and Germany have made the prospects of moving supercomputer sites to colder European sites attractive and would be able to provide savings of 20 percent.

In other news Airbus completed a deal with Russian airline Transaero for the purchase of four Airbus A380, worth $1.7 billion at list prices. The aircraft will operate on European, Central American and Asian routes.

The latest Gartner research shows that businesses spend $120 billion worldwide on enterprise application software this year.

Enterprise resource planning (ERP) represented the largest source of investment at $24.9 billion, the total spend was a rise 4.5 percent on 2011.

Tom Eid, research vice-president at Gartner, predicted that: "Spending in 2012 is anticipated to focus on industry-specific applications; upgrades to established, mission-critical software; integrating and securing established systems and infrastructure”, and that businesses were looking at cost-effective software as a way to counter economic downturns.

Wells Fargo & Co are looking at reducing cost through offshoring as part of continued cost-cutting measures. A spokeswomen from the company said that the bank is considering moving technology, retirement divisions and other departments to India and the Philippines.

The announcement comes as the fourth-largest US bank looks to increase savings by $1.7 billion through a variety of cost-saving measures.

Wells Fargo already has workers in India and China and the move would, according to the company allow for a global approach and provide for the demands of a worldwide client list at all times.

Hotel chain Accor, which owns 185 hotels across multiple brands, has said that it will create 3,500 UK jobs by 2015, with £5 million invested in employee training.

The hotel chain has also announced plans to create a professional training centre in order to deliver a apprenticeship scheme.

Managing director of Accor UK, Thomas Dubaere, said: “finding and developing talent is vital to achieving our ambitious growth strategy. This is why we are making this significant investment."

Selling Services to the Higher Education and Further Education sector is a complicated affair. Understanding how the sector works and how decisions are made varies greatly from organisation to organisation.

Often you will deal with Central IT Departments who manage large resources often two Data Centers plus staff and plenty of on Campus equipment used by students. The Computing Faculty tends to be self-sufficient and can pretty much manage their own affairs, Research Departments have a certain level of autonomy to purchase high spec computing and other Research related hardware, software and services. There are multiple decision makers and multiple purchasers. It’s no wonder doing business in the sector is often avoided due to the complex sales cycles and lead times and yet it’s a great business to be in.

Higher Education/Further Education people are approachable, open and always happy to put their cards on the table, unlike the commercial sector. Once accepted as a credible supplier to the sector there is a wealth of opportunity. The sector does not like to be ‘sold to’ it’s very much a case of ‘work with’ and ‘support’. Not all suppliers are prepared to work this way, it takes longer to gain trust in this sector and sales cycles being quite long don’t gel well with quarterly driven sales targets in commercial organisations. You have to be prepared to play the ‘Long Game’, more of a Test Match than a one day event.

Difficult times though are upon us. Student numbers are down by 10% for the 2012 intake, what about next year and the year after? Will numbers continue to fall and hence budgets become more squeezed. The Further Education sector is already feeling the pinch and as a consequence are looking for ways to deliver ‘better for less’ often acting as a catalyst to move to Cloud services and to find new and innovative ways to deliver.

Technology refresh decisions are now being considered as an opportunity to maintain a smaller presence ‘on Campus’ for critical Applications, but ‘off Campus’ things like Storage, Student Authentication to apps like Moodle/Microsoft 365 and take advantage of lower cost Disaster Recovery Solutions freeing up space and resources on Campus. The Further Education Sector being smaller has a good grasp on where the money goes and on their budget or lack of it - something the Higher Education Sector appears to be a little behind in.

Has the time come again for Finance to show the way? Will Institutions continue to bear all costs or look to allocate these to the appropriate cost centre? With these controls in place, when the time comes it will be easy to judge value for money and the pros and cons of in-house services as opposed to external provision. Without these controls in place judging value for money and it’s a guessing game and a potentially costly one at that. Of course it’s not all about money, the ability to deploy new solutions quickly requires a more agile organisation but a firm understanding of costs to deliver services today is a good place to start. Only then will organisations like Eduserv really be able to add significant value working as a true business partner.

At the beginning of April, Martyn Hart, chairman of the NOA, wrote a blog post for Sourcing Focus about a trend towards onshoring and nearshoring in SME manufacturing companies. I believe this trend is not just confined to manufacturing, which is heavily reliant on the price of raw materials, but is also affecting other areas like IT outsourcing. Anecdotal evidence from consultancies like Cap Gemini, as well as the financial results of companies like Logica, are pointing towards this.

Over the past 30 years or so, offshore outsourcing centres have evolved greatly. Recently several have been grappling with high inflation and strong exchange rates against the pound, which has pushed prices up. Some destinations have been a victim of their own success, unable to keep service levels high as they grow incredibly rapidly. This is particularly true at the moment as we have just been through a massive spike in demand for offshoring. At a recent event I attended in the UK, delegates were complaining about the levels of churn at their outsourcers and how they felt they now had the ‘C’ or even the ‘D’ team working on their business. Unchecked hygiene factors like this can incrementally push companies away.

The TPI Global Quarterly Index is also showing a decline in the large outsourcing contracts that offshore destinations excelled at. I believe this is for a range of factors that have been brewing for a while. Innovation and quality have been hot topics in the outsourcing industry for some time. Yet many of the contracts and service level agreements that companies hold their offshore outsourcers to are not conducive to producing these - in particular innovation. In fact, traditional outsourcing contracts can be quite the opposite. I get the impression that instead of altering the way their agreement is structured, some companies are just starting afresh. Furthermore, nearshoring is no longer new and some organisations simply want to try something different. While they may not move all their outsourcing away from offshoring, they may well put some of it into a new model.

As outsourcing matures, new drivers are vying with price. This too is gently pushing UK businesses away from far-flung destinations and towards Europe. Skills are taking a higher precedence, attracting organisations to the destinations with the highest skill-level for their requirements. The growing popularity of processes like LEAN, just-in-time and Agile mean companies are looking for closer relationships with their partners. For some organisations cultural affinity can play a key part in fostering those all-important inter-team relationships: there are several European sourcing destinations that the UK has close societal ties with. Other organisations may feel that shorter time differences and closer geographical proximity can help foster greater collaboration.

The upshot of trends like these is that nearshore destinations become more attractive and more affordable for UK companies. The UK media, or at least some sections of it, have been hyping up this reduction in demand for offshore, but I think that it is a natural part of the outsourcing growth and evolution cycle. And I certainly don’t think offshoring is dead – far from it. There will always be demand for it and it will always remain the right solution for some outsourcing needs. However, as the industry matures and develops we are seeing more of an even balance in the shape of the industry.

The connection between outsourcing client and supplier is often fraught. Misunderstandings, miscommunications and disappointment are a frequent feature of the relationship, with both sides becoming frustrated by problems. One client-side industry insider believes that as many as 80 per cent of clients feel dissatisfaction with their outsourcing. Given the critical role outsourced functions deliver for businesses, this is an alarming figure.

While suppliers absolutely need to address this issue, there are some straightforward but crucial steps that clients can take to maximise the value of their outsourcing contract, as well as making sure it doesn’t become a time-consuming and toxic relationship.

Viewing an outsourcing contract as an ongoing partnership rather than a straight handover is an important first step.

A report published this year by Accenture into how to achieve high performance in business process outsourcing validates the importance of this partnership approach. It found that nearly 85 per cent of high-performance businesses consider their outsourcing provider to be a strategic partner. This contrasts with only 41 per cent of typical performers having this mindset. Clients need to be more realistic about sources of value and what role they’re going to have to play to get that value. By consulting with their outsourcer as more of a partner than a supplier, clients can tap into their specialist knowledge for the benefit of their business. This will deliver the value creation, or transformation, that many clients want to see from outsourcing contracts.

It’s important to look at the effect outsourcing will have on the business as a whole; it cannot be seen as a process in isolation as business units are interdependent. Monitoring and measurement are essential to the success of the contract, especially if your company is using more than one supplier.

Trends in outsourcing have seen contracts getting smaller, as well as fragmenting, as companies look for the ‘best in breed’ in each field. Some outsourcers are forming consortia made up of a range of companies - each with different specialities - that allow them to tender for contracts.

Having specialist suppliers provides great flexibility and efficiency for the client, but it does present complications. As the number of parties involved goes up, it dramatically increases the amount of processes and ‘moving parts’ that need to be monitored.

It is crucial for the client to know how each is contributing to the business. But how can they keep tabs and track each process? How to tell where efficiencies could be made? And how to fix a small problem before it becomes a big problem?

Software available now allows minute by minute tracking of outsourcing results. No longer do businesses have to rely on slow, expensive reports that are out of date by the time they are issued. This technology offers a relevant and effective means of tracking all the moving parts of a business to give a greater control over the multi-layered processes. Monitoring software allows several providers to be tracked. Not only does this empower businesses to get better results from using multiple specialist outsourcing providers, it offers an efficient way to manage risk.

Software that provides a central dashboard to monitor all the elements offers clients a way to manage risk when moving their business from a single big supplier to multiple specialist providers.

A final important consideration for clients is to be very clear about what you are hoping to achieve. Often clients can assume that their outsourcer has understood something that they haven’t clearly outlined, and assumptions are never safe. Clearly defined objectives at the beginning set the contract up for success. If something is not working out as planned, articulate this to your supplier and work together to find a solution. Don’t wait until something has gone really wrong to address it.

In summary, clients should see outsourcers as an extension of the business. It is not enough to assign a contract and then expect the outsourcer to run with it independently. Put in place a tool that can drive and measure the value obtained from an outsourcing contract. The more the relationship is seen as a partnership and the more open the communication, the more successful and valuable results will be for you and your company

Can you define your business and your specialities?

Moneypenny is the UK’s leading telephone answering and outsourced switchboard provider. With over 250 staff, we look after in excess of eight million calls a year for businesses of all shapes and sizes - from sole traders right up to multinational corporations. Our award-winning service incorporates dedicated legal and property teams and is endorsed by the Law Society and Home Sale Network respectively.

How do you differentiate yourself from your competitors?

Moneypenny was born out of frustration with traditional telephone answering services. Businesses don't want to deal with nameless, faceless objects. They want to deal with real people, with real characters and a real understanding of their needs. Moneypenny Receptionists are employed for their can-do attitude and professional approach. Each trained on the importance of customer care and the quality of service, they are as much a part of our clients’ teams as they are ours. Moneypenny is not a call centre. Far from it. One visit to our UK-based office will demonstrate that. No timed breaks. No listening into phone calls. No battery farm desks. No scripts. Clients that joined us in 2000 are still with us today and our staff turnover is negligible. Moneypenny is much more than a telephone answering service, more than a place to work and so much more than a supplier. We're a family business with family values.

In your opinion - what are the top 3 outsourcing hot topics / trends at the moment?

1.

Client experience

A telephone switchboard has to be one of the clearest demonstrations of ‘client experience’ within a business. Having to wait for an available operator, or hearing out of office announcements, creates instant frustration even before the customer has had chance to state the reason for their call. Companies who fail to address their telephone answering issues are putting themselves at a clear disadvantage, jeopardising existing client relationships and also that crucial first impression to prospects.

2.

Saving Money

Now more than ever, businesses are looking for ways to reduce costs and make savings to the bottom line. Telephone support allows businesses to reduce switchboard operating costs in a number of ways. They no longer have the variable cost associated with costly temps and reception head count can remain constant and at an optimum level for the business. Despite the lower costs, high service levels will be maintained and new opportunities captured at all times.

3.

Outsourcing partnership

Historically, the process of outsourcing was largely mechanical in its approach. Lack of synergy between a business and its outsourcing partner led to repeated contract failings. It’s crucial that businesses realise the importance of trust and the need to actively manage the relationship on a long-term basis. An outsourcing contender must understand you and your business; offer ways to measure the success of your partnership; and finally, demonstrate that you are as important to them as they are to you.

Can you give some examples of best practice at Moneypenny?

Moneypenny understands that businesses need to know and trust the supplier they’re choosing to work with. For this reason, we will always hold a new client’s hand every step the way. From introducing them to the person who will be responsible for delivering our product, to talking to the company’s line provider and telecoms engineers about diverting calls – we’re in it for the long-haul. The exceptional calibre of our team and the technology we offer has been recognised by a Queen’s Award for Enterprise and being nominated by the Sunday Times as one of the Best 100 Places to Work.

What does the future hold for Moneypenny?

As part of Moneypenny’s Law Society-endorsed telephone answering provision for the legal sector, we will be offering a dedicated Business Continuity and Disaster Recovery product for law firms from July 2012. Due to repeated requests from clients, we are also looking to offer 24-hour telephone answering provision from September 2012. The future for Moneypenny and our clients looks bright.