Industry news

Jeremy Green, principal analyst at Ovum commented that the deal between by Vodafone and Telefonica in sharing netweork servcies in the UK to facialted the creation of a 4G network was expected and represents the future of shared services.

Jeremy called the sharing of services by the two competitors an "entirely sensible move" and that Ovum had predicted such a outcome of two networks sharing such services as early as 2008.

Vodafone joins with Telefonica to deliver 4G

Jeremey said “It follows on from the merger of T-Mobile and Orange in the UK into Everything Everywhere. If Vodafone and Telefonica had not also embraced sharing in this way they would have been at a competitive disadvantage."

KPMG have released data that indicates organisations are continuing to expand the services they outsource. The use of ‘shared service centres’ continues to outpace the number of organisations who favour traditional outsourcing.

Shared services were cited as the strongest area of growth by 52 percent of the respondents polled in the first quarter 2012 survey, while traditional outsourcing received 27 percent.

Shamus Rae, partner in KPMG’s Shared Services and Outsourcing Advisory team, commented: “Clearly, the relatively weak BPO growth expectations are a reflection of diminished demand for more traditional, generic, transaction-oriented outsourcing arrangements, such as in finance and accounting, in contrast to the greater demand for more specialised BPO.”

Companies are increasingly turning to specialist agencies to manage their social media channels and monitor online conversation about their brands. However, whilst there are clear benefits to be gained from tapping into this specialist knowledge, such benefits need to be balanced against the risks of outsourcing a function that has the ability to go wrong - at break-neck speed.

Who decides when to respond to a defamatory response to a blog post? What should be the response time? Who needs to approve new Twitter streams? Who is monitoring the Facebook page outside of office hours? What is on brand and what is off brand? How tolerant should the company and its executives be to criticism? Have the agency received sufficient legal training? These are just some of the questions that companies will need to consider when outsourcing their social media functions to agencies.

Unfortunately, there is no one size fits all approach to managing social media risk. Whilst most large companies now have social media policies and guidelines for staff and contractors, the detail in terms of acceptance of legal risk, tolerance levels, crisis response procedures, and branding guidelines will vary from company to company. What is right for a consumer brand such as Coca-Cola will be very different to what is right for a major high street bank.

Imagine that having outsourced all your company's social media functions, the company is targeted in the middle of the night by an anonymous blogger who is making various false claims about the Chief Executive and a contract which he helped to secure. The allegation started on a blog but is now causing a stir on Twitter and Facebook discussion groups.

In this type of scenario, there is rarely time to convene meetings and conference calls to determine who has authority to control the response and determine what the response should be. No response or the wrong response can often increase the damage when a sensibly co-ordinated response would have dampened down the flames. The key is therefore to prepare for such scenarios in advance and ensure that the key procedures and policies are communicated to the agency and form part of the outsourcing contract.

In terms of its own legal liability, a company can be held legally liable for any third party material which it knows is being published on the social media channels which it controls. For example, if the company's Facebook page permits "fans" to post comments on the page, the company is able to remove them and so will be potentially liable if it refuses to respond to a complaint. This means that companies need to decide whether to pre-moderate discussions (therefore reducing the risk of objectionable content but sharing in the risk of publication), post-moderate, or reactively moderate (where the company simply reacts to complaints). Many companies are opting for a mixture of pre-moderation and post-moderation, depending on the level of risk created by the conversation and the desire to facilitate a real time conversation.

Once a problem is spotted, either by the company or its agencies, the company then needs to decide how to react. Empowering an agency to respond to social media comments may facilitate quick response but also runs the risk of being premature or off-message. It can therefore be helpful to think in advance of different levels of risk and devise procedures for dealing each level. For example, a company may opt for a traffic light system whereby a green issue can be dealt with by the social media team, amber issues need to be escalated to the legal team, and red issues go straight to senior management. A pre-determined crisis team of specialist can also help to save valuable time.

Finally, it's all very well having beautifully drafted outsourcing agreements with brand policies, key performance indicators, and crisis procedures, but if the correct training isn't put in place, the paper becomes worthless. When was the last time you read your office manual? Companies therefore need to get comfortable that external agencies understand their brand values, know how to react to different scenarios, and have received at least basic legal training so that they know when to escalate issues.

Ashley Hurst is a Partner in the Commercial Litigation team at Olswang LLP

Steve Rees is product manager at Wesupply, the UK Electronic Data Interchange (EDI) service provider. He has spent many years assisting high profile supply chains in improving communication, accuracy and visibility. Today he discusses how organisations can reap the rewards of a fully managed approach to outsourcing EDI.

EDI is an essential component in any effective supply chain. Firms can gain real commercial advantages by ensuring that they have taken the right approach to EDI to serve their needs. Not only does EDI facilitate the sending and receiving of important trading documents and messages between an organisation and their trading partners, it also allows companies to gain greater control of their supply. This is achieved by creating clear and instant visibility of all transactional activities, whilst eliminating paper work, removing keying and reducing time between demand generation and sales order creation.

Despite these long established benefits a number of significant barriers are still faced by many companies using traditional in-house EDI. Purchasing and maintaining the necessary hardware and software components required to successfully implement an on-premise solution comes at a significant cost and effort; this is intensified by frequently changing requirements, standards and systems mandated by trading partners. In order to overcome the costs and complexity associated with EDI, outsourcing to a B2B service provider is becoming an increasingly popular choice, especially amongst organisations looking to extend capability to a larger supply base or growing customer portfolio.

While the commercial advantages of outsourced EDI are being increasingly documented, the range of different approaches to outsourcing on the market – from a basic outsourced solution, to a fully managed service – means that companies should err on the side of caution before jumping in with both feet, carefully weighing up the pros and cons of all the options available.

Many outsourced EDI solutions simply consist of adopting hosted hardware and software to transfer messages between an organisation and its trading partners, neglecting critical processes such as message translation and partner on-boarding. These are substantial overheads which would still have to be handled in-house of or through a third party. It is vital that prospective purchasers understand all the internal and external costs before deciding on the best route to take.

In my last blog, we discussed how effective electronic data interchange and digital signatures are in terms of archiving and human readability. We found that while both EDI and digital signatures are equally simple to archive, digital signatures are slightly easier to present in a human readable format upon request, and this slight difference gives digital signatures a small advantage.

In this blog, we will look at how EDI and digital signatures compare to each other when it comes to interoperability. What we mean by this is how effectively they enable businesses to exchange and share information between one another using any given format.

Businesses have been using EDI for e-Invoicing for many years and this method really took off in the 80s-90s with Value Added Networks (VANs). Companies connected through unified networks, signing interconnect agreements with one another. Since then, this approach, whether through VANs or otherwise, has become standard in industries such as the automotive, retail and finance sectors. Today, there are hundreds of existing interchange agreements in place through which purchase orders, advanced shipping notices (ASNs) and invoices have been flowing both domestically and internationally. An example of this is in France where EDI for e-Invoicing is very commonplace, and therefore service providers are able to interoperate freely.

As EDI is very straightforward as a well established measure of document exchange, companies are well aware of what constitutes a fully tax compliant EDI message. Language translation issues and a limited understanding of international standards and practices by local auditors can however sometimes create cross¬-border legal recognition issues. That human understanding aside, EDI generally works well across borders. This is especially true when the two countries accept EDI as a compliance method (as in the EU).

Interoperability using digital signatures can work well due to the variety of different formats in which digital signatures can exist. There are currently several different standards offered, the most common being CMS Advanced Electronic Signature (CAdES), the XML Advanced Electronic Signature (XAdES) and PDF Advanced Electronic Signature (PAdES).

Cross-border Interoperability with digital signatures must involve recognition among different countries of the current legal and technical challenges. This includes the varying local country legislation and certificate authorities, and the different formats and algorithms used. While some interoperability standards do exist (GS1) it is argued that a lack of digital signature interoperability is one of the barriers to wider adoption within Europe. The European Commission (EC) has recognised this and as part of the Digital Agenda for Europe program, has announced a review of the e-Signature Directive (1999/93/EC). The EC has incorporated this review into its current STORK initiative, focusing on cross-border electronic identification and authentication which has currently moved into a second phase.

Because of this, EDI has the advantage this time round.

Improving the chance of outsourcing success

With the acceleration in both commissioning and outsourcing, the public and private sectors alike are becoming increasingly reliant on third-party suppliers to effectively operate. At the same time, the environment in which outsourcing projects need to be run is getting tougher and tougher due to a vicious cycle of external factors which cannot be directly controlled, such as the macro global economic and political volatility; customer choice; competitor activity; corporate restructures; and potential changes to internal sponsors.

Perhaps, then, it is no surprise that some 64% of third-parties fail to meet stakeholder expectations and contractual commitments, according to recent research we have undertaken. But this stark reality lays bare the need for organisations to up their game when it comes to effectively managing their suppliers.

Two main outsourcing challenges spring to the fore when considering the role of third-party suppliers. Firstly, how do you plan and mobilise projects in the face of uncertainty, whilst balancing this against the understandable desire for detail and ‘accuracy’ in project plans and business cases? Secondly, how do you get the best out of your suppliers when inherent commercial and contractual constraints make it virtually impossible to respond to all these external factors in a cost effective and timely way?

The short answer to both of these questions is to not rely on ‘old fashioned’ project and third-party supplier management techniques. In the current environment, these simply don’t work and can actually hinder, rather than help, executives who are trying to transform their organisations.

Instead, organisations should bear in mind several key principals when it comes to third-party suppliers which can have a dramatic impact on efficiency and delivering better results:

Look (and measure) over the long term: Measure success on the performance against the contract over the lifetime of the arrangement, not just on whether a deal is done, and make sure everybody knows, and understands, what is critical.

Set the goalposts: From the outset, be clear with your suppliers on the outcomes you are looking to achieve, and establish monitoring processes against them. Constantly re-visit these outcomes to make sure they are not being adversely impacted or watered down as you focus on the specifics.

Consider the customer: Ensure that the impact on the customer of dealing with a third-party is sufficiently considered before outsourcing commences. The organisations which are most successful at this clearly communicate to their customers the benefits of the arrangements and effectively manage the transition to minimise customer complaints.

Disrupt the disruption: Outsourcing can be very disruptive – both to those who are directly impacted by it, and those who will need to work with the new third-party. Incorporate people management activity into the project plan so that key messages are sequenced in the right order and that the appropriate internal capabilities and behaviours are in place to make it work.

Know thyself: Be 100% clear on the functions that are being outsourced. If organisations don’t fully understand their current architecture, key processes, volumes and data integrity before outsourcing, it is almost impossible to establish an unambiguous arrangement with a supplier. Furthermore, understand the key aspects of your business that will need to interface with the supplier and determine the extent to which existing systems, processes and capabilities need to change.

Plan for some ‘risky business’: Ensure that your risk assessment covers all key factors, and not just the financials, including understanding both the ‘as is’ and ‘to be’ level of risk exposure.

Don’t expect miracles: Too many organisations believe outsourcing will immediately address the poor performance of people, processes, performance or data integrity. Successful outsourcing projects should ensure that any claims by the third party on improving performance are appropriately validated.

Think ahead: Ambiguity in the contract will hurt you in the long run. Whilst no one has a crystal ball, take the time to explore likely scenarios and test how, in the new outsourced world, these scenarios will work with existing systems and processes. This should include an understanding of how the legal contract is kept alive in the real world. Remember, whilst outsourcers are experts at taking on elements of an operation, they will never have the in-depth knowledge of your business.

Keep it simple: Ensure the deal structure is as simple as possible and appropriate management overhead is put in place to manage the contractual relationship and operational performance. There will also be a need to understand, at the outset, how the ‘exiting’ arrangements would happen.

By keeping these key principles in mind, the effectiveness of third-party supplier relationships can be improved, and they can have a realistic chance of meeting expectations and obligations in an outsourcing programme.

Salesforce.com announced on Monday the acquisition of social media marketing firm Buffy Media for £449 million in cash and stock.

The social media marketing company currently provides services for companies such as HP, Ford and Mattel and deals in providing expert targeted marketing through social media campaigns.The purchase will further bolster Sourcingfocus.com’s social technology that was enhanced by the purchase of monitoring provider Radian6 last year.

Marc Benioff, Salesforce.com CEO, said: “With CMOs surpassing CIOs in spend on technology within the next five years, our marketing cloud leadership will allow us to capitalise on this massive opportunity.”

Oracle has announced the acquisition of social intelligent vendor Collective Intellect. Collective provides services in monitoring, analysing and tracking social media conversations.

Full details of the deal have yet to be announced, but the deal comes at a time when Oracle’s rival companies are expanding rapidly to increase social marketing capability.

The acquisition comes on the heels of the purchase of marketing campaign software company Viture by Oracle. Oracle commented that the purchase would create the "most advanced and comprehensive social relationship platform."

Welsh parts firm Trax JH Ltd have won a bid to provide a contract for Renault valued at £4 million. The contract will see the Powys based company provide wheel balance weights to be fitted to Renault and Dacia cars.

The company has suffered from the European economic downturn with 70 percent of Trax JH sales coming from exports, most of which are to companies within Europe. The company commented that the new contract is the first of many and that the deal has safeguarded 50 jobs within the business.

Managing director John Halle commented on BBC Radio Wales, that "It took us seven years to get the business, which obviously was a long time.”

Suffolk County Council have purchased a cloud based mobile app platform, designed to increase efficiency via the G-Cloud.

The service called Weejot from management provider Jadu has been acquired in order to allow Suffolk County Council to develop and use mobile apps rapidly in real-time, by users who have little technical proficiency . The employment of the G-Cloud significantly reduced procurement costs.

The CIO of Suffolk County Council, Mark Adams-Wright, commented: “We’re looking to make a step change in how we service our customers and mobile is fast becoming the de facto standard for accessing services.”