Industry news

Multi-sourcing – the challenges for Governance and Compliance

Thursday 24th May 2012

Governance and compliance are vital in creating a solid framework for multi-sourcing in preparing for success over a contracts implantation and lifetime. While multi-sourcing offers numerous benefits in flexibility and value for money, procuring multiple suppliers can also lead to downsides.

The event on the challenges faced in implementing successful governance and compliance strategies began with a presentation on the challenges of multi-sourcing from a suppliers view by CSC. Jo Carruthers and Darren Taylor talked on the critical factors necessary for success in multi-sourcing. While the objective is to avoid concentration of one single supplier Jo and Darren made the point that employing more than three or four suppliers can create difficulties in creating a unified project. As with any contract it is vital that clear guidelines are established in what the scope and responsibilities of the project will cover.

Difficulties poised by separation must not be underestimated. Multi-sourcing must not produce confrontation between suppliers and the whole process should allow for clear communication led from the client down. The presentation highlighted a staggered approach as providing the most efficient model, promoting service integration and ensuring that all stages work smoothly. CSC covered the main challenges that multi-sourcing presented.

The presentation moved to practical reflections on intent and reality, presented by David Travis & Steve Briggs from The Co-operative banking group. From the beginning the contract between suppliers and end users must set out clear and realistic expectations. The focus must be on the end goal of the project rather than on the specific contractual obligations of individual suppliers.

Craig Chaplin from DWF pointed to the need to look at the whole picture rather than a focus on the best price, while a flexible approach produces the best results. Craig focused on effective governance as key to enabling faster, better decision-making and that it is more important to long-term multi-sourcing success than any other factor.

Alison Haigh Head of Procurement at UKAR presented a guide to ensuring compliance and governance in outsourcing. The UKAR guide agreed with CSC on the need to ensure clarity in the roles assigned to suppliers. While covered throughout the event the UKAR presentation took efforts to demonstrate the need to monitor the results of the collaboration on a daily basis and the need to look for undetected vulnerabilities and prepared for unforeseen obstacles.

The event presentations and group discussions saw surprise from attendees surrounding the lack of understanding regarding responsibility and the degree of inflexibility of governance within multi-sourcing. Group discussions following the presentations highlighted best practice, including the creation of an engagement model the most senior people in the process in order to avoid out-of-sight out-of-mind position.

Emphasis needs to be places on avoiding ‘loss in the noise’ by presenting a simple and clear contract. Care must be used to ensure that a one-size-fits-all approach is not followed, instead a different regime for each different project and the stages within the framework must be followed.

The information that is gathered and presented needs to be acted upon in order to make the data valuable. Lessons should be learnt from the information processed with follow-up actions resulting from results. In the end governance and compliance must be driven by business outcomes, the right behaviours that must be promoted should lead to favourable business outcomes as the end goal.

Exclusive interview with Gaurav Gupta of Mahindra Satyam, VP, Head Aerospace & Defence, Europe.

Mahindra Satyam is a leading information, communications and technology company providing a wide range of outsourcing services for a global market. The company is an expert in industry technology, functional practices and a global delivery models, ranking as one of the top 10 business houses based in India.

Gaurav Gupta is responsible for all aerospace and defence commerce within Europe, involved in collaborations and wider relationships including EADS, BAE systems and Saab , providing end-to-end engineering services and IT related services. Mahindra Satyam conducts contracts both offshore in India but also in Europe, with global centres in Hamburg and France.

What does Mahindra Satyam view as current strategic choices for destinations?

The growing relationship between France and India in the current climate, because of high defence spending, makes the country figure at the top of our list as a strategic destination to invest. Mahindra Satyam has over 1000 engineers working on Aerospace programs for global players in US and Europe, with around 200 engineers in France. With expansion into France, we expect in two or three years there will be significant demand in services based on various programs running within EADS including Airbus. From an operations standpoint this would involve creating local jobs and using talent locally which may not be available in India. This helps position ourselves slightly higher than purely providing services at a low cost. We are investing proactively in creating a local talent pool and infrastructure with a view of vision and investment.

What are the key topics and trends in Aerospace and Defence at the moment?

The Mahindra Group has made strategic investments in acquiring a couple of companies in Australia and an aerostructure components facility in India. Our relationships in Europe can be levelled to bring in technologies to other markets. Investing in the Indian defence markets would require a lot of technology and skill labour, this cannot be achieved without technology coming from the West.

With the coverage of private space shuttle flights in the UK press, what are your thoughts?

India has an established space programme, we support the programme from both an electric and a construction point of view. It is very interesting to see how the space programme can be made commercially viable in the future.

The use of open source software for running messaging infrastructure used within border control saved the Home Office £10 million. The system previously cost £12 million over a five-year period, the open source software saw the cost of upkeep fall to £2 million over the same period.

Open source software has only been adopted by a small number of departments within the public sector due to privacy concerns, despite its wide use in European governments including Germany and France.

Home Office lead IT architect, Tariq Rashid, said: “It’s not a toy, the best open source has been around for a decade.”

Google has been awarded a contract from premier Foods to provide there Apps for Business service. The service will increase the company’s web-based collaboration and communication suite.

The move comes as part of the food giants efforts to increase growth and improve the of simplicity of the business while reducing overall costs.

The move is expected to reduce operational costs by as much as 50 percent. Mark Vickery, Group IS and Change Director for Premier Foods, said: “Moving to a cloud-based system means we can now focus on how IT can strategically support our core area of expertise”.

The implementation of cloud based software by Wokingham Borough Council has reduced response times to customer emails from 10 working days to three.

The cloud contact service platform as well has reducing response times has the ability to substantially reduce savings by offering lower-cost alternatives to voice communications.

Susan Law, Chief Executive of Wokingham Borough Council, described the new service as being “very important to us as it will revolutionize the council’s customer care, whilst providing much-needed cost savings over the coming years.”

The American technology giant CSC has admitted that accounts relating to its NHS Lorenzo contract contained substantial errors.

Business accounts were found by internal auditors to contain exaggerated income figures relating to the NHS contract. The income records contained discrepancies of £15.5 million.

CSC commented that the error was “an internal CSC accounting error and has no impact on our charges made to the NHS. It is entirely a matter for CSC and does not impact the NHS”.

New research from YouGov shows that the UK government needs to increase the simplicity of information requests in order to benefit from the quality of the data.

The research showed that more that more than four in five citizens claimed that they never knowingly entered false information when completing government documentation, placing data collected by the public sector as highly reliable.

Director for the public sector at SAS, Bernard Baker, said: “If the public sector adjusts its communication methods and tools in line with this feedback, not only will response rates improve, but so will the consistency and uniformity of the data being collected, putting public servants in a much stronger position to provide citizens with improved services.”

Global IT Anglo-Dutch services firm Logica, whose clients include companies such as BT, Shell, BAE Systems has recommended a £1.7 billion takeover offer by Canadian CGI Group Inc.

Logica has suffered from setbacks from the European economic downturn, which has seen many of the company’s key clients including government public sectors reduce IT spending in order to make cost-savings.

If the offer is accepted CGI will see their sales and staff numbers rise by over double and place the company in direct competition with firms such as Accenture, Cap Gemini and IBM. Rival offers should also not be ruled out from Indian companies looking at European expansion.

Logica chairman David Tyler said: "Given the very limited geographic overlap and CGI's strong reputation for successful integration, we believe this transaction will offer great opportunities for Logica's people."

The acquisition of Buddy Media by Salesforce comes on the back similar acquisitions by rival companies as they look to deliver on the social CRM in the cloud, with social marketing integration.

Buddy Media provides social marketing and specialised campaign management, with a strong sales pipeline and customer base including Mattel, L’Oreal and Virgin Mobile. The acquisition is expected to be around $800 million.

Carter Lusher Research Fellow & Chief Analyst at Ovum, commented: “it is extremely likely that Salesforce will invest heavily in Buddy Media's R&D and sales force. The Buddy Media brand will likely be retained.”

Global Engineering and IT services provider Mahindra Satyam have announced the setting up of an delivery centre for Aerospace and Defense in Toulouse, France, as part of the companies European expansion strategy.

Mahindra Satyam previously set up a German based Aerospace centre in 2008. The new centre is expected to ramp-up operations and create opportunities for local talent in Engineering, Information Technology and Communications domains.

CP Gurnani, CEO, Mahindra Satyam, said “The large talent pool coupled with excellent infrastructure in the region offers an environment conducive to driving business growth and creating a more seamless customer experience.”