Industry news

A recent survey issued by the National Outsourcing Association (NOA) revealed that only 27% of UK citizens associate ‘a local computer company providing IT support to small businesses’ with ‘outsourcing’. However, 58% cited ‘a bank opening a call centre in India’ as an example of outsourcing – which it is not. Clearly misunderstanding the term, only 19% of respondents believe that outsourcing could help get the UK out of recession. These findings are quite worrying at a historical moment where this practice is not only important, but often vital for a company to survive in the current market.

The outcome of this ‘Public perception of outsourcing’ survey shows how outsourcing is often confused with offshoring, which generally has a negative connotation for UK citizens. Offshoring means relocating a department, certain business operations or functions to a less expensive country abroad, typically outside Europe. If this is managed by a third party, it is technically a type of outsourcing, although not the only one. If it is still managed by the organisation, then it is not, by definition, outsourcing – just a captive offshore project. With increasing concerns over job losses in this difficult economic climate, it is not surprising that 80% declared they believe ‘outsourcing hinders British businesses’ when they only have offshoring (outsourced or not) in mind.

This necessitates explaining more thoroughly what outsourcing is and how it can help the UK economy, from SMEs to large enterprises and across all sectors. IT outsourcing in particular, when correctly and appropriately implemented, does not negatively affect business growth. On the contrary, it can help organisations operate better with a more cost-efficient and productive IT service, allowing better forecasting of operational costs as well as possible cost savings, even potentially creating a competitive advantage.

Outsourcing, put simply, is the practice of contracting out certain business functions or operations to a third party and purchasing them as a service, rather than having them in-house. This has been common practice in business for a long time, and has only recently increased in the field of IT, becoming a buzzword.

In IT outsourcing, many different models exist. A third party may be involved in just the provision of a couple of temporary staff for busy periods, holiday cover, or just a few more skilled engineers to take care of a new technology or a particular project. The outsourcing service might only cover a portion of services such as database, server or email management, or just the out-of-hours IT support. An outsourced or managed service can be shared between more than one company (shared service) or just dedicated to one.

The IT outsourcing type or model depends on factors such as scope, needs and level of control. An IT Service Desk is fully outsourced when the department is completely managed by a third party, and is set on another site to the core business. This could be in the same city, country or abroad – the term ‘nearshore’ outsourcing indicates that it is close to home, which could include other countries in Western and Eastern Europe, while ‘offshore’ normally means far away, in countries like India, China and Brazil. An organisation could choose to only outsource certain functions, for instance 1st line support or Server management. A managed service, instead, is when the Service Desk or part of it are managed by a service provider, but on the client’s site – with staff normally being transferred into the other company with the same conditions and rights through the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). The presence of various IT staff employed and managed by more than one organisation (some in-house and some by one or more service providers) creates a co-sourced environment.

Although many types and models exist, they all have the same benefits in common: IT outsourcing is a way to gain immediate access to skills and expertise that might not be present internally, even just for a period or the hours needed. It is cheaper than doing it in-house, as the expenditure would be at a fixed cost and not variable, including any training and management costs that are necessary to meet the targets set. It can add value to the company: with sector experts taking care of one particular area of IT or all of the Service Desk, the organisation is free to concentrate on more strategic tasks and on their core business, including fewer day-to-day management worries, and more time released to focus on improving their organisation.

By increasing the awareness of what outsourcing truly is and what it can do for businesses, UK citizens can understand how big an opportunity this is to help the British economy in these difficult times. The fact that the practice is increasing every year among businesses large and small is a clear indication that more and more organisations are seeing value in outsourcing – the trend will definitely not stop!

IT outsourcing may have been around for some time, but it has a patchy track record. While some may point the blame at suppliers or their customers, I would argue that it is often the techniques and methodologies that have failed. A rigid adherence to templates, processes and procedures do not fit the very specific needs of IT development projects which by their nature, require support for rapid time-to-market, innovation and the ability to react to change.

To address this, we are seeing more organisations adopt Agile as a means to manage IT outsourcing projects. The Agile methodology – and its variants – has its roots in the software development world itself, so it is a natural evolution to use it for IT outsourcing too. I believe it is a better fit for procurement – and indeed, IT in general – than traditional waterfall approaches. Why? Because waterfall is based on the belief that much can be predicted, but in the world of IT, uncertainty is usually a given. Any IT development project is a journey of discovery and any process that does not recognise this will only hinder creativity and flexibility. This becomes even more important when considering how vital IT has become to customer delivery. Even organisations that are not technology-centric companies often have IT at the heart of what they deliver.

Agile helps to find ways that brings together the whole ‘concept to market’ value stream, enabling fast delivery, tight and short feedback loops that help to keep projects on track and to achieve time-to-market rapidly and efficiently. Agile is all about removing bureaucracy, placing the end customer at the heart of the process and focusing on the highest value work in a fast and reactive way.

Agile breaks a project into small chunks of activity – called iterations – that may be released early in to the marketplace, to maximise learning, generate value and delivering innovation quickly (because it is easier to prioritise). Sometimes, companies find that they do not need further iterations, thus enabling a project to be completed earlier (as opposed to the typical IT project that goes over budget and over deadline).

The iteration process is also great for creating a proper feedback loop (so that it is easier to see where change needs to occur) and making it easier for customer and supplier teams to develop a closer, more collaborate working relationship with greater transparency.

All this is good news for the procurement function, which through Agile, can have a more end-to-end and holistic approach to supplier relationship management. This is a sea-change away from the traditional role, whereby procurement normally focuses on the beginning of the relationships, during negotiations, when there are problems and with a general fixation on pricing as opposed to the ‘bigger picture’. What we are beginning to see is a new breed of procurement manager developing, blending procurement, contract and vendor management skills. With the feedback that the iterative process provides, Agile helps support this new breed of professionals.

This brings me neatly to the fact that any organisation is nothing more than the collective capacity of its people and their ability to make decisions and delivery improvements. Focus on deadlines, pricing and other contractual parameters can mean that the real objectives or outcomes become lost. Only by engendering an environment of trust, where customers and their suppliers can interact transparently, with room to acknowledge failure and to react to change, can companies achieve IT outsourcing that really works. Agile can – and is already – helping organisations to achieve just that.

Philip Black is Chief Operating Officer of Emergn, a global professional services consultancy that blends agile and lean principles to optimize the way organizations develop and deliver solutions across the enterprise. By offering a unique blend of agile and lean methodologies, emergn operates as a thought leader in helping enterprises solve their complex organizational and IT business problems.

The government has begun the second phase of procurement for the G-Cloud. The new framework hopes to draw offers of services from suppliers of which many are expected to be SMEs.

The first G-Cloud framework was made available through the government’s online portal Cloudstore. It saw 257 suppliers offering around 1,700 services signed up, with over 50% of these believed to be SMEs.

By reissuing the framework, the government hope that the G-Cloud will keep up with the pace of technological changes and as a result provide the most up to date service products to the public sector.

A spokesperson for the G-Cloud said: “We want to ensure that we have as big a range of services available as possible and that the content of the Cloudstore is kept fresh and up-to-date to ensure that governments use of technology can keep pace with the constantly evolving boundaries and new innovations that are happening all the time.”

They continued: “The whole purpose of the G-Cloud is to create a dynamic type of procurement to facilitate this. This procurement round is the second in an ongoing programme of continuous iterative procurements.”

The Co-operative Group has announced plans to create 3,000 jobs in the legal sector as it continues to expand the range of services available to UK consumers.

The Group, which already has major interests in professional services including banking, insurance, pharmacy and funerals, will establish the jobs at Co-operative Legal Services, creating the largest consumer law business in the country.

In March, The Co-operative became the first major consumer brand to be granted alternative business structure (ABS) status under the new Legal Services Act, allowing it to offer a range of consumer legal services previously only available from private solicitors.

Group Chief Executive, Peter Marks said that over the next five years Co-operative Legal Services, which currently operates out of Bristol employing around 450 legally trained and support staff, would open five additional regional hubs across England and Wales and set up a new family law operation in London which is on schedule to launch later this year.

“We already have a first class reputation for delivering professional services,” he added. “We see the law as yet another area where a Co-operative solution can be successfully applied for the customer’s benefit. Over the next five years we want to fundamentally change the face of legal services and make access far easier - today’s announcement underlines that ambition.

“We intend to be totally customer focussed and will help customers navigate the legal world so that they are much more comfortable with the experience and the outcomes.”

“It is envisaged that about 90 per cent of the roles being created will be actual legal functions, with 10 per cent made up of support staff.

“We are particularly keen to use our expansion as a way to offer opportunities to young people. Legal apprenticeships and opportunities for study leave will form an important part of this major employment opportunity.”

NHS 24 has awarded a multi-million pound ten-year contract for the replacement and support of its core frontline IT systems to a consortium led by Capgemini UK plc, part of the Capgemini Group.

Capgemini will work with a number of key alliance partners, including SAP, clinical trial software provider InferMed and software company OpenText, to replace NHS 24’s strategic frontline applications with new systems aimed at improving efficiency and providing a platform for NHS 24 to expand the range of services it offers.

Robert Stewart, Director of Finance and Technology at NHS 24, said: ‘We are pleased that the partnership with Capgemini has been confirmed and look forward to working with them going forward.’

NHS 24 is the national Telehealth and Telecare services organisation for Scotland. It offers people access to out- of-hours services when their GP surgery is closed, as well as a range of health information and digital healthcare services. The scope of the contract covers patient contact and patient relationship management, clinical decision support tools to assist with the triage1 process, and knowledge management. The new applications will also interface to external systems including the national patient database and local service information.

Suzy Foster, Account Director for NHS 24 at Capgemini UK, said: ‘This is a unique opportunity to help make a real difference to people’s lives in Scotland using the right technology and information platform.’

Google have announced announced plans to support the training of over 100 Teach First ICT and science teachers.

This three-year partnership between Google and Teach First is borne out of the severe shortage of teachers in economically important subject areas. It will see a new generation of teachers working in schools in challenging circumstances to enthuse pupils about ICT and open their eyes to the possibility of a career in the sciences.

Google's contribution will support Teach First's training of 102 teachers, 34 for each year of the partnership. Over the three years, Google will support 61 ICT and 41 science teachers to work in schools across the country, with the first 34 entering classrooms in September. To ensure that the ICT teachers, and their pupils, have access to the latest cutting-edge technology, Google will also provide each teacher with a bursary to fund the purchase of innovative teaching aides to inspire their classes.

Speaking about the partnership, Teach First Founder and CEO, Brett Wigdortz, said: “Through joining forces with Google, Teach First will be able to ensure that more than 20,000 pupils from low socio-economic backgrounds will benefit from having access to inspirational ICT and science teachers. It is fitting that, as we mark our tenth anniversary and begin to look to the future, we have been joined by a truly 21st century organisation. This partnership has the potential to help a generation of young people access the technologies of the future.”

Unite, the largest union in the country, is to hold urgent talks with Hewlett-Packard to safeguard up to 1,600 jobs under threat at its UK operations.

Hewlett-Packard, the world's largest maker of personal computers, is to cut 27,000 jobs across the globe by the end of 2014.

Unite believes that up to eight per cent of the UK’s workforce of 20,000 are under threat – and Unite will be working with the PCS union to use every means possible to protect those jobs.

Unite’s national officer for IT and communications, Kevin O’Gallagher said: “This is a devastating blow to the technology industry in the UK – a sector we need to develop to create future jobs and growth.

“We will be working with the PCS union to use every means possible to protect these vital and high-skilled jobs. We hope to arrange meetings with the senior management, both in the UK and with the global business leaders, as soon as possible to set out our alternatives.

“Hewlett-Packard is still a highly profitable company which is, we believe, simply aiming to cut costs to increase both its market share and profits, while showing scant regard to its loyal and dedicated workforce.”

Dell has announced it has finalised the acquisition of Make Technologies, a leading application modernisation software and services company.

This acquisition, combined with the recent acquisition of Clerity Solutions, enables Dell to empower customers to reduce the cost, risk and time required to transition business-critical applications from legacy systems to cloud infrastructure and open, standards-based platforms.

Through this technology, Dell is positioned to help organisations leverage more flexible platforms, allowing them to better leverage social and mobile technologies, enhancing workforce productivity and helping to deliver better business results.

Steve Schuckenbrock, president, Dell Services said: “The addition of Make Technologies to our Dell Services portfolio allows us to offer customers a complete suite of application modernisation services to help them move their legacy IT environments to more modern architectures. At Dell, we are focused on solving some of our customers’ most complex problems with powerful IT solutions. With Make and Clerity we believe we have the industry’s most robust offering to help customers meet their modernisation goals in an efficient, reliable and cost-effective way.”

“If Dell embraces the MAKE process as well as the tooling, it will gain a formidable weapon for its services arm. The sky truly is the limit for Dell - if it plays its cards right¹,” wrote Forrester Research, Inc. principal analyst, Phil Murphy.

“The combination of Make Technologies and Dell provides the market with a single vendor solution for any modernisation activity and is an exciting step in expanding growth opportunities for our core application modernisation software and services,” said Bill Bergen, president and CEO of Make Technologies, Inc. “Together, with Dell’s global reach, scale and reputation for customer support, Make’s methodology and tools will become even more accessible to more customers struggling with the dilemma that surrounds legacy environments.”

Oracle has announced that it has entered into an agreement to acquire Vitrue, a leading cloud-based social marketing and engagement platform that enables marketers to centrally create, publish, moderate, manage, measure and report on their social marketing campaigns.

The transaction is expected to close in the summer of 2012 and until the transaction closes, Oracle and Vitrue will continue to operate independently, and it is business as usual.

“The proliferation of social media and an increased demand by consumers to engage with brands across multiple social channels is driving chief marketing officers to look for an integrated social marketing platform,” said Thomas Kurian, executive vice president, Oracle Development. “Vitrue’s leading social marketing and engagement platform coupled with Oracle’s leading sales, service, and commerce products offers a complete social experience solution to our customers.”

Dell has reported a 33 percent drop in profits in a disappointing quarterly report for former market leader.

The company, which has slipped to third place in the global PC market, said its profit in the first fiscal quarter fell to $635 million. Revenue in the quarter was $14.4 billion, a four percent decrease from the same period the previous year.

Dell said however the firm was moving away from its traditional PC base to services. "We continued to shift the mix of our business during a challenging environment," said Brian Gladden, Dell's chief financial officer.