Industry news

In this series of blogs, Paul Hart, IBM, shares his observations and thoughts on outsourcing governance to consider during your next governance meeting.

Expectations play a key role in determining the nature of a relationship between a client and a provider. Outsourcing contracts will rightly focus on precise solution definition and scope, performance metrics and commercial models. However, it is rare for a contract to clearly articulate the very real and often personal mutual expectations which have been formed during the bidding process. These expectations will influence perceptions of success all round - irrespective of actual delivery performance.

I have witnessed several examples of the client and service provider having differing views of their relationship. Varying degrees of ambiguity around roles, responsibilities and contribution to business outcomes can lead to frustration, irritation and friction. A general and pervasive misunderstanding of value expectations, which have been left implied or un-formalised, can lead to seemingly unreasonable behaviours and in the worst cases outright conflict. Allowing these issues to fester undermines trust and introduces risk, which can sometimes be hard to recognise initially. So, managing the relationships between client and service provider(s) is an absolute ‘must do’. This holds especially true when such relationships are typically long term and rely on a high degree of mutual dependency for success.

It is crucial from the outset for everyone involved to establish and clearly communicate jointly agreed expectations and objectives. These can be described within a relationship strategy, which provides the business context for driving appropriate behaviours and attitudes. A clear relationship strategy will help shape and influence the governance orientation.

Service providers and clients should establish jointly agreed rules and guidelines that describe how to work together and more importantly what to expect from each other. Together, it is possible to take a much more positive and proactive role in articulating the respective expectations for the relationship. People bring the outsourcing relationship and corporate values alive, but there is still need for a disciplined management regime to provide organisational responsibility, accountability and continuity.

Successful senior management and leadership teams actively embrace governance as a powerful tool for resolving issues, enabling effective decision making and providing clear direction. It’s about the right people coming together at the right time, to get ahead of the game through effective leadership and control.

Mike Bull, Customer Support Manager at Sage UK outlines why organisations of all size need to start rethinking their approach to pensions

In an era where pension deficits are high, the economic outlook is uncertain and just one in three people are contributing to pension schemes (according to Office of National Statistics), a huge number of people are either saving too little for their retirement or nothing at all. Since Lord Turner's Pensions Commission in 2008, the UK Government has been looking for ways to boost the low level of pension savings among UK workers, and the UK Government has taken a step in the right direction with the introduction of its auto-enrolment programme.

This initiative aims to resolve the growing pension shortfall by making it a requirement for businesses to automatically enrol employees into qualifying pension schemes. From October 2012, larger organisations will need to ensure that qualifying workers are enrolled into a workplace pension scheme requiring them to actively opt out if they don’t want to be a member. Initial contributions will start at 1% from the employee and 1% from the employer, with rates rising at different stages over the next few years. This scheme is expected to be implemented across all companies by April 2017.

As auto-enrolment becomes widely implemented, employees will start to see pensions as a valued part of their benefits-package. This is good news for employees as it will encourage up to 10 million people to start saving for pensions, and for some workers this will be the first time that they’ve ever contributed to a pension scheme.

Naturally, the introduction of auto-enrolment will mean businesses need to, in some cases radically, adapt their approach to pensions. Each qualifying scheme must meet minimum standards in the benefits it provides and the amount of contributions paid to it. It must also automatically enrol all eligible workers, or new employees that meet the criteria.

As a first step to meeting this new body of guidelines, we recommend that companies work with existing software providers to identify what level of compliance they need to achieve and what their staging date will be. By having a holistic view of current pension arrangement, businesses can identify the processes and platforms that need to be implemented in order to enable auto-enrolment. Finally, companies need to consider whether auto-enrolment is a process that can be managed in-house or whether it needs to be outsourced to a third-party that has the specialist skills to handle pensions effectively.

While many have complained that it will be four years until auto-enrolment is rolled out across the UK, the reality is that companies need to start preparing for this next set of changes now. Implementing basic measures that lay the groundwork for auto-enrolment now, will mean that businesses can stay ahead of the curve with an efficient pension system that accommodates employee’s best interests.

Flexibility and transparency are a must for IT Service providers

Clients demand a service that is able to evolve with their changing organisation

The unpredictability of the economic climate, together with the ever-increasing need for cost-efficient IT and a better understanding of how technology can create a business advantage have deeply affected the way organisations see and manage their IT. For those outsourcing all or part of their Service Desk, in particular, this combination of factors has created the need for greater flexibility and transparency in IT Support contracts.

If, up until now, businesses of all types and sizes found themselves trapped in a managed service contract lasting several years with an IT service that was no longer fit for their organisation, they are no longer able to accept this. An organisation’s size and structure might change at any time, growing, downsizing, or simply changing strategy and direction to survive in the market and remain competitive. IT Support functions need to adapt to cater for any of these changes.

At the same time, organisations do not want to have to pay extra for every change that they want to make or addition to the initially agreed service or new project within it. What they are looking for in a service provider is an understanding of their needs and to provide a suitable level of flexibility – with regards to both the contract and the model they provide – as well as being transparent on any costs involved.

A research paper issued by CompTIA, the Computing Technology Industry Association, showed that nearly half of organisations interviewed have had all or part of their IT outsourced to a managed service provider. The results of the ‘Trends in Managed Services’ survey reveal that companies that did not choose to outsource were mostly concerned about costs (49 per cent), but also about whether they would be able to bring services back in-house after an outsourcing move, stated by 13 per cent of respondents. Nine per cent said they were unsure about the process. Organisations also stated they would have liked more information to consider before the decision-making process. In particular, 42 per cent of respondents would have liked to have been presented with more options to get out of a contract in the case things did not work out.

It is obvious that transparency on cost, processes and consequences involved in a managed service is a must to win over clients’ trust. When they manage to do this, the majority of managed services users are mostly satisfied with the services provided, and a third are very satisfied – however, it seems that the larger the company, the lower the level of satisfaction. Survey participants cited as a reason for dissatisfaction the fact the cost savings expectations had not been met.

Generally, flexibility tends to be more difficult to find in larger service providers, who are mostly used by larger companies, as they tend to offer out-of-the-box packages that are rather inflexible and filled with hidden costs for each extra (for instance, when you exceed the number of calls agreed upon for a fixed monthly charge) or change. This can have a huge impact on the cost savings the client was initially expecting.

Having a large number of clients, these providers do not always strive to perform at their best with each of the organisations they work for: if they lose a less desirable client, they can easily replace it with a new one. A famous name is not automatically synonym with better quality, yet it is not uncommon for organisations choosing the most popular, large service providers to change to another similarly big name as soon as the contract comes to an end, only to repeat the same mistakes again – trapping themselves in a repeated circle by staying with large providers.

A smaller service provider with fewer clients and specific expertise may be able to concentrate more on the individual cases and offer a service that is not only tailored to each organisation, but can also evolve over time as the business changes. It will agree with client on the specific features of the service to be provided, rather than dictate the rules themselves.

With fewer people and layers of management to deal with, the rapport will also be better: in the CompTIA report, communication between the service provider and the client is strictly linked to higher levels of satisfaction, and in fact seven out of ten of organisations which reported being ‘highly satisfied’ received regular activity reports from the provider they were using.

In any case, for a successful outcome, it is essential that the service provider is seen (and acts) as a partner, a collaborator and not as a simple provider of a service. At the same time, be it in-house, outsourced or a mixed bag, IT has to be seen as part of the business, an enabler and a value-add, rather than just a mere service in order for it to produce real cost-efficiencies, and bring the organisation to even greater success.

With only just over 2 months to go, public and media anticipation of the London 2012 Olympic Games is really hotting up. Whether you enjoy sport or not, it will undoubtedly be a spectacle to remember and is likely to garner a great deal of interest, especially once the actual events are underway. The challenging effects on businesses and their employees in London have been well publicised, with many opting to promote home or remote working throughout the games, however the wider ramifications for businesses across the UK, especially the increased pressures on the Internet infrastructure, may be less obvious and yet are still important considerations for every organisation.

Obviously many businesses that are located around or near Olympic events will be directly affected by travel restrictions and likely congestion around the sites (such as those located in The City) are already planning and practising ways to get around any likely problems. For many this will involve remote working on days that will be influenced by the Olympic events, which will put unusually high pressures on UK Internet providers and networks. However, there will undoubtedly be wider consequences as the nation turns to online video streaming and the web in general to keep abreast of the latest results as the spectacle unfolds.

As with other key audience events such as the World Cup, the draw of the Olympics will undoubtedly be a popular time for employees to take annual leave to watch it, or at least for the pressure to be put upon employers to offer coverage of key events. Whilst the economy dictates that businesses need to keep their eye on the ball, employee satisfaction is an important part of creating and maintaining a well-motivated and committed team – the key to any successful enterprise. On the other hand, whilst we are living in an age where remote or home working is a realistic and often beneficial facet of modern business, it’s important to recognise the wider ramifications on the IT and communications function and, if need be, to seek expert advice on the best ways to achieve this.

Whilst the technology is available to provide employees with a comprehensive eye on the games, it’s also important to remember that the IT network can be used to control and even limit this usage so it doesn’t encroach on the main business functions of the organisation. Video catch-up sites such as BBC iPlayer or key websites that will stream the events can be blocked or limited so that employees aren’t abusing the privilege. To do this effectively, organisations will want to discuss the measures at a management level and the in-house IT team or retained professional IT provider can help to ensure that network settings are just right to find a good balance between upsetting employees and adversely effecting productivity during working hours.

Naturally, for some companies, business drivers mean that rigid working hours will need to be maintained despite employee interest in the events, especially for client-facing employees. Without wishing to sound draconian, in these situations it may be advisable to block sports related websites, either permanently, throughout the event or during certain working hours, to discourage employee distractions. This is a straightforward procedure for your in-house or outsourced IT support team to administer and can be revoked later if appropriate.

Like the physical paths of communication, the UK Internet network is also bracing its self for the inevitable increase in traffic. As well as the strain on the existing Internet infrastructure, the considerable IT and communications demands of the event mean that getting new communications systems installed may be harder, especially in areas close to the event. In London for example, there will be a two month delay on new leased IP lines being installed, which will inevitably delay any subsequent work and will likely have an impact on businesses for the rest of the year. It is of course possible to work around these problems by making full use of existing systems, and even the mobile telecoms network, to get around these potential issues, but it should be considered in the wider IT plan and is something that good IT service providers can help you to deal effectively with.

Hosting the London 2012 Olympics has always promised to be a challenge as well as an undeniable benefit to UK plc., and like the country as a whole, businesses need to be well organised to deal with these. For many businesses that already use Unified Communications there will an obvious case for allowing home working, but the squeeze on the busy IP networks will need to be considered. For other businesses the cost and practical considerations may mean that a sensible policy for modified on-premises working which ensures the IT systems are well-managed may be more prudent. Whatever the approach, it is important to plan ahead and judge the best path for your business and employees – so everyone can be a winner during these landmark games.

The delayed second iteration of the Government CloudStore has gone live, providing a list of 1,700 cloud-based products and services from over 250 vendors.

The new build adds the function to make purchases through the store as well as improved SEO and the ability to filter G-Cloud attributes, compare services and carry out faster payments. The new version of CloudStore backtracks however on Cabinet Office comments that the service would be open source, requiring that users register to use the government’s eMarketplace.

Eleanor Stewart, engagement manager for the G-Cloud programme, said: "We're going to focus on improving access to the CloudStore catalogue data so others can create stores tailored to different audiences and look at putting in place ratings and reviews”.

IT services company Atos has announced today that it has secured a five year contract valued at £140 million to the Shared Services Alliance (SSA). The contract will see Atos supplying IT services to the SSA, part of a procurement initiative with the Nuclear Decommissioning Authority (NDA).

The contract will cover IT services with all four members of the SSA, covering networking, desktop applications, hosting-services and service integration. The contract will see the consolidation and modernisation of the existing IT infrastructure of the SSA as well as improving services to over 18,000 users, in order deliver 30 percent savings at the end of the five years.

SSA Award Project Manager, Keith Gibson, said: “It will reduce costs by simplifying IT support arrangements and provides a solid platform for future developments.”

Cloud.IQ have won £2 million in funding from ventures capital company, Bridges Ventures. Cloud.IQ located close to Silicon Roundabout provides services allowing companies to use text, phone, social media and email to manage their marketing.

The secured funding will allow Cloud.IQ to expand personal as well as supporting customer recruitment.

Cloud.IQ was only created in February this year but the platform has been deployed since 2002 and has provided services to over 12,000 campaigns and 40 million B2C interactions.

Facebook has floated 400 million shares on the Nasdaq at €38 each which could provide as much as $16 billion in revenue and the third-largest IPO in US history.

A report by the Wall Street Journal has reported that the planned share price will see the validation of Facebook between $93 billion and $104 billion.

Facebook has also been hit by setbacks including the announcement by General Motors last week that the company was withdrawing $10 million in revue from advertising on Facebook after claiming that the site advertising failed to warrant the investment.

Mike Lawrie the new CEO of CSC has directly taken control of protracted negotiations with the NHS in a bid to draw the line under the failed patent records contract.

Mike Lawrie took over as chief executive of CSC in March and has rapidly moved to turn around the company after publishing heavy losses, in part stemming from $1.5 billion in losses from tendering the NHS contract.

Mr Lawrie commented that “"There's no question both parties want to get to an agreement. Now on a weekly basis the head of the NHS and myself are getting together. We are hopeful the NHS agreement will get completed in the not too distant future".

HP is planning to cut their workforce by as many as 25,000-30,000 in the coming months attributed to a source close to the company according to the Financial Times.

The move would rank as one of the biggest mass lay-offs from a US company in the last decade and would take the form in part from an early retirement offer focused within service divisions.

The cuts would represent one of the largest measures by the company to achieve savings and reverse the companies falling value from increased competition.