Industry news

G4S, the world’s largest security firm has revealed a 7.5% rise in first quarter revenue growth. The company has cited a thriving resources sector across developing markets and a contract to protect punters at the Olympic Games in London as reasons for growth.

The figure was up from 4.5 per cent in its last quarter and in line with expectations. Shares in the firm – the world's second largest private employer behind Wal-Mart – rose 3 per cent to 275.2p. A representative from G4S said: "based on recent contract awards, outsourcing trends and the group's bid pipeline, the organic growth rate is expected to continue to improve during 2012."

The contract for the Olympic games will see G4S as the official security provider for the 2012 Games, supplying 10,000 personnel for the event in a contract worth £200m to the company and will earn G4S £150m of revenue in 2012.

Financial outsourcer HML has secured a contract with Arrow Global, the debt purchase solutions provider which will see Arrow Global acquire a portfolio of loans serviced by HML.

Andrew Jones, HML's chief executive, said: "HML's role as a servicer means we're in a unique position to drive value for clients and buyers. We have access to the contacts to facilitate these deals and can reduce migration and on-boarding costs if we continue to service the portfolio, or migrate them onto our platform against a strict deadline if they are currently being serviced elsewhere."

Speaking at the Shared Services Outsourcing Network conference in Amsterdam, KPMG’s director, Claudio Altini, said the decision to outsource is no longer simply about reducing costs or headcount.

Research from KPMG shows that more than two-thirds of service providers polled were cautiously optimistic about pipeline growth for the next quarter and KPMG would expect that key areas of interest will be customer demand for IT services to increase between now and the end of June.

Altini summarised the key reasons behind changes in outsourcing: “too often, in the past, outsourcing relationships have broken down because of mixed messages around the three Rs – rates, results and responsibilities. Now, however, businesses are no longer prepared to accept standard terms and conditions for outsourcing their core services. They want proof that service delivery arrangements are flexible, can move with the strategic needs of an organisation and will meet the targets demanded by stakeholders.”

Two of the common words I hear from clients, suppliers and as you would expect advisors, is governance and innovation, neither of which is particularly well understood or managed, in my opinion in a vast majority of cases.

All too often governance is simply treated as a review meeting by senior managers, for senior managers. The agenda is all too often focused on SLAs, Quality, Financial status and any significant change requests and the implications of them.

Little consideration is given to the wider business outcomes that the programme is or is not delivering, i.e. strategic alignment between the business and the sourcing strategy, little on the human and learning aspects of the deal, little on relationship management and some lip service given to the idea collaboration.

Important areas in terms of how the relationship can be nurtured, how changes can be made to behaviours and attitudes across the teams to drive better value creation, how devolved decisions can be made across the programme to address business imperatives, whilst satisfying policies, processes and risk appetites and how trust is developed within and between the parties, are all largely ignored, or poorly managed.

Unfortunately, most governance structures consist of formalised meeting schedules, at different levels within the organisation; operational, management and senior leaders. What this does is reinforce the idea that governance is a backward looking function, examining what happened and why, rather than being a forward-looking discipline, which should be about what is happening now and what can be done to improve performance. Governance should be a real time activity, with checks and balances on a periodic basis.

Another unfortunate factor in most governance structures is the segmentation of governance meetings by seniority – an effective class system for organisations. Although on the face of it, this would appear to have some benefits, what it does is hide or disguise the reality on the ground. Disputes, distrust and dysfunctional processes at ground level are never exposed or understood by the senior governance teams, and therefore nothing is done to change behaviours, policies, processes etc to drive performance. The status quo remains, or worse, changes are made with good intentions, which have little chances of making any real difference.

Governance must be an enterprise-wide philosophy; it must seek to remove the silos that exist within and inter-organisations, yet the very silo nature of governance today make this task next to impossible.

Lincolnshire County Council’s recent commitment to a new public services network suggests that the public service is starting to catch up with private sector in terms of ITO.

Public sector ITO is worth around £16 billion, accounting for around 40% of ICT outsourcing in the UK. Last year the Public Administration Select Committee criticised overspending and lengthy procurement processes while the National Audit Office released a report into inefficiencies in shared services. However, this looks to have struck a note with local authorities, as the situation improves.

It seems local governments are taking a logical approach in sourcing IT – through shared services. Like the majority of sourcing strategies, cost-cutting is a core goal and some of this will be achieved through cutting jobs, but the long term cost rationalisation will be driven by new innovative processes. Efficiencies are driven in the long term incrementally as processes increase in productivity. It is all very well outsourcing to a firm who will run things just the way they are, driving savings through low cost of labour, but should the deal come to an end, there will be no infrastructure in place to allow this to continue.

This has to be taken into consideration at the start of the venture, and as Rod Matthews, an expert CIO who has worked for Knowsley Metropolitan Borough Council, the Cabinet Office and the London Borough of Barnet, states, forward planning is vital. Matthews states in ComputerWeekly.com: "Shared Services have significant advantages, but this delivery route needs to come with a bit of forethought. If you only specify continuing things as-is, or you think it is a magic bullet, you might find adapting around your shared service to be labour intensive.

Matthews continues: "Seated above the commodity are the technology enabled business processes. These are often bespoke and will likely have a range of possible forward plans."

Like any other outsourcing deal, it is also important to gain a cultural understanding of the organisations involved and have patience. Organisational wants and needs may differ slightly, but if the long term benefits are kept in sight the need for cooperation should remain a priority. Terry Huggins, Chief Executive of South Holland Council, agrees.

Huggins was quoted in The Guardian: “You will have small differences in the way you see things, but it's crucial you don't fall out over things that are only worth a few thousand pounds, and in the process prejudice potential savings that are much larger."

South Holland District Council set up shared services company Compass Point Business Service with fellow Lincolnshire district council, East Lindsey. Last year the company signed a five-year deal with Capita to run certain processes, such as finance, HR and benefit schemes for both the councils. Running the operations in tandem is believed to have saved around 20%.

Jos Creese, CIO for Hampshire County Council sums up as: "a collaborative approach where we pool resources, and say we're going to operate with a single business model and operate in a very transparent and semi-commercial way."

Shared services are an extremely effective way for organisations to extract maximum value from the resources they have. Pooling people, budgets, strategies and infrastructure allows for less investment while still gaining every benefit of innovative strategy.

I'm looking forward to reviewing the case studies entered for their Shared Service Centre of the Year award. The award will be judged on the basis of its ability to deliver both initial and on-going business value to the clients, incorporating both best practice and continuous service innovation.

For more information or to enter the award please see award number sixteen in the PDF below.

NOA_Awards_Entry_Pack.pdf

Management of relationships is vital to the well being of the organisation and its up-stream and down-stream partners. The most valuable of all business relationships are likely to be those that are collaborative. Where organisations work together using their specialised resources innovatively to achieve aims and objectives that could not be realised on their own, collaborative relationship management principles will apply.

However, managing them is often seen as a ‘black art’ where we don’t know what to do, we don’t know that we don’t know what to do, it’s somebody else’s job or we haven’t the time or money to do it. Look for a course in a business school and you are unlikely to find it. They do Customer Relationship Management and Supplier Relationship Management, but not Enterprise Relationship Management - the process for coordinating all the business activities that are essential to the success of a joint/multi-party endeavour.

Relationship management is one of the most important management systems that should be in place and as such it should be clearly documented both in policy and in practice. It uses its own virtuous action cycle that acknowledges the joint nature of the endeavour and ensures that performance increases become inevitable.

The partners Review the quality of their collaborative relationship and its achievements, Adapt their way of working to keep their relationship in-step, agree Improvements to their processes and behaviours and Operate together.

By formally managing the essential activities of the joint enterprise it becomes proactive and accountable. It must be supported by objective relationship performance measures that create clear joint understanding between partners and ensure you ‘get things done’ to time, cost and quality. This management system has the ability to always capture joint value within your collaborative business relationships.

The idea of a management plan to keep track of the activities that support a business relationship is not a new one. It could be an Alliance Project Plan or Partnering Plan. We use the term Enterprise Relationship Management Plan because it covers the joint enterprise and is the key document used to support our proposed management system. Contents:

• Organisational Arrangements - Who’s who and what they do

• Business Case – Objectives and Value Proposition

• Asset Register of Resources and Capabilities - What we all bring to the table

• Risk Assessment - Keeping an eye out for the unexpected

• Commercial Agreement - Flexible contracting

• Management Activities - Operations and processes

• Continuous Improvement & Innovation - Building on success

• Knowledge Management - How we share IP

• Communications - The pattern

• Exit Arrangements - Pre-nuptials

The ERMP should be appropriate to the size of the relationship. It must be simple, clear and available to all those who need to access it for both reference and to record activity and must be kept current.

About the Authors

Andrew Humphries and Linda McComie are acknowledged experts in the field of business relationship management. Their company, SCCI Ltd, specialises in transforming business relationships and alliances around the world into more effective and efficient revenue generating operations.

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The Inside Sales team is usually kept in-house to ensure that there is a steady sales pipeline of well-qualified leads. This is particularly so in the technology sector because of scepticism that an outsourced team will be able to articulate a sophisticated value proposition.

A trend is emerging in the IT sector, where a number of companies are realising that current sales-processes are no longer cost effective. Too much time is spent discussing technology and not enough focus given to progressing the sales cycle. An outsourced Inside Sales agency’s core focus is sales productivity, so it’s worth considering if they can overcome the perceived barriers to success.

So, when is it right to outsource your Inside Sales to a specialist outside agency? The argument for outsourcing depends on a number of factors, including:

• The complexity of the product or service

• The value : volume ratio of the [inside] sales mix and the nature of the sales cycle

• The target audience (in particular their level of requirement for customisation of the sales process, and their need for in-depth technical reassurance).

• The culture of the vendor company (techie or saesy?)

Let’s take a closer look at some of the key decision influencing factors:

Product complexity

Complex new technology is always expensive to both sell and implement, but over time it will become more commoditised. As it does, the distribution channel shifts from direct sales to volume distributors, initially via VARs, but ultimately through direct selling to the public. For many products, it should therefore be recognised that Inside Sales will ultimately end up being outsourced.

The value:volume ratio and the shifting nature of the sales cycle

There is always a stage in the product lifecycle where dedicated enterprise field-sales is too expensive, yet commoditised, vendor-neutral distribution is ineffective. This is the ideal time to consider outsourcing your inside sales and channel sales functions. This is because while the product still needs both dedicated technical and sales expertise, outsourcing will accelerate the shift to a more cost-effective sales culture, where the focus on sales targets is equal to the focus on expert service.

At this stage in the product lifecycle, the target audience tends to become more comfortable buying over the phone, at least for the front-end of the sales cycle, although they may still require face-to-face contact with field sales or a reseller before committing themselves to any significant expenditure.

The target audience

Whilst the target audience matures, the in-house Inside-Sales function can remain in an ‘enterprise mentality’, continuing to support the view that their product requires high-end experts first, and sales skills second.

If buying behaviour shifts but sales behaviour doesn’t, the result is an expensive sales disadvantage. ‘Watch-out’ symptoms include field sales being too involved in accounts that should be serviced on the phone, or channel partners not meeting expectations because they feel there’s too much direct competition. This is the right time to consider outsourcing Inside Sales.

The company culture

Many technology vendors have a culture which is rightly proud of their technology. This can lead to tech-heavy sales conversations and in-depth meetings which don’t progress the sale fast enough. Changing the culture of the in-house team is one solution, but this can be costly and slow, and it doesn’t address historical cost-base issues.

Outsourcing inside sales to a specialist sales and marketing outfit is one good way to shift focus onto the commercial aspects of the sales cycle. Outsourcing Inside Sales also helps to clean up lines of communication, and make sales processes more efficient. Once best practices have been re-vamped, you can in-source once more to get the best of both worlds.

Other ingredients

While successful outsourcing of Inside Sales is about timing, it also requires a number of key ingredients in order to be successful. The first is that the outsourced team must be of the highest calibre, fully trained with the latest best practice techniques and conversant in the company’s products and services. There is little point engaging an outsourced agency if they are to be kept at arm’s length from the core sales strategy. This means that in order for any outsourced Inside Sales team to be effective, they must be made part of the ‘inner circle’ and treated as strategic partners.

A cost effective and results-driven approach is also driven by the outsourcing process, because it encourages both clarity and discipline through more formal communication and demarcation of responsibility, which tends to wane over time with an in-house team.

Whether you need a steady flow of appointments for your field sales, or a fully independent Inside Sales function, the market has developed to the point where it is both feasible and advantageous for you to outsource your Inside Sales.

Amazon Web Services today launched support for dynamic content in Amazon CloudFront. The CloudFront aims to improve the performance, reliability and global reach of their website to deliver all their content, including the dynamic portions of their site that change for each end-user.

Amazon CloudFront works with dynamic applications running in Amazon EC2, without any custom coding or proprietary configurations, making the service simple to deploy and manage.

Previously, developers who wanted to improve the performance and reliability of their dynamic content had limited options, as the solutions offered by traditional CDNs are expensive, hard to configure and difficult to manage. This often requires custom code on their websites, and configuration can take days or weeks.

“With this release, we are continuing on the same path we started when we launched CloudFront: iterating based on customer feedback and making premium and innovative content delivery features that other CDNs sell at high prices much less expensive and much easier to use," said Tal Saraf, AWS's General Manager for Amazon CloudFront.

"In 2008, CloudFront showed customers that they didn't need to pay premium prices and sign long term contracts to get great performance and reliability for static content. In 2009, we did the same for video on demand, offering RTMP streaming at the same low prices we were already charging for static object delivery. In 2011, we did the same for live events. Now, with this release, customers can use CloudFront to accelerate their dynamic content, and again, customers don’t have to pay any more than our already low rates. No up-front fees, no requirement to make a long term commitment, no monthly platform fees, no need to hire expensive consultants to help with configuration, no more being over-charged by traditional CDNs that used to be the only ones who could provide this important feature for customers.”

Lincolnshire County and District Councils are set to save over £2.5m per year after signing up to a new public services network.

The savings come after the Council joined the East Midlands Public Services Network (emPSN), an organisation that allows local public sector bodies in the East Midlands to bulk buy a range of IT services including Access and Application Services and connection to a core network infrastructure, supplied by Kcom. This has allowed the Council to replace IT contracts that are about to expire for less than half the previous price.

Councillor Kelly Smith, Executive Member for Finance and HR, said: “Like any modern organisation, the County Council needs certain IT services in order to operate effectively. This includes a large-scale computer network to link our different offices and a high-speed internet connection. Under this new arrangement we’ll not only see improvements to these services, but we’ve also reduced the associated costs by more than 50 per cent. The end result is a much better deal for taxpayers.”

The new contract also covers the seven district councils in Lincolnshire and broadband services for 349 county schools. The emPSN contract was awarded to Kcom as a result of its successful bid in a recent EU procurement process and its track record in establishing the current embc network, which supplies connectivity to all the schools in the East Midlands and which will be transferred over to the emPSN. The contract win also builds on Kcom’s success in implementing PSNs for Staffordshire and Dorset County Councils.

Afshin Attari, Kcom’s Director of Public Sector and PSN, added, “We are very pleased to have been given this opportunity to work with Lincolnshire County Council in delivering cost-effective IT services to their offices, schools and partners. This approach to purchasing services through a central partnership organisation, such as emPSN, provides economies of scale for all parties involved and as such is a good investment for the residents of Lincolnshire.”

O2 has announced a new initiative whereby customers will help define their crowdsourcing strategy.

Using its social media platforms O2 will be inviting shoppers across the UK to tell them which brands they would most like to receive experiences and money saving offers from. O2 will use these suggestions to campaign on behalf of customers to create deals from the top brands via Priority Moments. The campaign marks the first time a major brand has used crowdsourcing to secure deals from other companies, on behalf of its customers.

Launched in July 2011, Priority Moments delivers money saving deals and enhanced everyday experiences from leading brands to O2’s 22 million customers across the UK. Since launch Priority Moments has provided O2 customers with access to over 3,400 offers from more than 300 brands across the UK, providing a total saving of over £7.5m. Recent offers have included some of the UKs best loved brands such as Ocado, HMV, Odeon, BHS, Toni & Guy and Accessorize.

O2 Marketing and Consumer Director, Sally Cowdry said: “Priority Moments is all about creating great experiences and adding value for our customers. Now we want to take that a step further by asking them to tell us what brands they would like us to approach for new offers via Priority Moments. We recognize that times are tough and budgets are tight across many UK households so this is a further demonstration of how we’re listening to our customers and promising to deliver on their behalf. So whether it’s helping towards a family day out or providing extra value for a shopping trip we’ll be campaigning to provide more great offers for O2 customers.”