Industry news

The Post Office has put out a tender for IT services to support front and back-end operations at its branches and online.

The contract is worth £150m following its separation from the Royal Mail Group.

Post Office Ltd announced plans to transform about half of its network of 11,800 branches across the UK over the next three years as part of an overall £1.34 billion investment and support programme, subject to EU State Aid clearance.

The Post Office is a core part of the UK’s economic and social infrastructure — 99 per cent of the UK population lives within three miles of a Post Office branch. The investment will provide a more modern and convenient retail experience for customers, whilst maintaining the UK Post Office network at its current size.

Phoenix helps Welcome Break ensure reliable and cost-effective IT services 24/7

A Phoenix client since 2005, Welcome Break recently signed a new three-year maintenance contract covering its nationwide network of service stations. “We are the UK’s leading motorway service station company,” says David Willock, Director of IT, Welcome Break. Of the three major players in this sector, Welcome Break is the UK’s second largest, with 27 service stations.

Willock says, “All sites use Welcome Break systems and processes. All come under my remit as Director of IT – and are supported by Phoenix. We work with many suppliers and a limited number are strategic - Phoenix being one of those.” Working with Phoenix helps maximise Welcome Break’s capacity to trade, across all sites at all times.

Unite members across the country working for IT services giant Computer Sciences Corporation (CSC) will take to the streets today to voice their concerns over the company’s redundancy selection.

Unite members from CSC’s Chesterfield, Chorley, Leeds and Solihull sites (see notes) will take part in a lunch-time protest over the company's refusal to listen to proposal which will mitigate any compulsory redundancies.

Following several weeks of consultation over a reduction of staff working on the NHS account (Lorenzo contract), CSC is insistent on issuing compulsory redundancy notices despite receiving sufficient number or volunteer requests to leave the company.

Unite national officer, Kevin O’Gallagher, said: “We will now increase pressure on CSC to listen to its staff and to Unite’s proposals. We have put forward a detailed plan which will avoid any compulsory redundancies in the company.

“However, these plans have fallen on deaf ears. Our members are now taking to the streets to get their voice heard. As a union, we will do everything in our power to support these workers though this very uncertain time.”

The National Audit Office has reported on how government is fulfilling its commitments to promote the transparency of public information. The report recognises the strength of the strategic case for greater transparency, and highlights progress across government in fulfilling most of its initial commitments. However, government needs a better understanding of costs, benefits and use to assess whether transparency is meeting its objectives of increasing accountability, supporting service improvement and stimulating economic growth.

The Government has significantly increased the amount and type of public sector information released. Twenty-three out of 25 commitments by central government, due by December 2011, had been met by that month. However, the assessment of value for money is underdeveloped. While the Cabinet Office has identified six types of potential benefits from open data, it is not yet using this framework to evaluate the success and value for money of its various transparency initiatives. The new Open Data Institute will have a role to improve evidence on economic and public service benefits of open data, although the range and scope of its work is not yet clear.

Amyas Morse, head of the National Audit Office, said: "Opening up access to public information has the potential to improve accountability and support public service improvement and economic growth. What the Government is lacking at the moment is a firm grasp of whether that potential is being realised. If transparency initiatives are to be more than aspirations, then Government needs to measure and monitor both their costs and benefits. This is vital for tracking success and learning what works."

CSC has enjoyed mixed fortunes in its recent history with the UK public sector. CSC’s relationship with the government has been erratic, from being attacked in the commons, to winning new contracts

while still experiencing fallout from past failures.

Today employees from CSC belonging to the union Unite took to the streets in protest against redundancies from the UK government’s cancelation of CSC’s NHS IT project. The protest today is just the latest in a long line of negative stories stemming from CSC’s patient records project with the NHS.

While 500 staff face layoffs from the failure of one project, CSC have won a new £400 million contract to provide back office services with the Ministry of Defence. Other recent successes included the renewing of large numbers of extensive contracts with high profile companies including Transport for London, John Hancock Financial Services and the U.S. Citizenship and Immigration Services.

Despite the negative news today surrounding job cuts as the result of the damaging failure of the NHS project, CSC had announced only earlier in the week of its success in winning the MoD contract. The move was met by surprise from many, including analysts, because of the history of the NHS contract. CSC have now moved into final negations in order to finalise the contract which is expected to be completed by mid-May. The company successful bid for the MoD contact against HP Enterprise Services, who had expected by many to win the contract,

The results of the NHS project had seen CSC widely condemned throughout Whitehall. The chair of the Public Accounts Committee (PAC), Margaret Hodge had only recently attacked the company in failing to provide “functional” software to the NHS. The recent news of the MoD contract attracted further criticism of CSC from the PAC, with MP Richard Bacon, saying "In my opinion it is regrettable that CSC has been awarded more government work," in an interview with Computerworld UK.

The huge failure of CSC’s NHS project been highly costly for the company and has attracted many detractors from within Whitehall, however it is apparent that CSC has proved itself in many other business arenas, winning extensions on contracts and implementing programs successfully within the UK. The company has enjoyed increased growth with new business awards totalling $4.1 billion, up from $2.3 billion a year earlier. The MoD awarded the contract to CSC due to its ability to meet the stipulations of the programme at a competitive cost.

CSC has come to a crossroads in its turbulent relationship with the UK government. In winning the MoD contact, CSC now faces irrevocably destroying their public sector business prospects in the UK if it fails to deliver on the project, or win the opportunity to erase their past public sector failings, by delivering the project successfully.

Related stories:

London Mayor Boris Johnson pledges to make London No1 for Wi-Fi

MoD awards HR contract to CSC

Tfl extends $33 million contract with CSC

“Barcelona… I had this perfect dream.” So sang Freddie Mercury, and when Freddie sang people listened. Conjuring up romantic visions of this historic city, his song was an epic, memorable one.

Now no-one’s going to say that outsourcing your IT is romantic. But it can be epic. And quite frankly, Barcelona really is the perfect dream if you’ve been on the receiving end of a long and laborious offshoring project, not to mention all the flights.

There’s nowhere quite like Barcelona. This beautiful city is not only a popular tourist destination and a great place to live, it’s also a thriving place to do business. It’s a bustling blend of culture and commerce with a Mediterranean twist.

This isn’t just talk either. Statistics show that Barcelona has been voted the top European city for quality of life, in the top three best-known cities in Europe and the top five places to do business. It’s in the top three for qualified staff, telecommunications, external transport links and cost of staff. All impressive stuff.

So what’s my point? Well, as companies have started to realise the associated risks with offshoring, near shoring is becoming an increasingly popular way to outsource IT projects. And Barcelona is the European hotspot for outsourcing.

People are one of the main considerations when you’re looking to move a project abroad. And there’s no denying that traditional offshoring has offered a mass of talent and willing workers. But it’s also key to have a workforce that’s consistent and knowledgeable, key to have a workforce that’s on your wavelength and on your doorstep. With a culture and education system similar to the UK, you’ll find it easy to put your points across and discover a shared approach to your working practices. Your complex projects demand a flexible workforce, and you’ll be able to easily find the right people for your business. With lower staff turnover, greater retention of talent and unrivalled domain knowledge, Barcelona wins hands down on the people factor.

Cultural differences can also come into play. Traditional offshoring countries like India take a different approach to IT personnel, and it’s common for technical staff to become managers after about five years. In Spain, you are much more likely to find technical staff with 15+ years’ experience who are able to bring their expertise and knowhow to your project.

Barcelona traditionally boasts a highly skilled workforce with good levels of English and other European languages. So nothing gets lost in translation. It also has a culture of transparency, so you’ll be informed straight away if there are any problems or issues, giving you the chance to deal with them before they have the chance to escalate.

A beautiful city with a business brain. Next time you think offshore, think near shore. Next time you think near shore, think Barcelona.

Speaking about offshoring with a few of our SME members recently, they were telling me that for smaller companies, offshoring manufacturing isn’t quite as attractive as it used to be.

It’s not just rising travel costs and international political turbulence proving a turn-off. Total cost of offshoring (TCOf) is on the rise - small firms, doing small runs, are probably better off manufacturing locally or near-shoring.

Traditionally, long distance offshoring was all about labour arbitrage - nowadays, with rising inflation in popular offshore destinations like India and China, the cost of doing business abroad has skyrocketed. Not only that: the costs of supplier management are escalating too.

One SME MD was telling me that even if offshore labour was free, then it would still be more expensive to offshore purely because of the ever-increasing overheads. But its horses for courses, if you can achieve the economies of scale to reduce unit costs low enough, then offshoring might still be for you.

The overhead situation isn’t nearly so tight for the big boys: major brands who are shifting enough units to necessitate the big production runs where offshoring come into its own. Although, in the face of the rising costs of doing business in India and China, many companies are thinking about seeking out cheaper, non-traditional destinations such as Kenya or Argentina.

But moving destination is not without risk. There are always operational risks in managing the transition. As well as cultural fit, there are both systematic / IP issues.

There may be problems with releasing or using intellectual property such as the software solutions that all offshoring, not just ITO, could not happen without. If service delivery is dependent on supplier proprietary software, ensure there are appropriate contingency arrangements on exit. Procuring a suitable solution, dovetailing it with existing systems, and training people to use it present both operational and financial risk.

But those organisations who are hungry for risk - and the associated rewards - will continue to go for it.

Recent research suggests that offshoring is set to drop off after 2016. Hackett Group Chief Research Officer Michel Janssen says: "That trend is going to continue to hit us hard in the short-term. But after the offshoring spike driven by the Great Recession in 2009, the well is clearly beginning to dry up. A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased."

That comment seems far-fetched to me. As long as it’s cheaper, companies doing the requisite volume will pack up their processes and head offshore in search of new partners.

But for smaller companies, highly complex manufacturing or even call centres, the UK is a sagacious choice right now. Local-sourcing and nearshoring, as I advised the SMEs members, is their best outsourcing option in 2012.

In a flattened world, companies that effectively leverage the global delivery model stand to gain in several areas, ranging from cost advantages to access to talent to the ability to innovate rapidly.

However, outsourcing to another entity in another country where the culture, legal framework, language and commercial contexts are very different from one’s own, tends to increase the perception of the risks. While distance makes the heart grow fonder, it does make the risks seem larger. Partner selection and how you engage with the partner are the two fundamental aspects of managing outsourcing risks.

Traditionally, assessments of partner capability, size, financial stability, track record, references and perceived ease of working together were the criteria for choosing a partner; while in-house capabilities and confidence in the partner were prime factors in determining the model of outsourcing. The assumption was that if the partner was stable and had the ability to deliver, then the programme risk will be the aggregate of the individual project risks and that these can be tackled in a tactical manner.

While this model has its merits, it can tend to distort the decision criteria, leading to an uneasy relationship that become an increasing burden for both parties. Therefore, I believe that the time has come to rewire the decision making process along these lines:

1. Strategic Position: What is the industry in which you operate? Are you in a crowded market place looking to eke out a few basis points of profit over competition, or are you in the rather nice position of being able to command premium pricing due to your differentiated offerings? The truth, usually, is somewhere in the middle. Based on your competitive position, choose your partner.

If most of your business is commoditised and you are looking for some cost leadership, then go with a partner who can bring in efficiencies (over and above cost arbitrage). Structure your contracts in a manner that improves your costs year on year, in an aggressive manner – but think of partner risks in terms of the ability of the partner to recover from project or programme crashes and deliver.

However, if your competitive position does not demand focus on costs as much as building for the future, then you can choose partner(s) with track records that showcase greater capability to deliver innovative solutions, rather than their capability to reduce costs.

2. Your Learning Needs: Are you an organisation that needs to learn to continuously to retain market position? Are you in a place where you are constantly under threat from competition’s innovation? How much of your IT needs to be in step with the business in learning and innovating? Again, the answer these questions not only determine your partner selection, but also the extent to which you are willing to outsource and the commercial model of engagement.

3. Recoverability: How quickly can you recover from a bad choice of partner or engagement? While legal protections should exist, they can neither guarantee successful execution nor can they ensure that things can be recovered without significant impact on business. Evaluate your eventual dependence on the partner – and the costs of having critical internal knowledge outside your organisation. Calibrate your engagement model accordingly.

4. Depth of Partner Management: While it is definitely an ego-boost to have the CEO or senior executives of your partner company promising to be available to you for any issues, explore if there are people on the ground empowered to take decisions. Try to gain an understanding of the organisation structure and see if the people who are immediately above the partner people in your engagement are capable and empowered.

5. Your Roadmap: Do you have a technology roadmap laid out? Is your enterprise architecture in place? If so, look for partners who have made a commitment to the technologies that are part of your roadmap and your enterprise architecture choice. If you have, for example, chosen J2EE as your basic technology, then there is little merit in choosing a partner who has a significantly larger number of people and investments on the Microsoft Technology Stack.

There you have it, the five factors that are very relevant and will help minimise the risks of offshoring.

In my last blog I discussed EDI and digital signature EU legislation compliance within the European economic zone. Whilst both EDI and digital signatures can provide compliance, I reminded everyone of the importance of ensuring that your e-Invoicing solution takes into account all the varying legal requirements in different countries.

In this blog, we will examine the differing levels of complexity involved in setting up EDI and digital signatures, and in the process of exchanging e-Invoices across each.

EDI has traditionally been the consensual method of e-Invoicing. EDI is renowned for being an industrial strength solution, capable of processing tens of thousands of electronic documents in a day so it is no surprise that this method was first used by larger companies. However, the strength of EDI is no longer the domain of large multinational corporations, and now small and medium-size enterprises have EDI solutions tailored for their needs.

There are three main types of network communications methods that EDI is traditionally implemented through: an EDI Network, Virtual Private Network (VPN) or point-to-point using a secure internet connection such as AS2. Most businesses choose to use an EDI network from a major provider because setting up the different communications methods requires careful attention to detail. For example, you must consider your company’s data processing capabilities as well as your commercial business needs. In most cases, interchange agreements are signed between the different partners in the trading relationship and the success of the EDI solution will ultimately depend on the quality of the software, the network and the support that the vendor provides.

Digital signatures have some degree of complexity involved in the exchange of documentation, but are less intensive to set-up. All that is required to set up digital signatures is a private key, public key and digital certificate. The only real challenge is obtaining and installing the certificate to sign invoice data securely. When exchanging documents, tax administrations often favour local Certificate Authorities (CAs) as an encryption method although stricter administrations may require fully qualified digital certificates with Secure Signature Creation Devices (SSCDs). The advantage of digital signatures over EDI is that they are flexible enough to be sent over a multitude of communications methods, including the internet, and they do not require a specific agreement between trading parties.

Implementing EDI or digital signatures does have complexity, therefore solution providers offer outsourced managed services that will remove this complexity for your business. From your company’s perspective, you will need to decide on which method benefits you best, both in the short and long term and whether you want to manage the complexity yourselves. You can learn more about all aspects of e-Invoicing at www.einvoicingbasics.co.uk.

As companies struggle through the current austere times, many are investing in processes that will be cost-effective and beneficial in the long-term. Modern outsourcing relationships now offer and deliver much more than just cost savings. Businesses are often transformed through innovation to achieve far greater efficiency and productivity.

Innovation is perhaps the most mis-interpreted term in outsourcing. It seems everyone wants a slice of the pie, but many are unsure of what the pie actually consists of..

It is extremely hard to narrow down one definition of innovation in outsourcing. One man’s innovation is another man’s day-to-day activity.

Innovation can be both incremental and radical and does not simply have to be continuous improvement. Innovation can be new ideas or ways of working to drive commercial gain or competitive advantage. It is does not have to applicable to all service provider relationships. For example no innovation expectations may exist for smaller or commodity relationships.

There has been much talk about the development of an innovation framework. To date, thinking has been that this framework is comprised of two distinct areas:

1) The hygiene factors for innovation: essentially the processes, the way in which a problem is approached, which can be included in contracts.

2) The governance structures, which are used to manage and progress innovation. The innovation management process itself provides the operational governance framework and a structured approach to fast track projects through idea generation and selection, development, confirmation of sponsorship and business case validation and on into hand-over to project delivery and tracking of benefits realisation.

On the other hand, many believe that innovation shouldn’t be put into a framework and ‘managed’ as it should naturally evolve from a partnership. Regardless of your position, a modern outsourcing relationship should help a business to innovate - whether metrics are set from the start or organically produced as a product of the relationship. However a framework can assist outsourcing partners to determine their objectives and formalise the innovation achieved. Developing metrics will also help to share the results and prove the worth of outsourcing-led innovation.