Industry news

Goldman Sachs have received a $22 million fine from regulators over the investment banks failure to properly monitor trading and analyst communications regarding key conversations prior to changes to published research.

The fine also included penalties for failing to implement higher order controls for business strategies and high risk trading.

Brad Bennett, executive of industry regulator FINRA, said that Goldman Sachs "did not have an adequate system in place to monitor client trading in advance of changes in its published research".

Microsoft has successfully won a contract to provide over 7 million students and half a million teachers with communication software as part of a deal with the Indian Council for Technical Education.

The contract includes providing email support, Office Web applications, storage and instant messaging software.

The move comes as Microsoft looks to compete with the rise of cloud based computing with firms such as Google.

British Airways has entered into talks with unions over 1,200 potential job cuts as the airline plans to integrate with regional airline bmi.

The integration between the two group approved by the European Commission is expected to be complete at the end of this month. Currently bmi is losing £3 million a week, the deal is expected to secure 1,500 jobs with BA at Heathrow.

The union unite commented, "BMI's future has been secured but we are very saddened at the scale of the job losses being proposed," the union said, adding that it would look to ensure that, where vacancies exist, BMI workers can be placed within roles at BA.

Amazon Web Services have launched CloudSearch, the service allows for the integration of search based functionality into cloud based software.

CloudSearch allows users to add the data that they want to be made searchable, CloudSearch then indexes the data added. Users are able to define search parameters and change settings to the search functionality on the fly.

The service currently costs $0.98 for every gigabyte of data uploaded to the search parameters of CloudSearch.

The government G-Cloud project director Chris Chant is set to retire at the end of this month with no replacement yet chosen.

The director has been critical of public sector CIOs, attacking them in a personal blog posted yesterday for their inability to adapt to meet the modernisation requirements of government IT.

A statement provided by the Cabined Office said: "We are very thankful for the years of service and in particular, his recent success with the G-Cloud Programme. Chris leaves Government ICT in a strong position and we wish him all the best in the future."

In the election run up, Boris Johnson has promised to make London the most Wi-Fi covered city in the world if he retains his position as mayor.

Johnson pointed out that London already compared favourable to other technological cities and citied the Tube Wi-Fi set to be rolled out to over 120 stations as well as the success of Tech City.

Boris said, "my ambition over the next four years is to make this the most digitally-covered and Wi-Fi accessible city in Europe, if not the world".

Public sector CIOs have been criticised Chris Chant, director of the government’s G-Cloud, as being undeveloped and inflexible in moving to a new digital agenda.

In his latest blog, Chant said that progress had been blocked by multiple failings including “an absence of capability in both departments and their suppliers, by a strong resistance to change, by the perverse incentives of contracts that mean it’s cheaper to pay service credits than to fix the problem and by an unwillingness to embrace the potential of newer and smaller players”.

Chant did however recognise that the public sector had made strong gains in accepting quality contracts, with CIOs considering moving away from large companies and would no longer accept poor service.

Outsourced services from dynamic, dedicated private sector providers still set the industry benchmark, argues Leading Services’ Sheila Bryant

On the face of it, cost sharing groups (CSGs) that provide shared services exempt of VAT look a good thing.

Dig beneath the surface a little, however, and the question of whether real value is being offered arises. In order to qualify for VAT exemption, a CSG has to be non-profit making by providing services at cost to the organisations within the group – all of which jointly own the CSG.

The types of organisation most likely to be attracted to the idea of CSGs are charities, non-government organisations (NGOs) and public sector bodies. It follows then, that members are unlikely to benefit from the level of commercialism and competition that exists across the private sector. If the CSG is owned on an equal basis by all its members, there would be no clear leader in the group and probably, no real incentive to drive change and seek ongoing service improvements.

And, as we’ve seen before, the merging of back office services in the public sector is invariably bedevilled by bureaucracy and characterised by a wholly different culture to that in commercial organisations. It is very difficult to change this and create the environment in which the imperative to drive quality up exists hand-in-hand with the need to keep costs down.

The private sector, on the other hand, has a great deal of experience in demanding market conditions where efficiencies have been achieved through outsourcing, co-sourcing, process change and policy enhancement. Nowhere are these skills more finely honed than at specialist private sector consultancies. That’s why I believe that, by introducing a private sector driver, a client will enjoy more efficiencies than are currently available within the public or third sectors.

However, if the private sector created its own consortium along the lines of the VAT exempt CSGs, Its clients would not benefit from the VAT exemption applicable to CSGs. This means that members would be paying 20% over cost, yet would have no mechanism for claiming that money back.

This in turn restricts opportunity for those private sector oursourcing providers who owe their very existence to their skills, knowledge, experience and expertise in services that make a huge contribution to the success of many businesses and charities. Quite simply those who are arguably best placed to drive most value for money are disadvantaged to the tune of 20% when compared to CSGs.

Dynamic outsourcing consultancies such as Leading Services can facilitate the setting up of amalgams by bringing together customers that would be eligible to benefit from the VAT exemption. However, under the current proposals, they would be actively discouraged from doing this. In this scenario, their best bet would be to join a CSG, where they become subordinate to the consortium members and lose their ability to drive and shape a successful and efficient operation.

For this reason many organisations without the resources of large commercial businesses – such as those in the third sector – find themselves with a dilemma: go down the CSG route or outsource to private organisations?

To win these clients over and show that their needs are fully understood, private sector providers need to demonstrate their commitment to a wide range of ethical and practical principles. High among these are sustainability and transparency: third sector clients demand that providers share their environmental values and that they are open and operate with the utmost integrity. Similarly, the provider should show clarity in everything it does and work within clear management consultancy codes and guidelines. Governance structures should be sufficiently robust to assure the client of its adherence to corporate responsibilities. Clients are also increasingly looking for assurance that outsource providers understand - and can adapt to - their unique organisational culture and that they have the client portfolio and range of services that engender complete confidence.

Sheila Bryant is an experienced Chartered Accountant and CEO of Leading Services where she provides strategic professional and outsourced finance director services to the company’s clients.

www.leadingservices.co.uk

We want it good, and the government wants it on the cheap. There is much speculation about the economics of scale, and the expected cost savings, that shared services can bring. On the other side of the debate, there is voluminous criticism, and the oft-begged question: where is the evidence that shared services will save money? This feature will look at the current examples of best practice in shared services and the evidence of cost savings.

The employment of shared services has been most prevalent within the public sector, with Whitehall leading the way in pushing streamlined processes and efficiency as it seeks to create savings in the current economic climate. The Local Government Association has provided research demonstrating that councils are saving more than £156 million a year through shared services, with 219 English authorities sharing IT, recycling and waste, procurement and other corporate services. The use of shared services in councils according to Jonathan Hamill, Sales & Marketing Director at APD Communications, “can result in real savings and will increasingly be key to ensuring budget cuts do not affect the essential services provided to the public.”

The private sector has looked at the viability of shared services, but the large scale models introduced by the government have yet to be adopted fully. Currently the public sector leads by example on the implementation of shared services while the private sector waits to determine the results of large scale implementation. Public sector procurement has often been limited by failing to establish advice on best practice for the employment of shared services. The practice of departments requesting bespoke software coupled with a failure to provide effective mandation has led to a history of projects beset by over competition and lack of trust.

• Defining services.

The short term success of shared services requires that the public sector compiles guidelines on the implementation of services throughout departments. Records need to be compiled detailing all of the variables of the project prior to commencing on a project of mutual cooperation.

From the outset the services to be shared must be clearly defined with the end objectives detailed. Focus should be placed on the requirements and expectations of the parties involved and support services established. Service areas which lend themselves to being shared between parties tend to relate to basic roles including, invoice purchasing, accountancy and IT servicers.

• Structure.

In order to reap the benefits of combining resources, an appropriate structure including governance arrangements must be drawn up in the initial stages of the brief. Effort should be made to avoid the procurement of shadow personal. Many examples exist of collaboration being weighed down by the practice of hiring of multiple consultants. In detailing the services to be shared the goal should be to streamline services while increasing efficiency with resources.

The move to a shared services environment must incorporate a clear understanding of a collaborative IT strategy. The appropriate technology should be identified for delivering shared services as well as identifying the potential obstacles of consolidating software applications. It is vital that up to date technology is employed in order to facilitate the consolidation of information and increase efficiency.

The effective use of Cloud based services can provide multiple benefits in integrating systems. The rise of cloud based technology provides the potential for organisations to work quickly together to set up and launch shared services operations in an efficient and economic manner. This ensures that only the services required are employed while diverting additional resources towards the core service delivery. A shared services partnership focusing on support services between Stockton-on-Tees and Darlington Borough Councils was implemented in just two weeks through the use of Cloud software delivered by supplier UNIT4.

• Monitoring

The implantation of shared services requires on-going monitoring to ensure that evidence exists of clear benefits being achieved. The gathering of baseline service data should be gathered in the initial proposal as well as being actively undertaken throughout the shared services lifecycle to facilitate fine tweaking and ensure the flexibility of the model.

• Relationship management

Relationships are fundamental to the success of shared services. Difficulties arise when shared services are taken from a theory to practice in which departments seek the competitive edge at the expense of genuine reciprocal collaboration.

Examples of shared services have been plagued by difficulties caused by a focus on the individual development, rather than mutual benefit between the sharing partners. A focus by those involved in sharing services to take the most out of the party cooperation is counter-productive in producing a stable relationship. Campbell McLundie, partner at Scott-Moncrieff Business Technology and Consultancy, said a “customer centric approach is key to the development and potential expansion of shared services beyond the original portfolio of activities”.

The Cabinet office having identified the weaknesses of past strategies has now started to improve the deployment of shared services, reducing complexity and enforcing mandates. Research from the Hackett Group now shows that companies are to use shared services in greater numbers with an estimated 93 percent beginning to take the step in employing integrated solutions. As the private sector increases adoption, shared services can be adopted with greater scope for flexibility and innovation.

Education in IT has become a recurrent news item in the UK. Plans to reform the curriculum, which Education Secretary Michael Gove described as “dull and demotivating”, are already in place, with a new regime set to start in September 2014. With only 0.5% of all A-Level students taking the course in 2011 it is clear that something needs to be done, but why is it so important that we have an IT industry in the UK?

The benefits of having a succesful IT industry are untold. Perhaps most obvious are the general logistical advantages for UK businesses. For instance, outsourcing onshore will mean that there are no time differences, which can lead to breakdown in communications. The geographical proximity of supplier and user also mean that the potential for face to face contact on a regular basis is far greater. This is an advantage that should not be overlooked, as parties involved then have the capability to hold both informal and formal conversations and is a good way to build raport and gauge if the cultural fit of the organisation is still intact.

Apart from these clear benefits, the economic advantages are huge. IT dominates the outsourcing market, holding 28% of the market share in an industry that is valued at around $20 billion. If UK businesses could become genuine competitors for all IT contracts on a global scale, the financial advantages for the UK would be tremendous.

More IT businesses in the UK would also lead to an increase in standards domestically, as competition would drive up service levels and prices down. It would also encourage innovation as more businesses look to distinguish themselves from the crowd.

It soon becomes evident then that all should be done to ensure that the UK has an IT industry that positions itself as competitors on a global scale.