Industry news

Nokia Siemens will cut nearly a quarter of its work force in a broad restructuring to focus on mobile broadband.

Rajeev Suri, chief executive of the joint venture owned by Nokia Corp. and Siemens AG, said the company would cut 17,000 jobs globally, or 23% of its work force of 74,000, to save €1 billion ($1.35 billion) in annual costs by 2013—double its current target.

After more than seven years of major accomplishments as CIO for the DWP and one year as the Government CIO, Joe Harley, CBE, has decided to retire from the Civil Service in the Spring of 2012.

Joe has transformed IT in the Department which has made a huge difference to the efficiency and effectiveness of IT and of the DWP as a whole.

Work and Pensions Secretary Iain Duncan Smith said: "I would like to thank Joe for his significant and exceptional contribution to DWP and the Government - he has been instrumental in building reform and modernising our approach to technology. Joe leaves us with our highest regards having secured this Government well-placed to deliver major reform in the future."

respice, adspice, prospice

Author- Sanjai Velayudhan

The world is forced to continue its crusade against recession as the fundamental reasons that aided its resurrection are yet to be fully addressed. Like the squeeze of an incubus, financial nightmare refuses to fade away and is forcing implementation of dramatic measures. In a catch-22 situation, there is intense pressure to dramatically cut costs, postpone strategic investments, and stretch budgets while still keeping systems compliant. Resource constraints are accelerating inabilities of organisations to maintain competitive advantages and retain customer loyalty.

It is during turbulent times like these that loyal customers take the centre stage as a captive source of revenue. Scarce resources are spent on epic battles fought to obtain the holy grail of customer loyalty. A successful loyalty strategy seems to be the secret weapon brandished by mature organisations. Thoughtfully designed, implemented & administered loyalty programs continue to lure evangelists who vastly outnumber doomsayers. By delivering better customer experiences, organisations try to engender greater loyalty. Compelled to strike a balance between righteous investments and spend rationalisation, an increasing number of companies are learning the virtues of strategic outsourcing.

Despite obvious benefits, traditionally loyalty programs were implemented on-premise and were a luxury only a few could afford even during times of plenty. By outsourcing loyalty programs, organisations are still able to generate better customer value, build enduring competitive advantage and simultaneously streamline and reduce operational costs. On the other hand, outsourcing organisations are also aligning their people, processes & technology to strengthen a strong brand-building loyalty proposition.

Historically, outsourcing simply meant cost-cutting. The organisation segregated its core and non-core activities, outsourcing only the non-core activities (also called commodities) resulting in substantial savings. Information Technology (IT) was always counted among core competencies. Emerging circumstances are now prompting many organisations to adapt the idea of retaining a small core team of experienced IT employees and to work through third parties. Thus, when outsourcing a loyalty program, an organisation seeks robust technology platforms and access to modern, secure, comprehensive CRM/Loyalty solutions that are used by established and profitable companies in their respective industries.

Outsourcing has its critics who believe that it subtly implies the surrender of control to external entities especially in organisations planning to outsource CRM/Loyalty and other customer-facing activities. The stark reality is that by outsourcing, an organisation attempts to offer better service to its customers by drawing on the abilities of external specialised parties. The emergence of BPO & KPO outsourcing is a testimony to this trend. While slicing out cost is still inherent to such deals, fundamental objective today is to create strategic partnerships that help in achieving sustainable efficiencies, innovation and improvement. It is a symbiotic embrace, between partners seeking financial paradise in the growth of each other. The inter transmission of dual expertise-technology & domain knowledge may have resulted in strategic ‘right-sourcing’.

The elixir that any customer centric organisation seeks is ‘monetisable’ loyalty of a valuable customer. With strategic loyalty outsourcing model proving its ability to strengthen relationships between the outsourcing and their customers, expectations of greater professionalism & capabilities from the partners have been on the rise. It’s a two-way race for excellence and providers of outsourced CRM/Loyalty services are upping their technology/domain capabilities and recognise that proven successes can have a viral effect.

Outsourcing CRM/Loyalty operations enable organisations in considerably reducing their cost of operations, achieving greater flexibility and empower them with the ability to respond nimbly. The basic objective is to enhance performance & relationships dramatically. The crux for this success remains the growing technological capabilities of outsourcers and their ability to provide quick access to leading CRM technologies. Contemporary outsourced service providers are expanding their arsenals with sophisticated offerings that include technology and business process capabilities, deployable intensive marketing technologies, managed analytics, customer profile management, campaign testing, promotions management, communications management including contact centre, member data management to mention a few. Outsourced loyalty services offered by leading companies may broadly include:

1. Loyalty consultancy

2. Loyalty technology platforms

3. Data management and analysis including reports (strategic, tactical & ad-hoc)

4. Marketing/Campaign Management and Analysis

5. Customer service management

6. Loyalty Business Process Outsourcing

Methodologies like service oriented architecture (SOA) allow better componentization of the IT system and have enabled the growth of outsourcing business. Increasing numbers of organisations are adopting SOA, thus lowering the barrier of entry for outsourcing providers. Software as a Service (SaaS) is an ultimate manifestation of SOA enabling the outsourcing of high-cost activities that consume operational bandwidth. The emergence of webservices has also boosted the outsourcing industry.

By smartly integrating applications, systems and processes via internet, they enable organisations to quickly and productively leverage the capabilities of service providers. Eliminating the need for spending on software, hardware as well as the need to maintain expensive infrastructure, webservices enable the reduction of IT administration costs including upgrades, maintenance, backups, recovery etc. Many companies are relying not on service providers but on hosted CRM software, sparing themselves the challenge of implementing the systems onsite. Many leading CRM vendors such as Oracle, PeopleSoft, SAP, salesforce.com, Microsoft etc now provide hosted versions of their software.

Outsourcing offers the prospect of reducing production costs as the outsourcer typically pays for functionalities/services used per transaction apart from regular software updates and in-contract customisations. Partnership, or strategic alliance, is frequently becoming a major feature of CRM/Loyalty outsourcing which is enabling technological migration. Sharing of risk and reward is a feature often emphasised. Outsourcing partnerships are a viable & sustainable strategy as they help in reducing/mitigating risks.

Jim Stikleather, Chief Innovation Officer, Dell Services, explains how the different macro trends affect the workplace and how businesses need to align their innovation strategies to these changes.

“The most profound impact of the 20th century enterprise was in the way we moved workers to where the work was. The most profound impact of the 21st century enterprise will be in the way we move work to where the workers are.” Let’s zoom in from Tom Koulopoulos’ quipping view, floating at 100,000 feet above the Earth, and look at some of the current macro trends already affecting the workplace at ground zero, including work mobility, IT consumerisation, the new normal, and cloud computing,.

Work Mobility

Work Mobility is a reflection of socio‐economic changes in the workforce, globalization, and profound demographic changes occurring in the workplace. The Millennial generation are technologically savvy, hyper‐connected and mobile. They communicate by using blogs, social networks, wikis and video sharing. Their family, friends, and co-workers are constantly in touch, and straddle the fence of “Weisure Time,” the blurred line between work and fun. They bring a different perspective to work and expect businesses to provide work mobility.

The enabling technologies behind work mobility include the Cloud, social networks and, ubiquitous bandwidth. The impact on traditional organisations is huge, affecting corporate culture and hiring practices. There’s no going back and no place to hide: the only tenable recommendation is to accept the wave of change that is coming and assess control structures that exploit how the millennial generation expect to work.

With proper governance in place, smart companies will expand the use of social networks. They will deepen their understanding of the implications of online persona behaviour and its interaction with employees, customers and suppliers. Central to going forward is the need to address business process management and organisational structures to meet the expectations of the millennial generation and balance individual choice with information security.

The New Normal: IT Consumerisation

If we look at the macro‐trend of IT Consumerisation, we’ll see that the introduction of new technologies has shifted from the workplace directly to consumers. This has been facilitated by the ease of use of Web 2.0 technologies, economies of scale and lower hardware costs. Another facet of IT Consumerisation is the increase in employee‐owned assets at work, Smartphones, Netbooks, and Tablets. This trend offers organisations many advantages including increased productivity, lower capital and support costs as these costs are shifted to employees. On the other hand, there are many barriers for business and government organisations, such as security, Digital Rights Management, and supporting diverse employee owned assets

The book, The New Normal by Hinssen and Fingar describes a concept that states we are now halfway to somewhere known as the digital revolution. Digital is no longer special, it’s now just normal! This will have an enormous impact on the way companies organise and communicate with customers—and the way they have to be organised internally. Organisations are increasingly faced with customers and consumers who no longer tolerate limitations in terms of pricing, timing, patience, depth, privacy, convenience and intelligence.

Cloud computing

Cloud computing is not a technological breakthrough as much as it is a new way to architect how IT delivers value. It merely provides an innovative computing platform to transform the way IT delivers value to the business.

So what exactly is the Cloud? In one sense, there’s no such thing as cloud computing. It’s not a new architecture; it’s not a new technology; it’s not a new methodology. It is however, a radically new delivery model. In short, the Cloud is the computer.

Projects, ideas, dreams and world‐changing thoughts can all be launched using cloud computing. It truly makes for a flat, resource un‐constrained world. The only limit is your imagination, so think of cloud computing not as a stand‐alone skill or feature but as an integral part of the workplace that workers of the future are going to encounter. As cloud computing gets more mainstream, the barrier to conceiving new ideas and bringing them to the customer will go down dramatically. This is the sweet spot that innovative application developers should be targeting. CIOs are extremely eager to see if the potential of the Cloud can be transformed into tangible business value that will help them deal with three extremely pressing issues: moving faster, reducing the cost of infrastructure and increasing the amount spent on innovation as a result of reducing IT maintenance spending. Many CIOs say they are still spending upwards of 70 percent or 80 percent of their IT budgets on maintenance. As a result, very little money is left in the IT budget to fund new and vital customer‐facing projects because it all gets sucked up in keeping the lights on. But the real value in the Cloud is the levels of innovation it will enable.

Cloud computing is a big game changer for businesses; they will only need to make minimal hardware and software investments to achieve a new level of IT cost savings as the entire spectrum of business technologies and services becomes accessible in the Cloud. But it won’t be just cost savings. After all, a company cannot save its way to market dominance. In this sense, IT doesn’t matter, but innovative business processes do. Cloud Computing makes it possible to create new “business operations platforms” that will allow companies to change their business models and collaborate in powerful new ways with their customers, suppliers and trading partners—stuff that simply wasn’t practical before.

Over time, as more and more Cloud services are developed, companies can avoid the total re‐writing of existing applications to fit the Cloud. But even more critical for companies is the pressing need to choreograph and then manage complete end‐to‐end business processes in multi-company Business Networks. They want to manage “situational business processes” for rapid, innovation that spans multi‐company value chains.

Business Process Management (BPM) is what sets “enterprise cloud computing” apart from “consumer cloud computing.” Because the average end‐to‐end business process involves over 20 companies in any given value chain, multi‐company BPM is essential to business innovation and maintaining competitive advantage. Bringing BPM capabilities to the Cloud enables multiple companies to share a common BPM environment and fully participate in an overall end‐to‐end business process.

Putting the Macro Trends All Together

Taken together, the macro trends we’ve discussed represent an exponential change curve that has just taken off like a rocket. As we have no prior framework, we must begin anew to build up the tacit information we need to apply to each component, and to the whole.

Each decade or so it seems there is a seismic shift in information technology. Such shifts change not only the impact on business capabilities, but also which technology companies become the leaders.

Francis Maude’s comments this week about improving supplier relationships will have come as a delighted to outsourcers, particularly smaller providers, who will now be able to afford to bid for some much needed government work.

Phantom EU rules, misinterpreted by reading too much into them, have long been a bugbear of many people close to the government procurement process. Particularly the perception that its illegal / wrong / sinful to have informal conversations with potential suppliers before the full-on tender process begins.

Well, it’s not. The French do it. The Germans do it. It’s the best way. Competitive dialogue has its place, but it shouldn’t be the start of the deal. Sophisticated conversations pre-tender are a prominent feature of the discussions at the All Party Group on Outsourcing and Shared Services. It’s wonderful that the government seems to be listening, and is now keen to improve its skills in the procurement arena.

It’s interesting that the government is choosing Intellect as their partner in improving its commercial and technical skills. We at the NOA are concerned that, as an IT-specialist, supplier-only community, Intellect lacks the balanced opinions that having end-users and intermediaries involved brings. The government is likely to seek bigger savings in the business process arena than IT, so are Intellect the right people to offer the best advice? The National Outsourcing Association is on hand to plug any knowledge gaps, helping grow the government’s wisdom when it comes to managing outsourcing suppliers. Francis Maude’s outsourcing epiphany is most welcome, and we’ll support it all the way.

Defence giant BAE Systems has inked a 5-year £511m ($800m) deal with its long term partner CSC, that covers a full range of IT services such as support BAE's service desk, physical and virtual servers, mainframe, storage and networking. The deal also features project work and application support.

The FSA is launching cyber attacks today, in a bid to test out the hardiness of 87 firms’ business continuity plans, prior to the Olympics.

The firms – including high-street banks Barclays, LloydsTSB and HSBS – have volunteered for the scheme. The attacks will replicate widespread technical disruptions, such as cutting off internet access and phone lines, and failures among cash machine networks.

UK government CIO Joe Harley will retire in March 2012, it was announced yesterday.

This follows the news that his deputy, Bill McCluggage will leave to join IT supplier EMC later this year.

Harley was formerly IT chief at ICI Paints.

In September 2011 40% of government contracts were agreed with small and medium sized enterprises (SMEs), compared with only 5% in January, according to John Collington, the government's chief procurement officer.

Collington was among government officials at the Cabinet Office's conference - The Crown and suppliers: a new way of working. For the first time, the government will publish information on its future contract pipeline. This pipeline will give an indication of potential ICT and FM opportunities, and potential Government Procurement Service frameworks including the Public Sector Network (PSN), which may be competed over this Parliament and with an estimated value of £5m or more.

Francis Maude, the minister of the Cabinet Office, said: "Already in the last year we have started to see more transparency with the contracts finder website where businesses can survey everything on offer.

Capgemini will leverage on Dassault Systèmes’ PLM Version 6 solutions

IT services provider Capgemini has entered into an agreement with Dassault Systèmes, a provider of 3D product lifecycle management solutions, around the integration of Dassault Systèmes' PLM Version 6 offerings.

Capgemini said it intends to provide its clients in these sectors with the latest PLM solutions to enable quicker, more efficient transformation of their industrial processes.