Industry news

Cabinet minister Francis Maude has said that the government will crack down on large contractors who do not pay their smaller suppliers on time.

The government has a number of large contractors, including IT firms Atos Origin, Oracle, Logica and Fujitsu.

Maude’s comments come as Bacs, the organisation behind Direct Debit and Bacs Direct Credit, published research that found that large companies were the worst offenders when it came to late payments to SME suppliers. In contrast, the public and third sectors are meeting more of their bills on time.

“We are delighted that this report shows that government is serious about keeping its commitment to paying suppliers (including SMEs) on time. We expect and require our suppliers to pay within 30 days. We will crack down on any behaviour to the contrary,” said Maude.

South Bucks council has awarded a contract worth £11m for back office services including ICT to Steria and Northgate.

According to a notice published in the Official Journal of the European Union on 31 May, the suppliers will deliver a wide range of services including accounting services, software implementation and maintenance as well as hardware and consultancy.

The district council's new outsourcing deal will only retain functions in-house where contracting out is not permitted, such as fraud prevention and detection.

Revenue and benefits also form part of the seven year deal, covering the billing, collection and recovery of council tax and benefits.

The Capita Group Plc has acquired Call Centre Technology Limited, for a consideration of £15 million on a cash free, debt free basis.

CCT providesvoice telephony, applications and services for customer contact centres. Clients include 118 The Number, Strathclyde Police and Travelport. CCT made an operating profit for its financial year to 30 June 2010 of £1.7 million on a turnover of £18.7 million.

The acquisition adds valuable expertise and capabilities to Capita's existing telephony services. CCT already supplies services to a number of our contracts and businesses that have recently been acquired by Capita, including First Assist and Capita Secure Information Systems. Commenting on the acquisition, Paul Pindar, Chief Executive of The Capita Group Plc, said: "Our core outsourcing contracts are increasingly encompassing the customer contact interface and therefore, we are keen to enhance our capabilities and resource in this area.

This acquisition will be integrated with our current expertise in this area and will enable us to provide enhanced services to existing and new clients, as well as generating savings across the Group. Headquartered in Bristol, CCT employs 130 staff.

Mobile Operator Vodafone has decided to move two call centre operations from Ireland to Egypt and India respectively, and to outsource its debt collections to a third party in Ireland.

These moves will affect 45 staff at Vodafone and 139 employees of Rigney Dolphin, an outsourcing group that runs call centre activities on behalf of the mobile phone company.

These initiatives have been taken against a backdrop of falling revenues and declining customer numbers as the recession affects consumer spending.

Polaris Software, a leading global Financial Technology Company, has announced that Reserve Bank of India (RBI) has chosen Polaris to implement its IntellectTM Core Banking System (CBS) across the Bank. The end-to-end implementation includes System Integration and maintenance of software and hardware for a period of ten years. The deal is valued at USD 55 million.

RBI, the country's Central Banking Institution, wanted to implement a centralized Core banking Solution at all its offices encompassing all banking and accounting operations to align with its current and future IT requirements, including one Generalized Ledger for the bank. There were several functional and business requirements of RBI that are specific to large central banks and substantially different from the Core Banking System in a commercial Bank. Further, security was a major focus area in the CBS implementation, as RBI CBS will be a systemically critical solution in the country's financial scene. RBI is one of the most complex Central Banks globally managing public debt, collections and payments of a Central Government, state governments and union territories.

Commenting on the successful deal, Arun Jain, Chairman & CEO, Polaris Software, said, "I am delighted that after stringent evaluation of the Next Generation architecture of Intellect, RBI chose Polaris. The trust that the RBI has shown in us reaffirms our investments in building highly scalable yet open SOA technology. I dedicate this deal to the Polaris Product Engineering group and their commitment towards building such a high performance system."

In recent years the move to outsource IT or business processes has really taken hold. There are many reasons why an organisation may choose to outsource all or part of their database management system. The obvious answer is to save money and of course that is a major factor, however, it’s not the only reason for looking at outsourcing.

From speaking to our customers we see a range of different reasons for outsourcing database management. Cost is certainly one of those, as you’ll see below, but we also found a few others.

These are the top 5 reasons we see from our customers for choosing to outsource all or part of their DB2 database support:

# 1 Cost – In a tough economic environment, IT budgets are static or reducing. People continue to consume an increasing proportion of the IT budget. This is especially true for highly skilled staff such as database administrators.

It is often the case that DBA (database administrator) teams are overstretched and need more hands on deck but with pressure to keep headcount down there is no chance of employing an extra person. By utilising an external support provider, organisations can benefit from additional DBA support far more cheaply than if they had to employ another permanent member of staff. This combination of in-house and external support works well for many organisations and can be particularly helpful when dealing with the issues associated with cover – which is our next reason!

# 2 Cover – High or continuous availability is a common requirement for today’s “on demand” IT Systems and this can put pressure on small or overstretched DBA teams. Even without a 24x7 support requirement there can be issues with cover when holiday, sickness or maternity and paternity leave are considered.

Taking out an “out of hours only” support contract can be a cost effective way of managing cover during evenings, weekends and bank holidays. In addition, many support organisations also offer a “call-off” package whereby customers can use hours as and when needed. This type of contract is ideal for coping with either planned absences such maternity or paternity leave or unplanned absences such as sick leave.

# 3 Proactive vs Reactive – Expert DBA skills are often needed on different projects and so DBAs can find themselves spending more time on non-core functions. This means that the vital monitoring and management of the database can be sidelined. Overworked DBA teams may not have time to proactively monitor the database. Instead, only reacting once a problem has occurred and business users are already feeling the effects.

It is important when taking out a remote support contract, to check whether the service provider can offer proactive monitoring. This takes away the concern of problems cropping up unexpectedly and more often than not potential issues are noticed and dealt with before users are even aware of an issue.

# 4 Keeping up-to-date – it is increasingly difficult for DBAs and the organisations they work for to keep up to date with the latest database technologies. Database software is becoming more complex and takes years to master. Training is not only costly in terms of the price but also in time, with key DBA staff needing time out of the office. A managed support service can cover any gaps in knowledge within the team and most support organisations can offer training if required.

In addition to staff keeping up to date, sometimes it’s actually the organisation which is not on the latest database version. In some instances organisations are forced to stay on older, unsupported database releases. Skills for these older versions are hard to come by and lack of vendor support can mean a significant risk to the business.

Most service providers will be able to offer support on those systems which are officially “out of support” from the vendor thus taking away that element of risk.

# 5 Lack of skills in-house – We see organisations who do not have any DB2 skills in-house and organisations who have skills in-house but access to those skills is limited.

Some organisations will inherit DB2 systems through expansion or acquisition and do not have the skills in-house to support it. Whilst their own IT team may be able to cope for a while if any real issues come up, a support organisation needs to be called in.

Access to in-house skills can be a problem when DBAs are pulled into different projects and so have less time to spend on day to day maintenance. Their skills are often in great demand which can take them away from the routine tasks, again this is where an external support organisation can step in to take some of the strain.

Each organisation is different and their specific reasons for choosing to outsource will vary but there are many common themes. The need for quality support and technical excellence is of course paramount.

Triton Consulting offer a range of DB2 resourcing, outsourcing and training services.

As well as all the large, well-known outsourcing providers there is an army of smaller, niche service providers out there who are expertly placed to provide high quality support. Rather than outsourcing their IT systems lock stock and barrel, organisations can look to supplement their internal resources with niche technical skills for interim staffing, ad-hoc consultancy or even just as an “insurance policy” back-up. Rather than outsourcing to a good “all-rounder”, organisations should look to specialist providers for the in-depth technical knowledge required to support mission critical systems.

Sometimes organisations looking to outsource can be put off by the relative small size of a potential services partner, however, size isn’t everything. A niche services provider may be smaller than one of the large integrators but these organisations really know their stuff. They have to because whether it’s database management, business process outsourcing or HR services, that service is at the core of their business.

These organisations live and die by their reputation in the market, word of mouth is still one of the strongest marketing tools. The old adage “jack of all trades, master of none” is one which specialist service providers are very familiar with, these organisations are good at what they do and do only what they’re good at, rather than trying to offer a bit of everything.

A niche services provider can bring expert and often quite rare skills into an organisation. Access to specialised resources, which may not be available or are in short supply internally, is a major factor for businesses looking at outsourcing, especially in terms of database management services.

One of the key benefits of using a specialist service provider is the deep level of skills in their particular industry or technology. Specialist service providers bring insight into how other companies are solving similar issues. These “war stories” from previous engagements can really help build a customer’s knowledge of best practice.

War stories

In working with may different types of customers over the years Triton have come across almost every database support issue possible!

One of our customers was running DB2 LUW and they had outsourced development to an offshore organisation as part of a larger outsourcing agreement. They had just a small admin/support function locally, with no local DBA (database administrator) resource.

The offshore developers were complaining about poor query performance and were asking to move to another RDBMS (relational database management system). The offshore developers were extremely highly skilled in SQL. However, they had only basic database knowledge and no DB2-specific skills at all.

Working with the local admin staff and the offshore development team, Triton’s consultants were able to put in place a basic set of automated housekeeping routines which resolved performance issues.

The moral of this story is really about choosing the best supplier for outsourcing. Often a “one size fits all” approach isn’t the best way. By combining skills from the niche service providers, organisations are able to ensure that they have the appropriate skills available.

Triton Consulting offer a range of DB2 resourcing, outsourcing and training services.

Simple, effective and cost effective products have never been more important for the financial services industry than during the current economic downturn. Consumers are cutting back on expenditure wherever they can, regulation is increasing and the industry still hasn’t fully regained the trust of the general public - and financial services is suffering as a result.

Consequently, it is vital that the sector achieves a significant level of growth in order to get the economy back on the road to recovery and retain the competitiveness of the UK in the global financial marketplace. With future growth for the industry progressively emerging in the BRIC economies, the market needs to continue to innovate and respond to market conditions in order to keep up with the changing demands of the consumer. The opportunities available depend heavily on the adaptability and forward thinking of the industry, evidence of which has slowly begun to emerge in the UK marketplace.

A recent report has found that half of people have not taken steps to protect themselves and their loved ones by preparing for the future with comprehensive life insurance cover. This figure formed part of an eight-page study, the third Scottish Widows Consumer Protection Report which claimed that 44% of all people in the UK have taken out life insurance policies. During the current recessionary climate, the insurance market has suffered and a poll of 5148 adults in the UK revealed that during the recent economic crisis, many people have been continuing to ignore protection products such as life insurance, critical illness cover and income protection.

With the economy still way off the CBI predicted rate of growth and the impending threat of rising inflation, everyday life has become increasingly unstable. Consequently, the average consumer spending pattern reflects a need to cut costs in areas such as insurance and payment protection.

There are new entrants to think about too – retailers are looking at financial services and seeing opportunities to enter the market. All of these factors have forced the industry to sit up and take notice of the growing consumer demand for a more simplified and personal product which takes the headache out of lengthy applications and complicated advice. Providers are under increasing amounts of pressure in the current market conditions to create and bring new and innovative types of product to market whilst also keeping up with the consistently changing and heightened levels of regulation.

Let’s look at protection products for instance.

Could these be sold as ‘preserve your lifestyle’ products rather than ‘preserve your life’, for example. Could we reposition protection products to meet the needs of the consumer society? Couching the same products in language which appeals to the consumers, now carrying several hundreds (thousands?) of pounds worth of electronic equipment about their person every day, could be the difference between a successful launch and a damp squib.

So how can providers solve these types of problems in order to deliver the right products to market before the competition? A new way of thinking, as well as new and innovative tools to help them manage the challenges is crucial. What is needed is the ability to involve and integrate all of the different groups which need to have an input into product design and development - IT specialists, product consultants, actuaries, outsourcers and administrators, and, of course, product developers - to manage the product design. If a provider can put the power of product development in the hands of integrated, strategically-minded teams, what can be achieved is a much greater degree of control over product launches.

In practice, all of this means that providers will need to review and alter their policy administration systems – or outsource to achieve the same effect. Legacy administration systems will struggle to adapt to the new world of product lifecycles. In most cases, product engines in existing (and especially legacy) policy administration systems take too long to be easily modified. We’ve met with some clients who take 3 years to get a product to market!

Can you imagine what would happen to Apple’s share price if every new iPhone iteration took 3 years to launch? Furthermore, even if the product engine can be adapted, making the necessary changes requires the IT department's involvement as well as bringing in actuarial expertise to test the products before production, and business users to manage the products once they have been developed. With all of these different parties requiring involvement, product-to-market times clearly are considerably lengthened. Solving this challenge is the key to getting product launches right, first time, every time.

It seems like yesterday that green issues and the environment were both buzz words which no self-respecting business could do without. So what’s changed?’

Green largely fell off the corporate agenda throughout 2010, due to the recession and the inevitable refocus on cost savings and survival. However, with advances in technology, organisations are beginning to realise that being green and cutting costs can actually work together.

Indeed, only last week the Government underscored its own commitment to the green economy with two major investments in renewable energy technology. Business Secretary Vince Cable announced the start of a competition to form an Offshore Renewable Energy technology and innovation centre to focus on technologies for offshore wind, wave and tidal power.

The Government has committed more than £200 million over the next four years to establish an elite network of at least six technology and innovation centres. The centres will allow businesses to access equipment and expertise to help them commercialise new and emerging technology - and will, of course, help them capture a share of the global market.

Vince Cable said: “The UK is a world leader in offshore engineering and our reputation makes us an excellent location for research in this area. In creating an Offshore Renewable Energy technology and innovation centre we are taking the next step to transforming the UK into a low carbon economy. There is a clear opportunity for the Government to support the UK’s offshore industry and this centre will be of great benefit to the sector and the economy.”

When it comes to outsourcing, it’s not just the issue of cost of carbon consumption but also the added complexity of who is responsible for that cost. For instance, Data Centres consume large amounts of electricity and are rapidly increasing in size and numbers. End-users may believe that outsourcing their data centre(s) may make them except from the Carbon Reduction Commitment scheme but it is becoming more common for outsourcing service providers to ask their customers to contribute to the associated costs. Technology is also helping organisations to understand their consumption patterns and reduce carbon admissions.

“It is widely recognised that our use of energy and other natural resources can be reduced or at least optimised through the use of IT. Therefore, information technology is seen by many as being the primary solution to addressing and reducing the carbon emissions of almost every sector,” said Zahl Limbuwala, chair of BCS data centre specialist group.

IT companies SAP and HP backed Limbuwala’s comments, with Ian Brooks European head of innovation and sustainable computing at HP, saying that it will be ’imperative’ for organisations and governments to deploy measurement and control systems regarding consumption.

Aegis is the first Indian BPO to have published a standalone sustainability report on its global operations last year. The report, externally assured by Ernst & Young, achieved the highest rating of A+.

Asked about the advantages of adopting green practices in BPOs, Aegis Global CEO and MD, Aparup Sengupta said:

“We have an environmental policy in place that demonstrates our top management’s commitment towards the environment. We are taking concerted efforts towards ensuring that we expand in a sustainable way.

“In our existing as well as new facilities, we have taken several energy saving measures to reduce our overall consumption. These initiatives have been taken in the area of air conditioning, lighting, raw power, and DG usage and are detailed out below. These initiatives were taken at all our India locations. In FY11, we intend to include our overseas facilities in these initiatives. We have set a target of reducing our energy consumption by 3% this year. We shall continue to take initiatives to reduce our paper and water consumption.”

Patty Calkins, global vice president of environment, health and safety at Xerox, believes that in order to establish a green global economy, businesses need to pick the right projects, build support, measure results and repeat.

Patty Calkins said: “Most chief executive officers believe that within a decade, sustainability initiatives will be integrated with core business activities throughout their global supply chains making green practices the norm in most workplaces. The challenge to getting there is less about vision and strategy — most already have those — and more about execution.”

These are among the findings of a 2010 survey of 766 chief executive officers around the globe conducted by global management consulting, technology services and outsourcing company Accenture and the United Nations Global Compact. The Compact is an initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies.

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According to the survey, the vast majority of CEOs (93 per cent) report that sustainability will be critical to the future success of their companies. They are signing on rapidly — 81 per cent say sustainability is part of the company’s strategy and operations, up from 50 per cent in 2007. And the global economic downturn not only has not dampened enthusiasm, but raised the importance of their sustainability commitment (80 per cent).

Executing on these strategies won’t be easy. To integrate sustainability into global business processes and make it the norm will require monumental changes in regulation, technology, investment and consumer behaviour. This can only occur as a result of many discrete projects, executed well, at companies around the globe. A few simple guidelines can help managers achieve the excellence in execution these projects demand.

Of course, the first step on the road to success is to pick the right project. Take a disciplined approach by applying the same level headed analysis you would use in any other strategic business decision. Follow this by keeping an open mind when assessing projects. Try not to narrow the field before you start your research, and make the search a broad one that considers all the activities of your business, including interactions with suppliers and customers. Make a list of all the areas where projects can make a significant impact, then analyse and compare them.

The project you select should be achievable with the available financial and staff resources and within a reasonable amount of time. It should produce results that benefit both the business and the environment — including the strongest possible return on investment. Finding ways to measure where you are and what you hope to achieve are critical to tracking your progress and communicating credible results. However, you must also remember to keep in mind that not all measures are quantitative.

Brand equity, goodwill, the ability to attract and retain the best and brightest, access to key markets, the popularity of products and services in customers’ eyes, the hidden costs of compliance, the health, safety and comfort of workers — all can be improved through green initiatives.

When you carefully consider all these issues, you’ll be able to prioritise potential projects and recommend the best option to senior management and, hopefully, move forward with their support. They can help you focus company employees, partners and customers on a common set of goals, helping ensure their passions and creativity are applied to moving your project forward.

Establish a record of success, and you can begin addressing other worthy projects on your list and taking on greater challenges over time. And there will be greater challenges. Early projects likely will focus on doing current processes better, from a sustainability standpoint. To successfully integrate sustainability into the business and make it standard operating procedure, however, some disruptive changes will need to be made. By choosing projects wisely and executing them well, you can build the credibility you need to lead the transformation.

Innovation is often hailed as the ultimate solution in outsourcing. This is particularly true today, as organisations look to the future with ambitions for growth. But what do people really mean when they talk of innovation in outsourcing? How can it be delivered? And is there a way to quantify innovation and measure its impact? At its simplest, innovation is defined as introducing something new or different.

But as the decision to outsource itself is about change for the better, attempting to pinpoint the role of innovation can be a challenge. In reality, expectations can range from business as usual or continuous improvement programmes, to whole-scale transformation.

The first key to success is to create a joint understanding of exactly what innovation is and isn’t. Ultimately, innovation needs to be based on a clearly identified need. A good idea can be subjective, but a good idea with a purpose can make a real difference. Is the primary objective one of generating new revenue opportunities, uncovering the next new thing, or capitalising on changing market dynamics? The common denominator is the end result – not just transformation that adds value to a client, but change that benefits their customers. For example, the introduction of a new portal accessible via mobile devices may reduce customer service costs, but it could also revolutionise customer experience and increase loyalty, ultimately resulting in revenue growth.

For innovation to form a foundation for transformation it should be supported, rather than driven, by technology. Unlocking the potential in an organisation can be delivered through a range of developments; change in the process itself, implementation of new techniques, or new approaches to sharing information. Imagine the positive impact of a change that enables online retailers to deliver parcels to busy professionals in the evenings, without having to pass on additional cost to the customer. Cost will undoubtedly remain a key driver for outsourcing, but for smart organisations, it’s increasingly about change for the long term and enabling growth. These innovators want to transform their organisation for the better – to increase competitive advantage through greater speed and flexibility or improve quality of service to their customers. So how can we ensure innovation thrives?

A collaborative culture creates an environment where people listen, all ideas are considered and discussed, and fresh-thinking becomes the norm. Employees, who may have worked in an organisation for years, doing the same thing the same way, can suddenly come up with revolutionary ideas to truly transform outcomes. Equally, an outsourcing partner that has established a deep understanding of an organisation, its ambitions, strengths and weaknesses will be able to provide another point of view that may uncover potential opportunities for growth.

Risk aversion and a fear of the unknown can block transformation, but a partnership based on trust, long-term commitment and shared risk-reward creates more of a willingness to explore change. A collaborative governance model provides a level of comfort and control, helps turn ideas into action, and provides a mechanism to track and evaluate success. Measuring innovation ultimately depends on the motivation driving the change. From the outset, it’s vitally important to agree on precisely what success looks like. For some, this is about regular communication, measurement and reporting, but for others it can come down to something as simple as gut feeling.

While innovation isn’t a magic bullet, the behaviour and endeavour it represents can often be the missing piece in successful outsourcing relationships. Make no mistake, transformational innovation isn’t for everyone. But, a clear rationale and definition, combined with a partnership based on trust, can turn innovators into leaders.