Industry news

Lancashire County Council and BT have formed a partnership agreement that will deliver millions of pounds of savings for taxpayers.

The contract for a new strategic partnership – which creates a joint venture company called "One Connect" – was signed recently following the first board meeting of the new partnership at County Hall.

The strategic partnership will enable the county council to save £10 million per year over the next ten years, with One Connect taking on the delivery of services such as HR and payroll, ICT support and the customer service centre.

The partnership has been created in a way that will allow other public sector organisations including councils, universities, police and fire and rescue services to also choose to join it in future.

Additional potential savings of £30m per year through better buying, quicker delivery of services and improved access to services using the latest technology are among the improvements residents will see through the partnership.

Lancashire County Council and BT have been working closely over recent months to ensure that the transition to One Connect is as smooth as possible. The first benefits of the partnership are already being seen with the introduction of a new "self-service" HR system, 12 months ahead of schedule.

County Councillor Geoff Driver, Leader of Lancashire County Council, said: "Improving county council services and providing value for money for taxpayers is crucial to everything we do and the strategic partnership is a key part of this.

"We have a long track record of delivering excellent services to the people of Lancashire and the strategic partnership will help us build on the good work we've done and deliver even better value for money for Lancashire's taxpayers.

"By using our combined expertise and technology, we will cut red tape, simplify processes used for carrying out many day-to-day tasks, and provide services far more quickly and efficiently. We will also use our strategic expertise to plan to make further savings in the long-term.

"We've been working very closely with BT over the last few months and are looking forward to working with them in this new partnership. Now we have signed up to the partnership we can move forward together to revolutionise the way county council services are delivered."

Neil Rogers, President Government & Health, BT Global Services, said: “We are delighted to have signed a strategic partnership with Lancashire County Council. We are drawing on our extensive knowledge of the local government sector to provide a truly innovative approach. We look forward to delivering excellent service to the people of Lancashire over the next decade. This is a key contract for BT and extends our footprint in this crucial market sector.”

HP has announced that it has signed a definitive agreement to acquire substantially all of the assets of Printelligent, a closely held provider of managed print services. Financial terms of the deal were not disclosed.

The infrastructure, software and trained workforce of Printelligent, combined with HP’s channel relationships, experience and broad base of services and solutions will strengthen HP’s leadership in MPS. This acquisition, combined with HP’s current assets, also will help HP’s channel partners extend their customer relationships while recognizing new revenue streams.

HP’s acquisition of Printelligent is part of the company’s effort to optimize the traditional technology environments that its customers depend on and deliver a connected world – from the customer to the enterprise.

“As a market leader in Managed Print Services, this acquisition puts us even further ahead by strengthening our ability to deliver services and solutions through our channel partners to SMB customers,” said Vyomesh Joshi, executive vice president, Imaging and Printing Group, HP. “We’re reinforcing our commitment to our channel partners by bringing them a level of technology and experience that is unprecedented in the industry.”

A joint HR procurement initiative among London councils has extended the terms of its outsourced recruitment contract to include outplacement services.

The London Boroughs Recruitment Partnership (LBRP) has appointed Penna as its advertising agent and provider of strategic HR services.

The contract’s remit was expanded to include outplacement programmes to reflect public-sector workforce downsizing, according to the LBRP’s Dean Shoesmith.

“We regularly review the component elements of this strategic procurement partnership to ensure that what is offered meets current business context and need – hence we have added outplacement services as part of the offering given the current, significant retrenchment programme many of the London Boroughs partners have to address,” said Shoesmith.

Outsourcing Going Green – Raising the Retirement Age of IT Equipment

With government drives for public sector efficiency and private sector organisations facing continued capital expenditure freezes, no organisation should be embarking upon hardware replacement without excellent business reasons. Yet vendor policies of increasing support costs by upwards of 150% after the initial warranty period and refusing to support products outside of a sometimes unreasonably small service life window is leaving many organisations feeling they don’t have a choice.

As Paul Timms, Operations Director, Maindec, explains, it doesn’t have to be like this and third party support services can not only help drive down costs, but by extending the life of IT equipment, can help organisations improve their green credentials and meet efficiency targets.

Efficiency Drive

With continued economic uncertainty, going green will have slipped down a lot of organisations’ agendas, even though being environmentally sound and cutting costs can in fact co-exist to produce an efficient and profitable outfit. Yet every day across the country in both public and private sector organisations, equipment that is performing well, is stable and continuing to meet business needs is being ripped out and replaced at huge cost to the customer.

Is this simply another example of the throwaway society; reinforcing the perception that technologists are obsessed by the latest equipment, from the smallest PDAs to the most powerful servers?

Or is it, in fact, a response to the vendor strategy of hiking support/maintenance costs by up to 150% as soon as a product comes out of the three year warranty period? Or that vendors are actually choosing not to support equipment that is more than five years old? In the face of these strategies, it is perhaps no surprise that many organisations perceive the only option is to move to new hardware under warranty.

Realistic Business

Is it really necessary to replace a machine that is perfectly reliable; that delivers the performance required and, critically, has a stable operating system/application environment? The cost is not simply associated with upgrading the hardware. More often than not the new hardware will be running on a different operating system, requiring changes to the underlying application. The organisation will have to embark upon a development and migration project; it will have to incur the risk associated with environment change; and, if a financial institution, the demands of application recertification to achieve regulatory compliance.

From a vendor perspective it makes perfect sense to encourage customers to upgrade every few years. Not only is this strategy generating a strong revenue stream but by limiting the range of equipment that has to be supported to the most recent product set, vendors can carry a smaller range of spare parts and provide engineers with training only on the latest kit, all under the guise of providing you with equipment that is more environmentally sound.

Understanding Choice

There is a strong market of third party support organisations, as well as excellent international supply of spare and refurbished parts. Third party support contracts instead of a supplier’s out of warranty tariff can save any organisation 50% on service costs. In addition, by not upgrading to the new software infrastructure, there is no need to continue paying software license fees, further reducing costs.

But how does the quality of service compare? With aging kit running business critical applications, organisations will be understandably concerned about reliability, the speed of availability of spare parts and the responsiveness of any support operation. No business will want to delay a hardware upgrade if it jeopardises uptime or compromise operational performance – the business cost will be simply too high.

This third party support market is well placed to offer an exceptional level of service required by critical systems. To be at their most effective, support companies need highly skilled engineers with experience in a raft of different hardware platforms of very different ages. Regional distribution centres are needed, with spare parts always available to meet customer’s specific hardware requirements; and they need a support process that provides customers with rapid access to experienced engineering expertise as soon as a problem occurs.

Business Decision

Of course organisations need to upgrade systems. But should these replacements really be carried out every three years simply in response to the vendor’s hike in support costs? Or can outsourced service providers provide another way?

The argument that each successive generation of hardware, from servers to storage devices, is being developed to support the environmental agenda, is a common one, but should this really be enough to encourage the regular upgrade strategy? The new equipment will, indeed, consume less power. But is it really greener to scrap an entire system every three years in favour of one that uses a few less Amps and perhaps demands less data centre space and air conditioning? It is far better for the environment to extend the life of existing equipment even by a couple of years than continually rip out and replace.

Irrespective of whether it is reducing capital expenditure or improving green credentials that drive the agenda, organisations should be making upgrade decisions based purely on business need. Is the system performing effectively? Can it efficiently support additional storage? In the end, doing what makes sense for the business may be greener than it appears.

There are very real environmental benefits associated with extending the life of hardware, and it is clear that simply upgrading in response to the vendor’s support pricing policy does not make sense from a CSR (Corporate Social Responsibility) stance, not to mention the impact it may have on the bottom line. Organisations, despite what they are told, do have a choice, so why not help them go green and raise the retirement age of IT equipment?

Tuesday 24th May 2011

Seminar Summary

This seminar focussed on the future aspects of BPO and involved views from Siemens, TPI and Hogan Levells on how delivery engagements will evolve, particularly in the light of the emergence of enabling Cloud technologies, business services and cloud legal issues.

The importance of focusing on business values was emphasied along with the need to drive effective process transformation rather than adopting generic technology approaches to bring efficiency to existing processes.

By following a more ‘Cloud’ centric approach to BPO delivery, offering elasticity of provision within a shared, best of breed delivery model, businesses can reduce delivery capacity risk and improve process value. This combined with low cost of entry and flexible contract terms creates a new paradigm for BPO services. Moving towards a ‘pay as you go’ model is highly attractive where demand predictability is uncertain and capital expenditure is constrained.

Traditional BPO methods will no doubt remain for some time but managing the business transformation journey to Service Orientated delivery is as important for Business Processes as it is for core IT Infrastructure.

This seminar was opened by Adrian Quayle of the NOA who welcomed all attendees and explained the role of the NOA in promoting outsourcing best practice.

‘How delivery engagements will evolve, particularly in the light of the emergence of enabling Cloud technologies’.

John Hall – Siemens’ IT Solutions and Services

The forces shaping the cloud are cost pressures, need for agility, generation Y, data explosion, alternative devices, web 2.0, sustainability and connectivity.

What has happened?

• Cloud computing is an accepted concept and interest is moving from “What to How?”

• Technology is developing rapidly and there are many providers and enablers in the market.

• Significant investments are being made by established outsourcers and emerging providers.

• Most cloud propositions remain technology focused (infrastructure and application)

 Virtualisation

 Point solutions

 Commodity applications

The need to think differently

• Cost is a key driver for adopting cloud services, but it’s not the only consideration.

• Disaggregation of services to the cloud could increase complexity, destroy business value and increase costs.

• There is no “one size fits all” model. Cloud operating models must be driven by business needs.

The traditional outsourcing role will evolve into one of service orchestration and optimisation.

The cloud transformational journey is one which begins with a cloud adoption roadmap leading to dynamic computing and modular business change.

When managing complexity, the role of the outsourcer needs to move to one that securely and “seamlessly” bundles and orchestrates both cloud and legacy services.

BPU could be seen as "business process outsourcing as a service" or "business process outsourcing on demand.” Source: Gartner Hype Cycle

Business Services and the Cloud

Martin Stockton, TPI

Cloud computing is Internet (“cloud”) based development and use of computer technology systems in which automatically scalable and virtualized resources are provided as a standardized, on-demand service over the Internet. Users need not have knowledge of, expertise in, or control over the technology infrastructure “in the cloud” that supports them.

The concept relies on the Internet for satisfying the computing needs of its customers; common business applications are accessed through a front-end interface (such as a web browser) on a personal computer or PDA while the software and data are stored on servers. Software stacks of operating systems, databases, Web servers, storage, and networking are managed as virtual servers. Transparency, reliability, and security are the keys to cloud computing having a successful future in information technology.

TPI believe there are two concepts to the Cloud: Traditional and IT Cloud

Traditional Model

• Each business maintains its own IT infrastructure (1:1 relationship)

• Customised software

IT Cloud Model

• Many businesses receive IT services from one cloud of hosted servers and scalable resources IT resources (many: 1 relationship)

• Development and maintenance outsourced

• Standard software

Key factors of IT Cloud

• IT cost saving opportunities for non-IT functions are small

• The value drivers offered through the Cloud are lower costs through economies of scale, a higher utilisation of resources and a more efficient use of expert knowledge. As organisations have looked to cut their IT costs, they have increasingly turned to external providers that can host standard applications on their behalf. The impact on other support functions to date is limited.

• With an IT cost base for support functions of around 10-20%, the potential cost saving is too small to incentivise support functions to move away from their customised applications to less convenient standard software

Most companies expect to incorporate cloud computing into their portfolios in the next few years yet readily admit that they have not completed their cloud strategy and need help to do so. TPI found that there is considerable uncertainty about cloud computing models and use cases, but there is also consensus that the cloud is the future. There is a strong opportunity for outsourcing service providers to help clients develop cloud strategy and to guide adoption, but there are also some obstacles to becoming the cloud provider of choice.

Legal Issues with Cloud Solutions

Mark Taylor, Hogan Lovells

Written vs. electronic (click-wrap) contracts

• Standardisation and cost reduction are key drivers for cloud IT

– supplier contracts range from the very brief to lengthy & complex documents

– often embedded links to additional terms

– cloud IT customers may have to choose between the supplier’s contract and not proceeding

• Form of contract for cloud BPO?

– regulatory implications

– importance of risk assessment and mitigation

Due diligence enquiries

• All customers should do due diligence on cloud suppliers:

– financial stability

– disaster recovery/business continuity plans

– privacy and data security policies

– data backup and storage procedures

– satisfaction of provider’s other customers

• For each risk identified

– address in contract?

– manage or mitigate outside the contract?

– accept as is?

• Risk profile will differ for cloud BPO and cloud IT

– level of reliance on supplier

Services and service levels

• Clarity over service scope – what is / isn’t included

• Service (and IT) upgrades

– mandatory or optional?

– lockstep issues

• What service levels apply?

– more bespoking for cloud BPO?

– a double-edged sword? – attractive to customers but costly to provider

– which factors are within supplier’s control, and which are not?

– balance customer's desire for high degree of customisation vs supplier’s desire for standardisation

– capacity constraints

• Calculation of service credits

Termination and Exit Assistance

• Particular points to assess for cloud BPO:

– how much notice is required?

– how much exit assistance is required?

• provision of data / other information

• how service cutover will be effected

– for how long?

– application and consequences of TUPE

• Other (usual) concerns:

– termination triggers

– financial consequences

Data Protection

• UK customers need to comply with Data Protection Act

– customer = “data controller”; cloud supplier = “data processor”

– what personal data is involved?

• 7th principle

– written contract with defined, appropriate security measures

– services are audited and contract is enforced

• 8th principle

– is data being “transferred” outside the EEA?

– does customer know where its data is?

– does jurisdiction provide an adequate level of protection?

– approved Model Contract Clauses

NB fair and lawful processing

Business Continuity

• Comprehensive cloud offering should have alternative infrastructures available at a remote location

• Recovery times and recovery point

• Customer right to audit and test these facilities?

• Interface with customer’s own arrangements

• Inter-relationship with force majeure clause

Liability and risk

• From a legal perspective, the issues are the same ...

• included and excluded losses

• level of any caps

• interaction with service credits

... but the cloud BPO risk profile will be different

• Understanding the nature of the services and the impact if they are not performed is key

– use a risk and liability workshop to drive this

Innovation Day - Wednesday 8th June 2011

The NOA is running an Innovation Day led by Lee Ayling, NOA Board Member for Innovation. This interactive event will feature the latest information and advice on how to implement innovation in your outsourcing deals. During the Innovation Day the NOA will be announcing the results of their research, carried out in association with KPMG, “Driving Innovation Through Collaboration”.

For more information on upcoming NOA events and booking details – please visit www.noa.co.uk or alternatively call the NOA events team on 0207 292 8692.

The eruption of Iceland’s Eyjafjallajökull volcano in April 2010 led to some 100,000 flights being cancelled last year after the corrosive ash cloud grounded European flights. Unable to attend crucial meetings in person, Europe’s business people turned to videoconferencing. Across Europe, workspace provider Regus saw a 180 % month-on-month increase in video communication enquiries in April and May 2010.

One year later, Regus is still seeing a level of video communication enquiries far above pre-cloud levels, averaging a 75% increase on the previous year across the UK, following the latest Grimsvotn volcano. Many expected that it would be business as usual once Europe’s aviation authorities allowed planes to fly at higher ash densities in May 2010, and airlines resumed normal service. However, the continued raised interest in Regus’ video communication facilities suggests businesses now see virtual meetings as a viable alternative to face-to-face meetings.

“The worldwide disruption caused by the volcanic ash cloud of 2010 had a beneficial consequence,“ remarked Celia Donne, Regus’ regional director, “it taught businesses that video communication can replace time-consuming and costly air travel. At a time when companies of all sizes want to cut travel costs and shrink their carbon footprint, why spend money on flights abroad when they can achieve the same results at a nearby video communication studio?”

The effect has not been confined to Northern Europe however with interest in video communication also increasing in parts of the globe not directly affected by the ash cloud. The aviation chaos of April and May 2010 persuaded many companies in Asia and Europe that they no longer need to cross continents to hold effective meetings.

However, Joshua Norrid, VP of travel and leisure at Progress Software, believes that operational efficiency is the key to dealing with this latest event:

“It’s difficult to imagine an industry currently under more pressure than the airline business. It has faced a myriad of challenges – the rise of the low-cost airline, high oil prices, environmental concerns leading to higher taxes and restrictions in airport growth, tightened security, industrial unrest and, now, unforeseen events such as the latest ash cloud.

“This Grimsvotn volcano eruption could create immense pressure upon carriers, which could lead the industry as a whole facing further losses. It seems hard to understand that an industry that moves 2.5 billion people per year and is so intrinsic to the global economy can have such grave economic difficulties.

“Operational efficiency, or trying to “squeeze more out of less”, is one area that airlines have concentrated on to try and maintain their viability. Despite lots of attention in this area there is still enormous work to do. One key area is in the use of IT to become more operationally responsive to the complex environment that airlines operate in. At the moment, operational managers in airlines don’t have the information they need to make effective decisions in time.”

ITC Infotech, a global IT services and solutions company and a fully owned subsidiary of ITC Ltd., has announced a strategic partnership with SAP India Pvt. Ltd to become a solution reseller for SAP® Business ByDesign™. With this partnership, ITC Infotech is now entitled to market, sell and deploy SAP Business ByDesign as well as offer additional services.

Commenting on the partnership, Dr. Sanku Bose, Vice President, ITC Infotech said, “We believe the SAP Business ByDesign platform will further enhance our value proposition among customers. There is a huge traction for such on-demand solutions in the market, and this partnership will help us in addressing customer needs better.” He further added, “We are recognized for our best-in-class competency in SAP services by prominent global industry and analyst forums.”

Speaking on the occasion, Rohit Madhur, Director – SAP Business ByDesign, SAP India said, “We are pleased to have ITC Infotech as a new SAP Business ByDesign solution reseller. Their reputation in the industry and proven track record of success speaks for itself. We look forward to a long and mutually profitable relationship.”

The number of private sector businesses in the UK at the start of 2010 increased by 48,000 (1.1 per cent) since the start of 2009, statistics from the Department for Business, Innovation and Skills (BIS) today reveal.

At the beginning of 2010, there were an estimated 4.5 million private sector enterprises in the UK. These 4.5 million businesses employed an estimated 22.5 million people and had an estimated combined annual turnover of £3,200 billion.

Business and Enterprise Minister Mark Prisk said:

“Private sector enterprises will create growth in our economy so it is encouraging to see that the number of businesses at the start of 2010 had increased. This was a difficult period, and these figures show the resilience of British business.

“I am determined that the Government will do everything it can to create the right environment for these businesses to now expand and grow, and also to encourage more people to set up on their own.”

Symantec Corp. has announced it has signed a definitive agreement to acquire privately-held Clearwell Systems, Inc., a recognized leader in the eDiscovery market.

Under the terms of the agreement, Symantec will acquire Clearwell for a purchase price of approximately $390 million, net of Clearwell’s existing cash balance of approximately $20 million. The agreement is subject to customary closing conditions, including regulatory approval, and is expected to close in the September quarter.

“As information continues to grow at unprecedented rates, the biggest challenge for customers is to protect, manage and backup this information as well as have the ability to categorize and discover it efficiently,” said Deepak Mohan, senior vice president, Information Management Group, Symantec. “The acquisition of Clearwell’s market leading electronic discovery solution will further increase Symantec’s ability to get the right information, to the right people, at the right time, while reducing overall legal review costs and limiting risk.”

Lincolnshire Police Authority are looking to outsource a range of back office services over the next 10 years, a contract worth around £200 million.

The contract for the Lincolnshire Authority and Force involves the widest range of services offered in a single contract by any police authority in the country.

The Police Authority was searching for potential strategic partners since March, after budget cuts of over £20 million over the next four years were announced.

Five companies are already shortlisted for the contract negotiations:

■Capita Bluelight Alliance

■Serco and Logica

■Steria with Reliance

■Northgate Information Solutions

■G4S