Industry news

NOA Innovation Steering Committee

Wednesday 13th April 2011

The NOA innovation steering committee met to discuss potential research into innovation, share best practice, work together towards an NOA innovation framework, develop upcoming outcomes for the innovation seminar outcomes and confirm 18 month steering committee objectives.

Discussion Notes

• Innovation has to be flexible and is not needed for every project and collaboration. The management of innovation is critical

• Who sets innovation vision? A consistent definition is needed

• Innovation in multisourcing is more prevalent

• Getting suppliers to work together to maintain delivery of innovative services is crucial

• Example of best practice – contractual obligation for suppliers to attend ‘innovation workshops’

• Theme of ‘collaboration’ is ongoing and essential in innovation

• Cloud gives opportunities but it needs to mature before it becomes viable for corporate use

• Suppliers are driving the way forward with innovation through best practice

• Increase Cloud innovation. Cloud without governance

Research Topics

• How viable are the new technologies?

• Sustainability of contractual prices

• What makes innovation work and fail?

• Is Cloud stripping innovation?

• New technology and legal frameworks

• Account management and innovation

• Driving innovation in outsourcing

• Developing product innovation

• What is innovation integration?

‘Driving innovation through collaboration’ research to be conducted before the innovation seminar (8th June) by a quantitative perception online survey.

Lee Ayling to liaise with Tony Morgan, Dominic Dryden and Derek Parlour to produce survey questions.

Attendees included:

Lee Ayling – NOA Innovation Director, Kristina Holland - Bleum, Nicky Sessions - Hudson and Yorke, Dominic Dryden – Olswang, Tony Morgan – IBM, James Barber - Lloyds Banking, Nick Pantlin - Herbert Smith LLP, Derek Parlour - National Rail Enquiries, Ed Dennehy – Virtrium, Bridget Fleetwood - Pinsent Masons, Malcolm Robinson - Carphone Warehouse, David Marsh - Siemens IT Solutions and Services, Paul Corrall – sourcingfocus.com

NOA Masterclass - Relationship Management

Tuesday 19th April 11

Masterclass Summary

The NOA Masterclass in Relationship Management was chaired by Steve Briggs, NOA Representative for Corporate Users. Presenters from AstraZeneca UK Limited, Infosys, Royal Mail and Reynolds Porter Chamberlain used their experiences, along with case studies, to discuss this stage in the NOA lifecycle model.

Royal Mail

Antony Hayes, Royal Mail, said: “Many people believe that relationship management is a strange concept as it not something which one would traditionally think of being ‘managed’. It is really about getting the best out of a partnership for your company’s objectives.”

The presentation from Royal Mail outlined their own award-winning collaboration with CSC.

Where Royal Mail Began

• Delivery capability: service & projects

• No choice or competitive tension

• Managed to contract, mutual benefit not there

• Newly formed retained supplier management team

• Trust because our relationship management skills were immature and naive

Royal Mail Vision

• Recognition around issues and mistakes

• Openness – we shared multisource strategy, IT vision, challenges

• Contractual accountabilities on both sides met or removed if unnecessary

• Both sides performing well and engaged in terms of service and cost

• Proactively managed the relationship

What Royal Mail Did

• Acceptance of the problem – took a while, required management change on both sides

• Equivalence

• Improved and joint programme and relationship management on both sides

- internal training – all responsible for the relationship

• Engage extended team, treat as our own, in UK and India + subcontractors

• Consistency: Penalties for failures and recognition of successes

Royal Mail Tips

• Get recognition for the need to ‘manage your relationships’ in your organisation

• Accept the ups and downs. When you enter a business partnership, it is a long journey

• Use regular checkpoints, praise, incentivise and recognise staff for the efforts

Infosys

Srikanth Iyengar, Infosys, stressed the importance of the governance schedule along with culture and trust.

Goverence

• Clear metrics for measurement

• Relationship scorecard e.g. Innovation SLA

• Dedicated individuals from all sides including 1 person to manage relationship management

• Appropriate changes should be made over time

Culture

• Regular interaction between teams on the ground

• Continuity of teams – importance of stable teams

• Varying dimensions of culture. Focus on geographical and corporate identity

• Investments in training and re-skilling

• Celebrate wins and advertise war stories

Trust

• There is no substitute for performance

• Bad news does not become better over time. Be open about bad news and avoid a blame culture

• Important to develop a shared vision of the journey going forward

• Not every issue has to be dealt with contractually

AstraZeneca

Ken Morris from AstraZeneca commented on the characteristics of a contract and relationship learning.

• ‘Service Effect’ (Split of ‘What’ & ‘How’)

• Assets transferred to suppliers

• KT & Education for internal & suppliers

• Benchmarking

• Credits & Penalties for SLA’s & Customer Satisfaction

• Global Operations & Delivery

• Joint Governance

Relationship Leadership: Up-front

• Objectives

• Vendor Supply strategy

• Pricing

• Roles & Responsibilities

Relationship Leadership: On-going

• Transparency of activities

- Process Optimisation (lean 6 sigma)

• Transparency of costs

- Understanding of cost drivers (high/low)

• Overall P&L

- By Service Tower

- By Time

• Leading to collaborative working

- Customer understanding of charges and levers

- Efficiency - Stop waste, duplication, low value activities

- Redirect investment to raise value & performance

Reynolds Porter Chamberlain

Sanjay Pritam and Peter Lumley-Saville, Reynolds Porter Chamberlain, emphasised the importance of getting the contract right. A contract should be used as an aid in relationship management and promote openness, flexibility, fairness and integration.

Sanjay said: “A relationship is a fundamental human thing and it will ultimately bring issues which will need resolving. Communication is vital and the contract should be used as a framework - an organic structure in practice. There is no contractual cure for a bad deal.”

Cornwall Council has signed a contract with Capgemini UK plc for a new business system that is intended to save £20m over the next five years by streamlining internal services such as finance, purchasing and human resources. Capgemini UK plc is part of the Capgemini Group, one of the world’s foremost providers of consulting, technology and outsourcing services, and is a leading supplier of IT systems to UK local authorities, UK central government departments and UK police forces.

The Capgemini Enterprise Resource Planning (ERP) system, based on Oracle software, will replace the largely paper-based processes that Cornwall Council inherited from the old county and district councils with a single integrated online system that will cut duplication, bureaucracy and costs. At the same time the Council will introduce new and more efficient industry standard business processes to further streamline its operations.

The award of the £7 million fixed-price contract follows a rigorous competitive procurement process. The contract will be delivered over the next 15 months and includes implementing hundreds of industry-leading best practice business processes. The costs of ERP will be offset by the anticipated £20m in savings that are intended to be generated over the next five years and the potential to generate income by taking on finance and human resources services for other public sector organisations.

Michael Crich, Cornwall Council’s Corporate Director, Resources, said: “The ERP system and new business processes will make an enormous difference to the way we work. At present we have staff across the organisation processing the same types of paperwork in different ways using the various systems that belonged to the old councils. Because many processes are manual, there can be double or even triple handling.

“Things are overly complex and time consuming. The old systems weren’t designed for an organisation the size of Cornwall Council, are very out of date and were scheduled for replacement several years ago.

“The ERP system will modernise our processes, bringing us in line with other large councils across the country and make us much more efficient. It will also help us to make considerable savings that will reduce the overall running costs of the Council, leaving more money for frontline services.”

Council Leader Alec Robertson said: “As a council we have an ambition to create a Big Cornwall where public sector agencies work together to deliver efficiencies over and above those required by Government. The ERP system will mean that in the longer term we could run finance and human resources services for other public sector partners in Cornwall or even public sector organisations further afield. There is scope to join up services locally and to bring income into the area, both of which would greatly benefit Cornwall.”

Barrie Graham, Business Development Director at Capgemini UK, said: "ERP systems are the backbone of businesses and organisations in all industry sectors, including local government. They are used to run office processes like finance, purchasing, payroll and human resources and to provide performance management information. Of the 150 largest councils in the UK, 130 are already using the market leading ERP solutions from Oracle or SAP, and we are naturally delighted to be entrusted with the vital task of bringing ERP efficiencies to Cornwall."

Capita Software Services announces it has secured three new Capita Support contracts with:

•Family Mosaic, one of London and Essex's largest providers of housing support and care

•Worcestershire County Council

•Luton Borough Council

Through Capita Support, the software solution for local authorities and housing providers, organisations will now be able to guarantee that their clients are assessed according to their level of need and matched to the relevant services. This will ensure the most vulnerable of clients have faster access to the tools that will help them improve their lives. Customer services will also be enhanced as the referral process will become more streamlined. The system will hold all of the clients' details and help avoid unnecessary duplication for example, whenever they are required to complete a new form they won't have to provide all the historical information a second time round.

Capita Support, a fully hosted and customisable solution, was chosen by all three organisations because of its ability to increase transparency and improve productivity and efficiency through its enhanced referral and support planning process.

In addition, the organisations' officers will also benefit greatly as any paper based forms previously used will be mapped into the Capita Support system. This will ensure all information required is at their fingertips anywhere, anytime and allows them to provide a truly professional service to their customers. As a provider, Family Mosaic is implementing Capita Support as the case management system for its Care and Supported Housing department.

John Tilsley, head of business systems at Family Mosaic, commented: "We decided to purchase Capita Support because it provides us with the flexibility required to meet our organisational needs. Family Mosaic are passionate about only using 'world class suppliers' and the purchase of the product also matches our strategy of removing in-house developed solutions with a move towards 'software as a service'. We believe Capita will enable us to deliver this important project in a tight timescale to budget with the professionalism we expect from our selected service providers."

Capita's seven year contract with Luton Borough Council will see them implement a single point of access to manage their referrals and vacancies and contract management which will help manage all Supporting People related contracts within the borough including monitoring, renewals and quality assessments. Worcestershire County Council has also signed a contract for the Capita Support gateway system as their single point of access tool.

Roger Birkinshaw, director at Capita Housing, said: "We pride ourselves on providing housing solutions which encourage collaborative working, enabling all third parties such as statutory and non statutory agencies to access the same system to share information. This creates a truly efficient working environment which translates into truly flexible and first class customer service. The housing sector is currently working hard to stave the effects of the recent recession and we believe that our software, we can help them in some way."

All Capita Support solutions aim to help housing providers deliver services under the Supporting People funded initiative, which is the government programme to improve the quality and effectiveness of support services at a local level. The personal budget allocated to service users to pay for provisions such as meals on wheels can also be managed and monitored by Capita Support.

The Wild Challenge is an event where employees, clients, friends and family find a fun way to challenge themselves, connect with each other, and raise funds for one of the UK’s leading youth charities.

Five reasons to take the fifth Capgemini Wild UK Challenge:

1. Team building – A superb team building opportunity

2. Giving something back – Nothing makes your day to day work feel even more worthwhile than the knowledge that you are giving something back to the communities in which we operate.

3. Get fit supporting a fantastic cause – If you’re one of those people who needs a driving factor to make them get fit what could be better than the knowledge that the money you raise will turnaround the life of a young person?

4. Have fun fundraising – you’ll be surprised how fun and easy it can be coming up with innovative ideas to raise money.

5. It’s a life changing event – The Wild Challenge is one of those life changing opportunities. Emotionally, physically, motivationally – 100% of participants say their lives are changed for the better in so many different ways.

“The atmosphere and shared feeling of achievement as nearly 200 people gather at the finish line can’t be matched”, says Derek Hogg, Capgemini.

The Prince’s Trust helps over 40,000 young people a year get back into education, training or work. Established in 2007, 664 participants have successfully completed the Challenge, raising over £850,000 to help young people turn their lives around.

In 2010, Capgemini had 55 challengers from across our business and our clients. We want to better this for 2011 and help The Trust reach £1,000,000 raised in five years from Wild alone!

It’s time to Be Exceptional!

For more details about the Capgemini Wild UK Challenge and to register, visit the Prince’s Trust Adventure Challenges Wild UK website.

Centrica has awarded Fujitsu a five-year contract to provide Desktop Managed Services (DMS) for 25,000 users across Centrica’s UK business.

Fujitsu will transform the desktop infrastructure to deliver an improved experience for end-users in terms of desktop performance and access to the latest e-mail and instant messaging solutions. Fujitsu’s Infrastructure as a Service (IaaS) solution is delivered using Fujitsu high end servers and storage and will provide Centrica with a reliable IT infrastructure and a reduced carbon impact. It will be hosted in one of Fujitsu’s UK datacentres, recently awarded The Uptime Institute’s (TUI) Gold Standard in Operational Sustainability.

Centrica’s Group CIO, David Bickerton, commented: “As Centrica grows both organically and through acquisition, the IT capabilities and support we provide our people in doing their jobs is critical. Therefore our desktop services, which increasingly involve adoption of mobile devices, become ever more critical to the efficient running of our business and the IT experience we provide our people. In July 2010 we appointed Fujitsu to run our internal IT service desk. This new contract builds upon that existing partnership and is aimed at further improving the IT service and experience for our people.”

Gavin Bounds, chief operating officer for Fujitsu UK & Ireland’s private sector division, added: “For a long time DMS was seen by the market as a commoditised service, but it’s clear now that customers are seeing the strategic opportunity – offering significant cost reductions, improved user productivity, greater peace of mind and considerably more flexibility for their desktop estate. The virtualised environment is now giving even greater opportunity to realise the benefits that DMS can bring.”

Capita’s IT services division has announced the acquisition of Sheffield-based Technophobia Limited, a developer of next generation web applications, for £6.3 million.

Technophobia's customer base comprises both public sector clients and private sector clients inlcuding Co-Operative Bank, Pizza Express and the Technology Strategy Board.

Technophobia’s turnover increased by 81% in two years and it came 69th in the Sunday Times Tech Track 100 list of Britain’s fastest growing privately owned technology companies. The company also featured in the top 50 list of fastest growing digital media companies in Europe.

The acquisition adds valuable expertise to Capita’s existing capabilities, which will drive greater efficiencies across Capita Group, and also enhance its web based information management solutions such as websites, intranets and extranets for public and private sector customers. Emma Marshall will remain as managing director and will report into Paul Dawson, business director, systems integration, Capita. The business will be part of the IT Services division, but will remain a stand alone entity with a distinct identity.

“Technophobia has bucked the trend by growing significantly despite the challenging market conditions, so it’s an exciting acquisition for us”, said Paul Dawson, business director, systems integration, Capita. “Competition is tougher than ever for the private sector and having a website that is easy to navigate, intuitive and integrates neatly with other channels of communication – be that that internal or external - is essential. For the public sector, the trend is to move services online, enable self service and engage citizens in new ways. They want to have the ability to book and pay for waste collection, or change their address details at the click of a button. Together, we are in a great position to support our customers and help them to future-proof for the next wave of demands.”

Convergys Corporation, a global leader in relationship management, is seeking candidates to fill approximately 370 open positions at its Barreal de Heredia and Ultra Park II contact centers in Costa Rica.

New employees proficient in Spanish and English will provide customer service and technical support for three Convergys clients in the cable and financial services industries.

Convergys, a FORTUNE 1000 company traded on the New York Stock Exchange, offers employees comprehensive paid training, as well as a competitive wage and benefits package.

“Due to the very high levels of quality and professionalism provided by our current employees in country, increasing numbers of clients are requesting to locate their customer service operations in Costa Rica,” said Jason Brown, Senior Director of Operations for Convergys in Costa Rica. “Convergys is committed to delivering superior service to its clients’ customers and we’re delighted to offer these bilingual positions to anyone in Costa Rica interested in starting a career at Convergys.”

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..

Defining Innovation

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.

The following points were raised at the NOA’s end user forum:

• To avoid misunderstanding, definitions and expectations of innovation should be agreed upon with each service provider

• Innovation is not applicable to all service provider relationships. For example no innovation expectations may exist for smaller or commodity relationships.

• Innovation can be both incremental and radical. Innovation is not continuous improvement.

• Innovation is new ideas or ways of working to drive commercial gain and or competitive advantage.

According to Tony Morgan, Chief Innovation Officer at IBM: “The definition of innovation is flexible - it changes and evolves. From an outsourcing point of view, the supplier and the end-user need to work through, develop and agree a working definition of innovation to make sure their objectives are achieved.”

The NOA innovation steering committee meets on a regular basis to discuss potential research into innovation, share best practice and work together to produce a NOA innovation framework. At the last steering committee on the 13th April, the following discussion points were raised:

• Innovation has to be flexible and is not needed for every project and collaboration. The management of innovation is critical

• Who sets innovation vision? A consistent definition is needed

• Innovation in multisourcing is more prevalent

• Getting suppliers to work together to maintain delivery of innovative services is crucial

• Contractual obligation for suppliers to attend ‘innovation workshops’ can be seen as best practice.

• Theme of ‘collaboration’ is ongoing and essential in innovation

• Cloud gives opportunities but it needs to mature before it becomes viable for corporate use

• Suppliers are driving the way forward with innovation through best practice

• Increase Cloud innovation. Cloud without governance

Innovation Framework

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.

Simon Briskman, FieldFisherWaterhouse, opens the debate: “Putting innovation into a contract can often be a problematic approach. Many companies just want innovation to be included without understanding what it is. Procurement asks suppliers to show innovation and include the requirement in an RFP. But these requirements are generic and so that makes it very difficult for a lawyer to translate into the contract, outside of requesting continuous improvement requirements and reducing the price year on year.

“If the user can state the exact innovation they are looking for and how to transform it, then the contract can be more specific and a Governance structure built up to work and so make the contract an enabling framework to deliver that innovation – this is however a rarity.”

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.

As I suggested in last week’s blog, it seems as though the wind of change is blowing hard through public sector procurement processes at the moment - and large suppliers of outsourcing are feeling the full force of the gale.

Last week’s announcement from the Cabinet Office, in which it pledged to bring down what some have referred to as the ‘ICT oligopoly’, is clearly bad news for larger suppliers of outsourced IT, many of which have had the government locked into contracts for a number of years.

Clearly, the move to open up the procurement process is aimed at increasing competition, in terms of both quality of service and price, while allowing smaller organisations to take a slice of the public sector pie. But is it necessarily a good idea to ostracise larger suppliers completely?

At present, it’s thought that 18 large ICT suppliers control as much as 80 per cent of Britain’s public sector contracts, many of whom look set to have the rug pulled from beneath them as part of the government’s focus on supporting SMEs with a view to, potentially, multi-sourcing, with a number of smaller suppliers.

It’s clear, then, that this strategy is not without risk. After all, many large, established suppliers have a solid, established infrastructure, with resources which allow government departments to deliver projects in a fraction of the time it would take other suppliers.

Perhaps, moreover, there’s a much greater risk that in opening up the procurement process to smaller suppliers, who have little or no experience in dealing with public sector procurement, we’re running the risk of throwing the baby out with the bath water?

It’s worth remembering that large suppliers of ICT outsourcing have been dealing with the public sector for many years, which means that they have an increased understanding of its requirements, and what it needs to make the relationship a success.

Moreover, it seems to have gone unnoticed by many that the Cabinet Office’s announcement related largely to ICT, which typically refers to the provision of hardware and software.

It’s worth remembering that most major outsourcing and shared services contracts are also dependent to a large extent on building relationships and understanding business processes, which, if not effectively established, can lead to operational inefficiencies.

If the government is to ditch most of its larger suppliers and open the procurement process up to SMEs, surely it will be vital that there is an element of knowledge transfer in place for all of these relationships to ensure that the transition causes as little trouble as possible?

Of course, by opening up the procurement process to smaller suppliers, the theory goes that efficiency of service should improve, as the public sector will have more options in terms of which organisations it partners with.

Even so, it’s worth recognising that unless the short-term transition is managed effectively, the government’s shift in procurement strategy could cause as many problems at it solves…