Industry news

South West Trains and East Midlands Trains, both part of the Stagecoach Group, have enhanced their contracts with Fujitsu for ticket issuing systems. The contracts, which will see Fujitsu undertake a technical refresh and upgrade of the STAR Point of Sale (POS) ticketing system to Team POS 3000, run to the end of each of the company's franchises (2017 for South West Trains and 2015 for East Midlands Trains).

The enhanced system will enable both Train Operating Companies (TOCs) to further increase the speed at which tickets are issued to customers as well as have a technology platform that enables them to add ancillary products to their service at a later stage, such as contactless card payments and dual customer displays to support full-motion video advertising Fujitsu is currently responsible for the STAR ticket issuing systems in 164 stations for South West Trains and 30 for East Midlands Trains.

The enhancement of Fujitsu's equipment is a mark of the success achieved since the original contract signing for South West Trains in October 2004 and East Midlands Trains in September 2009.

Paul Chick, head of retail systems for Stagecoach Rail, said: "We're pleased to be continuing our successful working relationship with Fujitsu and are looking forward to working with them on the upgrade of the STAR ticket issuing system. This will provide our passengers with a faster service when buying tickets at our stations."

Nick Chisnall, head of rail at Fujitsu UK & Ireland, added: "Increasingly TOCs are demanding a more 'retail-like' experience for their ticket issuing systems. We’re confident that our significant experience and heritage in both rail and retail means we can support the TOCs in driving innovation in the way they issue tickets and work with them to ensure that key innovation in this area forms part of their franchise proposals when the time comes."

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The government has launched its much-anticipated new IT strategy, with open source highlighted as a key part of its plans, and a promise that the coalition is "determined to do things better."

"We want government ICT to be open. Open to the people and organisations that use our services. And open to any provider, regardless of size," said Cabinet Office minister Francis Maude.

The ICT strategy report put open source as a purchasing priority,

"Where appropriate, the government will procure open source solutions," it said. "When used in conjunction with compulsory open standards, open source presents significant opportunities for the design and delivery of interoperable solutions."

As part of the government strategy it will push ahead with a move to cloud computing, which will include large-scale datacentre, network, software and asset consolidation. A cloud computing strategy will be published in the next six months to detail the transition of services, building on the work done on the G-Cloud initiative launched by the Labour administration.

An online government applications store, to enable the reuse of business applications and components across the public sector, will also be created in the next 12 to 24 months. And the private sector is to deliver the first instances of public sector networks in the next six to 12 months.

The government reaffirmed its intention to move away from large IT projects worth more than £100m, although it did not rule out such projects entirely. The "oligopoly" of large suppliers that monopolise IT will also be broken by streamlining procurement and opening up contracts to SMEs, it says.

"Many of these actions represent not just technological change, but changes to the operating culture of government; strong leadership within and across all departments will be required to drive this strategy forward," said the report.

Maude says the government's bad reputation for ICT is largely unjustified. "It is not obvious that the record of government is significantly worse than that of other big organisations," he said.

"Nonetheless there have been significant failings. The coalition government is determined to do things better."

The strategy outlined a series of major problems, many of which will be recognisable to people working on government IT, including the complexity of projects, with too little attention given to their implementation at senior levels; a lack of system interoperability; poor infrastructure integration; too many datacentres; and lengthy procurement timescales.

To combat these issues, the government is committing to:

• Introduce new central controls to ensure greater consistency and integration;

• Take powers to remove excess capacity;

• Create a level playing field for open source software;

• Greatly streamline procurement and specify by outcomes rather than inputs;

• Create a presumption against projects having a lifetime value of more than £100m;

• Impose compulsory open standards, starting with interoperability and security;

• Create a comprehensive asset register;

• Create a cross-public sector Applications Store;

• Expect senior responsible owners to stay in post until an appropriate break point in project/programme life; and

• Encourage department boards to hold ministers and senior officials to account on a regular basis for the progress of IT projects and programmes.

Read the full Government ICT Strategy document here.

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University Boat Race title sponsor Xchanging is to end its backing of the Oxford and Cambridge event when the current contract expires in 2012.

Xchanging, an outsourcing company, will have sponsored the event for eight years when it ends its association with the 158th race next year.

The firm has recently hit financial turbulence and last month announced the departure of its chief executive.

Boat race organisers said they were confident of finding another backer.

David Searle, executive director of The Boat Race Company, said: "We are now focused on finding a new title sponsor for the event from 2013.

"Given the success of the race and its growing TV, radio and online audience around the world - reaching more than 200 countries - we are confident of securing another partner wanting to help us take the event forward."

Xchanging, which runs accounting, personnel, and technology functions for companies, issued a profits warning last month, sending its share price plunging.

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For India's top outsourcing companies looking to hire more local staff in the US, allegations of visa misuse and age discrimination in recruitment is the latest form of backlash to deal with.

Over the past few weeks, two individual lawsuits alleging H1B misuse and age discrimination in local hiring have been filed against Infosys, the country's second biggest tech firm that counts JP Morgan among its top customers.

While Infosys is the only company to have faced individual lawsuits, tougher visa regulations are affecting business for India's $60-billion software exports industry. For instance, US visa rejection rates for Indian techies have doubled from around 4% to over 8% over the past nine months.

"We're still quite young in this game. We'll need to learn from how companies like Toyota dealt with such issues many years ago," said a senior official at one of the leading Indian technology firms with operations in the US. He requested anonymity because he's not authorised to comment on this issue. "We are making sincere efforts to hire more locally and even engage with policymakers, such lawsuits against big outsourcing brands are opportunistic," he added.

Until last year, Infosys, Wipro and Tata Consultancy Services had to deal with new legislations and proposals that increased fee for work permits and even made it tougher for them to send Indian techies to the US for delivering projects locally. Now that the political rhetoric against outsourcing companies seems to have slowed down, these lawsuits are beginning to raise concerns about a new face of anti-offshoring backlash.

In the age discrimination suit filed by 58-year-old Ralph DeVito of New Jersey against Infosys, he has alleged that the company rejected his application filed through job portal Monster.com despite having adequate experience. According to the complaint, Infosys had set the maximum experience as 25 years, which DeVito had while applying in August 2009.

"The maximum experience requirements constituted a limitation, specification or discrimination as to age i.e. a de facto age limit because they were more likely to eliminate applicants for the Infosys positions who were age forty or older," DeVito said in his complaint, a copy of which is with ET.

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The King’s Fund has called for entire care pathways to be outsourced to external providers including private companies, claiming GPs do not have the time to make the required service re-design in primary care demanded by the NHS reforms.

The influential think tank says GP consortia should look to devolve responsibility under proposals which would see external providers offered financial rewards and take on the financial risks for developing NHS services.

It comes after Pulse revealed earlier this month that the Department of Health is backing plans for huge tranches of the health service to be put out for tender, with GP providers set to be pitted against private firms to take on care pathways, including services such as care for the frail and elderly, musculoskeletal services and respiratory care.

Dr Nick Goodwin, a senior fellow at the King’s Fund, told a meeting of key NHS figures in Westminster that the task facing GP consortia in developing services in primary care was so huge it would be impossible for them to take on without outsourcing huge areas of care.

He said if busy GPs attempted to re-design pathways the job could account for ‘five per cent of the budget and 50% of the time’.

‘They will have to devolve responsibility to groups at a more regional level and they may well be external groups including private companies,' he said.

‘GPs can set the standards but consortia will ultimately want to commission organisations to take on the risk.’

Mr Goodwin admitted the proposals were ‘controversial’ but said GPs would have no option but to look to external providers as the Government draws up plans for a 'series of rewards and penalties' to provide the financial incentive to consortia to reduce the cost and increase the quality of NHS care.

Earlier this week a major investigation by the King's Fund described the GP profession as a ‘cottage industry in need of modernisation’.

It said a change in mindset and culture was needed amongst GPs to encourage them to embrace change, with a shift from the role of gatekeeper to that of 'navigator' in the new world of GP commissioning.

Pulse reported earlier this month that NHS East of England is developing plans to put a raft of care pathways out to tender under the Government’s any willing provider policy, while other areas, including NHS Oldham, are also planning competitive tenders which would be open to private firms to compete to take on primary care services.

A series of GP pathfinders and NHS Surrey are already working with a private company, Integrated Health Partners, on plans for a risk-sharing model whcih would see private firms take on service re-design and practice performance management in return for receiving financial incentives.

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Serving police officers are being taken out of frontline roles and moved to cover the "back-office" functions of civilian staff who have been made redundant, according to leaked memos which show the perverse side-effects of budget cuts.

The decision by Warwickshire police authority – one of the smaller forces in England and Wales with 1,800 officers and staff – to draft up to 150 frontline officers into civilian desk jobs is expected to be followed by other forces grappling with a 20% cut in their Whitehall funding.

Police officers are Crown-appointed warrant holders and cannot be made redundant. They can only be "compulsorily retired" through an obscure regulation after more than 30 years' service, but civilian support staff do not enjoy such job security.

The leak comes as a second survey of police authority intentions carried out by Labour confirms that the police are heading for 27,500 job losses, including 12,500 police officers, over the next four years. Ministers have vowed to protect frontline policing from the impact of the cuts and a report by Her Majesty's Inspector of Constabulary to be published on Wednesday is expected to clear up the confusion over where the "frontline" can be drawn in the battle against crime.

The shadow home secretary, Yvette Cooper, said the Warwickshire situation showed that chief constables had been put in an impossible position: "It is now clear that when there is not the staff to help plan, co-ordinate or forensically investigate the fight against crime, then police officers will have to be taken off the streets to do this work.

"The government needs to take responsibility and recognise that the loss of 12,500 police officers and 15,000 police staff across the country is taking risks with public safety and the progress on crime and antisocial behaviour that was made over the last decade."

The decision by Warwickshire to redeploy frontline officers to roles such as staffing inquiry offices and control rooms and conducting routine visits to crime scenes was disclosed in a leaked memo by Richard Elkin, the force's human resources director.

He has written to all 860 back-office staff inviting those with more than two years' service to apply for voluntary redundancy: "Whilst the force manages the required reductions in the number of police officers, it has been agreed that some will be temporarily posted into police staff posts which are currently vacant, or which will become vacant following voluntary redundancy," says the memo.

The Warwickshire force faces losing 450 jobs out of its 1,800 strength to find savings of £23m in its £100m budget by 2015. The home secretary, Theresa May, and the police minister, Nick Herbert, have repeatedly said it is possible for savings to be found through cutting bureaucracy and back-office functions without hitting the frontline.

Ian Francis, chairman of Warwickshire police authority, has said that there are too many police officers in the county force for the new model of policing which is being implemented. "We don't like it, they [Warwickshire police federation] don't like it, I don't think the public like it, but at the end of the day we have no option," Francis has said.

Francis has predicted that other forces are also likely to draft frontline officers into support roles: "The simple matter is yes, we are going to lose policemen from the front line."

Simon Reed, vice-chairman of the Police Federation, said Warwickshire's example would be followed by other forces: "What is happening in Warwickshire will happen elsewhere simply because of the sheer amount of money being cut from budgets.

"When we lose staff in inquiry offices, control rooms or going to scenes of crime then this will happen."

Reed said the cuts would reverse a 10- year process of getting uniformed officers back into mainstream police roles: "It is a question of teamwork. We all depend on each other. The frontline depends on the back-office function."

But a Home Office spokeswoman insisted savings could be achieved without cutting the frontline. "We believe that police forces can make the necessary savings while protecting frontline services and prioritising the visibility and availability of policing," she said.

"Forces must focus on driving out wasteful spending, and increasing efficiency in the back-office. The effectiveness of a police force does not depend primarily on the number of staff it has, but rather on the way they are deployed."

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French IT services giant Atos Origin has been given clearance by the European Commission to proceed with the acquisition of Siemens IT Solutions and Services, which was originally announced on 1 February.

The transaction has also been approved by the US anti-trust authorities.

The acquisition is expected to close by July, subject to the completion of the remaining condition that the Atos Origin shareholders give their approval at an Extraordinary Shareholders Meeting.

Atos Origin will pay €850m (£725m) for the division.

The IT services company that will result from the acqusition will bring in annual revenue of about €8.7bn, and employ 78,500 staff worldwide.

Atos effectively cherry picked the best part of what has always been a loss-making division, by purchasing only 90 per cent. Siemens agreed to retain the remaining 10 per cent.

When the deal was announced, Tim Daniels, TMT strategist at Olivetree Securities, described it as "a steal".

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Southwark Council has lost a £700,000 legal battle against IBM over a problematic master data management system implementation.

The system was put in place in 2006, and after a review in July 2007, the council argued that it was unfit for purpose and of unsatisfactory quality.

Southwark found problems with the user interface, messaging integration, matching strategy, and a lack of reporting capability.

However the judge ruled that Southwark Council had fully understood the capabilities of the system, and decided to plough ahead with installation despite it being an inappropriate choice.

"An analogy is the potential car purchaser who might want an off-road vehicle but, having looked at the brochure for an on-road vehicle, says to the salesman 'That's what I want' and buys that vehicle," the judge said.

"There will be no cause of action against the garage for the car being no good off the road. The salesman will reply, with justification: 'You got exactly what you asked for'. That is essentially what has happened in Southwark's case."

The council said it will not appeal the case, and is now going to assess its current system and look to other vendors for implementation.

"This case refers to the acquisition of software back in 2006 which, in our view, was not fit for purpose," a council spokesperson said.

"We're disappointed with the judgment but we took this action because we believed we had been missold a product. Our duty is to have IT systems that work and that save the council and the council tax payer money.

"We will not appeal. We will now have an internal review to make sure we get the software we need so that we are able to cut running costs for the organisation and we will look for suitable partners to help us deliver this."

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Accenture has entered into a multi-year contract in which it will provide the Netherlands-based global logistics company CEVA with finance and accounting (F&A) business process outsourcing (BPO), and management consulting services. The financial terms of the contract were not disclosed.

The F&A BPO services Accenture will provide include accounts payable, accounts receivable, month end close, balance sheet reconciliations and reporting. Accenture will ultimately provide these F&A services to CEVA through the Accenture Global Delivery Network using delivery centers in India, Romania and Argentina.

The management consulting services Accenture will provide focus on the harmonization and redesign of a number of CEVA’s operational processes. The bundling of the management consulting services alongside F&A BPO will allow CEVA to accelerate the transformation of its finance function across both the outsourced and retained organisation by focusing on the end to end business processes.

Through these services, Accenture will help CEVA to exhibit greater control over cost management, minimize revenue leakage and create more consistency in business processes throughout the logistics and shipment lifecycle. By leveraging its deep industry skills and knowledge, Accenture will help CEVA to streamline its back-office operations while allowing the logistics company to concentrate on client relations and the development of better services.

“With its strong background in business transformation and BPO, Accenture was an obvious partner for CEVA,” said Rubin McDougal, CFO, CEVA. “Accenture already has a strong working knowledge of our operations which is helping the transformation process.”

“The bundling of our different capabilities will enable us to deliver a cost-efficient, seamless and enhanced service,” said Jan-Coen Smit, at Accenture. “And it will allow the logistics company to keep its focus on delivering quality and innovation to its customers and achieving high performance.”

Accenture has been providing a range of services to CEVA for more than three years and this agreement will bring the relationship between these companies to a new level of collaboration on a range of management consulting and technology projects.

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While faster growth looks good for investors, customers are more concerned about what a vendor can offer beyond pure cost savings.

"It's unlikely that faster growth in the past two years help these companies win a lot of new clients. A 5% or 10% difference in growth rates does not make such a big difference to the client. What a client looks at is the capability, the domain expertise and the pricing," said Amneet Singh, vice-president, global sourcing, Everest Group.

For HCL Technologies, the strategy has been about gaining more business by going for total outsourcing contracts - an area where profitability can get affected, according to analysts.

HCL's strategy of focusing on market share gain has yielded good results over the past 18 months as HCL has grown revenues ahead of peers.

"That said, the concomitant deterioration in margins and cash-flows has meant that there isn't enough in the plate at the cash profit level for investors. While we do not think having a lower margin is necessarily a bad thing, it needs to be accompanied by solid revenue growth over an extended period of time (which Cognizant has demonstrated)," CLSA analysts Nimish Joshi, Bhavtosh Vajpayee and Arati Mishra said in their February report to investors.

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