Industry news

Companies should be wary of potentially harmful clauses hidden in contracts with cloud providers, a report from the Centre for Commercial Law Studies has warned.

The research from at the University of London's law department examined contracts from 27 cloud providers and found clauses that could have a negative effect on customers' interests.

Some contracts reserve the right to terminate accounts for apparent lack of use, while others may hand over customer data if it is deemed to serve their business interests, and many cloud providers often exclude liability for loss of data, it found.

"Perhaps the most disconcerting discovery of the survey is that many cloud providers claimed to be able to amend their contracts unilaterally, simply by posting an updated version on the web," warned the report.

Christopher Millard, professor at Centre for Commercial Law Studies, said the ease and convenience with which cloud computing contracts can be set up may lull customers into overlooking important issues of data protection.

Customers should review the terms and conditions before signing up to anything, he said.

Hampshire County Council and Dorset County Council are the latest local authorities to team up and share IT in a bid to save costs and increase capacity.

The authorities will work together on a joint ICT strategy to use shared services internally and to offer wider shared services to other authorities. Over the next three years the collaboration is expected to save a total of between £2million and £5million in combined IT costs alone.

The two councils have already begun to share computer centres, business continuity, technical expertise and technical services, and a joint Management Board has been put in place at director level to oversee business case development for a variety of other areas. These include joint development on major IT systems, shared contracts and procurement, and the potential for joint support and service desks. Opportunities to use IT to share other services and to widen the partnership to other organisations will also be considered.

“This is a very exciting move for our two counties to find ways to collaborate on shared IT,” said Leader of Hampshire County Council, Councillor Ken Thornber. “As local government faces some of its most challenging times, it is essential that authorities look closely at developing more efficient and effective working methods, and the role of technology in helping to deliver more for less.

“As the public purse tightens, this collaboration is just one strand of a wider programme of work that will see the way Hampshire County Council operates and the services it delivers, transformed to ensure that expenditure can be reduced in a way that is sustainable and avoids indiscriminate cuts,” he added.

“By taking a long term view, Hampshire aims to reduce the impact on frontline services as far as possible and minimise the uncertainty for staff and partners. In planning ahead, the Council aims to be in a position to reduce its expenditure for the next financial year and beyond, in a way that avoids knee-jerk reactions and protects its ability to deliver and develop quality services.”

Leader of Dorset County Council, Angus Campbell said: “Our two local authorities deliver similar services supported by IT and we share some key systems. Maintaining and developing the use of technology in support of front line services is essential and, as we face unprecedented financial pressures, what could be more sensible than pooling our IT resources and expertise for greater efficiency and the benefit of the public that we serve?”

Source: http://www.publictechnology.net/sector/local-gov/hampshire-and-dorset-drive-shared-services-agenda

The government's decision to cut the cost of contracts with IT suppliers may not adversely affect the bottom line of those suppliers, according to a government supplier and a top analyst.

Fujitsu, one of the government's IT providers, has signed a memorandum of understanding with the government to help cut costs in the public sector. However, UK and Ireland CEO Roger Gilbert revealed that reducing those costs does not represent a significant challenge for Fujitsu, as the government was paying inflated costs anyway.

"We can deliver the cost savings to the government in a number of ways," Gilbert told Computing.

"First, technology is inherently getting cheaper. So contracts that were awarded three or four years ago on the basis of competing prices then are worth less now, just by the nature of the way costs are being driven down in the industry."

He added that, beyond that, there is now a greater recognition in government of the value of shared services and collaborative procurement; which can also deliver cost savings.

Sarah Burnett, a senior analyst at Ovum's government technology practice, advised that government needs to forecast and manage costs better to get value for money.

"Government departments need better visibility of their expenditure so that they, along with the different parts and levels of the organisation, can see what they are working on and where they might be making mistakes, such as not realising that they're allocating money twice for the same projects," she said.

Burnett added that government departments should price contracts based on the value that the contract generates.

"Rather than pay on a quarterly basis, government should look to put the burden of proving value generation on the suppliers, especially in the case of longer-term projects," she said.

She added that while long-term contracts should not be avoided, due to the inherently decreasing value of technology over time stipulations should be made to ensure contracts continue to generate value for money.

Fujitsu's Gilbert added that suppliers must work on having a stronger dialogue with government in order to ensure that each party's priorities are being met as cost effectively as possible.

"The industry could reorganise itself differently too," said Gilbert. "For example, where two suppliers are supplying two departments with the same technology, if they can communicate with one another and say to government: ‘If you're willing to restructure your contracts, then so are we,' we would be able to deliver a better service for less money."

Source: http://www.computing.co.uk/ctg/news/1928812/fujitsu-urges-government-improve-processes

A radical relaxation of Britain's corporation tax regime was signalled by the Chancellor, George Osborne, in his autumn statement yesterday.

New rules on controlled foreign companies (CFCs) and the so-called "patent box" will, ministers hope, stem the flow of businesses relocating to friendlier tax regimes, especially to Dublin – given that under the terms of the Irish bailout the Republic's competitive 12.5 per cent corporation tax will stay. In most of her EU neighbours it is closer to 30 per cent. Recent high-profile departures from the UK to Ireland include WPP, Shire Pharmaceuticals and UBM.

Mr Osborne told MPs: "In a world in which, increasingly, companies can choose where to locate, these tax measures will make us one of the most competitive places in the world."

Presently, the CFC rules prevent UK-based companies from avoiding the corporation tax by declaring profits in subsidiaries in countries with lower tax rates – unless the holding company also relocates, as many now are.

Having already announced a steady reduction in the headline rate of corporation tax in his emergency Budget in June, Mr Osborne yesterday brought forward a new rule that would allow companies to exempt intra-group transfers from tax from April next year. He also said that interest on debt incurred anywhere in the world could now be treated as tax exempt.

This could kick-start a new range of leveraged corporate deals, if private equity and other investors are able to exploit the new tax advantage in conjunction with funding from countries with ultra-low interest rates. During the boom many criticised the way that the tax system favoured debt over equity finance, thereby encouraging highly leveraged and arguably dangerous deals.

The Government's reforms were contained in a supplementary paper to the autumn statement, and are designed to demonstrate its "commitment to improving the levels of predictability and stability in the tax system". The statement adds: "The Government will ensure significant reforms are designed and planned effectively with fewer small changes and commits to extensive and timely consultation with business."

The indications are that, at a time when UK consumers and benefits recipients are being squeezed by higher tax bills, not least from VAT, companies will benefit from a substantial easing in tax liabilities. The reforms are being consulted on and are due to be implemented in April 2012. Meanwhile, the main rate of corporation tax will be cut to 27 per cent in spring next year, and lowered to 24 per cent in 2014.

Tax experts broadly welcomed the changes. Paul Smith, the head of international tax at Grant Thornton, said last night: "It's a positive step forward and should slow down the rate of companies leaving the UK."

Adrian Rudd, of the Chartered Institute of Taxation, added: "CFCs remain a major administrative burden on multinational corporations, often to no real impact so far as tax yield is concerned. It is encouraging that a timetable to legislate in the 2012 Finance Act has been published. This ought to allow sufficient time for proper consultation."

NorthgateArinso to provide in-house and outsourced services to Government agency

Historic Scotland, the Scottish Government agency responsible for Scotland’s historic environment, has signed a five-year contract with NorthgateArinso for a combination of systems and outsourcing services. A March 2011 implementation is anticipated.

For its HR administration, Historic Scotland is adopting NorthgateArinso’s ResourceLink Aurora solution, including training and HR self-service modules. In common with its application in other Scottish Government organisations, the solution will also include an interface with Historic Scotland’s pensions system to enhance efficiency.

The chosen arrangement for payroll is with NorthgateArinso’s part-managed bureau payroll service. All of the data entry will be carried out by Historic Scotland, again using ResourceLink Aurora, but the processing, pay runs and production of payslips (which will be delivered electronically rather than on paper) will be carried out by NorthgateArinso’s payroll bureau.

Cloud computing should be embraced across Europe, but needs an increased focus on security and data protection, according to the European Commission.

Neelie Kroes, vice president for the Digital Agenda, said that putting personal data in the cloud is a leap of faith for most people, and that it is down to regulators and member states to make sure that citizens can trust in the security of such services.

"Cloud computing is more than a technical challenge. By putting our personal data on remote servers we risk losing control over that data. The protection of personal data is a fundamental right in the EU, and this demands several actions," she said.

Kroes explained that Europe needs cloud assurances that apply to all member states, and recommended the development of new laws and codes of practice.

"A cloud without clear and strong data protection is not the sort of cloud we need. Having clear and cloud-friendly rules can help IT companies know exactly what is allowed and what is not," she said.

Existing rules are a grey area, according to Kroes, and self-regulatory initiatives such as industry codes of conduct should be used for international data transfers.

"Data protection is a must-have feature for consumers, individuals and society in general. A cloud without robust data protection is not the sort of cloud we need," she said.

Kroes added that cloud users should be assured that their provider protects data efficiently, and that there are legal frameworks in place to make sure they do so.

The commissioner added that the EC is working on a cloud computing strategy which needs the input of all European Union authorities.

"It takes brave governments and brave thinking to deal with these issues, and the Commission is prepared to be brave too. For this work, we will need your input in the first half of 2011," she said.

The UK government is likely to react favourably, after communications minister Ed Vaizey said earlier this week that the cloud offers real economic benefits to businesses and consumers.

"Cloud computing is a good illustration of the need for international co-operation to ensure that the important developments on the internet that hold great potential are taken forward," he said.

Source: http://www.v3.co.uk/v3/news/2273492/cloud-protection

Sony expands outsourcing to 50%, says report

Sony will increase its outsourcing orders to 50% of its total shipments, from the previous 30%, according to the japanese report Yomiuri Shimbun. Due to the relationship between Foxconn Electronics (Hon Hai Precision Industry) and Sony, Chimei Innolux (CMI) will be the major beneficiary.

Yoshihisa Ishida, president of Sony's TV business group, took over the management in April 2009. Under Ishida, Sony has gradually reduced its production costs and increased its outsourcing. Sony has reduced its assembly plants to four, from nine plants two years ago.

Due to weaker than expected demand in the US market, Sony will not be able to reach its shipment goal of 25 million units for the 2010 fiscal year ending on March 31, 2011, but the vendor aims to ship 35 million units for the 2011 fiscal year.

Foxconn and Wistron from Taiwan are the major OEM partners of Sony, and CMI expects to land more LCD TV panel orders from Sony further helping to improve CMI's utilization rates and operations.

With plans for a new uniform benefit systems underway, the National Audit Office's latest report on the DWP's computer systems doesn't make for encouraging reading.

According to the NAO. many of the administrative failings at the Department for Work and Pensions (DWP) are down to its IT systems. The DWP overpaid claimants by an estimated £1.1 billion over the past year, and made underpayments of £500 million.

The NAO noted that in 2007 “the Department introduced a number of IT system enhancements, such as a customer information system to share common data across existing IT systems in order to reduce the risk of administrative error.”

But it found: “Despite these efforts, the Department’s commitment has served only to hold the level of error steady, not to reduce it. Between 2006-07 and 2009-10 there has been no discernible decrease in the estimated cost of overpayments or underpayments due to administrative error as a percentage of benefits expenditure.”

In reality many DWP workers have to use IT systems that do not interoperate and communicate, according to the NAO. "Different computer systems were used to process benefits but they did not communicate well with each other," said the report. 'Staff reported that human error was also a key factor in administrative errors. By this they meant a transcription or typographical mistake in data entry.”

The Coalition Government's plans for a new universal benefit have been described as not being dependent on “mega IT systems”. But last week it was revealed that delays to HMRC IT roll out would likely impact on the delivery of systems to support the benefits scheme.

Source: http://www.publictechnology.net/sector/central-gov/dwp-shortcomings-tied-back-incompatible-ict

With plans for a new uniform benefit systems underway, the National Audit Office's latest report on the DWP's computer systems doesn't make for encouraging reading.

According to the NAO. many of the administrative failings at the Department for Work and Pensions (DWP) are down to its IT systems. The DWP overpaid claimants by an estimated £1.1 billion over the past year, and made underpayments of £500 million.

The NAO noted that in 2007 “the Department introduced a number of IT system enhancements, such as a customer information system to share common data across existing IT systems in order to reduce the risk of administrative error.”

But it found: “Despite these efforts, the Department’s commitment has served only to hold the level of error steady, not to reduce it. Between 2006-07 and 2009-10 there has been no discernible decrease in the estimated cost of overpayments or underpayments due to administrative error as a percentage of benefits expenditure.”

In reality many DWP workers have to use IT systems that do not interoperate and communicate, according to the NAO. "Different computer systems were used to process benefits but they did not communicate well with each other," said the report. 'Staff reported that human error was also a key factor in administrative errors. By this they meant a transcription or typographical mistake in data entry.”

The Coalition Government's plans for a new universal benefit have been described as not being dependent on “mega IT systems”. But last week it was revealed that delays to HMRC IT roll out would likely impact on the delivery of systems to support the benefits scheme.

Source: http://www.publictechnology.net/sector/central-gov/dwp-shortcomings-tied-back-incompatible-ict

Brewing giant SABMiller has signed a multimillion-pound outsourcing deal with HP.

The maker of Grolsch, Coors and Peroni has contracted HP to provide support for its users and IT infrastructure as part of a project to save money and standardise IT across the regions in which the brewer operates.

The company will see its servers and storage consolidated and virtualised, using HP's BladeSystem products, plus the provision of services to cover helpdesk, desktop management, and Exchange email support.

The contract is worth more than $100m and will last for eight years.

Andrew Derodra, business development director at SABMiller Europe said, "We look forward to a productive business partnership."

Source: http://www.computerweekly.com/Articles/2010/11/25/244121/Brewing-giant-SABMiller-signs-100m-HP-outsourcing-deal.htm