Industry news

  • 11 Jun 2008 12:00 AM | Anonymous

    As companies continue to move to using multiple providers for their outsourcing services, the number of reported megadeals (worth more than $1 billion) awarded to a single service provider has declined, according to analysts at Gartner. In 2007, 10 outsourcing megadeals were awarded, a decline from 12 in 2006.

    “The decline in reported outsourcing contracts can be partially explained by the fact that outsourcing is now ‘business as usual’ for many enterprises,” said Kurt Potter, research director at Gartner. “There is more outsourcing activity, but fewer deals on average are reported and this creates the false impression that outsourcing is decreasing.”

    In terms of megadeal total contact value (TCV), the total for the 10 megadeals in 2007 was $12 billion, the lowest level reported during the last eight years, with the closest level being that of $20.3 billion in 2001. Average contract value (ACV) of megadeals also continued to decrease, from an average of $2.6 billion in 2006 to $1.2 billion in 2007.

    “While further TCV erosion may be driven by the irreversible trends of global delivery and IT services industrialisation as many leading-edge organisations move into their second and third generations of IT outsourcing, they may be looking at deal expansion to include wider application or business initiatives,” said Mr. Potter. “Although these opportunities are likely to evolve from a single-provider to a multiple-provider engagement, in some cases, historical ties between provider and recipient may retain the potential for megadeals.”

    Of the TCV of all outsourcing deals reported in 2007, Gartner said megadeals represented 39.4 percent of the contract value and represented only 6.8 percent of the number of total contracts in 2007, down from 7.4 percent in 2006. Although deals with less than $50 million in TCV continued to increase and reached 39.5 percent of the total number of contracts, they only represented 3.3 percent of TCV for 2007.

    “Many providers are pursuing smaller contract strategies as a consequence of the new market realities, new competition and natural market pressures toward commoditisation, which reduces per-unit pricing. These strategies are often in the form of pursuit of smaller contracts from larger clients, or larger contracts from smaller companies,” said Mr. Potter. “Many clients want to test providers’ contracting practices, capabilities and cultures before moving favoured providers into larger contracts, or organisations are using smaller doses of outsourcing to delay larger outsourcing adventures. Many providers are forced to pursue larger contracts to meet growth expectations. Despite this pressure, providers should continue to evaluate different or at least accommodate go-to-market and product portfolio strategies for smaller clients.”

    Gartner has maintained an outsourcing contract trends database since the early 1990s as a means of tracking the activity and trends in the outsourcing market for public and private organisations. All of these contracts publicly disclosed their dollar value and the duration, as well as the nature of their services and the name of the client and the outsourcer. The database is a comprehensive history of all publicly disclosed contracts, but is representative. Contracts from more than 400 outsourcing vendors, 12 industries and the major global regions are included.

  • 11 Jun 2008 12:00 AM | Anonymous
    Release Consulting, an independent IT consultancy specialising in the music and entertainment industries, has this week finalised an agreement with Universal Music Group (UMG) to service its international IT digital initiatives department.

    In fact, the new specialist outsourcer was spun out of Universal in February this year by its founding MD, Will Lovegrove. The ambition now, he says, is to build out into new areas from the foundation stone of music-giant expertise that he and his team have acquired.

    “I was working inside Universal for five years and built what I thought was a very high-performing technology team in a media company and we've taken that team out and formed a consultancy. Our ambition is to carry on doing what we were doing for Universal but for other similar types of company. Obviously other music labels spring to mind, but also broadcasting companies and publishing companies as well.”

    Release Consulting says that it offers entertainment companies the opportunity to benefit from the IT expertise behind the systems that enable Universal's international digital supply chain.

    However, the real core of the new company's business is not entertainment or the media, necessarily, but intellectual- property-based organisations of all kinds, and how they digitise their assets and manage them.

    “We were involved in setting up the IT systems, workflows and processes to help Universal exploit its digital audio archives,” says Lovegrove.

    “So [such assets might be] sitting over here in an archive system surrounded by metadata designed for a specific purpose, but they perhaps need to be over there instead, so new metadata needs to be written, and then the material needs to be sent out over corporate systems. At the end of that process is consuming the material in an online form in an online channel by retailers or consumers.

    That process and that learning and expertise that we've developed, I think could be applied to broadcasters and publishers as well, where intellectual property is at the heart of that process. ”

    For many organisations, those archives may date back decades, perhaps? “Yep, absolutely,” says Lovegrove. “We understand archives, we understand incomplete data. We understand that data collected a number of years ago may not have all the things a company needs to do things with it in today's age. So we understand a lot of the issues and complexities of companies that deal with intellectual property."

    In fact, Lovegrove's business is in many ways a traditional IT outsourcing one: “On the practical side, we understand international media companies, we understand how projects are governed with multiple stakeholders in multiple countries – with language barriers and time barriers,” he says.

    “On that very pragmatic basis we understand how projects can work in international environments, in large companies. Where I see those kinds of indicators then I see where we can add value and have a meaningful conversation.”

    Of course, broadcasters are ahead of the game in the UK, with the BBC's iPlayer and its plans announced this week to digitise its entire archive, or at least create a webpage for every programme ever broadcast.

    “What happened to music five years ago is now happening to other vertical sectors today,” agrees Lovegrove. “They are making advances and tackling issues such as making their archives available and deciding whether to use their own software or other people's software, and which stage in the value chain do they want to occupy and what does that mean for their own internal resources and how they change and adapt and evolve.”

    For Lovegrove, though, these conversations should happen internally before Release is called in. “What I've seen with companies that deal in intellectual property is that they are investigating as many different strategies as they can. Strategic business planning is not one of our billable services.”

    Music, cinema/video and broadcasting are three industries that are being rewritten by the day by Internet-based businesses, from the original Napster – which, aside from all the noise about piracy, arguably proved both the business model and the market of online music distribution and saved the industry billions of dollars in R&D – to YouTube, Bebo, Amiestreet.com and MySpace.

    Does Lovegrove have any bets of his own about what business model might succeed? “My opinions are as a consumer. I get involved where by and large a company has already set out its strategy and they want it executed.

    For myself as a consumer, I like and want subscription services to prosper. I worry about advertising based services... I understand how they might work with very established, very famous high-profile stars, but the music business is also about nurturing new talent and I don't see how they would get a share of the revenue stream from advertising, when the media buyers don't understand who they are and what they do.”

    For Lovegrove, then, his business is not about how innovative the strategy might be – that is down to the customer – but instead about making it work. “That is the real challenge. However innovative your business model, your back office systems must be geared to operate in a certain way. There's innovation in business models in the front office, but being able to to fulfil those is where I tend to be involved.... and how you relate those innovative ideas to a major [label].”

    So the media companies may be hedging their bets up front, but Lovegrove's money is invested in the thing that never changes: the backroom; the real engine of any business.

  • 11 Jun 2008 12:00 AM | Anonymous
    A "damning", confidential Joint Intelligence Committee report into the security situation in Iraq, and a top-secret document assessing the weaknesses of terrorist network al-Qaeda have been found on a Surrey-bound commuter train, and handed in to the BBC.

    A nationwide police hunt for the missing documents had been set in motion, only for a passenger to find the seven-page document – wrapped in a business magazine – on a train out of Waterloo. The papers belonged to a senior official.

    This latest security breach is yet more evidence that private or top-secret data is being entrusted to public officials who have little regard for, of knowledge of, security protocols, and that even the most basic security measures are not being followed by the Government and its agencies in the handling of sensitive information.

    The security lapse is the latest in a woeful list of preventable public-sector breaches, which have included the loss of data on 25 million child benefit claims in internal post, mislaid personnel records for the armed services, the loss of patient details by several NHS trusts, dozens of mislaid or stolen government laptops, and the mishandling of data on driving tests.

    Each of these cases was preventable, and all are inexcusable. The private sector has not been immune, but the public sector is in the employ of British citizens and is entrusted by them with our national security, and our individual security.

    The time has surely come for a bottom-up assessment of security and data management procedures, rather than the top-down approach favoured by a Whitehall that is fond of throwing money at projects, but which has scant regard for training, staff, and management.

    Let's say it again: security is about people, not about technology; security is about policy and good management, not about the size of the deal; security is about the most junior employee in the office, not the CEO or the minister; security is about not sitting on a crowded train with top-secret documents while clinching confidential deals on your mobile... it's not about hackers and firewalls.

    One can only imagine the arrogance and stupidity of the official involved, flouting conventions concerning encryption and location as he joined bankers and brokers on the train home, the document nestled in his copy of the FT like some advertising insert.

    Indeed, it's becoming clear that the Government's attitude to data is akin to the City's attitude to stocks and shares: they're things to be traded, and are only of value en masse. In a portfolio of stocks, you hope to win more than you lose. It's a national scandal and until Whitehall reviews security at every level, all plans for a national ID scheme should be put on hold.

  • 11 Jun 2008 12:00 AM | Anonymous

    Proctor and Gamble, the consumer goods giant, has selected BT for an ITO contract worth over £330 million.

    BT is tasked to provide a broad and integrated portfolio of services in support of P&G's IT requirements. This includes WAN infrastructure across more than 1,100 locations in more than 82 countries and the migration of P&G’s legacy infrastructure across to state-of-the-art, high-speed network technology. BT will also manage security, conferencing, remote access, voice and IP telephony services and Internet services.

    By standardising the technology used across the business P&G hopes to benefit from greater cost efficiency and control whilst increasing quality of customer service.  The network infrastructure and associated applications are also designed to ensure compliance with numerous policy, regulatory and security standards.

  • 11 Jun 2008 12:00 AM | Anonymous

    ICAP plc, a major force in financial information delivery and brokering, has selected Accenture to develop and maintain its EU credit-trading platform.

    The five year project will be delivered through Accenture’s Global Delivery Network, which includes over 50 delivery centres across five different continents.

    James Dawson, Business Manager of credit products at ICAP, said: “This initiative is designed to increase the capabilities and cost-efficiencies of our credit-trading platform in order to continue to drive growth in an increasingly dynamic and evolving global marketplace”.

  • 11 Jun 2008 12:00 AM | Anonymous

    Steria, a European leader in the deployment of transport IT systems, has been chosen to deploy a large-scale taxi management system for Aéroports de Lyon.

    The new system, to be delivered in partnership with IES, Representative and FTPC, aims to reduce passengers' taxi wait times significantly and give the Lyon-Saint Exupéry Airport means to monitor and manage taxis much more efficiently. The airport, which caters for up to seven million passengers annually, hopes the system to play an integral part in ensuring well managed and regular taxi services for customers.

    This new contract follows similar systems rolled out at the Paris Charles de Gaulle and London Heathrow airports.

  • 9 Jun 2008 12:00 AM | Anonymous

    Cognizant a leading provider of global consulting, technology and business process services, today announced the acquisition of substantially all of the assets of Los Angeles, CA-based Strategic Vision Consulting, Inc. (SVC), a leading management and technology consulting firm with over 60 employees serving the media and entertainment industry. Terms of the transaction were not disclosed.

    SVC focuses on high-impact consulting and systems implementation for leading media and entertainment companies, including the major studios, broadcasters, post-production facilities and interactive media companies. In addition, SVC possesses extensive experience providing technology strategy and planning, and program and project management services.

    "We welcome the SVC team to Cognizant. This acquisition will expand our consulting capabilities in the media and entertainment industry and will allow us to help media and entertainment companies respond to the opportunities brought about by the digital transformation of the industry," said Francisco D’Souza, president and CEO, Cognizant. "The combination of SVC’s strong relationships in the entertainment industry and Cognizant’s global delivery model positions Cognizant as a services leader within the fast-growing media and entertainment industry."

    "We are very pleased to join the Cognizant family," said Frank Leal, co-founder and managing principal, SVC. "The combination of our market-leading consulting capability in the entertainment segment and Cognizant’s strengths as a top global services player will allow us to deliver superior services to our collective clients by providing them with a broader range of services. We found a great cultural fit between both companies in terms of commitment to unparallel client satisfaction, entrepreneurial spirit, corporate culture, and overall vision for the future of the global services industry."

  • 9 Jun 2008 12:00 AM | Anonymous

    China Telecom, China’s largest fixed network operator, has selected Alcatel-Lucent for a multi-million Euro contract to manage the expansion of its nation-wide IP metro area networks.

    Alcatel-Lucent will provide IP routing solutions to help China Telecom deliver premium IP services to its residential and business customers in the densely populated regions of Jiangsu, Guangdong, Shanghai, Sichuan, Hubei, Guizhou, Ningxia and Gansu.

    The project supports China Telecom’s initiative to transform itself into a full service operator. Once the solution has been fully deployed, China Telecom will be able to provide multiple IP-based services such as 3G wireless broadband, IPTV and virtual private network (VPN) services using a single network infrastructure.

    Olivia Qiu, President of Alcatel Shanghai Bell, said: “Service providers are looking for solutions that can support the effective delivery of high-quality next-generation services. This latest win with China Telecom is another example of a tier-one operator who has chosen the Alcatel-Lucent service routing portfolio as the foundation for its network transformation project.”

  • 9 Jun 2008 12:00 AM | Anonymous

    Sunrise, the second largest telecommunications provider in Switzerland, has awarded Alcatel-Lucent a seven year contract to manage the operation of its mobile, fixed and data networks.

    Through the deal, worth 340 million Euros to Alcatel, Sunrise hopes to ensure the long-term high quality deployment and management of the network and significantly reduce operational costs.

    Under the terms of the deal, 290 employees will be transferred between the two organisations.

  • 9 Jun 2008 12:00 AM | Anonymous

    HSBC, one of the world’s largest financial sercives institutions, has renewed and extended its outsourcing relationship with Capgemini.

    The relationship, which has existed for the last 17 years, will see Capgemini continue to support HSBC in several key strategic businesses, including Consumer Lending, Credit Cards, Group Consumer Finance and Insurance. Capgemini’s remit extends across all HSBC IT from legacy to modern Web-based systems used in: improving customer experience; launching new products; meeting compliance needs; and entering new geographies.

    John Carr, chief operating officer at HSBC Technology Services, said: “Renewing our relationship with Capgemini accelerates the benefits of the global delivery model, paving the path for amplified productivity, predictability and speed.”

    Through the renewal, HSBC is expected to use 4,500 man-years of Capgemini resources by the end of 2010.

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