Industry news

Ben Verwaayen is stepping down as CEO of BT Group from 1 June to be replaced by Ian Livingston, current CEO of BT Retail, signaling expansion of the global services operation.

Livingston, who will be one of the youngest chief executives of a Footsie 100 company, joined BT as group finance director in 2002. He took over as chief executive of BT Retail in 2005 and under his leadership BT Retail has returned to growth and sharply increased profitability.

Livingston signalled there would be no major changes when he took over, although there would be an expansion of the global services business. "We've got exactly the right strategy. We are a world leader and it's something we should be proud of in the UK,” he said. "We are already the best for service in our industry, but we need to be seen as the best for service among all service companies, whether for multinational or a customer that just has a land line."

After six years in charge, Verwaayen said: "I've been very clear from day one that effective management has a limited shelf time." Verwaayen joined BT in January 2002 from Lucent Technologies, where he was Vice-Chairman of the management board. He led BT through a series of transformations, including its push into broadband, the launch of the 21CN initiative, the expansion of BT Global Services, and the creation of Openreach, which gives all communication providers in the UK equal network access.

BT Chairman Sir Mike Rake paid tribute to the departing CEO. "Ben has been an exceptional CEO whose courage and leadership has transformed BT from being a deeply troubled organisation into a thriving business with global capability and a clear strategy for the future,” he said.

Analysts said Verwaayen left the company in a good state. “His legacy is a company that is in good financial health, well managed, and one that embraces change,” said Mike Cansfield of research house Ovum, citing achievements including: “sorting out the mess he inherited when he joined BT in 2002; personally initiating a constructive dialogue and rapprochement between BT and Ofcom; and championing the climate change agenda across UK industry, to name but three.”

Cansfield said Livingston had long been the obvious internal candidate to replace Verwaayen. “Along with Ben and ex-Chairman Sir Christopher Bland, as Group CFO, he was part of the trio that led BT back from the abyss,” he said. “For the past three years he has headed up BT Retail (which covers UK consumers and businesses - excluding corporates) and managed a return to revenue growth and profitability for this division. In our view, the future of BT is inextricably linked with expanding on the successes to date of BT Retail. To do this necessitates an understanding of how to compete successfully in this congested market, and hence requires strong marketing skills. Ian brings this from his past at DSG, so is well placed to succeed in his new role. Interestingly Gavin Patterson in BT Retail has an fmcg background, so BT now has a significant marketing presence at Board level.

“We have said in the past that BT is a well managed company. Clearly this succession has been carefully planned. Last year Sir Christopher was succeeded as Chairman by Sir Mike Rake. This year Ben is to be seamlessly succeeded by Ian as Group CEO, and Ian by Gavin in BT Retail. Cast your mind back six years ago when Chairman Sir Iain Vallance, CEO Sir Peter Bonfield, and CFO Phillip Hampton all left within a short time of each other. As evidence of good management BT has clearly mastered succession planning.”

Conservative party leader David Cameron has said his party would call a halt to massive IT projects, such as the £12 billion NHS national programme for IT (NpfIT), splitting them into modular components.

Giving a speech at the National Endowment for Science, Technology and Arts in London, Cameron came out against large-scale projects and in favour of open source computing. "Never again could there be projects like Labour's hubristic NHS supercomputer," he said."I passionately believe that if we are to take on and beat the great challenges of our time, we need the culture of public policy-making to have innovation at its heart. That's the way to get the best results. And that's the way to get value for taxpayers' money.

Cameron said there needed to be a reversal of thinking. "We're going to move from a top-down system to a bottom-up one.,” he said. “Where money follows the needs and wishes of individuals and the users of services - not the priorities of the bureaucracy. Where we don't ask, where does the voluntary sector fit in? - but rather: where doesn't the voluntary sector fit in? Where we in government concentrate on the results that public services deliver, not prescribe the processes they have to follow.

“Too often, as so often in the past, top-down government has stifled innovation rather than stimulated it. It reminds me of Harold Wilson and the famous white heat of technology. The phrase sounded good, but what it meant in practice was putting Tony Benn in charge of the Ministry of Technology. The odd thing about the Government's innovation policy is how un-innovative it is - more spending, more state control, more reliance on the levers of bureaucratic intervention.

“The chapter on public sector innovation in Government's "science innovation" document, has this as its centrepiece: the proposal to create a "Whitehall Hub for Innovation". Something about that doesn't ring true. Whitehall and innovation don't go together, for the simple reason that innovation is the product of many heads not a few, and free thinking not state control. Indeed, some of the best inventions of modern times come out of research which had a completely different intention - or none at all.”

He praised open-source development, and said the government should look to such methods to overcome difficulties with large-scale projects. "The basic reason for these problems is Labour's addiction to the mainframe model - large, centralised systems for the management of information," he said. "A Conservative government will take a different approach. We will follow private sector best practice which is to introduce 'open standards' that enables IT contracts to be split up into modular components. So never again could there be projects like Labour's hubristic NHS supercomputer. And we will create a level playing field for open source software in IT procurement and open up the procurement system to small and innovative companies.”

Cameron also called for what he referred to as “information liberation”. “It's do to with information - the vital currency of innovation. We should empower people by, as far as possible, setting data free,” he declared. “This approach - 'information liberation' you could call it - is inspired by some amazing stories in the world of business. Take Goldcorp - the Canadian mining firm which put its geological surveys online and invited the world to help find gold.The world found deposits worth $3 billion. Look at the private sector's take-up of open source software, developed collectively by a community of individuals, universities and small and large firms from around the world. They build the product, suggest improvements, check the source code and critique each others' work. Linux, the open source pioneer, is now the fastest growing operating system in the world, and even IBM is basing their new hardware on it. Information liberation could be hugely beneficial in the new economy.

“After all, what are the great new giants of the internet - from Myspace to eBay - but information processing systems? These companies have grown because people rely on them to transmit information quickly, easily, cheaply and securely.Imagine if the information that government controlled were available to the public too? I don't mean sensitive information - we don't want to see Revenue and Customs posting all our private records online, whether by accident or on purpose. I mean information which will allow people themselves, expert and non-expert, to create innovative applications that serve the public benefit.

“We have already set out a series of policies that embrace this open approach to government information. They will enable both greater accountability and enable new services - that we can't predict - to emerge to benefit the public. So our Spending Transparency Bill will require future governments to publish online, in an open and standardised format, every item of government expenditure over £25,000. And our commitment to standardised local government information will for the first time enable people to compare performance between different councils. This will put power properly in the hands of the local citizen.”

Outsourcing computer coding could be increasing the risk to companies from hackers, a Quocirca report states.

The report found that while outsourcing the coding process can reap benefits in terms of functionality and user experience, the cutting-edge development used by specialist companies often creates dangerous vulnerabilities which can be exploited by hackers.

Despite these risks, outsourcing of software development is booming, with nine out of ten companies outsourcing over 40% of requirements, while all of the companies surveyed outsourced at least some of their software development.

However, when it comes to specifying outsourced code, one in five companies did not even consider security when designing applications.

Fran Howarth, principal analyst at Quocirca and author of the report, said: "The findings indicate that not enough is being done by organisations to build security into the applications on which their businesses rely. This creates an even greater onus for organisations to thoroughly test all code generated for applications, without which they could be playing into the hands of hackers."

More businesses are expected to outsource their software needs as the economy weakens.

The software-as-a-service (SaaS) sector can expect to double its annual revenues in the UK to £2.5 billion by 2011, according to researchers at BIW Technologies.

A survey of over 300 senior IT directors and managers found that 65 per cent of respondents felt that a weakening economy would increase SaaS use, citing three reasons: the speed it can be put in place, low cost and small up-front investment.

Currently, those surveyed outsource 15 per cent of their software requirements but over 70 per cent thought this would rise to a third by 2013.

The chief executive of BIW, Colin Smith, said: "More and more companies are recognising the benefits of SaaS to enhance their business and help cut costs in this challenging economic environment. There is also an increasing acceptance that using SaaS can help companies reduce IT-related risks, manage costs and respond more nimbly to changing software needs."

Experts in the industry have also noted that SaaS can reduce a company's carbon footprint, making it especially attractive to the property and construction sector, which is responsible for almost a third of waste produced by the UK economy.

Outsourcing the headlines? That seemed to be on the cards with speculation that US television network CBS is in talks with CNN about outsourcing its reporting operations to the all-news network.

A report on NYTimes.com had said that CBS News/Sports president Sean McManus and CNN International president Jim Walton were talking about ways the two networks could combine forces. This could include CBS paying CNN to use its newsgathering resources.

According to US media scuttlebutt, the plan is about "reducing CBS’s news-gathering capacity while keeping its frontline personalities, like Katie Couric, the CBS Evening News anchor, and paying a fee to CNN to buy the cable network’s news feeds."

But CBS News denied any such talks. "We are extremely satisfied with and proud of our newsgathering operation," a CBS News spokeswoman said Monday. "No outside arrangement is being negotiated."

The spokeswoman conceded that there had been discussions around the prospect of a pool arrangement between CBS and CNN in Baghdad, but these had come to nothing.

Electrolux, one of the leading companies in global home appliances, has partnered with Fujitsu Services in a five year contract. The deal will see Fujitsu service various elements of Electrolux’s European IT infrastructure.

Fujitsu will take responsibility for PC, LAN, on-site-support, service desk as well as server management comprising around 10,000 work stations in 32 countries. Fujitsu will deliver these services in 14 languages from it centres in Portugal and Sweden.

“The idea was to find more centralised but flexible solutions for our IT infrastructure. The procurement process has been extensive and the choice of Fujitsu was, amongst other things, based on the fact that it offers easy to manage IT service,.” said Bertil Norberg, group CIO, Electrolux.

AMF Bowling, one of the biggest names in UK tenpin bowling, has signed up IMServ in a quest to boost its energy efficiency across all 33 of its bowling complexes and its head office. The deal is also expected to increase profitability whilst helping to demonstrate a heightened environmental commitment.

The energy intensive leisure industry has been hit hard by rising utility costs with AMF’s predicted gas and electricity overheads doubling from 2005 to in excess of £1.5 million for the 2006 – 2007 period. The IMServ deal has been implemented to address these figures by reducing energy usage and increase efficiency of usage.

AMF is now using an advanced energy data management system, Energy DataVision (EDV), to examine the total energy being used across the business. The tool delivers energy data rapidly, meaning that energy decisions can be made on a more frequent and relevant basis.

Lucy Fitzgerald from IMServ comments: “With accurate energy information, estimated bills can become a thing of the past. With a complete view of the energy consumed across all its complexes, AMF Bowling is now in a strong position to take action on its energy efficiency.”

Taxpayers' money is being squandered on public sector outsourcing deals where costs are ballooning up to 75 per cent more than the going market rate, reports Silicon.com.

Compass Management Consulting claims that lacklustre controls on spending over the full lifetime of government outsourcing contracts are leading to "poor value for money" because public sector organisations are lured by low upfront costs, rather than longer term savings.

The consulting group made its claims in a submission to the government's Public Services Industry Review (PSIR) that is looking at how to improve efficiency in the £40bn-a-year public outsourcing market.

Compass said that managers and systems need to be put in place to work with supplier to monitor performance and control spending once the contract gets underway, similar to the setting up of a vendor management office.

Democratic candidate Hillary Clinton has unveiled an insourcing policy aimed at ending tax incentives to US firms that outsource jobs overseas. She said a Clinton administration would instead create incentives of $7 billion a year for companies to create jobs inside the country.

''I believe our government should get out of the business of rewarding companies for shipping jobs overseas, and get back into the business of rewarding companies that create good, high-wage jobs – with good benefits – right here in America,'' Clinton told a cheering audience in Pittsburgh, during what has become an increasingly uphill campaign to win the Democratic Presidential nomination from Barack Obama.

''We reward companies like Exxon-Mobil who park $56 billion in profits overseas because they don't have to pay a dime in US taxes on those profits,' she said.'

The senator said her plan would inspire a new, local, greener manufacturing environment within the US, investing some $500 million to encourage the sector's use of clean energy.

The US is one of the top three outsourcing destinations of choice for UK CIOs.

Telecoms and services giant BT has become embroiled in a 'spyware' scandal. In 2006 the company secretly profiled the web browsing habits of 18,000 of its broadband customers using technology provided by 121Media, now known as Phorm.

BT ran the pilot without the knowledge or consent of its customers, up to 10,000 of whom might have been profiled concurrently. The aim was to deploy targeted advertising at groups visiting popular portals within areas such as finance and recruitment.

As reported in The Register, which broke the story, the Regulation of Investigatory Powers Act 2000 (RIPA) makes intercepting internet traffic without a warrant or consent an offence. It remains unclear whether the legal definition of an intercept covers the case.

It's a matter of public record that former BT Retail CTO Stratis Scleparis became group CTO at Phorm the following year.

The story comes amid increasing consumer concern about some companies' use of such technologies to track private surfing habits – and increasing government pressure for ISPs to retain surfing data. Social networking behemoth Facebook has also been in the spotlight for the data it gathers about users' wider surfing habits.