November 2011 Archives

What is the next step for the new BRIC superpowers?

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As the countries of the world referred to as BRIC nations (Brazil, Russia, India and China) celebrate ten years of the term BRIC being coined, today, Sudhir Chaturvedi, SVP of Europe for Indian IT services firm Infosys, tells us of the challenges these countries face if they are to reach their potential.

What is the next step for the new BRIC superpowers?

By Sudhir Chaturvedi

Infosys_24_03_041.jpg"Over this past decade, BRIC countries have taken a giant leap forward to become dominant players within the global economy - now contributing more than a third of the global GDP growth.


In recent years China and India have led the way in becoming the new hubs for growth, technological innovation and talent. Producing close to 700,000 engineers every year, this talent pool has helped to fuel the growth of industries across sectors in both countries. Additionally, the ability of BRIC countries to challenge Western domination as the global innovation and R&D hub, has meant they have shown tremendous resilience during the financial crisis. Brazil did not go through a recession, Russia experienced short-term impacts, while India and China continued to grow.

 
However, to realise their full potential, the BRICs still have to overcome a few key challenges. Firstly, the political, business and bureaucratic systems in these countries need to be improved to increase their global competitiveness. But more importantly, certain societal contradictions need to be addressed.


For instance, India has enjoyed growth rates of 8%-8.5% in recent years, yet over 300 million people still live below the poverty line. Although it produces over three million graduates every year, it is home to 35% of the world's illiterate population. Technological advances which have the ability to transform societies, have also had limited impact for the general population in the country. Even with 600 million mobile phone subscribers, 100 million internet users and 12.5 million broadband users, this level of technology penetration only India ranks 50th in financial inclusion globally.

 
These contradictions are not limited to India alone. Introspection into the finer aspects of growth in the other BRIC countries shows similar results. Economic disparities and the increasing gap between the haves and the have-not's clearly indicate that inclusive growth is an area of concern. BRIC countries should focus on inclusive growth to ensure the benefits of growth will truly trickle down to the poorest of the poor. Consequences of economic disparity will always catch up with the larger society through economic turmoil and social unrest, as witnessed recently in several developed countries. Inclusive growth is not just a moral obligation but an economic and social imperative - for the BRIC countries and others across the world."

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NHS IT project is dead, but why do large IT projects fail? Part 23

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature I was working on about why large IT projects are prone to fail.

Because I have had such a good response I am keeping the debate going on the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt, part 16 Fotis Karonis, part 17 Fergus Cloughley, part 18  Steve Haines, part 19 David Holling, part 20  Bryan Cruickshank, part 21  Rob Lee and part 22 Tony Prestedge

Today, in part 23, BG Srinivas, director at Indian service provider Infosys gives us his views.

He says: "The success of IT projects rarely depends on one single individual, action or technology. Rather, success is dependent on different components converging and working harmoniously until the task is complete. IT projects fail when different parts of the same project do not work in unison. Like a pyramid of cards, each stage relies on the one before and if one aspect is ineffective -the pack will fall.

Project failure also occurs when there is a perfect blend of bad decisions. It is easy to point the finger at mismanagement of budgets, but more often than not; a lack of understanding of real business needs can be blamed. If, during the course of an implementation, the original business requirements are not communicated effectively, projects can easily derail. Similarly, if programmes are not broken into aggregate stages, the momentum for change initiated by the project is likely to falter.  

Enterprises must select technologies that are relevant to their business and choose the right partner to help make the right IT decisions.  Likewise, experienced partners often play an essential role in designing, validating and ensuring there is robust execution and strong programme management of projects, which are vital to achieving success."

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Ever wondered what happens to runners-up on The Apprentice?

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An ex-finalist of the BBC's The Apprentice, which features Alan Sugar, has taken over the talent management responsibility at IT services firm Endava.

Helene Speight, who reached the final of the TV show in series 4 (2008), was taken on in April this year.

In August I interviewed Endava, which is a nearshore IT services company. It provides its IT services from a combination of Moldova and Romania and 95% of its customers are UK businesses.

Endava is the result of a UK IT services firm, known as Concise, moving into Moldova and then acquiring a company across the border in Romania.

With 80% of its staff based in Eastern Europe, but working with UK customers, it realises that it is critical that the staff skills, experience and aspirations match its own and its UK customers.'

For instance it has set up Endava University to train middle management in Romania and Moldova. The qualification is the equivalent of an MBA.


I interviewed Helene yesterday about her role.


Thumbnail image for Helene-306-Edit.jpgIt is probably a bit unfair just to focus on her appearance on The Apprentice because she already had a successful career with a global management role at General Electric her job when she was on the show.

First of all she said her job is satisfying because it "is the nice stuff in HR." Rather than telling people they are fired she focuses on attracting, retaining and developing employees.

The development of human resources at any company that offers outsourced services is vital because their employees in effect become the employees of customers.

I know that service providers in Eastern Europe see their staff as a great advantage in their competition with other global locations.

Speight says she is trying to identify where the gaps are in employee skills.

She has already made a change to the Endava University by shortening management and technical training courses and introducing more soft skills training.

Interestingly, while with General Electric, Speight was working in the IT management at the company's financial services arm. So she comes from a business background but has experience aligning IT with business. This will help her with one of the big challenges facing all IT leaders, that of getting IT workers to understand the business. It is even more important in an outsourcing company because customers will expect service provider staff to have a good grip on their business challenges.

She also said she likes the way the IT workers in Eastern Europe tell customers as it is, rather than just agreeing to do everything they want they will tell them if they think something is not right.

She also got a taste for offshoring during this time, when she was involved in a contract that saw some IT services at GE delivered from Calcutta.


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Consultants given verbal bashing by the government, but what's the alternative view?

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At the government's procurement conference last week, Crown and suppliers: A new way of working, consultants were given a real verbal bashing.

Minister for the Cabinet Office, Francis Maude, talked about the need for departments to get his specific permission before hiring consultants on procurement projects.

He said: "Too often in the past we have fallen into our comfort zone and hired consultants for procurement. But consultants that are paid on day rates have no desire to do procurement quickly."
 
HMRC CIO Phil Pavitt was similarly critical of much of the work of consultants. "Why should we pay consultants to give us our own ideas back, bound in leather?" he said.

I spoke to a consultant, who I know has worked extensively in central government, to get his opinion.

He said there is quite a lot of unpaid consultancy going on at the moment as firms want to keep close to the government.

He said there has unquestionable been lots of money wasted on consultancies by the government but he said they really do offer the government significant benefits in certain instances.

"There is a real need at times for good advice from consultancies for specific types of work, where the skills add value."

He said if the government is doing a large one off project it would benefit from using consultants who have done similar projects in the past. "The consultancies do it every day of their lives." This makes it quicker and removes costs for the government.

But he said money is often wasted when the government uses consultancies to do procurements that are actually repeatable with generic skills. He said the government should learn to do these internally.

So I asked him what he thought about Intellect being used to give public sector procurers more commercial and technical skills. He said: "I don't think this will work because Intellect doesn't really have the skill required."

Martyn Hart, chairman at the National Outsourcing Association, also criticised the Intellect potential role.   "Although the NOA welcomes the government sourcing advice around improving its commercial and technical skills, it has concerns about using Intellect exclusively. Theirs is an IT supplier-only community, lacking the balanced opinions that having end-users and intermediaries involved brings. The government is likely to seek bigger savings in the business process arena than IT, so are Intellect the right people to offer the best advice?"



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Why has CSC's contract with BAE reduced 60% in value?

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There is some interesting commentary about CSC's recent contract renewal with BAE systems.

The five-year IT outsourcing contract has a value of up to $160m per year. Service desk

The deal is pretty broad and includes:  End-user computing, mainframe management, storage, network services and application maintenance and support.

Rachael Stormonth, at outsourcing analyst firm NelsonHall, wrote an article revealing that this contract renewal sees the total contract value (TCV) drop by a massive 60%. This is a lot despite many suppliers being willing to cut prices during tough economic conditions.

The contract replaces an agreement due to expire in April 2012, and is the third contract renewal by BAE. CSC started servicing BAE Systems in April 1994, originally through a 10-year IT outsourcing contract in the UK.

This is what she wrote:

"BAE Systems is one of CSC's key clients in the U.K. commercial sector, together with the Royal Mail group. This renewal was therefore very important for CSC U.K.

However, the value of the contract has decreased significantly from $1.9bn in the previous 5-year agreement to a maximum of $0.8bn in this new one. While one might expect reductions of up to 30% in large scale ITO contract renewals such as this, the TCV has declined by nearly 60%. Significantly, its geographical scope has reduced and no longer includes the following significant BAE Systems markets:

-The U.S. (43% of BAE revenues, with 52,000 employees in the U.S. entity). BAE initially looked to CSC to help it develop its defence sector business in the U.S.
-Australia (6,000 employees)
-India.

CSC was not available to comment this week on whether separate awards are pending in these geographies.

The original CSC/BAE Systems relationship had the hallmarks of an old-style 90s deal: monolithic and with adherence to rigid contractual terms and pricing structures. IT outsourcing contracts awarded today expect far more commercial flexibility from the service providers.

Last year, CSC renewed its IT outsourcing contract with missile manufacturer MBDA (U.K. and France) with a 4.5-year contract (~$85m NelsonHall estimated value). MBDA is jointly owned by BAE Systems (37.5%), EADS (37.5%) and Finmeccanica (25%)."

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NHS IT project is dead, but why do large IT projects fail? Part 22.

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature I was working on about why large IT projects are prone to fail.

Because I have had such a good response I am keeping the debate going in the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt, part 16 Fotis Karonis, part 17 Fergus Cloughley, part 18  Steve Haines, part 19 David Holling, part 20  Bryan Cruickshank and part 21  Rob Lee.

Today, in part 22, Tony Prestedge, executive director group development and operations at Nationwide gives us his views.

Prestedge is no stranger to large IT projects. He is responsible for Nationwide's £1bn IT transformation project.

He says: "Spectacular failures are newsworthy but less common than getting over the finish-line by trading between a project's original scope, budget and schedule. Understanding failure in this context - trade-offs as pragmatism vs. failure - is closer to most people's experience of big project 'failure'.

This throws up an interesting question. An ambitious corporate strategy necessitates multiple big projects - as is the case with Nationwide - requiring a view of success at a portfolio level. Have we failed if we achieve the greater goal at the expense of individual projects deviating from plan?

The world doesn't stay still. The clarity of the strategic direction is critically important in assessing the success of 'big' projects against the 'big' picture.

Still, the question remains, do some reasons for 'failure' only crop up on big projects? Experience suggests the same factors affect all projects. However, the bigger the project the more likely they are to occur and the mitigation required grows disproportionately.
Big projects take longer so are more likely to experience life's unpredictable events, they involve more people so are harder to align, they touch more systems so are harder to spec and change control, etc. They need a more pessimistic approach to contingency and governance than smaller ones.
 
For me success or failure is simply about quality of leadership, team capability, partnerships based on trust and an obsessive focus on execution.

Competent people well led towards a simple and singular outcome works everytime."

It is not illegal for government departments to talk to IT suppliers, but be careful what you say

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At the recent The Crown and suppliers: A new way of working, procurement conference, which saw the government explain its new way of working with suppliers, the key message seemed to be that public sector bodies should talk to suppliers more before they put tenders out.

It seems that some public sector bodies were afraid of doing this for fear of breaking EU procurement rules, and the law in the process.

But, speaking at the event, Francis Maude was clear in his view that talking to suppliers before a tender goes out is not against the rules. In fact by not speaking to suppliers before tendering the public sector is not getting the most out of suppliers.

"We need to bust a myth. It is not illegal for public sector procurement to talk to suppliers," said Maude. By talking to suppliers public sector organisations can get a feel for the capabilities of suppliers and even see their road-maps. This will help them devise their own IT road-maps and better understand what they actually want.

But care must be taken when talking to suppliers.

I had a conversation with a specialist procurement lawyer to find out just what can be discussed before a tender is put out.

Ohad Graber-Soudry, procurement lawyer at Squire Sanders Hammonds told me the following:

"You can talk to suppliers but there are restrictions so you have to be careful."

"If you know you are going to publish a contract notice and you have specific information there is a risk if you provide it before pushing the notice out that it will give the supplier an advantage."

"If you just inform the market of your intentions or do a market survey to find out what people are willing to do it is usually allowed."

"You are also allowed to discuss with suppliers to get ideas how to draw up technical specifications and put together complex contracts, including IT."

"It is useful because sometimes organisations are not in step with what is available in the market."

"But you must be careful not to discuss specifics that could give a supplier an advantage."





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NHS IT project is dead, but why do large IT projects fail? Part 21.

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature I was working on about why large IT projects are prone to fail.

Because I have had such a good response I am keeping the debate going in the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt, part 16 Fotis Karonis, part 17 Fergus Cloughley, part 18  Steve Haines, part 19 David Holling and part 20  Bryan Cruickshank.

Today part 21 comes from Rob Lee, operations director at BDI Systems. This is a contribution from Computer Weekly's LinkedIn group, CW500.

He says: "In addition we must take into account politics and projects that are clearly too large....this limits bidding and thus value for money.

The ID cards project being a classic political example. In principle not a bad idea. Throw in conservative, socialist or liberal ideals and suddenly you have a political football screaming to be booted around and waiting to fail as leading politicians announce they would choose prison over an ID card...the project itself was subject of a number of leaks regarding the modus operandi or promotion that clearly reached way beyond just an ID card.

Take the NHS IT project as something that is simply too big. All it wanted to do when it started out was to have electronic medical records professionals could share....one sentence that cost the British tax payer £12.3bn and counting.

All the national organisation (NHS Information Authority at the time) needed to do was define a common interface for data exchange, not rocket science but simple...yes it may have taken a good year or 3 to define this interface but it would then have empowered each NHS organisation to procure what they needed to deliver their services while meeting the overall objective of patient record portability.

The politics is of course big brother...this is easily solved by empowering the patient to be the gatekeeper of their own records to decide which doctors have access and to see who accesses their records and when - imagine being able to see in almost real time your records being updated...you'd know in seconds that an appointment is cancelled not days waiting for a letter. We already have frameworks in place for people not capable of making decisions and they are just as valid with electronic records as they are with paper or for the needs of emergency medical action."

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Francis Maude is unashamedly obsessed with procurement but what's in it for suppliers?

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I attended a government event all about procurement today. The Crown and Suppliers: A New Way of Working, to be exact.

I know this doesn't sound exciting but I know for a fact that Francis Maude, minister for the Cabinet Office, has a different view. "I really mean it about being passionate about procurement," said Maude. "We have not got it right for quite some time."

Since the coalition government came to power Maude has been on a mission to cut government costs. IT is a prime target with billions spent on it every year.

The gist of it is that if the government can improve the process of buying IT, for example making it cheaper and quicker, millions can be saved without reducing the end product that IT promises.

But to do this Maude believes the government's procurement teams and the suppliers should talk more. This is why this conference was held and Maude promised it was not a one-off and that there would be more.

Here are some of the points I thought were interesting:

-The government has published its first ever forward looking pipeline of contracts that will be up for grabs. Deputy government CIO Bill McCluggage tweeted that there are £25.9bn worth of government IT contracts in the pipeline up to 2017.

-Maude says the public sector should engage more with suppliers and not rely on lengthy procurement practices which make it an "exceedingly and prohibitively [difficult] doing business with government." He said the UK is particularly bad with the public sector procurement process costing twice as much to run in the UK than in France, while it costs UK suppliers four times more to bid for public sector work compared to private sector contracts.

-He said part of the problem is related to a belief in the public sector that it is wrong, as a result of EU law, to talk to suppliers. "We need to bust a myth. It is not illegal for public sector procurement to talk to suppliers."

-Maude believes the use of consultants should stop. "Too often in the past we have fallen into out comfort zone and hired consultants for procurement. But consultants that are paid on day rates have no desire to do procurement quickly." He said he has "forbid" the use of consultants for central government procurement without his permission.

- The government will be training its own in-house staff so they can they can work with suppliers. "We must ensure that the skills needed to work with suppliers are in government."

-The government will embark on different business models to achieve its objectives of value for money and effective services such as introducing mutuals, joint ventures, cooporatives and social enterprises.

- There has been an increase in the proportion of SMEs winning government contracts with 44% of the contracts signed in September won by SMEs compared to 5% in January.

-There will be standardisation of contracts and technology and more use of open standards.

-Capital expenditure will go down if the government procures IT in the right way. But it needs to understand what it has got to do this. Government CIO, Joe Harley announced the government IT assets register. 

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NHS IT project is dead, but why do large IT projects fail? Part 20.

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature I was working on about why large IT projects are prone to fail.

Because I have had such a good response I am keeping the debate going in the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt, part 16 Fotis Karonis, part 17 Fergus Cloughley, part 18  Steve Haines and part 19 David Holling. 

Part 20 today features Bryan Cruickshank, global IT advisory leader at KPMG.

Thumbnail image for Thumbnail image for kpmg.JPGHe says: "Large IT projects do succeed, but those that fail have the potential to do so on a grand scale. As for the 'why?', a common scenario is for efforts to be focussed on deployment rather than design. As a result, projects become IT-driven, lacking ownership and all important input from the wider business. Although it's tempting to under-invest in the design stage of a project, this is the worst time to get things wrong as the rest of the project can be vulnerable to taking longer and costing more than it should.

"Another potential Achilles' heel is underestimating the importance of the people perspective.  Embedding the right culture is essential, specifically a culture of change. There needs to be a genuine desire to deliver change or the outcome can be little more than the legacy system in a new image. Ineffective governance magnifies this problem and allows additions to be continually added to the project scope by stakeholders - the result being death by a thousand 'nice-to-haves' as costs and time get out of control."

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Forget offshore, onshore and nearshore when you have Accenture's Geordieshore

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There seems to be a trend of late of businesses talking up their onshore premises. In fact there is even talk of offshore contact centres no longer being as advantageous as people think. A combination of risks, rising wages and poor communication is making UK businesses pull back offshore contact centre investments.

During the current economic climate creating jobs offshore rather than in the UK is also an unpopular move, that local politicians might frown upon.

There are IT services creating jobs in the UK. And it's not because of cheap labour.

I was pointed to an article in the North East press recently about Accenture's investments in Newcastle. I am actually from Wallsend so I am a member of the Geordie Nation and an opportunity to big up Newcastle is a good one. Here is the article.

Accenture is increasing its presence in Newcastle where it has a global IT delivery centre.
15 years ago Accenture opened a UK centre to handle part of the UK technology consultancy services business, with an initial focus on businesses in the North of England. It grew to employ 205 staff.

A year ago the North East centre was turned into Accenture's first UK global delivery centre outside London and now has a customers across the UK and overseas. It has added 68 staff over the past 12 months and it is moving into larger premises.

Accenture says it has no problem finding staff with the right skills. The Accenture development has even helped Northumbria University design IT courses so they are better suited to students finding jobs when they graduate.

We all know that IT service providers have a bad name for offshoring UK jobs by the shipload but the future could become very different as living standards in countries such as India go up and wages follow.

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NHS IT project is dead, but why do large IT projects fail? Part 19.

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature I was working on about why large IT projects are prone to fail.

Because I have had such a good response I am keeping the debate going in the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt, part 16 Fotis Karonis, part 17 Fergus Cloughley, part 18  Steve Haines.

If I get comments from readers I will try and include them so please send me your views on: Why do large IT projects fail?

Today in part 19, I feature the comments of a reader, David Holling. He provided his views as a retrospective comment after reading the first 9 posts.

He says: "Certainly decomposition is a critical part of the approach - but in order to successfully decompose, one has to have a detailed description of the constituent components, their interrelationships, (not purely process mapping or functional breakdowns...), and showing many "views", all done in a technology / implementation agnostic manner whilst wrestling with the subjective niceties of unspoken assumptions and lack of common meanings.

This process:

1 - involves a lot of work with business stakeholders, who cannot necessarily commit time or are prepared / able to make operational and policy decisions before seeing a "system."

2 - Requires analytical skills not possessed by many.

3 - Has to be done in a manner to explicitly build in flexibility and change resilience. Is it a coincidence that the most successful parts of the NHS project can be viewed as pure technology implementations requiring little business input (e.g. the spine)?"

Are the police setting up an IT company to get around European procurement law?

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I recently wrote an article about a Home Office committee report into police IT and the plan to establish a police-led IT company to take control of the IT procurement within police forces.

I was going to blog about the committee's views on the setting up of the police-led company but then got tied up with other things. But I want peoples' views on something the report, which you can see in full here, said.

The committee questioned the rationale for its creation, pointing out that "a key reason for it being considered that a company is the best kind of body to perform this role is that it will not be subject to EU procurement rules."

I was trying to think how this would be the case.

Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner, does not think such a police-led company would be exempt of European procurement rules.

What are your views? Why did the committee make note of this in its report?

The police-led IT company, if approved, would replace the National Police Improvement Agency.

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National Outsourcing Association awards the industry

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This week saw the National Outsourcing Association (NOA) recognise outsourcing services suppliers and end users.

The NOA held its annual summit on Wednesday and on Thursday held its annual awards.

I attended the summit on Wednesday and felt a bit of a positive buzz around the place. Martyn Hart, chairman, was upbeat about next year. Perhaps growth might be back on the agenda.

There was good news for nearshore service providers with Eastern Europe based Luxoft winning the service provider of the year award.

Here are the awards and the winners:

Outsourcing Service Provider of the Year
Luxoft

BPO Contract of the Year
National Rail Communication Centre and National Rail Enquiries

IT Outsourcing Project of the Year
Wipro Technologies and Diversey

Financial Services Outsourcing Project of the Year

Co-Operative Banking Group, Operational Partnerships Management, Implementation of alternative format provision

Public Sector Outsourcing Project of the Year
Arvato and Chesterfield Borough Council

Telecommunications, Utilities and High-Tech Outsourcing Project of the Year
Efficio Consulting Ltd and Thames Water

Offshoring Operation of the Year
RR Donnelley and Anglian Water

Outsourcing Professional of the Year
KPMG - Shamus Rae

Outsourcing Contact Centre Provider of the Year
bss and Office for National Statistics and Northern Ireland Statistics and Research Agency

Outsourcing Advisory of the Year
Hogan Lovells International LLP

Offshoring Destination of the Year
Poland

Outsourcing End-User of the Year
Thames Water and Efficio Consulting Ltd

Award for Innovation in Outsourcing
Serco and Barclays Cycle Hire

Award for Best Practice in Outsourcing
Co-Operative Banking Group, Operational Partnerships Management, Supplier Operating Model

Award for Academic Achievement
HML - Anu Biswas

Award for Corporate Social Responsibility
Infosys BPO Ltd and Project Genesis
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Cost cutting is still the main reason to outsource IT

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There is a constant debate about the value of IT outsourcing beyond cost cutting.
 
Suppliers are always talking about the additional value of outsourcing. They usually talk about the innovation they can offer.

Most benefits are cost related. They might not actually be cases of low cost labour but just for example the ability to reduce the retained team and scale up when required through the service provider.

There are also benefits related to domain expertise. Service providers often have deep expertise in applying particular technologies in certain industries.

The latest research from law firm Norton Rose found that a massive 87% of user businesses and 86% of suppliers believe that cost cutting is still the main driver for outsourcing.

The research, which you can read here, has some interesting findings.
On innovation in outsourcing I had a chat with Ilan Oshri, associate fellow at Warwick Business School and associate professor at the Rotterdam School of Management.

He said innovation can be split into two in outsourcing. The first, he said, is incremental innovation, which is already built into a contract with things like improvements to processes and platforms.

In contrast, radical innovation is where the real challenge is, said Oshri.

If you want to see how to better manage innovation in outsourcing read the report by Ilan Oshri, which I link to below.

Innovation report_Cognizant-WBS_2011.pdf

Why did you outsource your IT?


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Inside Outsourcing website has been upgraded

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Just a quick email to let any readers know that the Computer Weekly website has been upgraded. As a result if you want to leave comments or receive alerts when I post you will have to re-register.

I am really sorry but at least the website is a lot better.

I really appreciate your comments in the blog so keep them coming.
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NHS IT project is dead, but why do large IT projects fail? Part 18.

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature was working on about why large IT projects are prone to fail.

I have had such a good response I am keeping the debate going in the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt, part 16 Fotis Karonis, part 17 Fergus Cloughley.

Today in part 18 I am featuring the opinion of Steve Haines, is health & emergency services sector manager at business software maker Unit4. He left his comment in the blog. I also include as reply to his comment from  another reader.

If I get comments from readers I will try and include them so please send me your views on: Why do large IT projects fail?

Steve says: "Basically, the simple fact is the bigger something is the longer it takes to build. Even if it gets built, it's then more difficult to evolve and less agile to change. We know that technology does not stand still for long, so I can't believe anyone truly believed that a programme of this scale (NHS project) would ever deliver. There are economies of scale that can deliver efficiencies and benefit, but there is a point at which organisations and solutions go beyond the economies of scale and hit the diseconomies of scale due to the loss of manageability. Our strategy at UNIT4 is to continue to support our NHS customers to grow "local" shared services and collaborations working in local health economies, while at the same time helping new hubs establish, underpinned by leading edge technology that embraces continued development and change. Local collaborations have over time proven to deliver benefits from collaboration while at the same time staying in touch and understanding local economies, priorities and demands. We are now working with a number of customers who are developing "hubs" for such service provision across the country. Additionally, our licence models enable organisations to retain the agility to move in or out of shared services, or indeed from one service to another, encouraging a competitive environment where good quality, efficient and cost effective services can continue to develop. National agenda's often stifle development and innovation to drive such efficiency. Steve Haines Health & Emergency Services Sector Manager UNIT4 Business software Limited."

A reader, known as Matt then replied to Steve.

He says: "Steve from UNIT4 seems to be talking along much the same lines as the BCS recommended in its 2006 report "The Way Forward for NHS Health Informatics":  There has never been a lack of understanding in the industry of the problems associated with large IT projects, especially in the public sector, and there were plenty of sceptical voices over the grand NHS IT project right from the start. It's just that politicians don't want to hear that their grand pet project is destined for disaster, and civil servants don't want to acknowledge this either, while the bloated multinationals who dominate government IT are hardly going to discourage their customers from spending lots of taxpayers money on ludicrously expensive "Big Bang" white elephants, are they."

Why has Wipro pulled out of My Civil Service Pension bid?

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I wrote last month about the first of the government's planned mutuals. My Civil Service Pension is the body that administers 1.5 million civil service pensions. The government is turning it into a mutual that will partner a private sector company.

The organisation will be owned by three groups: the 400 plus staff, the government and a supplier. The supplier will run the service and also be a shareholder but will have to bid for reappointment after five years. This is a way for the government to fund upgrades to the service by passing the cost onto a supplier. The supplier gets a big contract and a shareholding for the duration of the contract.

A total of 14 private companies bid to be part of this and a shortlist of four was drawn up. All final bids from the four short-listed companies; Capita, Wipro, Xafinity and JLT, were due in on Friday 4 November. But it seems that Wipro decided not to and pulled out.

I am currently trying to find out why it pulled out at such a late stage.

This mutual model could become a more popular method for the government top outsource business processes, so the reason for Wipro's exit will be interesting.


 

NHS IT project is dead, but why do large IT projects fail? Part 17.

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Following the news that the NHS National Project for IT was dropped I have been posting some of the views I have recently had provided to me for an unrelated feature was working on about wghy large IT projects are prone to fail.

I have had such a good response I am keeping the debate going in the blog.

Here are the posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta, part 15 from a reader known as Matt and part 16 Fotis Karonis.

Today, in part 17, I present the views of Fergus Cloughley. He is co-author of The OBASHI Methodology, published by The Stationery Office, and CEO of OBASHI Ltd. 

The OBASHI methodology provides a framework and method for capturing, illustrating and modeling the relationships, dependencies and dataflows between business and Information technology (IT) assets and resources in a business context. Fergus is a specialist in understanding how businesses work and expert in analysing business processes. He began the development of the OBASHI methodology and software with his business partner Paul Wallis in 2001.

Why do large IT pojects fail?

Fergus says: "Businesses today rely on a complex interaction of people, process and technology to operate. That interaction is driven by the flow of data between these assets: the life-blood of modern business.

Large IT projects fail because those involved do not fully understand the inter-connectivity of people, process and technology, nor how data flows between and through them. This lack of clarity means they are unable to confidently predict what will happen if changes are made.
If we are being brutally honest, unlike businesses of earlier eras, most of today's businesses do not understand precisely how they work.

Since the beginning of the Industrial Revolution, flows of water, steam, and electricity, and then more recently, flows of oil, components and petrol, have all been critical for the development of business, economy and society.

Over decades, standards and practices for measurement, management, safety, optimisation and valuation, were created to accurately understand these different flows, meaning businesses could accurately capture and communicate how the organisation worked; how activities, processes and the supporting technical infrastructure were linked to deliver the outputs required.

This clarity minimised ambiguity, and enabled clear communication, in business terms, with stakeholders.  Better informed decisions became possible, and a high degree of trust grew between 'business' and 'tech'.

When today's businesses create comparable clarity on flows of data, they will be able to clearly see, and easily communicate, the 'as is' state of the organisation, and perform 'what' ifs' before attempting major change.

At that point, most IT projects will be successful, including the large ones."

I am still looking for more viewpoints. Feel free to post your views in the comments section. I will publish as many as I| can in the blog overtime.

IT operations in Malaysia could offer the near China experience

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Big businesses want to get a piece of the action in China. It is the fastest growing economy and is already the second biggest behind the US.

But there are still fears about political instability and data protection which might put some western firms off a move to China. Perhaps Malaysia is a compromise because it is near but not in China. But what has Malaysia got to offer and what are its advantages?

This week I met up with one of the directors of an organisation known as MDeC, which is driving the Malaysian IT Initiative (MSC). Vijayaratnam Tharumartnam (Vijay) told me the story.

In 1996 the Malaysian government kicked of the IT initiative as part of its economic transformation. Malaysia wants to be a high income nation by 2020 and IT services have a significant role to play. The nation already has quite a strong telco sector but wants its IT sector to grow.

Vijay told me that MDeC is trying to make Malaysia the place to put your datacentres and IT operations.

Vijay says it is a good place for datacentres and IT support for a number of reasons. He says Malaysia is politically and environmentally stable. That through the MSC project foreign companies can bring all the staff they need from outside Malaysia. He also says it has data protection laws on the level with those in the West.

Add to these the tax incentives on offer, the good telco infrastructure and the large supply of English speakers and you have an option.

Malaysia currently has 0.5 million square feet of datacentres but wants to get to 5 million square feet.

Oversees companies can bring in all the staff they need unlike other nations with strict visa control.

There is already an impressive list of large western corporates using Malaysia to deliver IT to global operations in the form of companywide shared services. These include: BP, HSBC, DHL, Prudential, Dell, AIG, IBM, Ericsson, Shell, Exxon, Nokia and Standard Chartered.
IT service providers such as Wipro, HCL, IBM HP/EDS and Atos Origin have IT delivery centres in Malaysia.

What are these companies doing in Malaysia?

BP

-BP Business Service Centre Asia

Established 2009

Operates a BPO and IT Outsourcing operations
Global Players in MSC Malaysia
-BP Business Solutions

Established 2004

Research and development of software and IT systems for the healthcare industry.

HSBC

-HSBC Global Resourcing UK Limited

Established 2007

A knowledge process outsourcing centre that provisions of management and operational support for HSBC Group Service Centres worldwide.
Global Players in MSC Malaysia
-HSBC Electronic Data Processing (Malaysia)

Established 2002

A Group Service Centre (GSC) for HSBC Group which operate as a financial services processing centre, service centre, call centre and also as a contingency centre for other GSCs of HSBC Group around the world

-HSBC Software Development (Malaysia)

Established 2009
Global Players in MSC Malaysia
Information Technology Outsourcing (ITO) in software development, software deployment , software support as well as consultancy and project management

Prudential

-Prudential Services Asia

Established 2003
Players in MSC Malaysia
Regional IT processing centre, regional data centre, regional shared services centre and regional customer call centre for Prudential Group in Asia.

Anyone got experience of outsourcing to Malaysia. If so your comments would be welcome.

Where is Cognizant getting its growth from?

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As IT services firm Cognizant seems to be growing at an astonishing pace, given the current economic uncertainty, I thought it would be interesting to see where sales growth is coming from. This is a great indication of what IT businesses are spending money on.

Cognizant is a good supplier to watch in terms of going with market trends. It has even been grouped with the likes of Apple, Google and Amazon in terms of financial performance. The fact that all the companies ranked have recorded over 30% growth over the last six years despite recession is a clear message that IT outsourcing is getting bigger.

So following Cognizant's latest results, which revealed 36% sales growth in the third quarter of 2011 compared to the same period last year, I had a conversation with Malcolm Frank, chief strategist, at the company.

He told me about the two market trends that are driving IT outsourcing

1 - Companies are outsourcing for efficiency

The first one is a more traditional advantage of outsourcing with businesses looking to reduce their capital spending and operational costs. Obviously with the cloud maturing there is a lot of activity in this area.

Frank said: "Clients are outsourcing to get efficiencies in their business models." To this end businesses are outsourcing maintenance of computing platforms; testing as well as business processes.

2 - Innovation


But perhaps more interestingly is the second trend. The fact that businesses are outsourcing innovation. Franks says this is happening in four key areas: mobility; social computing; cloud; and big data.

"We have seen these four, whether discreetly or in conjunction, driving demand where customers are trying to transform core business processes using these technologies."

He says for example retailers are investing heavily at the moment in innovation with service providers. All four of these technologies are being harnessed to improve business opportunities.

For example customers all have mobile devices that they take everywhere. These devices are used to browse and buy products. Cloud computing will make connections with these customers closers, particularly through the use of social computing platforms.

As a result the retailer will be constantly collecting information about customer behaviour and to make use of these high volumes of data (big data) it will need storage and business intelligence tools to manage it. IDC says the amount of digital data will grow 44 times over between 2009 and 2020.

Frank says that the numerous austerity periods of last ten years have made businesses focus on cost cutting and as a result have become more dependent on suppliers for R&D. The days when IT departments at corporates bring in major new technologies is a thing of the past.

NHS IT project is dead, but why do large IT projects fail? Part 16

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Following the news that the NHS National Project for IT has been dropped I have been posting some of the views I have recently had provided to me for an unrelated feature I am working on.

Here are the other posts already published: Part 1 Brian Randell, part 2 Anthony Finkelstein, part 3 Yann L'Huillier, part 4 James Martin, part 5 Philip Virgo , part 6 Tony Collins, part 7 ILan Oshri, part 8, Robert Morgan part 9 Sam Kingston, part 10 Peter Brudenal, part 11 Mark Lewis,  part 12  John Worthy, part 13 Stuart Drew, part 14 Milan Gupta and part 15 froma reader known as Matt.

Today, in part 16, I am am featuring Fotis Karonis. He is CTO at mobile phone company Everything Everywhere.

fortis.jpgHis role is transformational and involves bringing the Orange and T mobile IT into one centralised backbone service. See this recent interview with him.
 
Prior to this role he was CIO of Romtelecom, the largest operator in Romania between 2007 and 2010. Before entering in the Telco industry, Fotis was for 10 years in the Aviation industry creating best practises and leading technological changes. he was CIO of the new Athens International Airport, from a greenfield to a fully functional airport and after the Athens summer Olympics 2004.  Prior to that he worked for Cap Gemini in Paris, in large scale integration projects.

He says:

"For me there are 4 areas that often lead to large projects failing to deliver.
 
Scope - Quite often the scope of a project is over ambitious or takes too long to agree.  Successful projects focus on what can be delivered rather than spending time talking about what cannot be done. 
 
Energy and motivation - The role of the project manager is not an easy one, often having to manage people who are working on multiple projects.  I'm a firm believer that a project team needs energy and enthusiasm to get through the highs and lows of delivering a complex project, in my experience well motivated people can deliver even when facing the most difficult  of situations. Early wins is a must- its 50% of the project success. With the business engaging early and perceiving the fruit of the project.
 
Sponsorship- The crucial role of the sponsor is often underestimated. As a sponsor I represent the interests of the company and I own the outcome. I like to play an active role in the project ensuring that I regularly meet with not only the project manager but the teams who are supporting the project manager and delivering behind the scenes.  It's important that as sponsor you set challenging, but realistic goals for the team. Projects often fail, because sponsors are changing, or companies change strategic directions.
 
Architecture -New technology and being on the bleeding edge can often lead to project failure. It's important that the business and technical architecture is thought about well in advance of starting a project and the architects have laid the foundations for project success.  At Everything Everywhere we put a lot of emphasis on Enterprise Architecture and planning for the future."

 

Is the sum of all fears really destroying offshore contact centre Industry?

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According to research from Ovum the advantages of offshore contact centres are decreasing, while the fears associated with setting up call centres in low cost offshore locations are increasing.

The reducing costs associated with running contact centres onshore, worries about the quality of interactions between offshore contact centre agents and customers, as well as fears over political and environmental risks are making corporates think again.

Research from Ovum revealed that only 2% of large enterprises in Europe, North America and Australia plan to offshore customer services in the next 12 to 14 months. Only 10% said they will offshore customer services in the next 36 months and 80% said they have no plans to offshore.

We have all had expperiences with contact centres offshore as customers so these figures might come as a surprise. Particularly when you consider that offshore IT service demand just grows and grows.

The appetite for offshore IT services just seems to increase by the day. This is probably because the reasons for offshoring IT are changing. It always was, and still is according to many, merely a cost cutting exercise.

Newcomers to offshoring are a huge potential market. Only last week the head of the FA's IT said the organisation was looking at offshore application development, for the first time, in order to get more flexibility in development resources. This is in relation to a big project.

So despite fears over onshore and offshore communication, reducing onshore costs as well as environmental and political risks, more companies than ever are considering or already offshoring IT. Offshoring is about much more than lower costs then?

The options are increasing all the time and not just India, with Eastern Europe, South Africa, Brazil, Egypt and China to name a few I have written about recently. Or will nearshore locations such as Spain have their day?

I interviewed someone from Malaysia yesterday about the IT offshoring options there. It is an interesting one, which I will write about soon on this blog.

Is the £40,000 minimum pay threshold enough to stop IT firms abusing the ICT immigration loophole?

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The Migration Advisory Committee (MAC), on behalf of the government, is calling on people's views whether the minimum pay threshold for businesses to be able to bring overseas workers into the UK on Intra Company Transfers (ICT) is set at the right level.

This is part of a wider call for evidence to help the government set its immigration limits for 2012/13.

Last year the government introduced a policy where overseas workers entering the UK on ICTs would have to be paid a minimum of £40,000. This was an attempt to stop businesses using this immigration route to bring in cheap labour. The ICT route is one which allows multinational companies to move their staff between the countries they operate in.

ICTs were left out of the government's immigration cap that set the numbers of overseas workers allowed in the UK, which was worked out by analysing where there are skills gaps in the UK. About 80% of non-EU workers in the UK are on ICTs and a high proportion of these are IT workers, with a large chunk from India. See the figures for the last ten years here.

IT firms, including the Indian IT suppliers, are heavily criticised for allegedly using this route to bring low cost labour into the UK to work on customer contracts. It is part of the reason why these companies can offer large cost reductions to customers.

IT workers from India make up a huge proportion of the number of ICTs in the UK, while there are thousands of UK IT professionals out of work. As a result the exclusion of ICTs from the immigration cap has been controversial.

UK IT workers claim that £40,000 is too low because many IT workers earn more and the fact that tax free expenses can be included in the salary is unfair.

The government has now asked the Migration Advisory Committee to call on anybody with an interest to give there views.

The questions regarding the pay threshold were:

- Is the £40,000 minimum salary threshold for intra-company transfers seeking to stay for 12 months or longer an appropriate proxy test to ensure that migrants meet the General Agreement on Trade in Services (GATS) definition of senior Managers and Specialists?

- Should the £40,000 be a national rate or allow for regional variations in pay?

- Because current policy allows the £40,000 threshold to be met through a combination of salary and allowances does the inclusion of non-salary remuneration undermine the use of the £40,000 threshold as a proxy test of skill level?

What do you think? I am keen to get a debate oing on this blog so please leave your comments.

The government might become less reliant on IT oligopoly but more reliant on suppliers in the long run

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The government is determined to reduce its reliance on IT suppliers. It doesn't feel it has been getting a good deal from the oligopoly of major suppliers.

But at the same time the government is not hiring IT professionals. This could be a worrying trend.

While Frances Maude and his cronies have undoubtedly got the knives out for the big suppliers, and not without good reason, the government might soon be even more dependent on a larger set of suppliers. It will probably get good prices but there could be trouble in store a little down the road.

I am writing this following some articles I wrote about the findings of the latest research from Salary Services Limited (SSL) about the UK IT jobs market. One of the interesting findings was the huge drop in IT recruitment in the public sector. Obviously the fall in IT recruitment in the public sector is not a surprise, but the sheer scale of the drop is.

The research shows that while public sector IT vacancies collapsed to only 605 in the third quarter of 2011, some 40.6% less than the third quarter of last year, the number of jobs advertised by software houses and consultancies in the same quarter was 44,112, 18.8% higher than last year.

And things look set to get worse in the public sector. The National Audit Office (NAO) recently said it is likely government IT will continue to be subject to heavy spending cuts which will inevitably include job losses.

Perhaps it is irrelevant at the moment because nothing seems to be being done in government IT at present. Well that's according to a consultant contact of mine who works in the government sector.

The SSL research also revealed that if you want a job in IT you have to move to the South East, This is because the software houses/consultancies are based in the SE and so art the banks, which are the next boggest recuiter.

The survey also revealed the software skills that are in most demand across all sectors.

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About this Archive

This page is an archive of entries from November 2011 listed from newest to oldest.

October 2011 is the previous archive.

December 2011 is the next archive.

Find recent content on the main index or look in the archives to find all content.

 

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