January 2012 Archives

Are UK IT students better off being trained in India?

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Indian IT giant Wipro could give UK IT students training to close a perceived shortcoming in IT and engineering training in the UK.

According to The Telegraph Wipro chairman Azim Premji has offered to take UK students to India for 12 months to be trained up in software, IT and engineering.

Premji was speaking to The Telegraph at the World Economic forum in Davos. Fellow Indian IT services firm HCL also used the event to announce a plan to offer training to UK students.

In the Wipro programme students would receive three months classroom based training and nine months work based training.

The idea emerged when Premji met Prime Minister David Cameron when he travelled to India in 2010. Premji told The Telegraph that he and Cameron had talked about education and in particular the shortcomings of IT and engineering education.

Premji says the programme should help Wipro hire staff in Britain rather than have to ship workers over from Indian.

Wipro set up a similar programme  in the past in India with a view to helping students get ready for work.

Premji said he realised that the second and third-tier Indian universities were delivering engineering students who were not equipped for the job.  "Their curriculum wasn't good enough and teachers weren't up to speed. So we designed a new curriculum for them and retrained the teachers. We gave them new text books to have and even to circulate to other colleges."

See the full interview here.



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Smart metering - the next big waste of money or venerable project?

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Government plans to give businesses and consumers the ability to better understand and then reduce their energy consumption through smart metering has put another large IT project in the national conscience.

The GB Smart Metering Implementation Programme (GB SMIP) is estimated to cost £11.7bn and the IT that underpins it is set to be one of its biggest challenges.

With a planned 53 million smart meters installed in homes and businesses across the UK the GB SMIP aims to have aims to allow gas and electricity consumption to be monitored to provide information that will help consumers and businesses use energy more efficiently. This promises to lower bills, reduce the UK's carbon footprint and help energy firms to provision better and therefore prevent shortages.

But keeping project costs within the estimate is already being doubted, and the consequences of escalating costs on large government projects are well known. Loss of public confidence eventually reduces political support, which can spell the end of a project regardless of its promise.

According to the Public Accounts Committee (PAC), the GB SMIP is another huge project that has major challenges to overcome including its major IT requirement. In July last year the PAC, said the government's track record on delivering large programmes is patchy at best.

Margaret Hodge MP, chair of the Committee of Public Accounts, more recently said: "The idea of smart electricity and gas meters is a good one, but the programme to install 53 million of them in all homes and small businesses in the country by 2019, at an estimated cost of £11.7 billion, is both challenging and subject to significant uncertainty."

The IT

The idea for the smart metering project is that millions of intelligent energy meters in homes and businesses will collect information on usage and send all the data to a central hub that will process it and forward it to the energy suppliers.  The SMIP requires major IT investments, with a need for smart meters, smart communicating sensors, modules, advanced communications networks, as well as technologies to secure data.

First and foremost there will be a company set up that will form a hub that will manage the data that smart meters send and receive, which will require services from IT and communication suppliers. "Communication of data to and from smart meters in the domestic sector will be managed centrally by a new, GB-wide function covering both the electricity and gas sectors," said the DECC.

DECC has already begun procurement for the new function, known as the central data and communications company (DCC). "In advance of the appointment of the DCC, it is intended that DECC would initiate the process for procurement of the data and communication services that will be contracted to DCC," said a DECC notice. It wants suppliers for a wide area network, telephone and data transmission services, data transmission services and IT services - including consulting, software development, internet and support.

It has also called on IT suppliers to build the data and communications infrastructure that will enable data to be sent between smart meters in homes and businesses and the DCC. The deal could be worth up to £4.5bn.

Meanwhile a single supplier is being sought to provide IT services to the DCC for up to nine years, through a contact worth up to £240m.  The services are: systems integration and implementation; software development, integration, testing and integration with communications systems; IT hosting - including the provision of datacentres and computer servers on a managed service basis; and the support and maintenance of the software once implemented.

Hodge at the PAC emphasises the importance of getting the IT right and said the government's often tarnished record on large IT projects might actually help the smart metering project, through past experience.

"There are obvious risks in implementing such a large IT project which cannot be ignored. They include the practical difficulties of procuring and installing the data communications service and the security of the information held," she added. "The [DECC] must take on board the lessons learned from other large government IT projects to make sure that the system can support smart grids and that extra costs are not passed on to consumers."

There are plenty of examples of large government IT projects to learn from and none more high profile than the NHS National Project for IT (NPfIT).

Rising costs

Like the NHS NPfIT there is a heavy reliance on suppliers. This can be problematic in a very large project that is susceptible to changes and difficult to accurately define, because costs can go up if scope changes.

The NHS NPfIT, for instance, was initially estimated to cost about £2.3bn over three years but was later raised to £12.4bn over 10 years. Commentators have said it would probably have cost £20bn to complete.

The PAC says DECC must address uncertainties by conducting proper trials to identify and manage the risks associated with an IT project involving such a substantial amount of money which is financed by individuals as consumers. "There are obvious risks in implementing such a large IT project which cannot be ignored. They include the practical difficulties of procuring and installing the data communications service and the security of the information held. The department must take on board the lessons learned from other large government IT projects to make sure that the system can support smart grids and that extra costs are not passed on to consumers."

The PAC was constantly concerned with the NHS NPfIT from its announcement in 2006 Right up to its scrapping in 2011.

Robert Morgan, director at sourcing consultancy Burnt-Oak Partners has in the past applied his IT outsourcing expertise to a project to the virtualise DEFRA. He has repositioned major IT outsourcing deals at large organisations including Rolls Royce, Bombardier Transportation and the Department of Work and Pensions.

He says the network communications element of the project is critical and believes project managers can only hope to reduce overruns rather than prevent them outright.

"Will [the project] overrun? Yes. Could overruns be avoided? Yes," he says. "Huge care in defining the service and its attributes, early functionality and performance expectations, controls over later development of new functionality to be professionally handled (external scrutiny and audit), politicians to stay out of it and ... just maybe ... overruns can be dramatically slowed down or eliminated.

However on time and budget for the physical roll-out and deployment down every nook, crook and alley in the land ...  I doubt it."

Public support

If the smart metering project starts to see increasing costs its support from consumers, who it promises to benefit, will decrease rapidly. There is already substantial uncertainty around what benefits it will deliver to consumers fatigued by constant increases in energy costs, according to a recent survey carried out by the Economist Intelligence unit for smart meter technology provider T-Systems.

The survey of 1,000 consumers revealed fears of initial price rises and a lack of evidence on future savings associated with the government's plans. The government estimates that the smart metering programme will result in an increase in annual domestic energy and gas bills for the average dual-fuel customer of £6 by 2015, but by 2020 it will deliver a net annual saving of £23.The survey revealed antipathy towards the government's plans to roll out smart meters to 30 million homes by 2020. Consumers are more concerned about the financial costs of using smart meters than the environmental costs of inefficient energy use.

The NHS NPfIT lost confidence because of rising costs and stories of suppliers withdrawing from contracts.

The public fear that smart metering will merely increase the cost of energy, rather than allow them to cut bills through more efficient energy use. Unless consumers and businesses have smart appliances to go with their smart meters they will fail to benefit fully. For instance to take advantage of a smart meter, which tells you when you consume the most energy and why this costs so much, you need smart appliances that are able to be programmed to turn on automatically when energy is at its cheapest.

As a result for consumers to get the benefits there has to be investment made in the homes and business premises.

Energy suppliers prepare for big data

Likewise energy suppliers need to invest in technology to get any advantage out of smart metering. "Utilities have been piloting and testing smart infrastructures for quite some time," says Bastian Fischer, VP industry strategy at Oracle's utilities division.

He says energy firms have to invest in technologies to help them understand the data they collect to support the business. "The challenge for utilities is to understand what data to retain and how to use the data to add value."

Fischer says that infrastructure and communications are proven technologies but utilities have to make sense of the information coming in real time and use it for business purposes. This will involve software investments.

He says IT suppliers have been developing products to support their utility customers. Oracle projects include one in the Italian capital Rome, which involves 1.8 million smart meters and another in the US where the software supports 7 million smart meters.

Utility companies traditionally analyse data in batches but will be able to do it in real time. This will help utilities understand where energy is used and help them distribute it more effectively.

As with any large IT project today that generates masses of data which is then moved from pillar to post there is a major security challenge.

IT security challenge

Government plans to create a smart grid for energy networks will require a coordinated focus on cybersecurity as communication networks play a key role, according to a report from The Energy Networks Association (ENA).

The ENA published the report for the DECC. The findings of the research, which was carried out by consultancy KEMA, revealed that the government and network providers need a more "coherent and joined-up approach" to secure the smart grid.

The report outlines how the smart grid will affect networks and describes how cybersecurity should be an important consideration when developing the smart grid's architecture, technology and management systems. For example, the report says: "ICT security, along with computing system reliability, safety and maintainability, are critical attributes for smart grid implementation and operation, and need to be considered as part of overall risk management for this critical national infrastructure."

Peter Brudenal, lawyer at Lawrence Graham, says the data collected through the SMIP will also pose a risk to privacy. "One of the big issues is how this data will be managed. As homes become more intelligent, for example, the risk is that there will be a huge amount of data about our lifestyle that could then be used for purposes such as advertising. How easy will it be to monitor what data is being kept, and how it will be used by my utility and other third parties?"

Patient privacy is one of the biggest concerns related to the NHS NPfIT's plan to have the medical records of all people available electronically on the Summary Care Records system.

Multiple stakeholders

The similarities of the NHS NPfIT and the SMIP do not end there.

The NHS NPfIT was a high profile project which, like the Smart metering project, touches many interested parties, including the general public. With government, patients, clinicians and multiple healthcare providers all impacted by the project, reaching consensus was never going to be easy.

The SMIP will similarly  give government, businesses, citizens, energy suppliers and environmental agencies a vested interest which risks being dragged in  different directions and its success being measured in different ways.

The IT sector is attempting to help resolve conflicts before they happen with the launch of cross-industry organisation known as SmartGrid GB, which brings together stakeholders. IT industry body Intellect is behind the project, which will bring together IT companies, environmental organisations, government, regulators and consumer groups. SmartGrid GB will coordinate the multiple stakeholders and advise the government.

A good idea can quickly turn bad if it lose support and gains costs. Few can argue with the rationale behind a project that sets out to give businesses and consumers more control of the energy they use. But you would have thought that few could have argued against the NHS NPfIT, which set out to improve customer care and save money in the NHS through IT, but problems and rising costs meant they increasingly did. Its sheer size and complexity, wasted tax payers' money and a lack of stakeholder support were some of the causes that led the centralised NHS NPfIT to eventually be dropped and replaced.

GB SMIP will be closely scrutinised.
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Outsourcing growing strongly despite poor economic conditions

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It is always said that IT outsourcing does well in both depressed as well as-vibrant economic conditions. Outsourcing service providers have been as bullish as ever despite customers cutting IT budgets.

This is because outsourcing is a way of cutting fixed costs and freeing up money to invest more strategically, or perhaps just keep the savings for a rainy day. Or pay it as a bonus to a senior executive if you are a bank, probably the one that decided to outsource.

The reason I am compelled to write about this post is the latest TPI index, which monitors BPO/IT outsourcing contracts worth over €20m. The research found 2011 to have the highest total value of contracts ever in Europe - or the Europe Middle East and Africa as the region is uncomfortable known. This was €44bn.
 
This was heavily influence by mega-deals, which accounted for 60% of the total value. These mega-deals are those worth over €800m. But there were also 15% more contracts in total in the final quarter of 2011 compared to the same period a year ago. So outsourcing is on the up whereas economic confidence is heading in the opposite direction.

The graph below shows the total value of IT/BPO contracts in Europe (EMEA) over the last 10 years.

Outsourcing TVC.jpg
Click here to see the TPI index.

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Shared services and outsourcing taking its toll on public sector IT jobs

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Public sector IT professionals have had a bad couple of years. Government spending cuts have hit them really hard. Local government IT workers in particular.

Socitm has just announced that last year saw the largest cut in IT staff in local government for 25 years with 5,000 employees losing their jobs.

The fall has been the result of jobs being outsourced, whether it is through shared services, direct outsourcing to a supplier or the increased use of contractors.

Surely it will get worse as more local authorities move to shared services. I say this because the first round of shared services usually retain the staff, but as other clients are added they need less new people.

The Socitm report found that the top areas of efficiency programmes in 2012 will be shared services and self-service. Web-delivered services and information governance are also playing an important role, it said.

Geoff Connell, divisional director of ICT at Newham Council, which has joined services with neighbouring borough of Havering agrees shared services will continue to be an important vehicle for cutting costs.

"Some organisations may look at outsourcing as an option. Personally I feel there are greater savings and more flexibility in sharing services ourselves. And doing joint procure in certain areas also aggregates costs," he said.

"The good news from my perspective is that with having two ICT teams we have been able to minimise the overall impact of job cuts. The headcount would have been reduced regardless" he added.

Big data, cloud, social and mobility to be big trends in 2012

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I asked earlier this month for people's predictions for IT and outsourcing in 2012. Here is the latest response I have received. It comes from Sanjiv Gossain, who is UK head of Indian  service provider Cognizant.

"As we enter 2012 I believe there are four market trends which our customers have to consider to ensure they're ready for the rapidly changing working environment -- mobility; social computing; cloud computing; and big data/advanced analytics. All four of these technologies are being harnessed to greatly improve business opportunities.

For example, taking a retailer's perspective, almost all customers now have mobile devices that they take everywhere and use to browse and buy products, as well as keeping an eye out for special offers.

Cloud computing will enable closer connections to these customers, and as a result a retailer will be constantly collecting information about customer behaviour. In order to effectively make use of these high volumes of data (big data) organisations will need storage and business intelligence tools to manage it properly.

It is crucial for IT departments to change their "delivery and operations" mindset to be a sustainable agent for innovation and change, particularly around the way big data about customers is captured and analysed.

Collaboration and adoption of virtualisation technologies will be key this year in allowing organisations to create competitive differentiation and establish more innovative ways of working. Employees of the millennial generation need to have the same experience at work that they enjoy at home. Until now, the technology they experience at home on a Sunday night has often been more advanced than what they use at work on a Monday morning, meaning they have actually had to take a step back when entering the workplace. The combination of millennial workers and new technologies means that the virtualised and globalised enterprise is now a reality. While globalisation is not a new phenomenon, it is now reaching into almost every aspect of business and businesses need to be ready to embrace it."

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Why should I study computer science when the jobs go offshore?

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The government has this week scrapped the current IT curriculum. It will replace it with more focus on the "rigorous" teaching of computer science and programming subjects.

This will replace a curriculum that is currently heavily focused on using software rather than how it is created. This sounds good but the government will need to do more to address the trend of businesses offshoring IT work.

Big businesses these days aren't concerned about where there IT skills come from, but rather  how much it costs. As a result offshore locations, most notably India, provide thousands of software engineers to UK firms and UK professionals are priced out the market. Offshore workers can cost a third less or more.

Only this week the Migration Advisory Committee (MAC) said that 1 in 4 UK workers are displaced by non EU migrant workers, with IT the biggest hit group.

There is also pressure from Eastern Europe where EU nations have a wealth of IT skills and offer nearshore IT services to UK companies. Countries like Romania have a legacy of high standard IT education dating back to the Soviet days.

The government has tried to stem the flow and in 2010 it put a cap on the number of non-EU workers getting jobs in the UK. But this did not include the dreaded Intra Company Transfer that allows companies with operations in the UK bring their staff in. However it did assign a minimum salary in ICT workers of £40,000 if they stay over a year, which many in the IT industry is too low especially when you consider that non salary tax free allowances are included, such as living allowance.

So should the government back-up this plan to increase computer science and programming skills with policies that encourage businesses to recruit in the UK?

Or should it train people to manage services being delivered offshore?

Governments have been wrestling with this for some time. See this link on Wikileaks for a confidential document about government attempts to manage immigration.

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Cloud security breach inevitable as businesses underestimate security due diligence

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Expanding on my previous blog about a prediction of a major cloud computing security breach this year I have had a couple of people contact me to add their views to the debate.

With more and more IT outsourcing to the cloud this year could see hackers cybercriminals target clouds. When a business uses the cloud it is outsourcing the security to a service provider so it is essential that proper security due diligence is carried out.

In its 2012 Cyber Security Forecast, breach investigation firm Kroll says this is not happening and it believes cloud security will be more common this year.

It said: "As cloud services gain in popularity, related breach incidents will flourish. If we were meteorologists, we'd definitely be calling for overcast with a chance of storms. Companies are smartly embracing the cloud for the associated cost savings and ease of use. Unfortunately, current surveys and reports indicate that companies are underestimating the importance of security due diligence when it comes to vetting these providers. As cloud use rises in 2012, new breach incidents will highlight the challenges these services pose to forensic analysis and incident response and the matter of cloud security will finally get its due attention."

Meanwhile lawyer Mark Lewis at Berwin Leighton Paisner believes there will be a massive focus on cybersecurity with major information leaks and major cyber-attacks in the UK and elsewhere by sovereign states.

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Huge cloud computing data breach waiting to happen

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Here is another prediction for IT outsourcing in 2012.

This year promises to be one that will be remembered as the year that outsourcing to the cloud gained significant momentum. But it could also be the year that cyber-attackers target the cloud and send shockwaves through corporations by causing a huge cloud security breach.

Security is a major concern for businesses putting their systems in the cloud, but these fears don't appear to be stopping cloud computing in its tracks. Ok private clouds are being taken up by big firms that are unwilling to move to public clouds, but they could themselves be the subject of a major breach.

Peter Brudenall, outsourcing lawyer at Lawrence Graham, thinks 2012 could be the year that the cloud is shaken by a security problem. After all it is all part of learning.  He said: "I predict there will be at least one major data breach affecting the cloud - and that may well cause companies to pause and re-think their use of the cloud (or at least the contractual protection they may be lacking compared to traditional outsourcing platforms)."

He also expect there to be major changes to outsourcing as a result of reforms to data protection laws. "There is a possibility of a chilling effect on cloud computing. Companies will be required to incorporate privacy by design and cloud-based providers will need to ensure they have security at the top of their agenda. "

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Is cloud computing becoming an awkward teenager that needs orchestration?

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I asked for predictions about the IT outsourcing industry earlier this week and have begun to get some responses.

Terry Walby, managing director at IPsoft, thinks 2012 will see cloud computing mature into an awkward teenager. IPsoft is a company that offers remote infrastructure management which is carried out automatically by computers using artificial intelligence.

This is what he had to say.

"If 2011 was the year of the cloud, with increasing adoption across the market, then 2012 will see the technology move into its awkward adolescent years - and like any growing solution, it will be difficult to keep under control. Critical for 2012 is that cloud services can operate within a hybrid architectural environment, and deliver truly enterprise-class services. To realise this, the outsourcing industry will begin to adopt a cloud orchestration approach.

Cloud orchestration requires the deployment of tools and processes which can operate across the multiple methods of provision - and providers - in a typical hybrid environment. At the heart of an orchestration approach is an automated service which can affect the actions required in cloud management. For example, monitoring usage, scaling and provisioning; managing events and triggering actions such as approval processes. To be an effective orchestrator, the service needs to be able to operate in a consistent fashion across the myriad of cloud providers and traditional fixed architectures which exist - and therefore must be a service disaggregated from the underlying provision of cloud infrastructure in order to manage services consistently across multiple cloud and physical environments."

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Controversial predictions for IT and outsourcing in 2012

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I blogged earlier this week asking readers for their predictions for the year ahead in IT outsourcing. I have had some interesting predictions so I will publish some over the next few days.

Today are 8 predictions of outsourcing lawyer Mark Lewis, who works for Berwin Leighton Painsner.  They make interesting reading.

1. The year that standard public cloud offerings are taken up by big companies, but only after the major cloud providers facilitate data protection compliance and some acceptable levels of data integrity and security.

2. Central and local government and NHS IT/BPO outsourcing opens up, but will run trouble with the unions over pensions.

3. Government mutualisation models flop through lack of interest by most of the big providers.

4. Massive focus on cybersecurity in the UK and information leaks of major cyber-attacks in the UK and elsewhere by sovereign states.

5. Payment processing (mobile and Internet) grows exponentially, leading to even more M&A activity.

6. Logica "merges" - but with whom?

7. Online retail wipes out the high street, whatever Mary Portas advises.

8. The corporate Blackberry overtaken by workers using their own devices.

What you think will happen this year?



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What's in store for IT outsourcing in 2012?

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The global economy is creating an atmosphere of uncertainty in the IT outsourcing sector, but what should we expect in 2012?

This time last year there was a little more confidence about growth in the economy following the carnage left by the credit crunch. But hope has quickly changed into despair and the Euro crisis could push parts of the world back into recession.

Even the Chinese economy is growing at a much slower rate as European customers of its manufactured products tighten the belt.

So it is now time for your predictions.

Do you think there will be an increase as businesses outsource to cut costs?

Could more innovative outsourcing plans be put on hold until the economic outlook becomes clearer?

Will 2012 be the year that cloud computing finds its place in the outsourcing sector?

Please send me your predictions by leaving a comment.

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About this Archive

This page is an archive of entries from January 2012 listed from newest to oldest.

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