July 2012 Archives

Public sector IT service providers must comply with FOI

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With the government outsourcing services on a massive scale more and more private companies fall within the Freedom of Information (FOI) legislation.

A parliamentary committee is warning that the FOI rules could be undermined if those service providers supplying government do not comply.

According to an article about it on the Guardian website the Parliament's justice committee said that current contracts include a clause about FOI but warned that some public sector organisations might be reluctant to take action if a private contractor meets all other contractual terms except FOI,

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Computacenter tops KPMG IT service provider list

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Computacenter has come out on top of KPMG's 2012 UK Service Provider Performance and Satisfaction study. This is the study that used to be run by Equaterra the sourcing consultancy that was acquired by KPMG in February last year.

Here is an article I wrote about it.

The study of 630 contracts worth £14bn reveals a number of things including which suppliers are the best in terms of customer satisfaction. Out of the 25 suppliers analysed Computacenter was number one, according to a contact of mine.

This is a good achievement for Computacenter. Over a decade ago ago I worked for a magazine called Computer Reseller News (CRN), a magazine for IT resellers believe it or not, and then I moved to Computer Weekly sister publication and competitor of CRN Microscope, also but less obviously a magazine for IT resellers.

During these periods Computacenter was well and truly a reseller, although it didn't like being called one. Now it's top of a prestigious IT service provider ranking.

Computacenter does loads of desktop outsourcing, which is highly commoditised. How could a customer not be satisfied?

KPMG won't tell me the full list so if anyone knows more please let me know.

The suppliers studied were:

Cable & Wireless
Global Crossing
HP Enterprise Services
Mahindra IT and Business Services
Verizon Business

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CSC linked with CIA torture flights

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Had to flag this one up.

CSC customers are being urged to boycott the supplier over allegations that it took part in illegal CIA rendition flights in the US "war on terror".

CSC has been linked in court documents to the rendition of German citizen Khaled El-Masri, whose case against CIA collaborators in the Macedonian intelligence services is pending at the European Court of Human Rights.

See the full story, by Mark Ballard, on Computer Weekly.

Outsourcing is increasing the UK IT skills gap, says survey

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There is a debate in the IT industry about why UK corporates feel the need to outsource and offshore. Most say it's because of a skills shortage. There is no shortage of IT graduates but there is a shortage of those with the right skills," they say.

But cost cutting is felt to be the real reason by most the IT community. And the problem for IT graduates is getting the hands-on experience that corporates claim to crave.

I have been running a survey for a few months asking for opinions on the link between IT outsourcing and the UK's IT skills gap.

This week I exceeded the 200 mark in terms of respondents so thought it is a good time to publish the results and close the survey.

A massive 82% answered yes to the question: Do you think IT outsourcing has contributed to a shortage of UK IT professionals? 16% said no and 2% said they didn't know.

Outsourcing and more specifically offshoring is being blamed for a shortage in certain IT skills, say. There are plenty of IT graduates looking for work but they struggle to get work experience and the skills this provides. This, many say, is because entry level jobs are taken by offshore workers who do it for less money.

John Harris, chair of The Corporate IT Forum and chief architect and head of IT strategy at pharmaceutical firm GlaxoSmithKline (GSK) for example told Computer weekly in a recent interview that years of outsourcing commodity IT skills has much to blame for the lack of grass-roots IT talent today. "It is important to feed the pipeline at the bottom end," he says.

"While outsourcing did bring value, people moved jobs that should not have been moved. We outsourced our skills pipeline."

This has meant the IT prospects for young people were effectively hamstrung. He says young people were not being given a chance to come into the industry.

"Yes, it may be more economical to outsource to India, but such a job may be the type of work that gives an apprentice a real grounding [in IT]," he says.

By developing skills in-house young IT apprentices who progress into future IT architecture experts will have a thorough grasp of the businesses. It may be regarded as a long game, but Harris believes clear career planning and progression can ultimately deliver high value to a business.

One survey respondent says, "From experience I have seen repeatedly where Indian vendors bring to the UK resources with very limited experience. The UK is used as a training ground at the expense of UK citizens."

Many respondents blame the Intra Company Transfer (ICT) rules as the cause. Large multi-nationals, including offshore IT services firms, that have UK operations can bring in workers on ICTs. These workers are cheaper than their UK equivalents.

76% of respondents survey agree that apprentice schemes are the answer to the skills shortage.

One reader summed up how many IT professionals feel:  "We also refuse to hire UK-based IT graduates because they don't have the latest buzzwords on their CVs either (because nobody's ever given them a chance to acquire those buzzwords) and even a UK graduate trainee (burdened with massive college debts) will struggle to compete on cost with the ICT graduate trainees. Then, having systematically eliminated most of the ways in which UK-based IT workers can find work, stay in work and continue to develop their skills at work, we complain about the "IT skills shortage" and use it to justify yet more cheap imports. Repeat ad nauseam, or at least until the UK is so dependent on cheap foreign IT labour that we are no longer capable of maintaining or developing our own IT infrastructure, just like RBS.

I need to emigrate, and I would strongly advise any young person considering a career in IT (i.e. one that might last past their 30th birthday) to do likewise. The UK simply does not want to invest in maintaining and developing its own IT industry any more, whatever hype gets spouted by politicians and their corporate masters."

G4S fiasco was bad management on both sides and integrity of supplier questioned

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I blogged last week about an article by Journalist John Humphrys about the G4S Olympic balls up. He asked whether the fiasco, of G4S failing to meet its commitment in terms of security staff, was a sign that outsourcing might not be best.

Here is a view of the botched contract from an academic
. Ilan Oshri of the School of Business and Economics at Loughborough University talks here about bad management on both customer and supplier sides and questionable integrity on the supplier side.

Professor Ilan Ohsri says:

"The fiasco we have seen with G4S is a result of bad management on both sides, the UK Government as the client and G4S as the vendor.

"The Government should have set clear milestones and a monitoring system to help it detect challenges over time. Instead, the Government has treated executing this contract as 'one fewer matter to worry about' by outsourcing security to G4S.

"This is not how outsourcing should be carried out on the client side. G4S did not practice outsourcing as they should have.

"Holding up information about challenges they faced to recruit security personnel from their client raises questions about the integrity of this vendor. Clients should be wary of such vendors before trusting public safety or their business line in their hands."

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What makes a convincing cloud service?

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I interviewed the Imperial ICT service centre manager at London's Imperial College last week about the college's move to a cloud based IT service management (ITSM) service.

Paul Carter, told me about the move from an 8 year old system to a cloud based service from ServiceNow. As well as flexibility and the ability to pay as they consume the service removes the need for in-house development of the user interface. See the article here.

But what I found more interesting was his comments about unconvincing cloud offerings. He told me the college initially looked at 15 ITSM systems and narrowed it down to four. Of these, three were cloud-based. But he said not all entirely convincingly.

This is a recurring theme in the IT sector and is the result of the huge buzz around cloud services.

In September last year I interviewed the head of IT at credit company International Personal Finance (IPF), Andrew Herdand he told me how difficult it actually was to find a supplier that could provide what the company wanted. He also said there were huge differences in the prices applied to very specific requests for a cloud service.

The first thing IPF did when it decided it wanted to move to the cloud was to go to 20 suppliers to see what they offered. IPF realised it was going to be a challenge when less than half had anything resembling what they needed.

So what makes a convincing cloud offering?

Please let me know your thoughts.

John Humphrys steps in the outsourcing debate

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Journalist John Humphrys asks whether the G4S debacle puts outsourcing in doubt.

He wrote an interesting article following the failure of G4S to provide the bodies it promised to secure the London Olympics this summer. It is a good piece that looks at a bit of the history of outsourcing and questions whether it is value for money or even in the public interest to outsource public services. Read it here.

He talks about the highly paid bosses and the underpaid staff at the front line being part of the problem. The security staff that were planned to work for G4S at the games simply decided not to because the pay is so bad. This in turn put security at risk and the reputation of the UK. This is the problem caused when outsourcing service providers win deals on price.

One CIO that thinks outsourcing is not such a good idea is General Motors' CIO Randy Mott. He recently announced plans to bring 90% of outsourced IT back in-house. Is this a good idea? Read this blog from Burnt-Oak Partners and give me your views. 

In the IT sector, where outsourcing is rampant, there is also the debate about how it erodes the IT profession. The use of cheap offshore workers means less opportunities for UK IT professionals. As a result more has to be outsourced and fewer IT professionals are trained in the UK. And so on.

I have been running a survey about this very subject. I am going top publish the results soon so if you have views on it please fill in the questionnaire below. I have had almost 200 respondents so far and the vast majority thing IT outsourcing is destroying the UK IT profession.

IT Intra Company Transfers (ICTs) still dominate immigrant workforce in UK

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It has been a while since I have written about Intra Company Transfers (ICTs) and their impact on UK IT professionals. ICTs are used as a loophole to bring workers to the UK without a visa, if a company has a UK operation.

It is a method used by many offshore IT suppliers to bring lower cost about to the UK to work on projects. It is one of the reasons why companies, such as the Indian IT service providers, can be very aggressive on price and win so many deals.

The latest figures for the period 06 April 2011 and 28 February 2012 show that IT immigrants dominate.

The top 10 occupations accounted for 15,055 immigrants out of a total 23,952 immigrant workers in the UK.

Four IT categories featured in the top ten occupations. These were: programmers and software development professionals; Information technology and telecommunications professionals; IT business analysts, architects and systems designers; and IT specialist managers. These four accounted for 8,024 ICTs out of a total 11,684 in the top ten occupations. The largest group by far with 4,342 was programmers and software development professionals.

To put this into perspective there were only 757 medical practitioners, 905 charted and certified accountants and 904 sales accounts and business development managers permitted entry.
The Migration Advisory Committee is currently looking at the level to set the minimum salary for workers that come in to do certain jobs. In the IT sector many believe the minimum pay threshold is set far too low and makes it difficult for UK IT professionals to compete with offshore workers. A source told me they are considering lowering the threshold.


Government finds it impossible to break systems integrator habit

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Despite calls from inside government and the IT industry for a more equitable distribution of government IT contracts, with SME suppliers given a fair crack of the whip, nothing is changing.

The Department for Communities and Local Government (DCLG) has stuck with old ways of working and will contract a single outsourcing giant for its desktop management services contract.

DCLG has been given the go-ahead to refresh its IT services under the government's Desktop 21 contract next year, which contains just three suppliers - Atos, Fujitsu and HP.

See the full story here.

According to sources Atos is going to win the DCLG.

Also see: The obstacles facing SMEs in government IT procurement.

Computer problem caused G4S Olympic security staff shortage

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The Independent on Sunday has revealed that the reason that G4S couldn't get enough staff to handle the Olympics might have been related to a problem with an internal computer system.

An insider told the newspaper that the root cause of the problem with G4S was its internal computer system which had failed to calculate staff rostering.

The armed forces had to be called in when it became clear that G4S, which provides security services, could not meet its obligations in terms of providing security personnel. The Government announced it was deploying 3,500 troops to cover the shortage.

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London Stock Exchange shows how a customer can take a supplier's technology further?

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I met up with the CIO at the London Stock Exchange last week.

Antoine Shagoury, joined from the American Stock Exchange in February 2010. He was brought on board partly because of his track record working with a trading platform from Sri-Lanka based supplier MillenniumIT. The London Stock Exchange bought MillenniumIT when it decided to replace its ailing trading system.

In one fell swoop it got hold of offshore development resources with hundreds of software developers in Sri-Lanka and one of the fastest systems in the market.

From an outsourcing perspective it is interesting because it is an example of a big corporate acquiring a technology supplier to get control of a market leading system and take control of its development. What is perhaps more interesting is the fact that the London Stock Exchange, rather than ending MillenniumIT's services to other exchanges, is continuing to run MillenniumIT as a supplier.

The stock exchange is using the technology to reposition itself as an investment sector service provider. Using its core technology it is able to provide services to investment firms such as trading, data feeds, clearing, surveillance etc etc etc. But it can also sell technology to other stock exchanges, which it is currently doing successfully.

With its resources and position in the industry it can build and test systems using its vast IT resources and deep understanding of the business.

Interestingly Antoine was telling me about the exchange's strategy to industrialise trading systems. The idea is to create off-the-shelf packages that can be customised to fit a particular customer. All based on the MillenniumIT technology.

It is using agile software development techniques and through giving the business visibility of development and creating prototypes quickly can create new services that the business requests quickly. These services can then be put into industrialised packages, and sold to other trading venues.

Read the full interview here.
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Outsourcing to the cloud helps SME meet FSA regulation

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When the Financial Services Authority (FSA) introduces new rules, companies under its jurisdiction often have to invest in IT to enable them to adhere to the new guidelines.

Because data is so important in finance companies, regulations around data security and storage have forced them to invest in technology. And it is not just the big banks.

While large banks have the IT resources to meet the regulations through in-house development, small financial services firms face major challenges.

One such company is insurance broker Quote Me Today.

Instigated by the attack on the World Trade Centre on 11 September 2001, financial regulators introduced new rules that meant finance firms had to ensure a percentage of their businesses can maintain operational continuity in the event of a disaster. There are hefty penalties if they fail.

Quote Me Today is a small company with 50 staff and one in-house IT worker.  With 11 severs and over 60 workstations the company used back-up to tape for its critical data.

Paul Cole, IT manager at Quote Me Today, who is the only in-house IT worker, said after weighing up the possible penalties for downtime the company decided to use a managed disaster recovery service. About two years ago the company moved to a cloud-based disaster recovery (DR) service fully managed by Plan B DR.

Cole said the previous method was too risky and a cloud service managed by a third party made sense: "We chose a cloud service because I am on my own here so we needed it managed by a supplier. In the past we were just hoping that nothing went wrong."  

Quote Me Today now has fully comprehensive protection cover of its IT systems - with a guarantee of full systems recovery within 30 minutes if there is an outage.

The company had previously used cloud-based web filtering software and its email was also cloud based.

Cole said transferring the data to the Plan B DR cloud was straightforward. An appliance was plugged into the Quote Me Today infrastructure to take a snapshot of the data that was destined for the cloud. It took about two weeks to transfer the data. Now a snapshot is taken each night and transferred to the cloud.

Quote Me Today pays a monthly charge per server in the cloud.

Cole says the cloud service had not only given the company peace of mind but freed him up to do more proactive IT work. "DR is a job in itself," he said.

"The service has allowed me to focus on more proactive work keeping the network running and making tweaks to it to improve things."

But Cole does not believe that the cloud is the answer to everything: "I am still not entirely convinced that the cloud is the best for everything. You lose control of data and the infrastructure."
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Some outsourcing companies deserve a bad name

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Next time your outsourcing supplier visits you just check the car park to see what he or she is driving. If it is a flashy sports car you may want to ask questions.

Outsourcers have a bad name if you ask the average person on the street. Most people associate outsourcing with job losses and they don't think it is a good strategy.
Research from the National Outsourcing association (NOA) recently revealed that most of the general public (80%) don't think that outsourcing adds any value.

The bad name might be a little unfair on many outsourcing firms but not for Thomas Scragg, yes his real name, who used several payroll companies, which dealt with construction work, to collect PAYE payments but did not pass them to HMRC. The money was passed to another group of payroll companies.

56 year old Scragg, from Hockley Heath, and his accomplices. managed to buy expensive cars and all the trimmings of a millionaire's lifestyle. This was his downfall when people reported that his lifestyle was not in keeping with his status. He was jailed for a total of 17 years which is one of the longest sentences in UK criminal history for fraud.

Here is the blog by Burnt-Oak Partners, where I saw the story . And here is a news report by the BBC .

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Report slams outsourcers charges but reveals improvement

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Just over a year ago I wrote an article about some research carried out by automation software supplier Lieberman Software.

The survey of 250 IT professionals this year has the headline figure of 64% of respondents believing outsourcers invent work to get more profit. This is an improvement from a similar survey carried out by Lieberman of 500 IT professionals last year, which revealed that 77% believed outsourcers invent work.

Another criticism, but again an improvement on last year, is the fact that the survey revealed that 42% of respondents claimed that outsourcing contracts cost more than expected. Not good but better than last year's survey, which revealed that 62% of respondents said that contracts cost more than planned.

And outsourcing is growing despite discontent. This year's survey revealed that 71% of companies outsource a significant portion of their IT, compared up from 43% of respondents in a similar survey last year.

This year's survey results:

Have your IT outsourcing agreements cost you?

Less than originally planned: 9%
About as much as originally planned: 49%
More than originally planned:: 26%
Significantly more than originally planned: 16%

Thinking only about your IT outsourcer agreements, have you ever felt that the outsourcer made up more work to earn extra money from your organisation?

No: 36%
Yes: 64%

Do you trust the quality of the work performed by your IT outsourcers:

Less than work by in-house staff: 33%
About the same as work by in-house staff: 52%
More than work by in-house staff: 15%

See last year's survey in full.

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What will Bob Diamond's demise mean for Barclays outsourcing?

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When a CEO leaves a company it often means a change of strategy. Certainly it puts things on hold.

I was chatting to a contact of mine last week who told me that Barclays has a lot of outsourcing contracts in the pipeline.

This is part of a strategy at the bank to reduce costs by £1bn over a period of years.
So what will happen to all these deals? Will it all be put on hold or scrapped completely?

"It is inevitable that with a new CEO coming in it will put the strategy on hold."

Robert Morgan, director at sourcing consultancy Burnt-Oak Partners says in theory the strategy should not be affected. "It has all been set and agreed at board level."

However he adds that a new CEO might want to leave his or her mark, which could slow things down if changes are made.

"Also if it takes a long to find a new CEO the strategy might drift."

Robert says there will be people at Barclays that do not agree with the outsourcing strategy and they will be eager to be heard by a new CEO,

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Bill Crothers tipped to be next chief procurement officer

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According to government sources Bill Crothers, executive director for commercial relationships at the Cabinet Office, has been tipped to take John Collington's job as government chief procurement officer.

Collington will be leaving his role as government chief procurement officer at the end of July to become the chief operating officer at recruitment process outsourcing Alexander Mann.

The role of chief procurement officer was created last year and is seen as one of the top jobs in the Cabinet Office, as government seeks to centralise its expenditure across Whitehall.

Sources close to government say Crothers is expected to take the role. But a Cabinet Office spokeswoman said the department was unable to comment about the appointment adding that an announcement is expected to be made shortly.

Crothers has been increasing his profile within government of late, having recently attended an event with deputy CIO Liam Maxwell to discuss licence savings with Oracle and SAP.

At the event Crothers said the Cabinet Office now expects suppliers to treat the public sector as a single customer, adding that the government would increasingly look to purchase direct from suppliers rather than through system integrators. "Even BPO [business process outsourcing] is [an area] we are looking to disaggregate. You can get electricity cheaper than typical BPO provider [are able to offer]," he said.

Cabinet Office minister Francis Maude said of Collington's departure: "Under John's leadership, government has transformed the way it buys common goods and services, generating substantial savings for the taxpayer with around £1.7 billion saved in 2010/11 alone. Thanks to John's work Government now has a much sharper approach to procurement and a much tighter grip on this spending."

What can banks learn from public sector when it comes to IT?

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Could the ring fencing of UK banks be an opportunity for them to share more services in common functions?

Daniel Wakefield, head of capital markets at business intelligence specialist IMGROUP, wrote this for the blog:

Ring fencing -  An opportunity for Banking to learn from the public sector's Shared IT Services model.

By Daniel Wakefield

"With George Osborne's Mansion House speech (on ring-fencing banks) ringing in their ears, there will be no doubt in the banks' minds as to the challenges that separating "the inseparable" will bring. Although the deadline may seem like a way off yet, banks will need to invest a significant amount of time and thought to cope successfully with a restructuring of this size.

At IMGROUP, we have customers who are already engaging with us to answer the fundamental question - how can I safely manage the necessary technical separation in a cost effective way?

The challenge is a big one. IT complexity reigns supreme -but it isn't impossible!

Banks will be forced to carve up their data, an opportunity for them to consider not only what must be separated, but where data can still be shared. One option would be to keep the data in-house and segment it, reconfiguring systems and adding layers of access intelligence on top - this is really a band aid solution however, adding more complexity to an already multi-layered legacy system.

The ring fencing requirements should instead act as a catalyst for banks to review their data management strategies, looking to future proof rather than apply a quick fix solution.

One approach perhaps is to take a good look at the public sector (and the NHS in particular), which has made successful use of the Shared Services model for many years now, using it to support common functions such as finance, procurement, estates, facilities and of course Information Technology and IT services.

It is quite simply a successful model, and there are now many shared service agencies across the UK supporting multiple different public sector organisations. Significantly, their challenges also mimic those we hear about in banking;

•   They don't want anyone else owning/touching/seeing their data
•   They don't trust anyone to manage their data/applications/systems/vendors
•   They want to manage it themselves

All these statements are understandable when dealing with such sensitive and business critical information. That said, just look at the success of the G-Cloud programme - many public sector organisations are using a mix of on-premise and hybrid/private cloud services that are processing sensitive financial, individual, medical and patient data in a secure way.
So why would this model interest the banking sector? Where both retail and investment arms use common data, applications and infrastructure between them, then using a shared service could:
•    enable increased economies of scale and avoid duplication of IT services
•    encourage and enable both arms to work together and share knowledge
•    enable each arm of the bank to focus solely on its core banking business while the shared service focuses on its core objective of supporting both businesses
•    Savings of time and money on individual supplier/vendor management

So ring-fencing doesn't necessarily mean added cost, complexity and duplication. Banks can face this challenge head on and look to share the burden and rewards across their two entities. In a quest to future proof their systems, a private cloud shared service well could be part of their answer."

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

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