August 2012 Archives

Why Sean Finnan left IBM

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Sean Finnan has left IBM Global Services, where he headed up outsourcing in Europe. The former EDS man says the IT industry is on the cusp of a wave and he wants to ride it.

A few people have asked if I know anything about Sean's departure so I called him. This is what he said:

"After three successful years at IBM in a variety of roles culminating in running Strategic Outsourcing for Europe I decided to leave as I was ready for a more multi-threaded career and I think the IT industry is on the cusp of major change.

I wanted to be in a position as a non-exec/advisor/coach to a number of firms ready to go through that fast growth phase. My pan European experience in running businesses is perfectly suited to that and its going to be fun."

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HP's and EDS's different DNA meant trouble inevitable

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More comment in about HP's failure to make its EDS acquisition work. This time uit comes from T-Systems' UK head Sam Kingston. Sam used to head up EDS in the UK so knows a thing or two about the company.

This is what he said:

"EDS at its core had good processes, tools and technologies which enabled clients to rely on strong service management and delivery capabilities.  This resulted in a customer first ethos which meant that EDS would never walk away from red projects or complex delivery environments.  HP has a different core DNA and would regard EDS as having too great a focus on customer satisfaction through service excellence.  Therefore HP, like most technology companies, would not understand the investments and returns gained in a service orientated business, hence the dramatic restructuring which took place to drive cost and the associated core competence out of EDS.  In effect, HP through their cost reduction measures, demonstrated they have a firm focus upon technology rather than service."

Also read:

How did EDS lose $8bn in value in four years?


Ten reasons why EDS is worth $8bn less than it was four years ago


How did EDS lose $8bn in value in four years?


EDS is to HP what Carroll is to Liverpool FC


Ten reasons why EDS is worth $8bn less than it was four years ago

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HP is writing off about $8bn as a result of the drop in value of the EDS business it acquired in 2008. See this article I wrote.

Robert Morgan, director at sourcing consultancy Burnt-Oak Partners, gives us ten reasons why HP ended up devaluing EDS by $8bn.

1 - This was a takeover and not a merger. The HP management hierarchy reigned supreme and ensure that the highly paid EDS exec was swept away
2 -  HP's culture is not one of services, it is of product. New HP management could not relate to EDS client's and their service related contractual needs
3 - Big accounts withered on the vine due to a complete lack of understanding of the size, complexity and criticality of these systems - name any government account where this is NOT true - you cannot
4 - HP pushed HP product when EDS was hardware agnostic - this upset clients
5 - Commercial models deployed by HP do not cater for one off deals, they have not room for flexibility against certain changes and funding needs
6 -  HP Margins are inflexible in spite of scale
7 - HP views risk as a major corporate "no-no" EDS embraced risk based on their competency and ability to contain and mitigate it
8 -  and probably most important Meg Whitman has ZERO understanding of services and treats HPES like a child in need of discipline and restraint
9 -  HP is totally focused on a quarter by quarter basis of reporting
10 -  HP has driven all the Business metrics and criteria for success out of the system and allow technobabble to rule - cloud everything rules

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How did EDS lose $8bn in value in four years?

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HP is writing off about $8bn as a result of the drop in value of the EDS business it acquired in 2008.

Earlier this month HP warned that it would write off $8bn after the business it bought for $13.9bn was devalued.

HP said the downgrading of EDS's value contributed most of its $8.9bn loss.

But how could EDS, a pioneer of IT services with a list of customers the envy of every IT company on the planet, lose value so quickly?

Peter Brudenall, a lawyer at Lawrence Graham says, "I suspect the EDS business has also lost ground to lower-cost alternatives such as the Indian technology companies."

See what other people think in this article I wrote.

And see this article giving 10 reasons for EDS's decreasing value.

What do you think?

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The common fallacies in IT outsourcing and the Picasso effect

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This is a contribution from a reader. Bala Narayanaswamy is an experienced technology and management consultant based in London. He has over 16 years in the IT industry and holds an MBA from business school as well as an MS in Software Engineering.

The article describes the common fallacies in IT outsourcing as believed by decision makers across industries.

The common fallacies in IT outsourcing


By Bala NarayanaswamyMe.jpg

"Let us start with a typical scenario that gets played across boardrooms all over the world. The CEO of a leading global company is troubled by many things - tanking share price, reduced margins, high cost base etc. He has called in his army of managers and consultants to figure out a solution. Soon, they spot one of the problems i.e. the company's IT spend. On average, the company seems to be spending a good deal more on IT than its main competitor. On subsequent analysis, the CEO understands that the competitor has outsourced most of its IT and is thus able to use freed up capital for developing the core business. Voila! The solution presents itself - the CEO immediately orders a comprehensive review of IT portfolio with a view to outsourcing as much IT as possible.

Let me pause here for a show of hands! How many of you actually think the decision was a no-brainer and the CEO made the right call? If you raised your hand, be assured, you are part of the majority. After all, the rationale is straightforward - since IT jobs are not core business jobs, they are the right candidates for outsourcing. In addition, this will enable the Company to benefit from the scale economies of the provider with minimal impact to IT delivery quality, or so the thinking goes.

It is true that IT outsourcing, when done the right way, can provide the aforementioned benefits, but it is also true that in most cases, these promised synergies and benefits do not materialise. While it is easy to come up with a ready-made list of causes (some people get paid a lot to say things such as "time difference between the Company and the Vendor"), the following two or three assumptions are the main culprits in the author's humble opinion.

The fallacy of perfect substitutes (a.k.a Picasso fallacy)

Guernica is Picasso's most famous and controversial painting. The story goes that in the 1950s, the man himself allowed three copies to be made so that they can be shown around the world because the original was too fragile to travel. While the current day stardom of Guernica is no doubt in part down to these substitutes, the artists who copied the painting don't command exulted status because they are what they are, imitators. In other words, it takes a Picasso to create a Picasso! Imitators can copy, but can never create an original masterpiece.

When companies outsource IT jobs, they often fall for this fallacy of perfect substitutes. During skill set reviews, the outsourcing Vendors regularly produce very-relevant-for-the-job resumes replete with glossy references. The decision makers then go through a very impersonal, paper based skillset comparison, often deciding that an employee with, say, 10 year experience in solution architecture can be easily substituted by a low cost vendor resource with similar experience. But these processes tend to ignore one important factor - that is, the company might actually be substituting a Picasso with an imitator.

Let me give a case in point. There is this established Fortune 500 Company with presence across the globe. Not too long ago, it decided to transfer the Payroll IT function to an established Vendor. During the immediate six months following the transition, the payroll date was missed twice due to IT system related problems. Prima facie, it did not seem like a big issue since the impact was less than £50k and both issues got resolved under two days. But when you compare it with the record of the previous team, which never missed a payroll date for nearly 30 years, you get the complete story. That team seem to have had an X factor, which the company had failed to spot while deciding to transition the roles.  

The Venetian arsenal fallacy


Let me take you to the story of world's first assembly line. We are not talking Ford Model T, but that of the Venetian Arsenal, a ship building machine that was key to protecting Venetian trading interests in the Mediterranean.  The story goes that, by the 15th and 16th century, the workers had gained so much experience and the process so well-tuned that the Arsenal was able to produce one ship a day, start to finish.

When a company does IT outsourcing today, one of the most common assumptions is that there will be little drop in the level of productivity short term and an increase in the long term. People will explain that the IT vendors have been in the business for a long time and bring a favourable experience curve. In addition, because this is the only thing the Vendors do, they should naturally be very good at it (an argument sometimes supported by Adam Smith's Division of Labour).

The problem here is the misalignment of productivity and incentives. If you agree with me that productivity means "doing more for less", then it also goes without saying that the IT Vendors are not incentivised to increase their productivity. After all, why should they? If the agreement was to do N number of things for P pounds, then it is not in vendor's interest to do N+ things for the same P. Most managers realise this only much later in the game when stacks of CRs begin to pile up quoting various changes to the scope of work.

One Team, One Culture fallacy

When a Company decides on an outsourcing partner, the "Cultural fit" question is usually ignored. This is because decision makers automatically assume that the vendor would adopt the company's culture and deliver within that framework. Whatever little attention is paid is usually focused on religious/political beliefs, body language etc. The vendor's attitude towards "Risk", a potentially deal breaking factor, does not get a look-in because no one sees the need.

Now compare this with a Mergers and Acquisitions scenario. The CxOs of the Company will pay top money to financial advisors to fully understand the culture of the Company being acquired or sold. While this is the right thing to do, a variant of this cultural due diligence is also essential to make IT outsourcing work.

A company can belong to any category across the risk taking spectrum but almost all vendors are clustered around the conservative side of the equation. Imagine that you are an investment bank with an aggressive, risk taking front office business with an outsourced IT support function. Since the vendor business model is based on risk aversion (think formal documentation, approvals etc.), no amount of education and encouragement will convince the vendor to match the go-getting attitude of the business. From the vendor point of view, this is fully justified since they don't participate in any upside but take the full brunt of down side.  

Summary

Companies will be better off by questioning the common assumptions when deciding to outsource IT functions. It is easy to overlook the gap in all round skills needed to successfully do the job. In addition, expectations need to be clearly set out and understood on long term productivity improvement targets. Lastly, a thorough analysis of cultural fit should be made mandatory and results fed into decision making process."

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Why are IT companies confident amid economic uncertainty?

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Research from IT industry body Intellect shows that the bosses are UK IT companies are confident about their business performances despite not being particularly confident about the economy as a whole.

Is this a sign that IT is genuinely recognised as a cost that cannot be cut too much during hard times?

A downturn is a time when businesses reflect and in doing so might find better ways to do things. This is often through new technology.

See the article I wrote about Intellect's research here.

One UK IT firm which is doing quite well is cloud based collaboration supplier Huddle. It is growing fast and picking up plenty of VC cash and recruiting. See my interview with the CEO.

Phil Smith, CEO at Cisco in the UK had this to say about the UK technology sector. "It's encouraging to see that the future is bright for UK technology firms. Against an uncertain economic landscape, the latest Intellect State of the Sector survey predicts that two thirds of UK IT company executives are very likely to recruit additional staff over the next six months.
 
"Big companies and investors are no longer shying away from investing in innovation or new talent. This is why the entrepreneurs and tech start-ups of today shouldn't be afraid to push their ideas right to the top and ensure they live up to their true potential. The relationship they have with technology is unique and their originality and affinity for IT amazes me, so there is no reason as to why the next Twitter or Google can't come out of the UK.
 
 
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Mobile integration could be the next big outsourcing push

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Everybody is talking about mobile today. Smartphones are being bought at an alarming rate.

Mobile phones now outnumber people.

This in turn is making businesses speed up their plans when it comes to offering customers mobile services and interaction via mobile networks.

Add to this the fact that businesses are trying to enable more flexible working, which involves staff accessing corporate systems via mobiles, and you have a load of work to do in the back end IT department.

New demands such as more requests from customers, the need to engage with customers and securing the use of corporate systems for mobile users, are just some of the challenges.
Forrester did a paper on the hidden costs and disruption associated with increasing the use of mobile. Here is an article I wrote.

What I didn't delve into in this article is the role of the IT outsourcer.

Some businesses will probably hire lots of contactors to help them through. Recent surveys of the job market have shown that businesses are looking for mobile technology skills. This is not just about understanding smartphones and mobile apps but the back-end integration.

But what about the service providers? Which companies have the most compelling mobile services?

I recently spoke to Cognizant's UK head Sanjiv Gossain. He was explaining how mobile is a big focus for the supplier as part of its SMAC stack (social, mobile, analytics and cloud).

Businesses will increasingly need this kind of skill. Mobile and social go hand-in-hand with real-time communication with more customers. Mobile means for more data to analyse (even bigger data) that can help the business plan, and the cloud is enabling easy access to systems via mobile.

So how will companies cope with the massive changes demands on back end IT? And which suppliers will make hay in this sector?

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IT suppliers don't want to manage government's multi-sourcing

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The government's plan to break up massive IT outsourcing contracts and have system integrators manage them has taken a major blow as it appears few service providers want to manage these multi-sourcing contracts.

The plan, in what is known as the tower model, was to separate IT components - such as hosting, applications development, security and desktop support and contract different suppliers.
 
One supplier will then take on the role of Service Integration and Management (SIAM) to manage the various suppliers/towers, without holding any of the  contracts itself.

This is part of a trend to create service integrators rather than use system integrators. I have read loads about this particularly as cloud computing becomes more mature. If organisations are using cloud services they will have loads of suppliers and might struggle to manage them.

One of my colleagues recently wrote an article revealing how the government departments that are adopting the model are seeing interest from suppliers, in being the service integrator, diminishing.

The Foreign and Commonwealth Office (FCO) and the Ministry of Justice (MoJ) were adopters of the model and are currently seeking a SIAM provider. However, both have seen a significant drop out in the numbers of suppliers bidding in the first round of the procurement: down from eight to three and four to two, respectively. 

One of the suppliers who dropped out of the running told Computer Weekly that a common issue with the current SIAM model is that suppliers are not allowed to bid for the towers as well as the integrator piece.

For example Capgemini is doing this for Rolls Royce. But the big difference between this and the government's plan is that Capgemini also runs support applications such as Rolls Royce's SAP Enterprise Resource Planning (ERP) and supply chain software systems.

So is the service integrator model, in government, doomed because the supplier sacrifices potentially lucrative work when it becomes service integrator?

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Why do businesses outsource IT?

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The latest research from KPMG reveals the changing reasons why businesses outsource their IT?

In its 2012 UK Service Provider Performance and Satisfaction study, KPMG found that over the last year 70% of businesses are influenced by cost when making their outsourcing decisions compared to 83% in 2010 and 81% in 2009.

I touched in this recently in an article but I now have all the stats on the reasons people outsource IT.

Now I have the full details which are in the graph below. Financial flexibility as a reason to outsource is an interesting one in the graph. It leaped in importance in 2010 and then back down to 2009 levels in 2012.

Here is the KPMG graph giving the drivers of IT outsourcing.

Thumbnail image for KPMG - why outsopurce.png

So why did you outsource your IT? Pleas fill in this questionnaire?




UK gets its own BPO Shawshank Redemption

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Apparently the Ministry of Justice has a plan to put some of the country's jail birds to work. In an effort to win business from Indian call centres the MOJ wants UK prisoners with British accents to work in call centres. This is because in India call centre workers are often difficult to understand.

But this is already being done in India at Hyderabad's Cherlapally Central Jail. An IT firm is working with authorities to turn hundreds of educated convicts into workers in the BPO sector.

Those working on the UK project might only earn £3 per day but this will be supplemented by giving them access to the personal details of thousands of people.More valuable than a cigarette in prison.

Whatever next? TVs, the internet or even the chance to work with celebrity chefs?

EDS is to HP what Carroll is to Liverpool FC

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HP has had to take an $8bn charge as a result of its EDS acquisition. The computer giant acquired EDS in 2008 to try and compete with IBM in the services space. But it has been a bit of a disaster.

From my understanding the write down means that the market value of EDS is now $8bn less than when HP forked out $13.9bn four years ago.

A bit like the signing of Andy Carroll by Liverpool. When the striker left the Mighty Magpies, he did not just give up playing in front of 50,000 people every other week but also lost his form and value with it.

There has been lots written about EDS and HP and most of it negative. When HP acquired EDS in 2008 there was an exodus of staff.

I was contacted by EDSers, as the staff are known, in the US and the UK following the take-over. They were not a happy bunch.

As a result of staff being laid off, leaving on their own accord or just being unhappy, many felt that HP would suffer as a result.

One thing seems clear and that is the fact that lots of former EDS staff are now working for other companies in the sector. Every event I seem to go to I bump into someone who was at EDS but is now working for one of its former competitors.

People always tell me that EDS revolutionized the IT services market. I suppose HP spent billions of pounds on it for a reason. It was never going to retain everyone was it?

So the break-up of a company like EDS has probably done the wider industry some good by spreading talent and experience. Especially with non-specialist services companies like Dell and HP trying to emulate IBM Global Services.

So do you think the exodus at EDS helped the competition? And how well is HP doing in the services sector without the staff that left? It has lost contracts too. "The mice have been nibbling at the EDS sack of grain since HP acquired it, but this could create a hole that grain might pour out of," said a contact of mine.

EDS history before HP; according to Wikipedia: "Electronic Data Systems (EDS) was an American multinational information technology equipment and services company headquartered in Plano, Texas. It was established in 1962 by H. Ross Perot. Perot's goal was to start a company that offered skilled electronic data processing management personnel along with the computer equipment. He targeted large corporations and offered long-term contracts at a time when short-term contracts were the norm. In 1984, General Motors agreed to buy EDS for $2.5 billion. In 1996, GM spun off EDS as an independent company and became one of its largest clients."

Is the cloud driving IT outsourcing or frosting outlook?

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Cloud computing is an increasingly significant segment of the IT outsourcing sector but has the tipping point really been reached or are we one large data breach away from an about turn?

The cloud only represents a fraction of the IT outsourcing sector and a minuscule slice if the overall business process and IT services market. But according to Gartner's latest figures, for 2012, it will be the fastest growing segment in a global market worth over $250bn. This is 2.1% higher than the same period last year.

At $5bn cloud computing outsourcing is insignificant compared to the application outsourcing market of $40.7bn, and datacentre outsourcing sales worth about $87bn. But the cloud outsourcing market grew 48% compared to application outsourcing, which increased 2%, and datacentre outsourcing spending that declined 1%.

Spending on overall IT outsourcing in Western Europe is expected to fall 1.9% as economic turmoil continues to blight the region, according to Gartner. Furthermore research on the first half of 2012, carried out by the Information Services Group (ISG), revealed that spending was down 26% compared with last year, its lowest point in five year.  The amount spent on outsourcing in the UK was down 12% to €5.7bn, found ISG.

But can the cloud genuinely spur the overall outsourcing sector or will the commercial models offering pay as you go services distort the outsourcing spending figures. The removal of upfront capital payments, in favour as subscriptions or true utility services, will mean the figures will fall.

This is true across the IT sector according to TechMarketView (TMV). The firm predicts that the UK IT industry will decline in real terms until at least 2016, and there is a real risk of the sector reaching a decade of downturn. It said the take-up of technologies designed to reduce costs, such as cloud computing, as well as continued economic slowdown, are combining to reduce market growth in terms of revenue.

"It's not just the financial crisis which is constraining growth. It is also the inexorable march of disruptive technology trends, such as the consumerisation of enterprise IT, BYOD [bring-your-own-device], mobile internet, social media, big data, offshoring and, of course, cloud computing," said TMV. "The key characteristic they have in common is that they are all designed to reduce the cost of computing - in other words, they are all deflationary."

The cloud is disrupting the outsourcing sector in ways other than changing revenue figures. Robert Morgan, director at sourcing broker Burnt-Oak Partners says the important customer/supplier relationship is broken with the cloud. "If people are prepared to go through the pain and energy of going onto the cloud they can then switch suppliers easily."
He says the process of moving to the cloud whether public or private will usually require support from an IT services firm, because the skills to do this have been outsourced.

Morgan says cloud computing is proving very successful in corporate IT departments for things like testing and storage but believes the more commoditised services, found in the public cloud, are unlikely to have a major impact on the outsourcing industry.
"I see cloud services growing a fair amount but there will come a point when it slows."
He says the cloud is still overhyped and will not reach the heights predicted by many. Public clouds still lack the security guarantees and data protection levels that corporates desire, he says. To this end it is private clouds that are being used "which defeats the object of cloud," adds Morgan.

While the cloud might be benefitting SMEs and corporates for certain IT functions, Peter Brudenall, lawyer at Lawrence Graham, says he has not seen a change in the number of outsourcing contracts involving cloud computing. "There is a lot of intent but I cannot say I am seeing more contracts involving the cloud at large businesses."

Like Morgan he says there are still major security and data protection issues for large corporates to contend with. "There are still a lot of large companies sceptical about it. The benefits of the cloud are relatively obvious but big businesses are concerned about some of the risks."

"We are one big data breach away from big businesses moving away from the cloud."

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Oi! Cameron. 'It's not grim up North,' stop focusing on 'That London.'

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Manchester based IT services boss claims that Manchester deserves to be known as Tech City rather than the area of east London redeveloped for the Olympics.

Scott Fletcher, founder and chairman of ANS Group, blasted the London centric attitude of David Camerom

 "It's a bold plan trying to hype up the space down there (that London village) as Britain's answer to Silicon Valley. But Silicon Roundabout is only ever going to put Investors in a spin".

We have the BBC in Manchester in MediaCity, as well as Cisco and NetApp and global trading companies such as PZ Cussons, Co-operative Group and Umbro, Kelloggs, Adidas and Siemens.

He says the North West boasts the second-largest 'digital cluster' in Europe. "Manchester has all the top talent and a sensible cost infrastructure".

"Ultimately we can provide a lot better value for money and are more attractive to foreign investors".

Skyrocketing rents are forcing StartUps out of the Olympic Park area and ultimately this will drive away talent, he says.

Not only is 'Madchester' trying to stake a claim on years of indie music but it also wants to be Britain's IT hub.

But he and the PM are both wrong. I am from Newcastle and live in East London (well south east) and I used to live near Manchester. So I am well qualified as a Computer Weekly journalist to say Newcastle is the place where the Tech hub should be. Not biased at all.

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Why software testing is increasingly being outsourced and what should businesses consider?

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Business critical applications are increasingly being tested by third party suppliers as businesses strive to reduce the high costs associated with software failure, without the huge investments needed for rigorous in-house testing processes.

The digitisation of business has created an increasing reliance on software for internal and customer facing activities. This in turn has increased the focus on software testing within the development process. This in turn is increasing costs in terms of time, money and human resources. This in turn is accelerating the outsourcing of software testing.

According to research from software quality tester Cast, the average big application costs an extra £2.23m as a result of problems with the code that need to be fixed after software goes live.

Software is becoming increasingly important because the web offers businesses new ways of servicing customers and linking with third parties. Failures in these systems can be costly. Banks are perhaps the companies that spend the most on software development and, although not necessarily outsourcing, they are investing in improving their testing processes to cut losses from failures after production.

HBOS has invested in testing to set benchmark for itself and suppliers. The bank carried out the TMMi software testing methodology processes across three of its four major IT departments in a programme designed to reduce the number of errors in thousands of applications it builds every year. It will use the knowledge and processes gained for a reference point, either to help them improve processes or use it as a way to get their development partners to meet their standards.

Meanwhile Nationwide has invested in a virtual testing environment as part of a $1bn IT transformation that is seeing core software platforms replaced.

But not all businesses have the resources to do their own testing.

Software testing is one of the most important tasks for 91% of IT departments and almost all believe it is crucial to outsource this activity, according to a recent report from analyst company Pierre Audoin Consultants (PAC). It also revealed that three-quarters of companies already use service providers with onshore and offshore capabilities to provide testing services.

According to analyst Nelson Hall, the global testing services market was $8.4bn in 2011, and although 2012 is expected to be flat, it predicts an average 9% growth every year over the next five years.

The challenge of introducing large numbers of applications to deadline is a challenge that drive energy provider Centrica to outsourced testing to dedicated testing firm Software Quality Systems (SQS). The company's software testing requirement increased because it is working on programmes related to introduction of smart metering applications in relation to the governments Smart Meter Implementation Programme. Utility companies have a deadline to offer smart metering services to 53 million consumers by 2019. Software to collect and analyse huge volumes of data will require rigorous testing before going live because failures will be headline news.

Through the deal with SQS Centrica will gain access to testing resources locally and offshore through SQS's software testing resources in India and South Africa.

Deutsche Bank is also taking advantage of SQS's service. SQS will test the bank's applications until the end of 2013 with integration testing the primary challenge. This will be delivered via the near- and onshore test centres in Görlitz, Germany and Cairo, Egypt, with the target of expanding it to the test centres in Pune and Durban.

Dominique Raviart, analyst at Nelson Hall, says software testing is an increasingly important discipline that requires more focus. As a result it lends itself to dedicated organisations.

"Cost savings are a major driver and also the need to do testing in a more professional manner. Testing has become more professionalized and now requires significant investment in terms of tools, people recruitment and automation," he says. He adds that in the UK there is a shortage of the right skills. "...finding onshore testing professionals is difficult: there are very few testing classes in universities and when there are, they are about quality, rather than on test execution."

He says as a result not only is software testing being outsourced but offshored. "...testing is a human resource intensive activity: in spite of all automation work, it requires people. And India therefore looks like good alternative for performing testing work." He says there are about 165,000 career testers in the world. Nelson Hall expects Indian-offshore based delivered testing services are to grow by 8% in 2012 while onshore-delivered testing services are to decline by 5%.

As well as offering cost savings though centralisation and the introduction of common processes as well as reduced human resources Raviart says a focus on testing will build up a level of expertise. He says there are about 165,000 career testers in the world and adds that application developers/business analysts perform testing as part of their work.

IDC told Computer Weekly last year that software testers are increasingly in demand. In the past software testing has been bundled with projects and often done at the end of the software development lifecycle, but businesses are increasingly contracting independent software testers to test throughout software development, according to Jennifer Thomson, software testing researcher at IDC.

"There is a lot more interest in standalone testing across Europe because there is a focus on quality. When we started looking at software testing, it was predominantly a process that was added at the end. It was often a reaction to a business requirement rather than a sound methodology."

Suppliers are reacting to this trend. Capgemini, for example, integrated its software testing resources to help it compete with pure-play software testers. The French IT services provider integrated its specialist software testing arm Sogeti with its other testing resources. This bolstered the resources and footprint of the Sogeti business to help Capgemini compete with large software testing specialists.

Geoff Thomson, is chairman of the UK Testing Board and consultancy director at Experimentus, which runs a TMMi accreditation programme. He is a proponent of ingraining testing in the development process. He says there is a trend seeing more and more suppliers are going through accreditation and end user businesses are also doing so to, like HBOS, benchmark suppliers.

Thomson says he is seeing outsourcing of testing of software in terms of does it do what it should and its performance, security and capacity but he says there is a shortage of user testing.

He says while outsourcing is on the up he warns businesses that currently " most of the really good outsource deals seem to happen after at least two failed attempts, when eventually lessons are learnt and lead to good partnership arrangements."

 "...overall I see outsourcing of testing as a positive thing that with the right focus and experience can create real value for the customer and supplier. In simple terms a true partnership rather than customer/supplier."

He says many suppliers are buying into this but he says businesses must not lose control when they outsource. "I also see some suppliers who see the value of a real relationship with the customer and spend time nurturing and supporting their customer to achieve a bigger bang for their buck but there are also a lot who still push the land and expand approach regardless of the client's wishes.

"I also see stupid customers who see their role as policing the contract to the finest detail creating an adversarial atmosphere which is in no way conducive to long term success."

He warns that outsourcing is not almost the fastest and cheapest way to test. "In a lot of instances the failures are still due to a belief that outsourcing will reduce costs - in some instances I have seen increases in the actual resources needed to deliver the outsourced service, some as high as a 10 fold increase. In some companies I have seen the recreation of the company test team to retest everything that comes back from the outsourcer, in one company the number of internal testers now is larger than it was before testing was outsourced. How can that be good?"

He says there are common mistakes when outsourcing testing. These include testing providers not being able to contribute to the software development process, businesses outsourcing accountability and responsibility rather than just the testing itself and suppliers putting their best resources on projects initially but then downgrading them later.

Software runs our lives today. We use hundreds of applications without noticing them. Businesses will only prosper if their internal business, their customers and their partners have software that does what it should when it needs to. Failure is expensive. But so too is embedding testing within an organisation. If testing processes can be implemented once by a supplier and used by numerous suppliers the cost savings are obvious as well as the gains in efficiency and effectiveness gleaned through experience by focussed testing organisations.

Indian IT firms no longer moving as a group

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The mixed performances of the Indian IT service providers is evidence of their maturity and the different paths they have taken.

Indian suppliers have become a good gauge of IT spending. They all seem to have been growing at a rapid rate with double digit after double digit revenue growth. These suppliers were known as the SWITCH group of suppliers Satyam, Wipro, Infosys, TCS, Cognizant and HCL.

I even suggested in a blog last year that they as a group were replacing IBM as the bellwether of IT spending.

These companies have low cost workforces, based onshore and offshore, to help them win business quickly. But most big IT companies today have big workforces offshore and as a result offshore services is hardly a differentiators today.

Recent results have been a bit different and there seems to be quite a bit of differentiation. Obviously the slowing economy has had an impact but so too the different business strategies of the major Indian Suppliers.

I was talking to Cognizant's UK head, Sanjiv Gossain, recently and he said there is a divergence. "The success of the different strategies of the different companies are now becoming more apparent."

He says offshoring today is just the way people do business and money cannot be made just doing the same thing.

Cognizant has been one of the fastest growing IT services firms for years. In fact it has been up there with the likes of Apple and Google in growth terms. See this blog I wrote a couple of years ago.

The company is currently seeing demand for services around what it calls the SMAC stack which is social, mobile, analytics and cloud.

Ilan Oshri, a professor at Loughborough School of Business, says cost cutting, although critical in outsourcing contracts, is no longer the main reason why suppliers are chosen. He says because IBM for example can combine low cost delivery with R&D based services. He says the likes of Infosys and TCS need to be able to link R&D with services if they are become like IBM.

Here is a Computer Weekly profile of India's second largest IT services firm Infosys. You have to sign up but its free. 

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Businesses don't have the tools to manage clouds

Karl Flinders | No Comments
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Vishy Narayan, AVP & Principal Architect- Cloud at Indian IT services firm Infosys writes about the challenges facing businesses implementing cloud projects.

Reigning in the Cloud

By Vishy Narayan

"Over recent years, cloud computing has taken the IT industry by storm, with businesses swept along by the promise of a flexible, scalable, secure storage environment.  However, as the cloud frenzy settles, IT teams are being brought back down to earth with the realisation that a speedy implementation isn't enough.  What they really need for the long-term success of their cloud projects is to establish the same governance and management processes that currently apply to their traditional IT systems. And, this is where the industry has come against a big stumbling block, as currently businesses simply don't have the tools or systems in place to facilitate this.

As a result, there is a real danger that the investment that has already gone into these cloud projects will go to waste, or even worse, that businesses could be putting themselves at risk, for example if an incomplete view of an enterprise's cloud network means they fail to comply with a key regulation. While every business wants to choose and maintain the best cloud infrastructure possible, and for the lowest cost possible, the truth is that they simply lack the time and resource to do this without help.  

This above need has given rise to the introduction of a 'cloud broker', which for the first time offers businesses access to a single catalogue of leading cloud vendors, detailing what their offerings are, and providing the best match for their IT infrastructure. David Mitchell Smith, Gartner Fellow and VP Research, puts it rightly when he says "those efforts and dollars can be better spent solving business problems than solving technology problems which someone else has already solved for you".

Added to this is the responsibility placed on organisations to manage the needs of their employees across multiple departments, and sometimes even in multiple countries.  Keeping track of this and the most suited cloud products available, can be difficult to say the least. Cloud brokers will change the way cloud is purchased and used in the long term. Rather than being seen as a series of cloud clusters, the dashboard approach of a cloud broker creates a unified view of an enterprise's cloud environment in one central location, enabling IT departments to carry out real time cost structure analysis across multiple service providers for a particular service.  Thus, in just a few clicks, an enterprise user can determine the best pricing at a point in time [offered over a period] for any service, whether it's renting from Linux-based virtual instances, data analytics service or persistent storage on a public cloud.  When access and usage of these services is tightly integrated to the Unified Service Catalog, an IT team is given a view into various offerings from multiple best-of-breed providers, which is invaluable in helping a business to make the most of their cloud.

In addition, cloud brokers help businesses ensure they're getting their money's worth through the entire lifecycle. Tools, such as TCO analysis and infrastructure utilisation, have never been more important for IT teams who are continuously expected to demonstrate the real value of their implementations to the wider business.

Thus a cloud broker is increasingly seen to be a trusted intermediary entity.  According to Gartner, by 2015 most enterprise customers will rely on such intermediary brokers to provide a diverse range of services.  Service providers today look to such cloud brokers or integrators to market and enhance their service offerings and help fill in areas where they lack service coverage.  Such cloud service integrators will aggregate and integrate a set of customized services for their clients. More importantly, an integrator who brings in additional capabilities around cloud security, geo-specific compliance and regulations can add immense value to enterprise clients."
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