October 2012 Archives

Migration Advisory Committee report is flawed and meaningless and does UK IT professionals no favours

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Damning retort to the pay recommendations for non EEA IT workers.

The Migration Advisory Committees (MAC) recently published its salary recommendations that non EEA IT workers, applying for UK visas, should be set. These recommendations are used by the government to set pay threshold  for worker from overseas being granted visas.

This is a very important subject as thousands of UK IT professionals believe they are being undercut by overseas workers that are paid far lower salaries.

George Molyneaux, from Salary Services Ltd/jobadswatch, has published a response to the recommendations made by the MAC. It makes very interesting reading. First I have a snapshot of his views followed by a link to the PDF of his full article (at the bottom of this article, just click on the image).

Molyneaux has criticised the government in the past for using out of date salary figures.
Here are his comments on the latest MAC recommendations.

"...the changes being implemented do not reflect the structure and salary levels of personnel working in IT and effectively mean the criteria being applied to grant visas to non EEA IT workers is flawed.

"In the view of the author these changes will result in a meaningless set of salary figures being applied by UKBA.

"MAC states that some partners involved in the survey had stated that the job functions of programmer, analyst programmer, software engineer and developer encompassed similar roles. In that case why do employers advertise all these roles under the different job titles? The answer is that the job functions are not the same. The software skills required for a software engineer are totally different to those required for a developer.

Does the MAC really believe there are IT directors at any level earning just £25,300?"

He also describes the problems caused if pay thresholds are set too low.

"Advertising for IT jobs is 68.9% down on pre 2008 levels. Despite this there is no evidence that the number of non EEA migrant workers has declined. The rush for companies to outsource IT operations and development over the past ten years has had a major impact on opportunities for IT workers in the UK. The fallout from the financial crisis seen during 2008 should mean there is a pool of experienced IT personnel available.

According to the Higher Education Statistics Agency newly qualified computer science graduates are finding it increasingly difficult to find employment and currently head up the table of undergraduates out of work. These factors should mean that non EEA recruitment should be kept at a minimum. In particular visas for non experienced personnel (new entrants) at the 10th percentile level should not be implemented.

The overall impact of the MAC changes will certainly do no favours for home grown IT professionals, whether experienced or newly qualified. Over the past twenty-five years Salary Services Ltd/jobadswatch, together with its predecessor Salary Survey Publications has produced quarterly reports covering IT recruitment trends and salaries. During that period we have constantly highlighted the dangers of outsourcing to foreign companies and the likely impact on UK based IT employment. What started as a trickle of outsourcing computer operations rapidly expanded to incorporate development. Since year 2000 the UK has become more and more reliant on foreign based companies, all requiring their own imported staff to be based in the UK to support their operations. The time has come to start and curtail this."

Click the PDF below for Molyneaux's comments in full.

MAC summary Oct 2012.png

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Is Xerox's European services plan in tatters and is ACS to it what EDS is to HP?

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Xerox's plans to grow its services business in Europe could be in tatters. A source told me it is about to lay off lots of people.

This is the Xerox that acquired US IT and business process services giant Affiliated Computer Services (ACS) for billions of dollars in 2009.

The firm gave Xerox a services footprint in over 100 countries from 500 locations.

Speaking at the time Xerox CEO Ursula Burns said the deal was "a game-changer for Xerox". "By combining Xerox's strengths in document technology with ACS's expertise in managing and automating work processes, we're creating a new class of solution provider," she said. Xerox wanted to use its brand to grow ACS's business outside the US with a strong focus on Europe.

But according to a source close with good knowledge of the company it is about to retrench in Europe and lay off lots of people.

Xerox like HP, with its EDS acquisition, and Dell, with its Perot Systems acquisition is a hardware giant attempting to expand into services. We all know that HP has halved EDS's market value since its take-over in 2008.

Do hardware firms and services suppliers have incompatible DNA?

Tell me what you think.
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Cost cutting primary driver in only 10% of BPO deals

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There is a constant debate about whether IT outsourcing has moved beyond being a strategy purely to cut costs or if it is a good way of improving business performance.

If you talk to outsourcing industry experts such as consultants and lawyers they will say cost cutting remains the main driver while suppliers and some end users often say other factors are increasingly important.

A recent KPMG survey revealed some of the increasingly important reasons to outsource.

When it comes to BPO cost is surely a bigger driver than in IT outsourcing?  Handing a business process to a third party that can use economies of scale to do it for less makes sense in many cases. But here is a guest blog from the CEO out service provider Arvato.

What's the missing link in business outsourcing partnerships today?

By Matthias Mierisch CEO at Arvato

"Those of us who live and breathe business outsourcing know that the drivers for engaging with a BPO provider have changed hugely - while cost savings remain a given, companies are looking for ways in which they can become agile enough to capitalise on changes in market trends or customer demand, to further long-term growth.

An independent research study with 100 senior BPO clients we commissioned confirmed this, but also indicated that there are still factors on both sides of BPO relationships that are limiting the sector's potential to contribute more to both individual organisations and the UK economic landscape as a whole.

In particular, there is a disconnect between the drivers for outsourcing, and the attributes organisations look for in a partner. Today just 10% of organisations describe cost-cutting as the primary role that their BPO provider plays, ranking access to specialist skills and expertise (72%) and growth and expansion potential (66%) far higher. These drivers are all more about the strength of 'people' than just simply 'process' based in nature and they are focused on enabling success as a ultimate goal, rather than immediate savings. However, almost three quarters (74%) reference 'adhering to strict KPIs'  or 'well-defined processes' (69%) as the most important attributes - arguably hygiene factors in empowered outsourcing partnerships that deliver and add real value.

While 71% cite the ability to adapt to changing industry and relationship dynamics as a key expectation of their BPO provider, currently 67% of suppliers have to submit a change request for even the smallest changes to processes. This conservative approach is reflective of tight budgets and a fear of spiralling costs in today's economic climate, but also highlights a trust issue that has to be addressed openly by both parties.

The outsourcing industry is already contributing £207bn (8%) of the total UK economic output[1], but by facilitating better, deeper and more effective engagement, business outsourcing can reach its full potential and deliver more value to clients and their customers.

An agile, flexible programme isn't just about dealing with forced change but the willingness to deliver and step beyond contractual agreements to try fresh approaches, or amend priorities to deliver real value, even if that's more difficult than just delivering what's in the contract. Establishing an effective engagement approach, where everyone understands the overall objectives and is incentivised to playing their part, means that the contract can stay in the drawer to enable the best outcomes.

Effective engagement is the first theme of arvato's Open Outsourcing report series, which aims to get to the heart of real-life outsourcing relationships. We've collaborated with industry experts and clients to understand the elements that ensure business outsourcing is delivering the very best results for both parties."

To read more about the click here. http://www.arvato.co.uk/openoutsourcing

Tell me what you think?

Is recession and search for discounts reversing multi-sourced IT services?

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Multi-sourcing was a strong theme at the recent Gartner outsourcing summit in London. I attended several presentation about the challenges managing multiple IT service providers. The likes of Syngenta and Old Mutual have created strategies to get more out of their suppliers in a multi-sourced environment.

But here Kit Burden, an outsourcing lawyer at DLA Piper, talks about a trend he is seeing where businesses are moving away from multi-sourced environments.

Swing of the pendulum - sole to multi-sourcing and back again

By Kit Burden

"If we cast our collective minds back to the days pre-Crunch, a marked feature of many sourcing strategies adopted by larger entities was a move to embrace multi sourcing (i.e whereby a service or set of services which could conceivably have been awarded to a single supplier was instead broken up and divided between a number of different suppliers). There were a number of reasons why this appeared attractive to customers and buyers of outsource and IT services, not least being:

- disaggregation of risk (i.e no more "too big to fail" risk, or reliance upon a single supplier)

- increased flexibility (with contract terms usually drafted on a framework basis, the effort and time involved in switching services between different suppliers could be greatly reduced)

- improved service quality (working on a "horses for courses" approach, whereby service providers could be selected on the basis of being the very best in relation to (for example) deskside support services, whilst enabling the customer to select a different supplier who would be perceived to be better at providing application support and development services, and another again to deal with network and telephony)

For a time, then, we were primarily engaged in helping to structure such framework agreements, and thinking up innovative ways of dealing with the imperative of ensuring end to end service delivery and to keep the multi-sourced supplier community incentivised to keep working closely together for the benefit of the customer.

But now.....

Whilst multi source strategies and arrangements undoubtedly still exist and are still be structured for new deals for some customers, we have seen a marked shift back towards the bundling of multiple services and service towers with single suppliers, and even to the extent of it being done on the basis of "sole source" procurement processes during which there is little if any engagement with other potential suppliers. So what has led to such a shift in approach - was the multi source strategy flawed at the outset, or are other factors are work?

The reality is that there will often be a wide array of likely reasons, but there is a notable frequency of a particular set of drivers which is closely associated with today's economic woes. In many cases, with declining/slashed budgets and ever increasing pressure from management to find ways to reduce costs still further, CIO's and their sourcing/procurement colleagues have already "been to the well" with their key suppliers to try to convince them to reduce rates or find ways of reducing scope and/or costs. However, there is a limit to how much blood can be squeezed from that particular stone. Ultimately, then, the realisation will dawn that the only way left to get a particular supplier to offer deeper discounts will be to give it MORE work rather than LESS...and the only way in turn to achieve that end will be to take work away from other suppliers and combine it with that of the successful "survivor" supplier. In one example we have seen, a retail bank has effectively abandoned a "panel" approach for IT service providers in favour of consolidating their scope of work with just one of their legacy providers, and adding in some additional services to boot. In another, a supplier won out on a large bid not on its individual technical merits, but by offering to give a very significant additional cost reduction if it could also be awarded some associated applications support and BPO services.

To this cost-based driver can be added another factor closely linked to the recession; customers will frequently have been forced to make staff cuts as a result of their internal cost reduction exercises, and procurement/vendor management teams have not been exempt from this process. For some of our larger customers, the situation reached has effectively been that they no longer have the effective capacity or manpower to manage multiple supplier relationships; in such cases, the move to a reduced set of suppliers to deal with becomes a matter of necessity rather than choice.

So, the pendulum swings again....it will be interesting to see whether - as and when we emerge from the economic crisis - the attraction of multi-sourcing will re-assert itself, and how this will impact upon the potential renegotiation of some of the larger and longer term deals currently being signed up in the market!"

Richard Branson tells CEOs to harness social media

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bransonfinal.pngI have written blogs about how mobile, social media and cloud are three fast growing areas for IT service providers.

I think mobile and cloud are areas that businesses are either investing in or planning to invest in. But social media, usually referred to as social, is not so certain.

See these articles for example.

Social, mobile and cloud are more than just supplier hype

IT services firm do not understand social media and cloud applications

Is social media and outsourcing a match made in heaven?

I have been told by CIOs that the reason Apple iPads are being introduced to the workplace is because the CEO wants one.The same might be said for social media if one of the world's most influential CEOs is right.

Richard Branson wrote an article following the results of an IBM survey which revealed that only 16% of CEOs currently participating in social media.

He thinks they are making a mistake for not harnessing the technology.

In his article he writes:  "...when you get to the very top of companies, there is a surprising lethargy about using the online tools already available: social media. Embracing social media isn't just a bit of fun, it is a vital way to communicate, keep your ear to the ground and improve your business."

Click here to read the full article.

Suppliers have already got the message with investments in social media but when will CEOs start insisting that businesses fully harness the technology?



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EE finds Newcastle businesses to have highest demand for 4G but makes them wait

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So 4G is now available in 11 cities in the UK, from EE, so businesses can start to consume high bandwidth services such as video.

I chose the headline I did because EE, previously known as Everything Everywhere, released some research in conjunction with its 4G launch.EE store.jpg

It found that businesses in Newcastle showed the highest demand for 4G services. But EE has not put Newcastle in its initial roll-out to 11 cities.

On a more serious note, I recently interviewed Accenture's CIO Frank Modruson. And he told me all about the importance of video to businesses today. He said as Accenture's internal IT head video is at the top of his wish list. Read the interview here.

It will be interesting to see how IT services firms react to 4G.

Are you planning to use 4G?

Are outsourcing terminologies thinly veiled euphemisms for privatisation?

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As public sector plans to outsource to cut capital expenditure increase there are more and more stories about the outsourcing of public services hitting the headlines.

It is interesting to see the different ways outsourcing contracts are being put together and as a result the plethora of names they are given.

Today we have joint ventures, shared services, outsourcing and mutual in the public sector but should this be grouped as privatisation of outsourcing?

Growing up  in the 70s, 80s and 90s made me highly aware of the controversial nature of the word "privatisation." Outsopurcing in the public sector is being described as privatisation in many cases rather than outsourcing.

The term could not be used in the business sector because they are already private and if IT services are carried out by a supplier it is not privatisation. It might have the same impact on the internal workers that are replaced.

Also see:

Has the government just re-invented privatisation and outsourcing?

Is the government services sell off Labour's privatisation?

The reason I write this is because recently I have been writing about some controversial local government outsourcing projects. Strategies at Barnet and Cornwall councils show what an emotive issue outsourcing is in the public sector. Here it is well and truly being described as privatisation.

See these articles:

Cornwall council leader falls on his sword over outsourcing contract

Has Barnet council lost its way on outsourcing and could its leader be axed over issue?


Please fill in the questionnaire below.

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Are HP's claims over internal IT mess justified?

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When HP announced its financials Meg Whitman said part of the blame for the company under-performing was internal IT. More specifically she blamed the lack of compelling sales and customer relationship management (CRM) systems within the company for some of HP's problems.

I have since spoken to someone that used to work at HP in quite a senior position. My source told me that decisions at HP might have caused it some problems.

"Massive slashing of applications and datacentre infrastructure resulted in a business that was less able to cope with the demands it faced. Whether the business units just didn't have the quality of data any more to know properly where they were and what was needed to run the business. We know what happened to HP."

It was quite interesting because the former HP CIO who made these decisions, Randy Mott, is now the CIO at General Motors. GM is going through the process on insourcing large chunks of IT work that is outsourced to HP. So he is probably not that popular at HP.

Are there any other HP employees that can shed light on this? If so please comment.

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Could outsourcing damage the Police's ability to police?

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Back office outsourcing removes important link between frontline police  services and back office, says union.

Yet more controversy in public sector when it comes to outsourcing. This time it's the police and union Unison that is criticising police authority plans to outsource back office jobs, including IT, in Hertfordshire, Bedfordshire and Cambridgeshire to G4S.

See the BBC's coverage of the story.

It is an interesting one because the union is highlighting the important link between frontline police and the people in the back-office.

The BBC reports that Unison's regional representative, Lorraine Kalaher, said back office staff supported frontline officers with a "team ethos" and without either party the work "could not be undertaken as successfully as it is."

Does she make a good point?

Did General Motors just fall out of love with outsourcing?

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I recently blogged about GM's decision to insource IT. I asked whether people think it is a one off or a move that might be copied by other large firms. I am working on an analysis of the move so want peoples' views.

Sean Finnan, who used to be the UK head at EDS and later had a pan European role at IBM Global Services sent me his thoughts.

He said: "There are always some that are falling in or out of love with outsourcing. I don't think this is the start of a new trend beyond the normal ebbs and flows of business.Outsourcing remains an important and viable part of the IT landscape.

The essence of rejecting outsourcing as an option is normally a CIO who believes he or she can gain sufficient scale advantage to equal or outweigh the profit requirements of the market.

The forgotten element is often the transfer of risk. Not just risk of project failure (where suppliers soak up cost over runs) but also the risk of innovation failure.

The failure to provide sufficient new features from the IT environment to remain competitive is often overlooked."

Tell me your views.

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Has Barnet council lost its way on outsourcing and could its leader be axed over issue?

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I wrote earlier this week about a call from councillors in Barnet for a confidence vote on the council leadership. This has arisen over a controversial outsourcing project known as Barnet One.

I spoke today with councillor Alison Moore. She is the leader of the Labour opposition and has submitted a motion of no confidence over Council Leader Richard Cornelius over the controversial 'One Barnet' council transformation programme. For the leader to fall there needs to be a straight majority. There are 63 councillors in Barnet with 22 Labour and 3 Liberal democrats.

Cornwall council's leader recently fell after a vote of no confidence over an outsourcing agreement.

Barnet council already outsources through the One Barnet programme but two large bundles, worth about £1bn over 10 years, are about to be handed to a supplier.

One of the large outsourcing bundles is for IT, Finance, HR, revenue and benefits and it is close to being awarded to either BT or Capita.

Moore said the motion is an attempt to get the council to meet and discuss the project before the contracts are awarded. The One Barnet Programme has actually incurred a net cost for the Council of at least £663,000 so far an councillors don't want to jump into anything.

She also says there is political disarray with the council leader and his deputy disagreeing on what to do.

Leader of the Barnet Labour Group, Cllr Alison Moore said: "So many of these large scale outsourcing and privatisations are failing or running into problems, and yet the Barnet Tories are just carrying on regardless.  They really need to stop and learn the lessons before risking £1billion of council tax payers' money."

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What makes a good CIO?

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I recently met Matt Barney from Infosys. He is the person in charge of developing leaders within Infosys.

I blogged about how he turns his executives into the rock stars of the IT services world.

Matt is a psychologist so a lot of the stuff he talked about was new to me. But I did ask him to write an article for me that describes what makes a good CIO.matt barney.jpg

Here it is: So You Want To Be a CIO...

By Matt Barney, vice president and director at Infosys Leadership Institute

"All the great corporations of the world devote substantial energy and resources making sure they groom the next generation of leaders.  But not all such efforts payoff.  

Indeed, the scientific approach to leadership is overwhelmingly appreciated by leaders who don't want their development by witch-doctors.   In the last 100 years, there are good, measurable methods that improve your shot to be at the top, whether you want to be a Chief Innovation Officer or variant of 'Chief Geek'.

Still, there's a twist involved with becoming the best CIO you can be. The transformation is as much style as it is substance. Consider the renowned healthcare executive Quinton Studer. He's long been known for identifying top performers in the companies he's run. He acknowledges their work with hand-written notes addressed to their homes. Although the gesture doesn't cost a lot, the tailored, surprise-filled note from the chief executive is invaluable to a star employee who relishes the recognition. Plus, he can readily share it with appreciative family members.  

Genetic studies show that early childhood experiences have profound effects on intelligence and personality. Yet these same studies also show that 70 percent of the skills and traits it takes to be a great leader aren't hardwired; they're elements you can develop and grow yourself. This study further supports the notion that leadership is a subtle mix of art and science.   

It's vitally important to concentrate on three levels of developing and honing your leadership skills. The first level is to learn how to set difficult but achievable goals.  When your followers successfully achieve milestones, customize their rewards. Friend and Professor Emeritus Robert Cialdini of Arizona State University has conclusively shown that the most effective rewards are those that are meaningful, personalized, and unexpected.  Recall Quinton Studer's thank-you notes to his employees.

Next, learn how to scan the environment to understand the evolving competitive landscape - including the presence of disruptive innovations. Great leaders and their visions include ways to extract competitive advantages in ways that are difficult for competitors to copy, mimic, or substitute.   

Top CIOs need to know how technology and business models evolve in tandem. That way they can connect technical expertise with the creation of business value. Another aspect of a great CIO is that they're great followers. When legal, operational, or financial colleagues have superior expertise, the best CIOs follow and learn from them.

The final and most recognizable lever of leadership is charisma. Another friend, Professor John Antonakis of the University of Lausanne in Switzerland, has shown conclusively that charisma can be taught as well. The best CIOs break out of their techie shells and tell compelling stories. They use metaphors and alliteration to electrify followers in a deeply personal way.  And their charisma helps their followers stay motivated even when they're not around - and become leaders themselves. That's because they create and perpetuate a corporate culture that pervades every corner of the organisation."



Barnet council leader could be next to go in local government outsourcing row

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It seems that confidence votes over local government leadership are becoming the order of the day. And more to the point it is the outsourcing of council services that is driving this mini-trend.

Today I saw this story in Barnet's local press. Another bit on controversy in the outsourcing sector.

It seems the Labour party in the council are calling for a confidence vote over the Conservative leader, Richard Cornelius, in relation to an outsourcing project known as One Barnet. There is also a petition for a referendum on the issue.


Barnet.png












I have blogged a lot about Cornwall council and the political carnage caused by the previous council cabinet to outsource services to a private company.

I also recently blogged about discontent in Barnet over an outsourcing project.

Also See: 

Local government outsourcing debate hits cinema screens and

Over 100 reasons why local government shouldn't outsource

Please fill in this questionnaire to give me your views.





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Over 100 reasons why local government shouldn't outsource

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I came across this article when I was writing about Cornwall council's controversial outsourcing debate.

It comes from Unison at Barnet council and lists over 100 examples of reasons why Barnet should not outsource services to the private sector. The reasons could be applied to any council and many of the examples are from other councils.

Click on this picture to see the list .

Barnet100.png


Mind you every debate has more than one side. In my recent survey asking for people's views on outsourcing local government services I have had feedback from people that think it is a good idea. Although it is a very small minority here are some of the comments left by those that support local service outsourcing.

"If you believe in basic economic principles that competition increase quality and lowers price. Also the only alternative is jobs and services cuts on a massive scale, see Sheffield."

"Private companies can invest for the long term and can improve productivity, maybe not for front line services but the classic back office, IT and call centres are often better ran by private companies."

"Why shouldn't back office be delivered by private shared service centres."



Are you against preferential tax benefits for offshore IT workers in the UK?

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I have been emailed an e-petition that someone has created.

These are the online petitions that get discussed by the government if they get a certain abound of signatures. I think it is 5000.

The e-petition I have been sent is all about Intra Company Transfers (ICTs). More specifically how workers brought to the UK on ICTs, often IT workers on projects in the UK, are paid a large portion of salary in expenses, which is not taxable.

In the end it makes the offshore worker much cheaper than the UK worker, hence making UK IT professionals uncompetitive.

The person that put the e-petition in linked to an article I wrote about this which should help explain.

The e-petition, which can be logged into here, asks for people's views on whether the HMRC should tax expenses paid to ICTs. If you have a view why not fill it in?


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General Motors insourcing: One off or trend?

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One of the big stories recently concerning outsourcing IT is one about doing the opposite. GM is in the process of insourcing its currently heavily outsourced IT.

The plot gets even thicker when you look at GM's outsourcing CV. It is the company that basically created EDS. GM originally bought EDS as its internal IT department before spinning it out as a separate company. It continued to buy services from EDS. Then EDS was acquired by HP and now, a few years down the line, GM is bringing almost everything in-house.

GM has already recruited 3000 workers from HP to help the transition.

So GM is a bit of a pioneer when it comes to IT outsourcing. But is GM's pioneering insourcing going to be copied by others?

I am working on an article about this so thought I would ask people whether they thought insourcing would become a trend. Below is a sample of some of the responses so far. Please tell me what you think.

Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner, says GM's decision will not be repeated across the industry.

He said there are broadly three drivers for a move to insource: Suppliers messing up, short tern tactical needs, and strategic goals.

He said if suppliers mess up or things like offshoring models aren't working businesses can pull back work out of necessity. They could also pull work in-house for tactical reasons, for example in the interim if they wanted to change suppliers and there may be a more strategic reasons such as it wants to focus its IT attention on developing systems specific for its business.

He said he would be surprised if any company in-sourced things like back office work.
Douglas Hayward, analyst at IDC, says the pendulum is swinging towards insourcing but only marginally

"GM insourcing is not a one off but won't be a trend. Only some large organisations can do it."

He says big businesses can create opportunities for themselves through IT, which they would not get from suppliers. This is because suppliers rarely go beyond what they are contracted to do. "We have not reached the stage where supplier services are fully trusted to be on time, to budget with creativity and proactivity.

He said insourcing might become more common if suppliers change their attitudes and become more proactive and business orientated.

Give me your views.

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CSC losing cash through award winning contract with Royal Mail

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Interesting story on Computer Weekly this week about CSC and its 10 year loss making outsourcing contract with Royal Mail.

It seems the contract which won the National Outsourcing Association's (NOA) innovation award and been shortlisted for the NOA's  IT Outsourcing Project of the Year yet is not making any money for CSC. In fact it is losing money and would lose a lot more if it were not for job cuts, tax breaks and relief payments.

So how can a potential outsourcing contract of the year not be making money for the supplier?

Read the story from Mark Ballard here.


Promising too much, delivering too little seems to be commonplace in today's outsourcing contracts. This is probably part the reason why contract renegotiations are at a ten year high. It also sheds light on why suppliers are often as willing as customers to renegotiate.

If outsourcing is to work both parties need to get something out of it. If you can create mutually beneficial agreements service levels will go up. Here is a case study about how finance firm Old Mutual did it.


Cornwall council votes to freeze outsourcing deal

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As I wrote yesterday Cornwall council has put its planned outsource on hold pending further investigation.

Recent weeks has seen drama at Cornwall council with the council leader being voted out as a result of his controversial stance on the plan to outsource council services.

I have written a lot about this, which you can see in the various links below, but here is some of the wording of the motion that has put the deal on hold.

" The current proposals (BT) for the Strategic Partnership for Support Services shall not progress to the Invitation to Final Tender (ItT) until after they have been debated and unless approved by a meeting of Cornwall Council.

The Chief Executive be requested to investigated fully, as a matter of urgency, all reasonable alternative methods of delivering the Council services covered by the proposals for the said Strategic Partnership, which addresses the need to make efficiency savings and to generate income including; a thin trading JV working with a commercial partner to deliver services outside Cornwall; a shared services project with local NHS and other public services, but without a private sector partner; an employee owned mutual and other in-house options."

So what other options?

Here are some articles I have already written with the links below.

Cornwall Council puts outsourcing move on hold after landslide vote
http://www.computerweekly.com/news/2240169035/Cornwall-council-puts-outsourcing-move-on-hold-after-landslide-vote
 
What now for Cornwall Council?http://www.computerweekly.com/blogs/inside-outsourcing/2012/10/what-now-for-cornwall-council-outsourcing.html outsourcing?

Cornwall council former deputy leader is now leader and is against outsourcing.
http://www.computerweekly.com/blogs/inside-outsourcing/2012/10/cornwall-council-former-deputy-leader-now-leader-and-against-outsourcing.html

Cornwall Council axes leader Alec Robertson in outsourcing controversy
http://www.computerweekly.com/news/2240166479/Cornwall-Council-axes-leader-Alec-Robertson-in-outsourcing-controversy

Deputy leaves and council head faces axe over outsourcing at Cornwall council
http://www.computerweekly.com/blogs/inside-outsourcing/2012/10/deputy-leaves-and-council-head-faces-axe-over-outsourcing-at-cornwall-council.html

No surprise shared services are on the Cornwall council agenda
http://www.computerweekly.com/blogs/inside-outsourcing/2012/10/no-surprise-shared-services-are-on-the-cornwall-council-agenda.html

"No confidence" in decision and doubts over appropriateness of Cornwall council outsourcing
http://www.computerweekly.com/blogs/inside-outsourcing/2012/10/no-confidence-in-decision-and-doubts-over-appropriateness-over-cornwall-council-shared-service.html

Shared serve row sparks no confidence vote at Cornwall Council
http://www.computerweekly.com/blogs/inside-outsourcing/2012/09/shared-serve-row-sparks-no-confidence-vote-at-cornwall-council.html

Shared services proposal splits Cornwall Council
http://www.computerweekly.com/news/2240164218/Shared-services-proposal-splits-Cornwall-Council

Local government outsourcing debate hits cinema screens

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The savage cuts on public sector budgets have been controversial to say the least but now that the hits are really beginning to be felt in local government it has gone up a level.Some local authorities are being asked to cut costs by over 30%.

A story about how outsourcing effected the lives of people in Barnet hit a cinema screen in North London.

Outsourcing services, including IT, is one of the main tools at the disposal of councils when they try to cut costs. But when you are cutting local services or passing the delivery on to private companies citizens really feel it. As a result the local councillors feel it.

The recent controversy at Cornwall council which I have blogged extensively about is an example of why outsourcing shouldn't be taken lightly. A planned outsourcing contract led to the sacking of the council leader.

Yesterday a film about the outsourcing strategy of Barnet council was shown in London. The film, Barnet - The Billion Pound Gamble, was directed by Charles Honderick and produced by Roger Tichbourne, was screened at the Phoenix Cinema in East Finchley.

According to this report over 200 people watched the film.

The documentary interviews people about their experiences with consuming outsourced services.

Watch some clips from the film here

Please fill in this questionnaire to give your views on local government outsourcing.

Watch Cornwall council's outsourcing shenanigans here

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I have written loads about the controversy at Cornwall council regarding a plan to outsource services. It led to the downfall of the council leader Alec Robertson, who was replaced by his former deputy who had actually resigned earlier over the issue.

The council will today discuss the outsourcing plan in response to a public petition over the issue. The petition received enough responses to warrant a full council debate.

So if anyone is interested in hearing the thoughts of the councillors tune into today's Cornwall council debate.

The relevant discussion will be item 12 on the agenda. It all starts at 10.30am. Click on the logo below to watch the debate. It might get heated.

Cornwall Council crest
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Essential read before renegotiating an IT outsourcing contract.

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Back in September I did a series of blog posts about IT outsourcing contract re-negotiations. It seems we are amid a period of increased renegotiation activity.

I did several blogs, which are all linked to below. I was trying to build up as much material as I could for a feature I was writing. I also got some good feedback. There is some good advice in there from lawyers, academics and consultants. All worth a read if you are considering renegotiating an IT outsourcing contract.

Here is the feature:

Renegotiating outsourcing contracts to fit new reality.

Organisations in many sectors seek to renew the terms in their contractual agreements as they adjust to the economic climate.

IT outsourcing is going through a period of major change as the result of an economic downturn of extreme proportions alongside major advances in technology.

Tight budgets amid recession and increased service options as a result of new technologies, such as the cloud, mean many IT outsourcing contracts are no longer fit for purpose or the best option available. Read more.

Here are the blog posts:

Are we seeing first wave of recession proof outsourcing contracts in trouble?

Is the recession and utility computing driving outsourcing renegotiations? 0

Advice for companies that want to renegotiate outsourcing contracts

Nine ways to make bad outsourcing deals good

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Cardiff council says outsourcing is a last resort

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I have been blogging extensively about a controversial outsourcing contract at Cornwall council, which has led to the sacking of the council leader.

As a result I have been asking people about their views on outsourcing public services. I did a survey asking whether people think private companies should run council services.
I have now had 69 people respond to my survey.

- 52 said that local government services should not be run by private companies.

- 12 said they should and 5 said they didn't mind.

See this post for some of the comments.

The reason I am blogging about this again is I have just seen comments from a councillor it Cardiff council, on walesonline.co.uk, saying outsourcing is the last resort.

The council said it is looking a different ways of delivering public services. But outsourcing is unlikely.

The cabinet member for finance at the council Russell Goodway said outsourcing was not the council's preferred option, and would only be used as a last resort.

He said despite the fact that the council was currently facing a funding shortfall of at least £55m outsourcing is the least preferred option.

He said: "As in so many other areas, we could get into a situation where thousands of people are being made redundant and services are terminated. We want to avoid that, and keep as many people in work as we possibly can, and for the avoidance of doubt we want to keep as many people working for the council as we possibly can."

"What we are saying is we will look at every option, and outsourcing is the least preferred option for us."

If you want to tell me what you think of outsourcing local government services please fill in the questionnaire below.



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General Motors insourcing gathers pace with 3000 HP staff join company's payroll

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Earlier news that General Motors (GM) was bringing its IT in house and in the process looking to hire 10,000 IT professionals is gathering pace as 3000 HP workers join GM's ranks.

These are staff already working on GM IT projects but are employed by HP.

GM outsourced almost all it's IT to HP via a previous agreement with EDS, which HP acquired.

I bet there are 3000 very happy people there. Morale at HP's services division, which was created after it acquired EDS, is low following lots of redundancies.

GM announced this yesterday. "These agreements with HP will enable us to accelerate the progress of our IT transformation by delivering increased innovation and speed of delivery to our GM business partners, and reduce the cost of ongoing IT operations," said GM CIO Randy Mott. "Transforming our internal IT operations will give us the resources, tools and flexibility we need to provide better services and products to our global GM customers."

The other twists in this fascinating story is the fact that EDS was part of GM, from 1984, before it was spun out as a standalone company in 1995. it continued to be GM's main IT supplier. But it doesn't end there. Randy Mott, CIO at GM was previously CIO at HP. And only last week HP CEO Meg Whitman has said poor internal IT systems have hampered the business.

GM is probably doing HP a favour and saving it the costs associated with another round of redundancies.

If you work for HP at GM and are being transferred please tell me how you feel by leaving a comment.

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Should we expect outsourcing U-turns in local government?

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Recent weeks has seen a controversial outsourcing contract at Cornwall council in the news. The controversy has led to council resignations and a vote of no confidence in the leader.

Read this blog to see how the whole saga unfolded: What now for Cornwall Council outsourcing?

I have used the story as an opportunity to run a survey to get peoples' views on outsourcing in local government. I have now had 64 people respond to my survey.

- 48 said that local government services should not be run by private companies.

- 11 said they should and 5 said they didn't mind.

Below is the survey if you want to add your views and some weight to the sample.

The survey asked people for the reason for their answer. Not everyone gave a reason but here are some of the comments already left.

Those against outsourcing local government services said the reasons not to are:

"Security concerns on data."

"Conflict of interests."

"Private companies tend not to be accountable to the public."

"Private companies have the shareholder and profit as there number one motive, public sector, if run effectively, is run for the customer & value for money for the taxpayer."

"Because we are living in a democracy, and the decision needs to be made by the people."

"Local government should not be run for profit. This sort of thing will lead to conflict of interest."

"It's undemocratic."

"Loss of control and worse staff conditions."

"Because private companies over-promise and under-deliver."

"History proves low value - low accountability - no genuine outsourcing of risk."

"Loss of democratic control and flexibility."

"Too many failures and cost to the tax payer."

"Same staff, same salaries, profit for company, how can that be cheaper? By cutting back on staff, which is what Mouchel are doing in IT at Bournemouth."

"Complexity of services will never fit a solely for profit model."

Those that said local government services should be outsourced said:

"Cost savings less bureaucracy."

"Best value."

"Because private companies have access to economies of scale and expertise that no local government organisation can ever access."

"Because private companies use current and up to date practices."

"Better service and better value, councils should be run for their consumers not their employees."

"Many times government needs the employee for short term projects and it's not possible every time to recruit. On that time is better to deal with private company to recruit the people for the short time."

"Why not?"

Those that don't mind if local government services are outsourced said:

"It's about what is best for the resident/citizen and provides public purpose value to them at an acceptable cost.

Judging by this survey there could be a few outsourcing U-turns on the horizon.

What do you think?

Accenture eats what it sells and CIO benefits from free advice

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It would seem strange if your IT service provider didn't provide its own internal IT services.

Mind you it would be less surprising if it had a different version of IT service for itself.

According to Frank Modruson, Accenture's CIO who I interviewed last week , the outsourcing giant outsources all of its IT to itself. Well apart from certain niches where it uses third parties.

So its departments use the various Accenture delivery units for all its services.

Modruson is internal IT head so, like Accenture's CIO customers, he has responsibility for IT strategy and just outsources the work.

He told me that despite his role not being customer facing he regularly meets customers to discuss issues with them issues they face and he shares with them how Accenture deals with it internally.  Mind you it is not all one way traffic. He says he gets good ideas from customers which he uses.

He said that supplying IT to Accenture's staff means that there are about 270,000 consultants that can do parts of your job watching your every move. But Moduson says this is great. Not only does he supply IT to people that are passionate about IT, but he also gets a lot of free advice.

CIO interview: Frank Modruson. Accenture.




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What now for Cornwall Council outsourcing?

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It has been an interesting couple of weeks at Cornwall Council. We have seen the political ramifications of outsourcing public sector services played out at the council.

At the end of last month I picked up a story on www.thisiscornwall.co.uk which revealed that the leader of Cornwall Council was facing a no confidence vote in relation to a proposed shared services deal, with either BT or CSC to provide services such as libraries, benefits, payroll and IT services.
 
Councillors were unhappy about the fact that the council leader was trying to push the decision on the outsourcing contract through the cabinet, hence bypassing a full vote in council. They were calling for a confidence vote over Alec Robertson's leadership of the council.

Councillor Rob Nolan told me at the time that he thought the move to shared services should be a decision taken by the full council.

"We even had a vote of the full council and 46 members out of 123 voted against it, 29 voted for it. But the council counted those that abstained as voting for it," said Nolan.

Nolan said that, although he is not a proponent of shared services, it is the fact that such a fundamental change is not being decided by full council that is the area of contention for him.
See the interview with Nolan here and more from him and another councillor here.

I then blogged about the man driving to outsourcing deal, CEO Kevin Lavery, who has worked for BT and Serco in the past.  It seems Lavery, who is responsible for a £1bn budget at Cornwall council, is a bit of an expert on shared services. Read more here.

Then the deputy leader Jim Currie of the council resigned over the issue. See his resignation letter here.

Then yesterday the confidence vote over Robertson's leadership was held. Robertson lost by 63 votes to 49.

Soon after this it was announced that Jim Currie who had resigned as deputy leader was now leader.

So the deal with either CSC or BT would be dead in the water then? Well according to reports one of the suppliers has pulled out. But who knows?

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Cornwall council former deputy leader now leader and against outsourcing

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The proposed outsourcing strategy at Cornwall council looks doomed to fail as the new leader is voted in because he is against the proposal.

Earlier today Cornwall Council's leader Alec Robertson lost a confidence vote following a controversial plan to outsource certain services, including IT, recently. The proposed deal with either BT or CSC is worth hundreds of millions of pounds.

News hot of the press is that his deputy, Jim Currie, who stepped down from the cabinet earlier citing differences of opinion related to the proposed outsourcing, has been voted in as leader.

He is against the outsourcing plan. Read his resignation letter here.  So I don't see that being approved in the near future.

What a day for Cornwall council. And what a day for local government outsourcing.

Tell me what you think of outsourcing local government services to private companies.

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Cornwall council leader falls on his sword over outsourcing contract

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If you think outsourcing isn't controversial think again. I have been writing about Cornwall council's plan to outsource certain services, including IT, recently. The proposed deal with either BT or CSC is worth hundreds of millions of pounds.

The council leader Alec Robertson wanted to make the decision in cabinet, bypassing a full council vote. This was his downfall has it led to a confidence vote. The vote today went against him 63 to 49, leaving the council's Conservative party looking for a new leader. His deputy had already resigned from the cabinet over the issue.

Councillors did not feel that something that would change council services as fundamentally as the proposed outsource should bypass full council.

I suppose Robertson was concerned that full council would have voted against it.
This story highlights just how controversial and difficult public sector outsourcing can be.

Read more about the proposed Cornwall council outsourcing deal here.

Do you think local government services should be carried out by private companies?
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Is IT just a convenient excuse for Santander pulling out of RBS deal?

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I wrote an article yesterday about Banco Santander's decision to pull out of a multi-billion pound deal with RBS to take over 316 branches and the accounts tied to them.

There were several reports claiming that problems integrating IT made the deal less attractive and as a result Banco Santander pulled out of the deal.

When I called a few people in the sector the general feeling was that IT was just being used as an excuse. It seems the deal might not be as convenient for Banco Santander as it was.
More weight is added to the argument that IT was used as an excuse if you look at Banco Santander's strong record in integration acquisitions.

In recent years the bank has acquired companies such as Abbey and Alliance and Leicester. Part of this strategy is to make huge IT savings by moving acquisitions into its core banking platform Partenon (see list at the foot of this post for information about Banco Santander's acquisitions and IT migrations.)

OK this is not necessarily an outsourcing story but one reader did point out that if there are integration problems it could be the result of offshoring work. RBS has offshored thousands of jobs and many people with a deep understanding of legacy systems have gone.

One reader said it seems unlikely that IT concerns would be the whole reason for this decision, but that RBS's policy of offshoring IT work might be part of the problem. "On the other hand, any major migration project depends critically on having people around who understand the old system. RBS demonstrated quite forcefully this summer (when systems went down) that after firing most of its UK IT staff and shipping the work offshore, it no longer has much of a clue about how its own IT systems work," said the reader.

In 2008 I wrote an article about the challenges facing German banks Commerzbank and Dresdner Bank in their attempt to merge and make huge IT savings as a result.  German banks use more proprietary systems than UK banks because of the complexities of German banking regulation so IT is even more complicated. It seems the banks have systems that nobody today understands. This is an extreme example but If you outsource or offshore too many people you will lose knowledge.

Banco Santander UK Acquisitions:

October 2004: bought Abbey for £9.5bn planned to reduce costs by £300m

July 2008: agrees £1.3bn takeover of Alliance and Leicester and expects to make efficiency savings of between £30m and £50m

September 2008: £612m acquisition of Bradford & Bingley agreed.

What Abbey's integration to Partenon involved:

All customer records moved onto a single database, reducing the total number from 52 million to 20 million.

Abbey moved ten million savings accounts, four million current accounts and eight million card accounts to Partenon.

Renewed entire branch communications network.

Built more than 45,000 portals for staff and third-party organisations

Created a back-up datacentre infrastructure

Provided face to-face and e-learning, about new ways of working, to 25,000 staff

Deputy leaves and council head faces axe over outsourcing at Cornwall council

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Earlier this month I wrote about how a plan to outsource services, including IT, at Cornwall Council was causing serious friction.

The council leader Alec Robertson was proposing an outsourcing deal with either BT or CSC to provide services such as libraries, benefits, payroll and IT services. The plan was to push on with the deal even without a full majority vote in full council.

But councillors were very unhappy about this and there were calls for a confidence vote on the leader and a petition was signed by thousands of citizens. Councillors did not believe that a decision that would change how the council provides services fundamentally could be made in cabinet alone. They insisted it should be full council.

But according to this article l  Robertson has done a U-turn, saying of more councillors vote against the deal it will not go forward.

Tomorrow will see the vote of confidence so Robertson might lose his position.
His deputy, Jim Currie, has already stepped out of the cabinet over the issue. I recommend you read a copy of his resignation letter here.

I will get the result of tomorrow's confidence vote and blog about it as soon as I can.

Please fill in this questionnaire if you want to shar your views on local government outsourcing.


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Local government services should not be run by private companies, say majority

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I recently blogged about opposition to plans at Cornwall Council to outsource services, including IT.

I took the opportunity to do a survey to find out people's views on local government outsourcing. A controversial subject.

So far I have had a small response. Only 23 have filled in the questionnaire so nothing can really be taken from it apart from the fact that 18 out of 23 said local government services should not be outsourced to private companies.

Two said yes they should and three said they didn't know.

Below is the survey if you want to add your views and some weight to the sample.  Here are some of the comments already left.

The neighsayers said the reasons not to outsource local government services are:

"Security concerns on data."

"Conflict of interests."

"Private companies tend not to be accountable to the public."

"Private companies have the shareholder and profit as there number one motive, public sector, if run effectively, is run for the customer & value for money for the taxpayer."

Those that said local government services should be outsourced said:

"Cost savings less bureaucracy."

"Best value."

Those that don't mind if local government services are outsourced said:

"It's about what is best for the resident/citizen and provides public purpose value to them at an acceptable cost."



Banks see core business understanding as most important IT service provider skill

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Yes banks are more interested in their IT suppliers understanding core business processes than the cloud or specific software. This is a warning to suppliers.

I blogged recently about how banks are the still the biggest spenders in the IT outsourcing sector. I also asked the question what are the spending money on.

Here is the post I wrote: Banks still biggest IT outsourcers but where is the money going?

It was based on the findings of a large report from KPMG.

Fujitsu have this time kindly provided information about what bank CIOs are planning over the next few years. The banking sector is not just the most interesting IT outsourcing sector because its massive spend but also because it was hit hardest by the downturn. It has had to change the most as a result of the crash, particularly as it was partly blamed.

Here is an article I wrote about Fujitsu's Financial Services Report.

Click the image below to view the entire report.

fujitsu report1.png

The survey also revealed that 51% see reducing cost as a top priority, 27% said upgrading IT systems, 22% improving customer experience, 20% mobile banking and 18% said moving to the cloud.

A total of 85% said the IT department is attempting to meet the needs of the business by doing more with less.

When it comes to moving to the cloud, 40% of all banks said they have already implemented cloud across their organisation, and 29% said they planned to do so. A significant 22% said they do not see the cloud as an enabler for change and will not move any systems to it.

Internal IT teams are wired for negativity when it comes to change

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When outsourcing IT we all know that the challenges go far beyond choosing technology and suppliers.

Getting internal acceptance of an outsourcing agreement is, to the executive driving it what The Chair is to a horse running the Grand National.

At the Gartner Outsourcing Summit this week analyst Linda Cohen did a session on this.
She said as a result of IT outsourcing most IT departments are a hybrid of in-house and supplier staff. But she says to make outsourcing work they have to appear to the business as one.

Add to this the fact that you have multiple suppliers in a multisourced IT environment and you have a real mix of people. If these people cannot work together the business will notice.
She talked about the changes that outsourcing brings as being in three groups. These are obvious changes, subtle changes and inflammatory changes.

It is the inflammatory changes that have the biggest derailing impact on outsourcing projects and will remember. "Internal teams are wired for negativity and will remember the bad things more than the good things."

Cohen said change management must be carried out throughout the outsourcing process.
She said finding the right people to manage the process is essential. "Do not just put the people in charge of the part being outsourced in control."

She said watching someone else do your IT better is not pleasant.

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Desktop virtualisation just a stop gap - but an important one

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I met up with Accenture's CIO today. Frank Modruson is the person responsible for the outsourcing giant's internal IT. I will be writing a long interview piece for Computer Weekly but I will blog a selection of what he said.

I thought his view on desktop virtualisation was controversial enough to blog about first.

He has been global CIO at Accenture for ten years and before that, from1987, he worked on the customer facing side at the company. So he has a good view of what CIOs want and what IT service providers can offer.

My title was intended to shock a bit. It is a bit controversial to describe one of the fastest growing technologies as a stop gap but when I asked Frank Modrusom about whether he was using it internally he said no.

"I do not need virtual desktops because in 2001 my predecessor decided to move to browser based applications," he said. He added if he bumped into that person today he would give him/her a big hug.

I listened to another CIO present recently at Computer Weekly's CW500 Club. He said the company does use desktop virtualisation so staff can access the applications they need from any device anywhere, providing they have an internet connection - but that in time he sees it as an interim technology that will eventually be discarded. So same functionality but different name.

Mind you Modruson did stress that if an organisation has not got the functionality required to enable applications to be accesses anywhere desktop virtualisation is a very effective and fast way of doing so.

"It is a way to get to the same situation quickly."

So how long will desktop virtualisation be a buzzword?
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Outsource the full software lifecycle and avoid unexpected software crashes

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I have blogged recently about the trend for companies to outsource software testing. IT services forms are increasingly investing in their software testing capabilities.

This involves resources used to test whether the functionality is right, whether it does what it is supposed to. Suppliers are buying into methodologies such as the independent Test Maturity Model integrated (TMMi), which has five stages and ensures testing is carried out throughout the development process rather than when it is finished.

But service providers are also investing in technology to check the structural quality of the code well before the functionality testing takes place.

This is important because although software might be functional and do what it is supposed to, it might have little errors hidden away that become problems in the future.

I am not saying that banking failures such as, most recently a system error at Lloyds TSB causing customers problems, are the result of structural problems with software but if it is taking time to explain problems it could be.

Back to my point about IT services firms investing in analysing the structural quality of software. I met up with Lev Lesokhin from Cast Software yesterday. The company does analysis of the structural quality of software to find if there are errors that are overlooked in development that might cause future problems. It describes these as "critical violations".

Cast sells its services to both suppliers and direct to end user businesses. About 60% of sales are direct to end user businesses.

Its business customers include Wells Fargo, Deutsche Bank and the US army. These companies scan their software using the Cast software to catch potential future problems. This will save a lot of money that will be required for fixes, not to mention reducing the risk of reputational damage caused by failures.

Lev told me about the growing number of service providers that are now taking on the service. IBM and Capgemini have been customers for a while. It also works with companies like HCL, Mahindra Satyam and Steria. These companies are using this within their own software development teams to test quality and are offering the Cast product as a service. It has become a calling card for some.

I wanted to get people's views on this so please leave comments about the processes you use to check the structural quality of applications.

How to successfully manage a multi-sourced IT environment - treat suppliers like kids

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"No matter how angry you are don't smack your IT suppliers and make sure they don't play with each others' toys"

Multi-sourcing is embedded within most IT departments within large companies. Today it seems that the key question to answer for CIOs, rather than what to outsource, is: how do I manage multiple suppliers and ensure I get the best value?

Bringing in multiple suppliers to provide IT services introduces competitive tensions which, might lead to lower costs. The problem is the level of service might drop as suppliers have a smaller share of work.

I was at the Gartner Outsourcing Summit on Monday (08 September) and I went to two interesting presentations about managing multi-sourced IT delivery.

The presentations were from Jonathan Apted, global IS strategic relationship manager at agri-business Syngenta and Richard Boynett, CIO long-term savings at finance firm Old Mutual . These presentations were all about getting the best out of suppliers in a multi-sourced environment.

Read the Old Mutual case study here.

Read the Syngenta case study here.

It reminded me of an article I wrote after the Gartner event last year which was all about how BP manages its service provider ecosystem. BP is big enough to boss its suppliers but the principles are the same.

The recurring theme in both of Monday's presentations were how suppliers and their business customers should communicate well and how businesses should incentivise suppliers through opportunities rather than the risk of punishment. It's simple "if you do this job well you will have a good chance of winning a bigger job later on."

It is also important that suppliers within an ecosystem are not too competitive and stay in their own service tower. It's a bit like raising kids really.

Here are some of the key tips from people that have successful strategies to manage outsourcers.

-ensure relationships are mutually beneficial
-ensure internal that staff understand why things were changing. They might have relationships with suppliers.
- create separate groups of services and suppliers for them
- give suppliers the opportunity to expand that role in the future
- make it clear that you would rather have the service you paid for than the penalty money for failed delivery
- continuously engage with all the suppliers
- share information with suppliers about what you want from the deal and ask them what they want
- large penalties for missed targets can cripple partners. Make penalties progressive and allow suppliers to earn back penalty money if they have quick sustainable fixes
- work with the suppliers when you create SLAs and reduce there number
- invite suppliers to come forward with ideas for mutually beneficial approaches
-understand that both parties have to profit

Tell me about your multi-sourcing experiences.

Gartner outsourcing, the silly dance man and Apple's rubbish mobile phone

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I attended day one of Gartner's annual outsourcing summit in London.

I have been every year for about the last 5 years. The first thing I must say is that it was very busy.

So busy that another room had to be made available so everyone could at least hear the keynote and the guest keynote slot.

The guest speaker was Magnus Lindkvist, a trend spotter and futurist according to Gartner's programme. His presentation was very funny, unexpectedly so given that I was at a conference about outsourcing. Some people have a way of engaging an audience and Magnus Lindkvist is one of them.

He talked about why businesses should not just concern themselves with their competition but be creative.

Lindkvist said the problem with creating new things is scepticism from others who think a new idea won't work.

He also said businesses should not be afraid of failure and have a long term view on innovations. He said businesses have short term and that patience is a missing ingredient.

He said failure should be treated with respect and can be beneficial to future developments
He talked about how if Apple had given up on making mobile phones after its first attempt. Apple and Mortorola developed a phone known as the ROKR Phone in 2005. Lindkvist said there is one word to describe the phone and that is "shit."
 
But Apple didn't give up and look at its phone business now. Its iPhone business is bigger than Microsoft's entire business.

Lindkvist used another clever example of why business shouldn't give up on something that doesn't work out. He said the music single Torn, made famous by Australian singer Natalie Imbruglia had already been released by various Scandinavian bands with different levels of success until Imbruglia made it massive.

But then he showed a video which I found hilarious. It is all about starting off a trend but involves doing silly dances on hills.

See it for yourself.

I will blog more about my day at the Gartner summit and have a few articles to write. The biggest trend I noticed, which is by no means new, is the increased maturity of multi-sourcing models. In the past a multi-sourcing strategy meant using more than one IT services provider but today it is far more complicated and businesses are spending a lot of time putting together the rules and guidelines underpinning multi-sourcing strategies.

I saw presentations from finance firm Old Mutual and agri-business Syngenta about this which I will write about. But what are your experiences of multi-sourcing.


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Is Lloyds TSB's managed service causing Co-operative problems?

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Today Lloyds TSB is having problems with ATMs and online banking  as a result of a yet to be identified system error.

See the article I wrote.

The interesting thing from an outsourcing point of view is the fact that back in July, when the Co-operative bank acquired thousands of Lloyds current account customers, Lloyds TSB agreed to provide a managed service to the Co-op for the accounts taken over.

And it turns out that the Co-operative bank is also having problems today. Mind you I called the press office and they said it is a complete coincidence and the Co-operative problems are completely unrelated to the Lloyds problems.

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HP CEO partly blames internal IT for company's problems - why not outsource?

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HP CEO Meg Whitman has said poor internal IT systems have hampered the business. She blamed the lack of compelling sales and customer relationship management (CRM) systems within the company for some of HP's problems. See her comments in this story.

Not only is this a poor reference for anyone thinking of outsourcing IT to HP but it also puts some blame on former CIO Randy Mott.

Perhaps Whitman is just having a dig at Mott because of his decision, as General Motors CIO, to insource all of its outsourced IT. Most of which is done by HP.

Whitman was talking about turning HP around when she mentioned the poor IT. Maybe she is thinking of outsourcing HP's internal IT. Who would be up for that job? EDS? No that one's lost its reputation. Perhaps IBM.

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Social, mobile and cloud are more than just supplier hype

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In my role at Computer Weekly (services editor) I unsurprisingly spend a lot of time speaking to IT service providers.

One of the things they have been talking about recently is the demand from customers for services in mobile, cloud and social media.
 
For example Cognizant talks about what it describes as the SMAC stack. This is social, mobile, analytics and cloud.

When you speak to suppliers as a journalist you obviously have to take things with a pinch of salt.

But last night I got to hear IT leaders within businesses talking about mobile, cloud and social media.

The CW500 Club featured presentations from two IT heads. Chris Hewertson, the CIO of Colt Telecom and BA's head of Service Transformation at British Airways  Glenn Morgan.
It was great to hear about the large amount of working being put into enabling both staff to use mobile devices to do their work and customers to consume services. The cloud and social media is enabling a lot of this.

Chris Hewertson, CIO at Colt, talked about the company's bring your own device programme (BYOD) and the challenges associated with introducing that. This programme includes introducing Wi-Fi, enabling staff to use any device they want and Colt paying for the support. He talked about desktop virtualisation and the importance of workers having the same tools to work regardless of where they are.

He said the company had focussed its investment on the technology that serve its customers and is now investing in technology to support its own operation.

Meanwhile Morgan talked about the criticality of mobile to BA and its customers. He talked about mobile applications for customers, such as check in and choosing where to sit as well as providing staff with the devices they want.

So it seems big companies are now spending on social, mobile and cloud rather than just thinking about it.

What are you doing in these areas?

Indian firm TCS takes Home office contract from under Capita's nose

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Interesting story today that India's biggest IT services firm has won a major government contract from under the nose of the UK's Capita.

According to the Public and Commercial Services Union, "Capita members who work on the Criminal Records Contract in Liverpool have been informed that the Home Office has announced its intention to award the DBS contract to Tata Consultancy Services (TCS). The Home Office is currently finalising discussions with TCS on the implementations plans of the 5 year contract which will start in 2013."

Capita has been running the Criminal Records disclosure service for over 10 years. The contract is worth hundreds of millions.  It had been shortlisted for a contract on the government's new Disclosure and Barring Service (DBS). But it looks like TCS has got it.
DBS is the merger between the Criminal Records Bureau, that helps employers make recruitment decisions, and the Independent Safeguarding Authority, which prevents unsuitable people from working in certain places.

With cost cutting on the agenda in government it was only a matter of time that Indian firms started winning government contracts. Even sensitive ones it seems.

How far will the coalition go in its bid to get the best price it can for services?

WorldPay uses pick and mix outsourcing

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I have just had an interview with the CTO of WorldPay, Erik Toivonen, for a case study I wrote for Computer Weekly.

He told me about how the company is flexible about whether to insource or outsource and how some things are better done yourself.

When two investment companies took the former RBS division off the bank's hands when it was forced to sell assets, Toivonen was brought on board to create an IT infrastructure for the payment processor.

The reason I am blogging about it here is that fact that the project to create an IT infrastructure for a business that requires the tightest security and cannot afford downtime has an interesting take on outsourcing.

When WorldPay went it alone after breaking from RBS it had no IT infrastructure to run its payment processing business. It agreed with RBS to keep the transaction processing on its IT infrastructure until it could build its own.

This was a big job for a business that requires an infrastructure that is highly secure and always available.

To make matters worse it had 149 IT staff who were mainly software engineers and project managers with no IT infrastructure expertise.

So outsource you would think.

This is where it is interesting. It has used a mixed bag.

The first decision to make was about datacentres. It went for a co-location datacentre from SunGard. This was the two buildings only. Then it looked at system integrators to see who could build the IT infrastructure to sit inside.

Toivonen said it was the usual suspects. The likes of HP, IBM, Capgemini, Infosys etc.
But in the end WorldPay decided to build the IT infrastructure itself and hired people with the right skills to do so. It now has a total of 350 IT staff including those working via an outsourcing supplier.

Toivonen said the reason it did it itself was because of the risk. He says it would have been really difficult to get a supplier to sign up to the level of risk required. Any downtime or security breach to a service that transacts millions of people's banking details is about as high risk as it can get.

So it outsourced the building of the datacentres and insourced the building of the IT infrastructure that sits in it. It did however hire the expertise of a consultancy, Xceed Group, to help it plan the infrastructure and used a system integrator for what Toivonen described as discovery, which is about working out what you need.

He also says the company outsources other functions where appropriate. This includes security, although the overall security leadership comes from Toivonen and his internal team.
So it is a bit of a pick and mix and shows that the options are there for outsourcing whatever you want. It is also a good example that helps explain why multi-sourcing is on the up.

Is there a company in the world that doesn't outsource something? I doubt it. Even companies like WorldPay with extremely high risks and security demands can outsource. It is a case of outsourcing where appropriate and retaining checks and balances.

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HP still in there with Rolls Royce despite losing its exclusivity in March

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Back in March I reported about HP losing its big contract with Rolls Royce. This was a contract to provide all of its outsourcing needs, which was won by EDS 12 years ago.

Capgemini was named by Rolls Royce as its service integrator to manage its multi-sourced outsourcing environment. This was a blow to HP, which is attempting to boost its reputation as an IT service provider on the back of EDS's good name.

It meant that a lot of HP contracts at Rolls Royce could be under threat.

But news today that HP has won a contract renewal from Rolls Royce to host its applications in its datacentres as well as manage the Rolls-Royce remote server and storage environments in Brazil, Canada, France, Germany and Norway, shows that all is not lost.

Robert Morgan, director at sourcing broker Burnt-Oak Partners said at the time of the Roll Royce deal with Capgemini that it did not mean that HP has lost everything but a case of HP  losing the moral high ground.

But he did say it could be the beginning of a gradual reduction in the amount of revenue HP gets from Rolls Royce. He expects perhaps a 30% reduction in HPs revenue with Rolls Royce quite quickly.

Changing datacentre provider would have been a big step. With a highly commoditised service such as this it is difficult to look further than the big players such as HP or Fujitsu. But in other areas, such as the cloud, HP might find it difficult to compete.

HP has not had the best of times with its EDS acquisition. It recently wrote down $8bn from its EDS business, which it acquired for $13.9bn.


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Accenture and Deloitte killer on the prowl in the cloud

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A company called Appirio believes times are changing and even sells itself as an Accenture and Deloitte killer.

"Our stated aim as a company is to do to Accenture and Deloitte, what Salesforce did to Siebel," is the company's bold aim.

It is a cloud only consultancy with expertise in things like Salesforce.com and cloud based service management software from ServiceNow.

Salesforce's CRM as a service is cited as being a major cause for the decline of the once dominant Siebel in the CRM market.

Siebel, which is now owned by Oracle, still has massive business but its dominance was reduced. With the cloud reaching into other parts of businesses today companies that consult on traditional IT could have similar problems. Well that's what Appirio says.

Here is Facebook's CIO Tim Campos talking about Appirio.
 
Could this be the new shape of IT consulting?

Appirio lists five advantages it has.

-100% cloud focus (no distraction from maintaining existing on-premise practices)

-Running a 500-person global business with the same products recommended to customers

-Agile delivery model (agile processes, use of prototypes, and pre-existing cloud assets)

-CloudSpokes - a 50K person crowdsourcing developer community where customers only pay for what they use

-Cloud Enablement Suite - an integrated platform of tools, assets, analytics and community used by every consultant to industrialise the delivery process

Perhaps Accenture and Deloitte will have something to say about this.

Offshoring no longer synonymous with India but what does offshore IT mean today?

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Last week Gartner announced its figures on where in the world are the main areas where businesses offshore their IT.

Western European buyers predominantly use India (35%), Poland (21%), Brazil (18%) and China (16%). The UK is probably even more dominated by India because of the language advantage.

But things are changing and there are other options. The suppliers themselves are even increasing the number of locations they deliver services from.

So offshoring IT is no longer having your IT delivered from India. There are nearshore options in Central Europe and many far flung alternatives such as the Philippines and China.

But that's not all that is changing. The services being delivered from offshore locations are also changing. It is no longer just a source of cheap call centres or low cost software development resources. And offshore doesn't actually mean offshore now because offshore based suppliers can ship offshore staff onshore to carry out work.

The reason I am writing this blog is to try and get some feedback for an article I am planning. I want to write about what the term "offshoring IT" means today? I want to look into how it has changed and the multiple opportunities available for businesses.

Please leave your views as a comment or fill in the questionnaire below.

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No surprise shared services are on the Cornwall council agenda

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I blogged earlier about a shared services proposal that is causing friction at Cornwall council. 

Councillors want a confidence vote as they feel the full council is being bypassed on decision that will fundamentally change how the council works.

It is hardly surprising the Cornwall Council is embarking on a shared services journey given the background of its CEO.

I mentioned in an article earlier that CEO Kevin Lavery has worked for BT and Serco in the past.

It seems Lavery, who is responsible for a £1bn budget at Cornwall council, is a bit of an expert on shared services.

He has even written a book: Smart Contracting for Local Government Services: Processes and Experience. It was published in 1999 and claims to "shift the debate away from the politics and rhetoric to the practicalities and realities of contracting."

The synopsis reads: "Privatisation of local government is making headlines throughout the world. Scottsdale, Arizona, contracts for fire protection; Baltimore, to run nine city schools; and Chicago and Philadelphia for a range of services from janitors to recreational facilities. The United Kingdom, New Zealand, and Australia have arguably gone further than the United States. But much of the debate on contracting has been high on politics, philosophy, and emotion with little attention to practical issues of how to do contracting well. The book shifts the debate away from the politics and rhetoric to the practicalities and realities of contracting."

He joined the council in 2008. I am surprised services have not been outsourced earlier.

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"No confidence" in decision and doubts over appropriateness of Cornwall council outsourcing

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I blogged last week following reading an article on www.thisiscornwall.co.uk about a dispuite at Cornwall council. It seems the CEO and the council's ten person Cabinet want to push ahead with an outsourcing contract, which includes IT services, with either CSC of BT.
 
Councillors are unhappy for a couple of reasons. There is a feeling that a decision of this magnitude, which "fundamentally changes how the council works" should be decided by full council vote and not the ten person Cabinet that has so far been doing all the negotiating. There is also a belief outsourcing to private firms, which the shared service involves, is the wrong thing to do.

To put it into perspective the deal, which will be signed with BT or CSC if it goes through, will see services such as libraries, benefits, payroll and IT services passed over to a supplier as well as 1000 workers.

There are quite a lot of shared services agreements in local government at the moment. With cuts on the agenda it is being sold as a magic wand answer to the problem of supplying the same level of service at a lower cost. But the public sector is a place where politics and morals are more prevalent than in the private sector.

I have spoken to two councillors at the council. They are both opposed to the shared service agreement.

Here is their reasoning.

Councillor Ron Nolan said although he is not a proponent of shared services, it is the fact that such a fundamental change is not being decided by full council that is the area of contention for him. "I am not keen on shared services because what we have seen at other councils has not worked."

He said his views are shared by many councillors. "We even had a vote of the full council and 49 members out of 123 voted against it, which was more than those that voted for it. But the council counted those that abstained as voting for it."

Councillor Andrew Wallis, who has set up an online petition to attempt to have the issue debated at full council, said it has exceeded the 5,000 signatures required to push through a re-examination of the proposal.

He is strongly opposed to shared services in local government. "I do not believe it is in the best interest of the council to hand too much over to a private company. This is most of our core services and a private company is answerable to its shareholders not our citizens," said Wallis.

See also this article about an outsourcing contract in  the South West of England and the problems it is having: Southwest One shared service under spotlight after "shambolic accounting revealed."

Also see the damaging impact shared services are having on local government IT teams: Shared services and outsourcing taking its toll on public sector IT jobs.

And read this: Is a group of MPs focusing on outsourcing and shared services a waste of time?


Better still give me your views below.

IT outsourcing renegotiations at a ten year high

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IT outsourcing contract renegotiations have become a subject close to my heart over the last couple of weeks. That's what writing features about an issue does to you. Interviewing people that know a lot more about a subject than yourself is great for building up a good understanding of what's happening in the market.

It has also given me lots to blog about. See below for some of them.

Today I am writing about figures about renegotiations from TPI's Index of contracts worth over €20m. If you didn't think it was a trend you might be surprised.

For commercial IT outsourcing contracts worth €20 million or more 15% of total, in the first half of this year, were restructured contracts.

"Anecdotally from clients, we also know that service providers are much more open to the idea of renegotiations. IT outsourcing contracts are simply a projection of future requirements, and renegotiations are now seen as a normal adjustment to changing business conditions," says Steve Tuppen, director at TPI parent ISG.

Kit Burden, head of technology sourcing at law firm DLA Piper, says the number of contract renegotiations has been high over the last year. "We were doing almost as many renegotiations as new deals last year. It has eased off, but there are still a lot."

I will post my full feature once it goes live but in the meantime if you have anything to say about IT outsourcing contract renegotiation, please post a comment.

Here are some recent blogs on the subject of IT outsourcing contract renegotiations:


Advice for companies that want to renegotiate outsourcing contracts


Nine ways to make bad outsourcing deals good

IT outsourcing contracts failing to deliver 28% of what is expected

IT outsourcing marriages sometimes require changes from both partners


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