http://www.sourcingfocus.com/index.php/site/newsanalysis en paul@sourcingfocus.com Copyright 2012 2012-02-01T17:02:46+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/offshoring_v_onshoring_-_which_way_is_the_pendulum_swinging/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/offshoring_v_onshoring_-_which_way_is_the_pendulum_swinging/#When:16:02:46Z   In recent years, we have seen UK businesses moving away from the tendency to outsource business functions overseas and once again seeking delivery of these services within their borders. However, have national pride and political sentiment now become the drivers of the onshoring vs offshoring debate? Or do cost-consideration and expertise still determine where a business locates its services? Adrian Guttridge, EMEA Head of BPO, HP Enterprise Services investigates the importance of these factors and the role of vendors in this decision process. Since late 2007, most of Western Europe has been in the shadow of economic uncertainty. Large numbers of reputable business institutions have struggled to survive and for some, the impact of the debt crisis has been overwhelming. The UK banking sector witnessed the nationalisation of Northern Rock and saw both the Royal Bank of Scotland and Lloyds TSB receive an injection of public funds to shore them up. One might think that such developments would, if anything, strengthen the allure of offshore cost-savings. However, cost was no longer the only consideration. Alongside a renewed cost-cutting imperative, the economic downturn also ushered in the politics of protectionism. Sending business abroad to create jobs, infrastructure, and skills overseas when these are needed so desperately at home has a negative impact on companies and political goodwill, another valuable asset, already in extremely limited supply. The past 12 months have also been characterised by social and political unrest, particularly in many developing markets. This has demonstrated the geopolitical risk of locating business services abroad and alerted corporate decision-makers to the fact that while offshoring delivered benefits to the balance sheet, it also brought with it the very real possibility of denial of service and the business challenges that come with this. Such cost-savings, it suddenly seemed, could have a significant cost in themselves. These factors have indisputably shifted the context of a CFO’s thinking when grappling with the offshoring vs onshoring debate. In HP’s experience, what will ultimately remain the most pressing consideration, and the easiest sell internally, is cost. While the events of 2011 have demonstrated that the analysis cannot stop here, the essential savings to be made from offshoring through, for example, labour arbitrage, have not lost their allure. As such, businesses have had to find the middle ground. At HP, we are finding that organisations are increasingly seeking to get the best of both worlds by adopting a hybrid model with the core business at home and selected services strategically outsourced overseas. HP’s Best Shore delivery strategy caters to this dual requirement by giving the customer the advantage of a global infrastructure and balanced global footprint. This enables the business to react quickly to any uncertainly, but capitalising on the cost benefits of offshoring. Individual customers may have specific reasons for wishing to keep certain services onshore – such as data-protection and security – but it is more than likely that for other services, location choices will depend largely on the vendor’s judgment that conditions are suitable. Moreover, what will ultimately determine a market’s viability as a centre for, for example, the provision of BPO services is the expertise, the people, the processes, the tools and the infrastructure available. This is what a vendor will look for when deciding where to establish itself. HP’s approach is to develop centres of excellence for specific services in broad based key global hubs supported by regional language centres. What delivers value to customers is our investment in people, technology and modern facilities; it means they get more time to spend on managing their core business and don’t need to worry about their location strategy. As ever, advancing technology will continuously shift the goalposts of this debate. Connectivity has created a global village in which individuals and communities everywhere can contribute in the outsourcing market. As this trend moves towards its logical conclusion, the particular resources or characteristics of a specific market will lose their significance and a location-based outsourcing proposal will become less relevant. For now, the pendulum on the “onshore vs offshore” debate will continue to swing back and forth, impelled by transitory political, social and economic exigencies. Cost is still what the CFO will have front of mind when tackling this dilemma, but the growing sophistication of technology may make it a headache of the past. 2012-02-01T16:02:46+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/time_to_look_again_at_outsourcing/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/time_to_look_again_at_outsourcing/#When:12:32:15Z It is nearly four years since the banking crisis precipitated the recession and the majority of global businesses have cut costs to the bone. But as these organisations face up to the fact that the era of austerity is set to stay for several years to come, it is clear that business models need to be reviewed. Following systemic under investment, internal resources are simply no longer good enough. Consolidation is rife; companies are looking at international expansion and building global business networks. Research carried out by TPI* in the third quarter of this year shows that there are many different models of outsourcing used throughout businesses around the world. However, with times tough and business competitive, it is key that each organisation chooses the best model of outsourcing to work for their business. As Joanna Sedley-Burke, Business Development Director, Sovereign explains, in tough times, companies across the globe need to do far more with less and become far more savvy about leveraging external outsourced expertise to derive additional value. One size fit all? As Gartner describes**, the offshore IT outsourcing market is “big, and there’s no turning back. Everybody is either doing it, planning to do it, or should be doing it.” But with this comes various additional options of outsourcing choice, from staff augmentation, out-tasking, project based outsourcing, managed services or BOT (Build-Operate-Transfer). However, the right choice for each business can vary immensely based on a whole array of varying factors. There is far from a ‘one size fits all’ approach. The right outsourcing choice must be assessed on the best model to fit each organisation and this will vary hugely around the globe. Different countries carry out business in so many different ways and can be at differing ends of the scale in terms of their development when it comes to infrastructure and economy.  Even from business to business, the culture of an organisation must be fully understood by any external provider in order to ensure the correct IT choices are implemented to complement and support the organisation appropriately. Skills and costs The TPI research suggests there is a trend in global outsourcing from EMEA, down by 23%, to Asia Pacific, that experienced an all-round year on year increase. It is clear that the availability of highly talented and experienced workers in this region are able to carry out the same level of work as in EMEA but at a significantly lower cost. With rising inflation and escalating fuel costs just two examples of how businesses are being hit, each year is bringing a new financial challenge for business. Over the past four years, these organisations have cut costs to the bone – not least across IT. But is this really a sustainable long term approach? Is the current internal skill set really capable of supporting the current business needs or any potential expansion into more buoyant global markets? Can it deliver the robust communications required to create international networks of collaboration or exploit innovative technologies to increase efficiency and the timeliness of service delivery? Leverage Expertise Successful organisations will know the value of external expertise when used appropriately. But continuing to rely on limited internal resources as they come under increasing pressure is increasing corporate risk and potentially constraining opportunities for business growth.  Companies would do well to exploit the proven experience and skills of external providers and look globally when they do. Turning to an outsource provider in any part of the world offers companies a real opportunity to drive down the risk associated with day to day operations; provides a chance to reduce costs and delivers access to the experience required to build a solid business case for on-going investment. The TPI research shows that BPO is strong and expected to increase further, with businesses having to consolidate and keep the chargeable heads whilst the back-office functions go elsewhere and thus reduce the overheads. It is those organisations that accept the need for external professional services provided by a company with no vested interest in boosting CVs, and with the required depth of skills and experience, that will be best placed to adapt and respond to the continuing economic challenge. 2011-11-14T12:32:15+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/itc_infotech_journey_from_xp_to_windows_7/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/itc_infotech_journey_from_xp_to_windows_7/#When:15:35:50Z ITC Infotech, Heineken and Insight took part in a webinar on the 22nd September 2011 which discussed in detail the issues, risks and processes associated with migration to Windows 7, from each perspective Although Windows 7 is rolling out quickly to favourable reviews from a consumer perspective, 75% corporate enterprises are yet to complete their migration to Windows 7 and many are in the early stages of planning. This is because, from the enterprise perspective, like any major update or operating system migration, migrating can be challenging, time consuming, and costly. In any case, all enterprises will need to set about migrating to Windows 7 because it promises the productivity, reliability, performance and security enhancements they need, and primarily because Microsoft has scheduled a tight April 2014 deadline to pull out enterprise support for Windows XP. This webinar hosted by ITC Infotech in association with Heineken International and Insight addressed issues and risks associated with successful on-time migration to Windows 7. Webinar Highlights • Issues and risks associated with a federated and distributed enterprise- strategies that hold promise to manage the transformation- A case study of Heineken International • Typical challenges of planning and migrating to Windows 7 • Challenges of full enterprise rollout-A case study of Insight Enterprises. Issues and Risks Associated with a Federated and Distributed Enterprise Heineken International– Windows 7 Migration Case Study Heineken is one of the world’s leading brewers with a wide international presence through a global network of distributors and breweries. Heineken owns and manages one of the world’s leading portfolios of beer brands. With a portfolio of globally distributed operating companies, Heineken has a very federated and distributed enterprise IT landscape. The organization has 48,000 workstations running over 2000 windows applications. Heineken started the Windows 7 upgrade in January 2011 with the support of ITC Infotech at the 2nd and 3rd level to: • Standardize and globalize the workplace environment • Attain the flexibility to cope with local diversity • Improve user experience and decrease TCO Issues and risks Heineken faces as it migrates to Windows 7 Application compatibility, ensuring applications will install and run predictably on Windows 7, is at the heart of Heineken‘s Windows 7 migration issues. Simplifying the management and deployment of applications during Windows 7 migration poses the most time consuming challenge. Another key issue Heineken faces is managing the change in terms of the time it will really take individuals to adapt to the new features and functions and be able to operate with the same speed and efficiency as they do now. Heineken also battles with the risk of not being able to complete enterprise wide rollout by April 2014(when Microsoft plans to pull out enterprise support for Windows XP). Issues and Risks Associated with a Full Enterprise Rollout Insight Enterprises - Windows 7 Enterprise Rollout Case Study Insight is a global provider of information technology (IT) hardware, software and service solutions to business and public sector organizations with Operations in 21 countries, serving clients in 191 countries worldwide.  Evidently, Insight had a very distributed IT landscape with applications portfolio of over 200 applications. Insight was using Windows XP with the latest service place and was quite sceptical about the Windows rollout. Along with the upcoming expiration of enterprise support for Windows XP, the company was motivated by an opportunity to acquire new tools for tightening network security, accelerating PC performance, and improving employee productivity to move forward with a companywide upgrade to Windows7. Also, the company placed an emphasis on minimizing the impact of the upgrade on employees. Challenges faced by Insight Enterprises in migrating to Windows 7 Ensuring application compatibility and deploying applications for optimal performance and functionality posed the most challenging and time-consuming challenges. The IT team spent months before the deployment performing readiness testing on more than 200 applications.  Memory was surprisingly an issue with the OS running extremely slow on less than 2 Gb. Typical Challenges of Planning and Migrating to Windows 7 • Application compatibility • Hardware compatibility • Assessment & remediation of applications and hardware • Project planning • Windows 7 deployment Benefits of Migrating to Windows 7 Windows 7 offers desktop and server optimization, management flexibility faster PC performance, while strengthening its network security capabilities. Deploying Windows 7 offers gains in productivity across the organization as more employees take advantage of enhanced desktop tools and simplified access to network resources. A central benefit of Windows 7 is its extensive cost savings, which can be as much as 20% in direct costs and impressive IT cost savings with MDOP. So even though Windows 7 migration has key benefits for an organization, the risk of failure and the enormity of the project may be intimidating and can have significant impact on an IT organization in terms of time, budget and internal reputation. The ITC Infotech Approach to Windows 7 Migration ITC Infotech has a clearly defined process of helping organizations migrate to Windows 7. This involves determining client readiness by checking hardware and application compatibility, ensuring security from a policy and governance perspective, image engineering, migration and deployment, and finally operation of application - end-user acceptance and helpdesk support. 2011-11-02T15:35:50+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/procurement_bpo_-_helping_you_accelerate_value_realisation_for_your_co/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/procurement_bpo_-_helping_you_accelerate_value_realisation_for_your_co/#When:14:43:17Z Often BPO is used by Procurement as a means of applying labour arbitrage, exporting a bundle of processes and activities off-shore, for these processes then to be optimised overtime. Some use BPO as a means to augment procurement resources and cover more spend. However few use BPO as a strategic lever to “drop in” a new best in class business process that will resolve current inefficiencies and secure Procurement is involved in the right places throughout the purchase cycle. Procurement professionals can buy best practice processes for specific business activities (or spend categories), like Fleet, Travel, Resourcing, or FM. Proven solutions that have Procurement embedded in the right places of the business cycle, and with the visibility to manage the supply base for continuous improvements. Take for example Resourcing Process Outsourcing (RPO), often offered by recruitment companies, followed by Outsourcers specialising in off-shoring. RPO often creates a “black box”, from which Procurement can only influence via audits. This puts procurement in a difficult position. After the honeymoon period is over. The better alternative is to have Procurement inserted at the right stages of the process, and make sure the suppliers are engaged in win-win solutions that incentivise them to offer best value. Xchanging offer a vendor neutral process, where we manage the supply chain from start of hiring to payment to the contractors. We ensure this is done efficiently to a high service standard. Along the way we manage compliance to policies and save our customers money by ensure accuracy in billing. We work with the supply base in a collaboratively to create win-win situation been the suppliers and our customers. We don’t focus on reducing the agencies mark-ups on candidates, but rather on incentivising them to find the best value candidate for the customer. Another example of where BPO can solve procurement challenges is FM outsourcing. A full outsource of the FM portfolio also creates a “black box” which is difficult to un-tangle. It also creates a challenge around spend visibility, not allowing finance or procurement to understand the drivers. We manage the back-office financial processing for our clients in the FM market, covering transactional and administrational tasks from Vendor set-ups to Payment, including all the financial reporting. Our standard platform services are able to deliver clear tracking of budgets and spend across the portfolio. Most finance and procurement functions recognise the challenge in obtaining granular visibility of the spend across a real estate portfolio. “Drop-in” Xchanging’s platform services and achieves full visibility to track budgets and compliance to the procurement strategy.  Furthermore, we are seeing emerging interest for complete “drop-in” Procurement solutions, inclusive of people, processes, and technologies, across all categories of spend. These solutions enable our customers to drive procurement value across their businesses to an accelerated timetable, as opposed to building from scratch or adding to legacy business processes Procurement professionals can apply BPO to act quicker in the value delivery, while becoming strategic contributors to their businesses. 2011-10-31T14:43:17+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/dont_let_clouded_thinking_make_you_forget_the_network/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/dont_let_clouded_thinking_make_you_forget_the_network/#When:09:09:14Z All businesses that have outsourced, or intend to outsource, parts of their IT infrastructure should consider the vital importance of the network to the successful operation of their cloud service, according to Michel Robert, Managing Director, Claranet UK. “In our experience, many haven’t, and the consequences of this include them paying over the odds for a networking solution that is often not suitable for taking advantage of the cloud, with businesses suffering from poor application performance as a result,” stated Michel Robert. “Much has changed in the networking space over the past decade: incumbent carriers are no longer the only providers of high-quality connectivity. The market has greater competition than ever before, thanks to the rise of new network providers. In addition, a new breed of IT outsourcers has arisen - managed service providers - who can leverage the array of networks available and combine them with other technologies in one complementary service that suits the specific needs of each customer.  All of this has had a positive effect on prices, choice and service quality,” he continued. The broadband revolution has bought about faster connectivity and an increasing demand for next generation networks that can support greater voice and data traffic volumes at greater speeds. Michel continued: “New networking technology gives businesses unprecedented freedom regarding the types of networks they use for cloud services. For example, instead of having to utilise fibre-based networking technologies, carriers can now combine multiple legacy copper lines – traditionally used for phone and broadband services - to create a lower cost, copper-based Ethernet connection with data transfer speeds, both up and down, of up to 20Mbits/s. Speeds like this, whilst falling far short of those provided by fibre-based technologies, would be sufficient for a small business that wants to access some cloud services,” “The drop in connectivity costs and the increase in the choice, reliability and sophistication of networking solutions mean that cloud services are potentially available to businesses of all sizes. They also mean that businesses should assess their network provision as part of a move to the cloud if they are going to ensure it is as cost-effective and seamless as possible. In some cases, it may be worthwhile to, for example, break a contract with a carrier and incur related penalties in order to get a new service that is much faster, cheaper and more reliable,” he added. It goes without saying that you need the right network for the job, and if you are going to outsource business-critical IT functions to the cloud, then you need a connection with strict performance and availability guarantees. But who is responsible for the performance of the network and the overall cloud service? “Whether a business is moving to the cloud, or just thinking about it, they must consider who is accountable for the performance and availability of whatever might be outsourced. If multiple providers are involved in an overall cloud service – e.g. a carrier, hosting company and application provider – there may be problems when it comes to identifying the root cause of service disruptions and fixing the problem. For example, a number of businesses that have come to us for combined cloud hosting, application management and networking services have done so because they were frustrated with the finger-pointing by providers of different elements of their outsourced service,” he added. The most obvious solution to this is to secure a Service Level Agreement (SLA) for the overall service, not individual elements. However, this is only possible if the service provider controls both the cloud hosting and network services. If a business has multiple providers, it will need to ensure the company’s SLA with their network provider covers the cloud application, and consider what headaches may be caused if it doesn’t. Businesses need to weigh up whether they’re prepared to take this risk or whether it’s more worthwhile to place networking and cloud hosting with one provider. Michel concluded: “It’s easy to get wrapped up in the wonders of the cloud and the business benefits available, and only consider the means of accessing and retrieving your data as an afterthought. The good news is that, with good due diligence, it’s relatively easy to have the right networking solution and cloud service provider for your business. This in turn will ensure cost-effective and reliable access to, and operation of, your cloud-based infrastructure.” 2011-10-25T09:09:14+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/persuading_staff_to_pull_in_the_same_direction/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/persuading_staff_to_pull_in_the_same_direction/#When:11:12:32Z Persuading staff to “pull in the same direction” can deliver hard business benefits, writes Shirley Barnes, Client Relationship Director, Dinamiks Limited Today’s often tough economic environment makes it imperative that all aspects of business performance be studied to see if they offer prospects for optimisation.  Staff behaviour and attitudes are one area where the complexity of the subject might make change look daunting. Individual behaviour, attitude and motivation, team working and alignment to objectives and values - and compliance - may all need to be addressed. However, new, online approaches to measuring and managing performance, as well as attitudes and behaviour, have brought costs down and improved ease of use very considerably.  Where reducing costs and improving productivity of employees are top of the agenda, the effort can be particularly rewarding and the means to get there relatively pain-free. Traditional route In large organisations, the traditional route to change has been to use external specialists and an array of tools and techniques to map what is going on in the company, and then roll out a programme of change.  It often involved using modern variants of time and motion studies to highlight where individual improvement was required. Workshops and training were employed to make the changes required. Smaller businesses relied on the MD or FD changing the company culture through group or face to face meetings, perhaps following informal or formal performance appraisals. With the switch to web enabling applications, the traditional ways are being replaced by a simpler and more automated approach. This analysis piece looks at how Medex Research, an SME,  made the changes that have resulted in a more cohesive workforce; where staff now pull more strongly in the same direction.  The lessons learned at Medex Research can be scaled up or down. The company is a full service global market research agency, operating in the medical devices and diagnostics market, which outsources research to companies like Medex.  Traditionally, Medex used paper-based appraisals to track staff performance to ensure its people were permanently focused on the essential business objectives and values.  MD Sarina Masson recognised the drawbacks of that approach and decided to switch to a new generation of employee performance management. Complete picture The new generation is automated and web-based and gives management a complete picture, from the employee performance and behaviour perspective, of what is going on in an organisation “Many people,” she says, “are now more familiar with web-based applications than paper ones, which makes the switch to web-based appraisals an increasingly painless one.  There is the added advantage that they can be rolled out very easily at any time locally or globally. All that is needed is web access and computers.” The appraisals at Medex Research are carried out with two objectives in mind – (i) staff development, including meeting training needs and how best to improve performance, if it needs improving.  “The system will tell us if it does,” says Masson (ii) using the system to build and maintain quality across the business. These objectives complement the business goal of always producing the highest quality research, in order to secure solid long-term client relationships. Staff development and re-direction “We’re different to a lot of other companies, but similar to market research companies, in that sales output can’t be objectively measured,” Masson cautions.  “So, we focus on staff development in areas like analysis and report writing – generally, how to perfect the different stages of market research. “Now in its third year here, the system is key to optimising our employees’ market research skills, as well as their knowledge of the medical industry, through highlighting any gaps in it, which we then address.” Masson says the system “has helped us formalise and systemise employee appraisal and career progression.  Paper-based systems can be run very informally and will take more time. A computerised, web-based system enforces good discipline by the managing director, or the head of HR or whoever manages its use.” The introduction of a new approach to performance management “also gives the opportunity for staff ‘re-direction’ in their personal development.  It’s not just useful for showing where training is required; it can pinpoint where change is required in attitudes, attention to detail and overall quality of work, in line with company goals. “And it helps with fostering a better ‘connection’ with the company, in terms of individuals helping other staff; for example in generating more sales, being pleasant to work with, having ideas for the business and the workplace, being proactive in company support – including the way clients are serviced – and working better as a team.  “Where a company’s positioning is ‘quality’, the system supports the drive for excellence in every area that contributes to it,” she says. Medex’s experience of the online approach is a good pointer for other SMEs and departments or divisions of large operations. It shows there is a new way for change and it’s one that challenges fear, cost of change and the assumption that managing employee performance is a complex and time consuming process. It’s not. 2011-09-28T11:12:32+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/how_a_business_can_benefit_from_employee_legislation/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/how_a_business_can_benefit_from_employee_legislation/#When:09:05:33Z It’s not necessarily the burden it first appears to be, writes Shirley Barnes, Client Relationship Director, Dinamiks Ltd Employee legislation has not made it any easier to do business in the UK. The latest significant piece of legislation was the abolition of the Default Retirement Age [DRA] which came into effect on April 1st 2011 in a phased manner. The completion date is October 1st this year.  It means that employers will no longer be able to use the DRA to compulsorily retire employees. Employers who fail to embrace this new legislation may face claims of unfair dismissal and discrimination Preceding it with another challenge to employers is legislation that has increased the maximum limits on statutory unfair dismissal compensation, redundancy payments and other awards. The increase in retirement age means that many companies will experience situations where age/experience/capability will be a challenge and where the companies will require evidence leading up to and beyond the legislation change to justify why people should retire from a role or even why they should stay. Employee legislation can help employees but it also increases costs and adds to the many burdens that businesses face.  Legislation changes also add a layer of complexity to HR and other aspects of the business. Changes provide challenges around constructive dismissal, data protection, DRA, disciplinary procedure, equality, employment tribunals, fair and unfair/wrongful dismissal, grievance procedures, statutory rates, working time regulations, performance, training, coaching and productivity. Key points about, and arising from, the abolition of the DRA Guiding principles associated with the retirement age change are provided by ACAS.  Below are key points to consider and take action on. Until April 6th, the law set a DRA of 65 years.  Provided an employer properly followed the prescribed statutory retirement procedures, a business could fairly dismiss an employee on the ground of retirement at or above the age of 65. The DRA change means that in order to retire an employee, a company now needs to demonstrate just cause and follow due procedure. “Just cause” and “due procedure” are viewed as problems but, as with other issues arising from employee legislation,  can be managed to a satisfactory conclusion with an online system that… (i) Aligns every employee’s objectives to those of the business (ii) Provides the means to set development plans, track and record progress (iii) Provides a record of capability for all employees, thereby supporting a common and consistent set of guidelines and principles that apply across all employee ages of the business. (iv) Allows an employer to demonstrate just cause and follow due procedure A variety of factors can determine at what stage an employee should step down. All these can be tracked, recorded and analysed by the system. The DRA has long been viewed as a valued stake in the ground for employers, because it has been a focus for performance issues and succession planning. It has allowed poorly performing employees to retire gracefully and has enabled - in an orderly fashion - open discussion for succession planning. That has now changed.  From October 1st, the door closes on it. The “stake in the ground” concept does beg the question of why or how organisations don’t take action about poorly performing employees before they retire. Succession planning may have been months or even years in the making, to ensure a smooth transition and the engagement of a [hopefully!]  more productive employee, but that does not excuse the inaction. The opportunity for businesses The reasons why unproductive employees are tolerated are not in the scope of this article, but the subject does lead us to the question “Is the change in retirement age actually an opportunity for employers to re-tune the business in an era of suppressed economic activity, squeezed margins and demands from investors to optimise performance?”  We can also ask if the legislation that increases the maximum limits on statutory unfair dismissal compensation, redundancy payments etc, helps a business in unintended ways? If the business uses a system that helps it conform to employment law while improving performance, then, yes.  The system does this by providing an audit trail of performance, behaviour, attitude and the ability of individuals to meet set objectives. A manager in the business can track an individual’s performance over a period of time and share the view he or she has of it with that individual and/or with another manager, such as the individual’s line manager. There is the belief in some quarters that employees don’t like change, but in reality we find that if the CEO and board get behind change initiatives, staff are happy to learn and advance in order to help the business and themselves. In fact, many desire it and employees in outsourcing are no exception. That desire can, if harnessed, help business benefit from new, or changes to, employee legislation, by re-scoping the business where it needs it.  More at http://www.ikdevelopments.com 2011-09-13T09:05:33+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/industry_background_a_time_of_change/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/industry_background_a_time_of_change/#When:10:53:29Z Despite the troubles in the global economy, the worldwide book market is continuing to grow. It was worth $ 75 Billion in 2010, and is expected by Outsell to hit $ 79.4 Billion in 2013. Digital book sales are still dwarfed by print, but they are beginning to pick up at an increasing rate. Outsell predict that “the percentage of the worldwide book market attributed to e-books will rise from 3.2% in 2009 to 16.1% in 2013”. This rise in digital sales will be at the cost of print. So where in the market are these changes occurring, and what are the factors at play? Regional differences There are large disparities in eBook sales figures around the world, and this has much to do with the way that devices have launched at different times in different markets. The Amazon Kindle has been extremely successful in the US (while Amazon does not release specific figures for the Kindle, their overall sales for Q2 2011 grew to $9.91 billion, with much of this attributed to their Kindle store). However, the device been more slowly introduced in Europe (the UK received its first Kindles in August 2010, while the German Kindle only launched in April 2011). While both the UK and Germany have their own dedicated content stores online via Amazon, France is still to receive a Kindle store, or direct sales of the device via Amazon.fr, and thus the smaller French market is shared between Apple with their iBookstore and domestic retailers such as Fnac.  Expansion is therefore much stronger in the United States where the market grew by 76.2% in 2010. As Ronn Dunn, President & CEO of Cengage noted at the Jouve organised ‘April In Paris’ (an international digital publishing conference held in Paris earlier this year), the “digital content market is now worth over $ 1 billion”. It’s not just the so-called ‘e-tailers’ who are profiting. Barnes and Noble is one of the few bricks and mortar stores to succeed in the digital era, and their Nook ereader (especially the color version) has also proved extremely successful. Apple must also be mentioned. Despite the fact that they had no history of work in publishing before the launch of the iPad, the device quickly became seen as the ideal platform for enriched ebooks. This is a market which will certainly expand. However Europe is set to catch up. Joerg Pfuhl, CEO of Random House, observed that the projected 2011 growth curve for eBooks sales in Germany matched the American market one year beforehand. Digital reading is well established in Japan, where large numbers of adults enjoy reading novels on their phones and other portable devices, and there is certainly plenty of potential for growth in markets like China. Dianli Yu, the president of the Commercial Press, one of China’s largest publishers, has spoken about the huge potential for digital content, saying that “the market is huge”, with over 800 million mobile phone users in China. All previous experience seems to indicate that when there is a surge in adoption of ereading devices, which can be seen as a sort of digital ‘tipping point’, then there will be a major increase in eBook sales. Market segment differences Print markets are shrinking and digital markets are growing; as different market sectors contract and expand, there will be significant fluctuations, and new winners and losers will emerge over the next few years. The majority of growth will be in the Consumer Book Market. Most digital reading platforms like the Kindle, Nook, and iPad, have been fairly exclusively targeted at mass consumers. It must also be remembered that for learning, neither ereaders nor the iPad will be the preferred platform for educational content – it will remain PC based. Initiatives like Mind Tap are electronic educational environments which use digital content to create personalized learning pathways. Nonetheless, as a percentage of the total publishing market, sales of digital content are largest within the professional sector. Businesses have adopted digital formats due to their lower price points and economies of scale.  This is another area where we will see major growth, as firms move more of their business data away from costly paper and into digital formats. What is driving these changes? Digital technologies can offer significant savings to publishers and wider businesses. There are none of the overheads relating to physical content, and the printing, storage and distribution it requires. However, as with the music industry, customers are demanding to see these savings reflected in retail prices. This new generation of digital content means that books are available to download wirelessly - they never go out of print, and they can be accessed anywhere. Customers’ reading preferences can also be highly accurately tracked. Power is placed back into the hands of the author and the consumer, and publishers can build up a much clearer idea of what their customers enjoy. Print on demand technologies also allow publishers to offer customers single copies of a book, without having to commit to costly reprints. These technologies will gain in importance, and will perhaps operate as a stepping stone between digital and paper formats. These sorts of new high quality technologies will bridge the gap between the print and digital worlds, allowing consumers to enjoy content like photographs, which might start life in digital form and end up in a traditionally bound photo album.  Print on demand offers new business perspectives with business models (cartoons, cultural heritage content, personalized books). It’s not just a question of optimizing the back office. Jouve has 30% growth in these areas, which have been opened up thanks to our investments in workflow systems (especially in optimizing the way we process single orders). How content providers need to respond Publishers need to move fast to make their titles available in digital formats. With new technologies, content providers will be able to meet unlimited demand with no time delays for popular titles. If you are not in a position to meet your customers’ requirements, and offer them a range of options, then you are likely to be left behind. The solution is to offer the widest possible range of content via digital, print and print on demand to ensure that consumers can have their book as they want, where they want, and when they want. The future is uncertain, but working in partnership with other companies can help to create the next wave of opportunities, and can also mean that risk is shared. There is no silver bullet solution, but it’s by offering customers a range of solutions for their content needs that publishers and businesses will succeed during this testing time. 2011-08-30T10:53:29+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/making_global_delivery_work/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/making_global_delivery_work/#When:10:21:48Z Five factors that determine the success or failure of a globally delivered applications project Love it or hate it, for the past two decades the story of global delivery (or offshoring as it’s often considered), has been a mixed bag: for every success story put forward there has been a horror equivalent highlighted as well. On one hand, more and more organisations are eagerly embracing the concept of global delivery for application projects in order to lower costs, increase efficiency and productivity. While on the other side, communication issues, management overhead and cultural incompatibility are forcing companies to re-think their global strategy. And even within organisations, some divisions will report successful project deliveries using global teams while others fail to take advantage of the same. Application projects are no longer delivered by IT professionals all huddled up in a single office. Today, application projects and related activities make-up the bulk of IT business delivered by global teams. The breakdown of global delivery activity makes for interesting reading: • By sector:  While the private sector has led the way in embracing the Global delivery model with over 30% already doing some form of offshore, the public sector has stayed away from it with less than 1% usage, predominantly citing security and social reasons • By geography:  While USA and UK account for over 70% of global delivery business and have been in the forefront of using offshore and nearshore services, mainland Europe and Japan have been slow in adopting the same and account for less than 25% • By domain: The largest vertical sectors using global delivery are financial services (32%), manufacturing (20%), telecom (12%) and energy (11%). However, retail (5%), health care (5%), media (3%) and supply chain are still warming up to the idea But whether or not applications projects are delivered successfully on a global scale depends on a number of key factors. Below are the five areas organisations need to be considering if they want to implement successful applications projects globally: 1. Organisational maturity Research4 indicates that many global projects are perceived to have failed because the benefits expected are far higher than the delivery maturity of the organisation. So, it is vital that the right expectations are set with all stakeholders. Organisational maturity is a key factor that defines the type, size and complexity of the work that can be delivered using the global delivery model. Maturity in this context also means the availability of the infrastructure (e.g. remote development centres, WAN etc.), having standard global project development practices, having staff with experience of the model and, of course, commitment from management to deal with issues. All of this will have a significant bearing on what can be delivered globally and what potential benefits can be gained. 2.  The right project Taking a blanket approach is a recipe for failure. Technically, all projects can be considered for global delivery, but, practically, not all lend themselves to offshore or nearshore development. Practical considerations likely to prevent work being carried out using global teams are often either security related (regulatory compliance, data protection and confidentiality), the business case itself not stacking up – where the cost of overheads outweigh benefits gained, or simply because the client is not comfortable with the model. A recent report by ComputerEconomics5 confirmed that 51% of the organisations that engage with offshore use it for application development and the average amount of development work done offshore is 35%. With the evolution of cloud, there is a general expectation that the potential for using global resources on application projects will increase as the required infrastructure can easily be made available to remotely located staff. 3. The right location Having identified a suitable project for global delivery, it is important to choose the best offshore/nearshore location that will meet the project objectives. The deciding factors for selecting your location will typically include cost effectiveness, the technical skills and numbers, the functional roles of the project and the cultural affinity, security and language requirements. The 30 Top regional locations for 2010-117 as identified by Gartner are listed below: • Asia/Pacific: Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam. • EMEA: Bulgaria, the Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Romania, Russia, Slovakia, South Africa, Turkey and Ukraine • Americas: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru. 4. The optimum blend Perhaps the greatest challenge to successfully implementing global delivery is choosing the right blend to offshore. It depends on a number of factors – the platform, the project size, the project type, the development methodology, and the process maturity. There is no one size fits all solution here. Typically, there are activities such as application and product development that can see a high offshore blend. Assessing the right blend is crucial to your company’s needs.  5. Project Management Skills As ever, the success of rolling-out a globally delivered project lies in its management. Whether done locally or globally, the basics of project management apply in both cases. But many project managers underestimate the skills required to build a blended team: indeed it is one of the biggest reasons responsible for projects failing. Training project managers is therefore vital so that they get the expertise and skills to deliver offshore/nearshore projects. Working remotely demands a greater degree of communication and collaboration to ensure that all involved are working in tandem and are aware of all the factors that might impact their delivery.  Global delivery is not about offshoring. It’s about “doing the right things from the right places”. Global delivery is not a ‘silver bullet’ for all IT issues and needs to be applied in specific circumstances according to the criteria listed above.  As ever, it is down to experience and judgement in order to apply the right global delivery model to your business. ENDS [1] - NASSCOM, 2009 [2] - PMP research, 2008 [3] - BCG Group 2007 and Data Monitor 2009 [4] Tom Philip, Erik Wende, Gerhard Schwabe - Identifying Early Warning Signs of Failures in Offshore Software Development Projects, 2010 [5] - IT Outsourcing statistics 2010/11, Computer Economics 2011-08-24T10:21:48+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/unrest_puts_egypts_outsourcing_credentials_at_risk/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/unrest_puts_egypts_outsourcing_credentials_at_risk/#When:13:06:19Z As the crisis in Egypt continues, Ovum lead analyst Peter Ryan asks what the effect on the country’s outsourcing market will be: As the global community watches in horror at the scenes unfolding in Cairo, many in the outsourcing community are pondering the demise of what appeared to be the next big thing, in terms of location, in offshore services delivery. The virtual state of martial law imposed by the Mubarak government not only impacts the ability of outsourcers to service their clients, but also counters the pro-business message of openness that has been the watchword for foreign investment for the past several years. The largest question remains whether this once-waking outsourcing giant can recover regardless of a change in government, and what the broader implications are for offshoring. Curfews, restricted movement, and no Internet impact service delivery It is clear that the expression “business as usual” has no practical application for outsourcing work currently slated for Egypt. Communications within, to, and from the country have been minimal, and staff are under government curfews restricting movements to and from work. These constraints are giving outsourcers on the ground a significant amount of pain from the strain of fulfilling tactical processes and ensuring that adequate labor and technology backups are in place. Many service providers, as well as their clients, are re-evaluating whether Egypt is still the right location for outsourcing deployments. This is especially disturbing considering the large number of global players that have set up in Egypt in the past several years – among them most recently, Sutherland Global Services in Alexandria. Other IT vendors that have been investing in Egypt for longer periods, just as large, home-grown providers (including Xceed and Raya), could be impacted severely in the coming months as clients are anxious to minimize offshore risk. Microsoft has already begun to move some of its work out of Egypt. Can Egypt’s outsourcing sector recover? Over the longer term, it will be crucial to see how Egypt’s global reputation as a leading destination for outsourcing services can recover from this wave of violence and civil and political unrest. Effective damage control among prospective and existing investors will be difficult for any future administration, and convincing many outside investors of ongoing Egyptian stability will be a tough task to say the least. For nearly ten years, executives, consultants, and site selection specialists have been fed a steady diet of positive rhetoric from Egypt’s government, quasi-government affiliates, and the Egyptian private sector touting the country’s political and economic stability in order to secure BPO and IT service investment. It is unlikely that these same investors will be quick to take such declarations at face value in the future. However, Ovum believes that Egypt’s outsourcing space retains value in the form of a sizable talent pool with significant education and language skills. This, along with generous financial incentives, has been the backbone of the country’s growth in services. That said, after recent events the extent to which educated, multilingual Egyptians will choose to emigrate to more stable shores (at least in the short term) is questionable. This could erode the country’s competitiveness further. What are the Egyptian crisis’s broader implications for offshoring? What has recently occurred in Egypt is certain to have ramifications for offshore outsourcing destinations the world over. “Following recent border violence in Mexico and the 2009 terror attacks in Mumbai, the events in Egypt are certain to make outsourcers and their clients much more risk averse than any time in recent memory, and are likely to push many companies to choose the more secure , albeit costlier, option of keeping third-party work onshore,” added Ryan. According to respondents to Ovum’s 2010 CRM outsourcing Business Trends survey, this sentiment is already present among Western enterprises. Approximately two-thirds indicated no offshoring plans, and regardless of location, the Egyptian unrest will reduce the bar for enterprise risk tolerance for offshore delivery. 2011-02-07T13:06:19+00:00