Basman | Explore: IT Outsourcing

Cultural differences are often blamed for merger failures, but the proof of this is hard to pinpoint in “real world” analysis. One interesting “laboratory” study seems to show irrefutable evidence that culture is a significant barrier to unlocking post-merger value. The implications and insights are important considerations for effectively managing an integration – or, for that matter, any significant change in business models such as shared services or outsourcing.

Many if not most mergers fail to realize their full potential or just plain fail. This happens not necessarily as a result of a strategic flaw in the marriage or even poor integration, we are told, but because of something called “culture” or, more precisely, cultural differences between the two pre-merger entities. Blaming culture for underperforming mergers is easy. Of course, proving it is much harder. Culture is a difficult creature to define or measure, so how to pinpoint it as a culprit? Click here to view the white paper by Alan Hanson, TPI Project Director.

What a coincedence, duh? In August IBM had publicly stated its intention to invest $6 billion over the next three years developing its hi-tech workforce in India.

Now Paul McDougall reports today in InformationWeek:

IBM is quietly laying off about 400 U.S.-based engineers who have been working on the development of components for one of the technology giant’s most important hardware products, according to sources familiar with the company’s plans.

The cuts are taking place at IBM engineering facilities around the country, including sites located in Austin, Tex., Burlington, Vt., San Jose, Calif., Raleigh, N.C., and Rochester, Minn. The cuts have also touched IBM locations in Poughkeepsie and Fishkill, N.Y.

The affected engineers are developing components for IBM’s line of BladeCenter servers–one of the company’s best-selling hardware products. Sales of BladeCenter systems, which feature a slimmed-down profile for ease of management and expandability, enjoyed a 35% year-over-year increase in IBM’s second quarter. During the same period, IBM’s hardware sales overall increased only 3%, according to the company’s second-quarter financial report.

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NHS Connecting for Health, Accenture and CSC today announced a change of the Local Service Provider for delivery of the NHS National Programme for Information Technology in its North East and Eastern clusters.

Accenture will transfer responsibility for delivery of its obligations within the National Programme for IT to CSC in these clusters by 08 January 2007. Accenture will retain responsibility for delivering Picture Archiving and Communication Systems (PACS). CSC will continue to fulfill its contractual obligations to provide services to the North West and West Midlands cluster.

The changes are presaged by NHS Connecting for Health and its suppliers’ ongoing desire to ensure that delivery of new systems is as rapid as is practicable within existing costs.

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IBM today announced that a dozen key India-based solution providers will incorporate IBM’s self-managing autonomic technology into their software and solutions. By working with IBM, these companies can deliver software that can radically automate and simplify IT management and underlying systems, while reducing costs for their customers.

The India-based solution providers will build IBM self-managing technology into their offerings over the next six months as part of IBM’s global Autonomic Computing Business Partner initiative. As the first Indian solution providers to adopt IBM’s autonomic technology, this signals a new era of computing in India, where other technology firms are turning to IBM to help develop systems with built-in intelligence to reduce IT complexity for customers. IBM estimates that autonomic technologies can reduce IT administration costs by up to 40 percent and increase IT utilization by up to 25 percent.

“Autonomic computing has risen to the top of the IT agenda for businesses in India,” said Mr. R. Dhamodaran, vice president for ISV and Developer Relations, IBM India. “IBM is helping solution providers quickly adopt self-managing autonomic technology, which is critical for customers trying to cut costs and remain competitive. In turn, as solution providers build IBM’s autonomic technology into their offerings they spur customer demand for products based on IBM middleware.”

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Simulating a national disaster in India, over 30 engineers rush to Satyam’s Global Business Continuity and Disaster Recovery Center in Singapore in a first-of-its-kind, live country outage

In what is believed to be a first-of-its-kind, cross-border country outage recovery – Satyam simulated a nationwide outage in India, and revived business operations from its Global Business Continuity and Disaster Recovery Center in Singapore. The exercise showcased Satyam’s ability to ensure seamless business continuity for its customers, as well as its disaster recovery capabilities. It also highlighted the complex processes involved in an event of such magnitude.

On the morning of September 25, Satyam initiated a three-day mock drill, a simulation of a national disaster that disrupted the Satyam’s business. Network control and command resumed almost instantaneously from Satyam’s Global Business Continuity site in Singapore. Additionally, in less than 24 hours, Satyam deployed more than 30 mission-critical engineers to Singapore. The entire exercise was facilitated by the Singaporean Government, which had provided pre-approved employment passes for the engineers who flew in on Singapore Airlines.

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Simon Bowers reports in The Guardian that the US consultancy walks away with burned fingers and the IT project loses its most efficient lead contractor:

Accenture, the biggest and most successful regional contractor working on the NHS’s troubled £6.2bn IT overhaul, is poised to pull out of the project. This will be a body blow for the NHS as Accenture has been responsible for deploying more than 80% of the systems installed so far by the four lead contractors under the National Programme for IT.

An exit deal has been agreed with health executives. A joint statement from Accenture and the NHS could be issued as early as tonight, when the consultancy firm is due to report full-year earnings figures in the US.

Under the NHS’s 10-year IT programme, which started two and a half years ago, Accenture was charged with delivering computer systems to 344,000 NHS staff who look after 17 million patients in east and north-east England. In March the firm made a $450m provision against future losses from the two contracts. This came in addition to Accenture losses on NHS work last year of more than $110m.

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The many factors of crisis preparedness
 
The list of natural and manmade disasters businesses have had to contend with in recent years is long. Many organizations felt the effects of the September 11 terrorist attacks, acts of bioterrorism involving anthrax, and bombings in London, Madrid and Bali. The Severe Acute Respiratory Syndrome (SARS) pandemic, the South Asia tsunami and Hurricane Katrina also have had costly, far-reaching impacts on businesses.

Chances are, like many organizations, you’re making crisis preparedness and response a key focus of your business continuity planning. But even if your company’s business continuity plan serves to protect its physical assets, such as data, network(s), core business applications and facilities, is it also addressing the human side of disasters?

IBM’s new white paper, “In the spotlight: The human side of business continuity planning,” outlines issues and risks related to human capital resiliency that could arise in any crisis, and provides a comprehensive framework for addressing them. The paper offers key insights to all business leaders, but should be of particular interest to CIOs, who are often the drivers of business continuity planning and related risk management initiatives.
 
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Many buyers of outsourced services are approaching the contract negotiation process without a full understanding of the issues that negatively impact their bottom lines, according to a new white paper by TPI. As a result, companies that fail to implement appropriate price-inflation mechanisms in outsourcing contract negotiations risk losing millions of dollars during the lifetime of a typical five to seven-year contract.

“Buyers of outsourcing services are often paying more than is necessary because they are not properly negotiating the impact of economic factors, such as inflation, that have a tremendous financial impact,” said Chris Kalnik, TPI Partner, Financial Analysis practice leader and Chief Knowledge Officer. “It is critical that corporate buyers seeking to maintain a competitive cost advantage understand how future pricing factors will impact the duration of their outsourcing arrangements.” (full free copy in PDF)

The BBC has been rebuked for miscalculating the money it would save by outsourcing BBC Technology. The National Audit Office (NAO) has revealed that the BBC miscalculated the savings it would make through its outsourcing deal with Siemens Business Services (SBS).

The BBC had originally projected that the deal would generate savings of £35.2m. It has now admitted it overestimated the cost of running its IT in-house by £7.7m, after mistakenly including a one-off cost in its calculations.

The revelation has angered union officials, who had warned in 2004 that the outsourcing deal would not generate the cost savings the BBC claimed.

“BBC Management accepts the savings figure should have been updated, and regrets that this was not identified so that it could be reported to the Executive and the Governors,” said the NAO in its report. “Management are satisfied that appropriate controls and processes are in place to ensure this will not recur.”

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Since you have embarked your outsourcing deal, you have to think of the end. David Clarke, vice president of enterprise technology services at The American National Red Cross, is describing the dangers of outsourcing (and what to do about them):

Outsourcing is a risky proposition, but one that offers potential benefits to the organization in terms of cost, service levels and access to talent. Managing an outsourcing deal well is not just a matter of negotiating effectively or implementing a strong governance model. Effective outsourcing management requires a life cycle approach that includes a robust sunset strategy. Whether you are contemplating an outsourcing arrangement or are well into one now, it's never too soon to start looking for the exit.

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