Archive for March, 2013

Teaneck School Board Nixes Outsourcing Plan

March 29th, 2013

The school board has opted not to outsource some instructional paraprofessionals, lunchroom aides and substitute teachers, but left open the possibility of using outside staffers as district jobs become available.outsourcing11

An initial $91.9 million budget introduced earlier this month called for outsourcing 46 lunch aides, 27 instructional aides and substitute teachers in a move to save $800,000. The $92.7 million budget approved Wednesday night saved the district positions after school board members heard widespread opposition from employees and parents, many of children in the special education program.

Most members wanted to avoid outsourcing, but were faced with a tough financial reality, said Board of Education President Ardie Walser. The school board was working to be transparent throughout the process, he added.

“It’s a necessary evil when we look at what’s going on in these economic times,” Walser said of possible outsourcing.

The district may still use outsourced staff to fill positions of instructional paraprofessionals and lunchroom aides who leave their district jobs, and for new positions, Business Administrator Robert Finger said. The school board would have to first approve a contract before outsourcing the jobs.

Cutting per diem payments to substitute teachers by $10 a day would save about $45,000, according to Finger. The district would also go from four to two unarmed security guards at Teaneck High School to save $36,000.

A Teaneck police detective is assigned the school and the building had an extensive security system, Finger noted.

THS Principal Dennis Heck was consulted on the reduction and said his staff along with the police department’s school resource officer would be adequate, Finger said. More guards, who are not district employees, could be added if needed.

A reduction in administrative positions would save $50,000 while the district planned to save another $30,000 by opting not to replace a technology department van, he said.

Courtesy busing would also be cut, with the mileage requirement increased from .9 miles to 1.3 miles at a savings of $100,000, Finger said. Another $95,000 would be saved by using fewer buses to transport non-public school students.

Other changes to the budget included $260,000 to purchase computers required for students to take online tests starting in the 2014-2015 school year. A math enrichment program, called GoMath!, will also be expanded, along with new textbooks and professional development.

Under the budget, the school tax would increase $91.42 on the average assessed township home. Teaneck’s revised budget reflects a 1.5 percent increase.

Board of Education member Sebastian Rodriguez pointed to new programs in the budget that would benefit district students.

“I said before this budget is not only about cutbacks, or reductions or outsourcing,” Rodriguez said. “It’s also about adding much needed educational initiatives that we have been postponing for three or four years.”


Outsourcing Competitive Advantage?

March 29th, 2013

There are a number of core strategic questions which firms need to answer when entering into an outsourcing arrangement. The most significant is to what extent a firm should be prepared to outsource areas of potential competitive advantage.outsourcing10

If one takes the view that outsourcing is driven by a desire to reduce costs, by buying into a consistent set of scalable processes which are shared across a number of organisations, then it follows that none of these areas should (or could) be sources of unique competitive advantage.

Once under the wing of a third-party they will no longer be unique but shared. They will also be engineered to the lowest possible cost whilst still meeting agreed service standards – they will be efficient but not necessarily effective.

By all means, outsource elements which are process rich to a provider which can deliver the same output at a lower cost; but we should be clear, in so doing , that the only competitive advantage accruing will be a transient lowering of costs. Any advantage soon passes because it is shared across the provider’s wider client base, some of whom will likely be direct competitors, as well as being easily imitable by other outsourcing providers.

It is an inconvenient truth that, within their particular weight-class, firms are very similar. Opportunities for differentiation will arise most commonly through service-innovation. When large elements of service delivery are no longer under the direct control of the firm (and are being delivered on a lowest-cost basis) it is easy to see how an inherent competitive disadvantage could be unwittingly built into the business model.

This potential for disadvantage doesn’t only apply to outsourced services which have a direct client touch point but also those which facilitate the wider operational effectiveness of the business. These ultimately drive client experience from below the surface, by impinging on the ability of those engaged directly with clients to add value.

As a more sophisticated view of service strategy has evolved, we have seen firms change their approach. Elements of client service innovation and delivery which provide strategic advantage are now being retained, even if these means splitting previously monolithic support functions between those which are process-rich and those which are knowledge-rich.

In considering what to outsource and what to retain, firms need to be clear about which activities add unique, difficult to replicate value and those which do not. By using statistical techniques, such as factor analysis, it is possible to identify the core drivers of client value. These can then be disaggregated to ensure that there is a clear understanding of the relative importance of individual service components in the overall recipe. Analytical techniques such as Service Blueprinting can also be used to explore client interactions fully.

The aim must be to ensure that there is a clear understanding of the implications of wholesale outsourcing before key directional decisions are made. This is far easier than having to pay for the untangling of a complex service breakdown or the mending of a damaged client relationship at some point in the future.


NOA Outsourced Applications Management Special Interest Group

March 29th, 2013

Following on from the last Outsourced Applications Management SIG in 2012, this event focused on the rapidly changing application landscape, and how technology modernisation is shaping the way businesses are employing application integration to drive savings and efficiencies.

The 4th Outsourced Applications Management SIG was chaired by Andy Rogers of the NOA Council, Ivar Sinka, Principal at Capgemini, Steve Howes Managing Director of RSP, ATOC and Sinead Lynch Senior Associate at CMS Cameron McKenna.outsourcing9

Ivar Sinka of Capgemini opened up the presentations, introducing his talk on ‘Application landscape modernisation’ by describing the long history of application deployment and management up to the present day, describing how modernisation has allowed a greater range of businesses to take advantage of services, that had in the past been limited by traditional approaches, to a small percentage of businesses.

The presentation entitled ‘Modernising RSP services’ by Steve Howes, Managing Director Rail Settlement Plan (RSP), ATOC (Association of Train Operating Companies), focused on transiting the outsourcing contracting model from BPO to an applications management service. Steve described how ATOC followed a similar process to the public sector in moving from BPO, to decide on the different available options, including IAAS or PAAS, or to outsource application management.

Steve described the main triggers for ATOS’ move to a service based on application management as:




While application management delivers significant advantages, the committee highlighted how governance must avoid the obstacles of the service. Ivar described the inefficiencies and obstacles that are frequently impact on application contracts, including the tendency to artificially place a division between the development and lifecycle of applications.

The impact of out-dated applications

With the long history of application development and use, the market while rapidly developing, is not new. In many cases systems are already mature, with enterprise clouds having now been around for a number of years. Ivar described how a growing problem at enterprise level is the use of outdated software, saying: “applications are being continued to be used well after their sell buy-date”.

As applications and IT services as a whole become increasingly flexible allowing for an agile approach. Old out-dated applications are in-turn becoming increasingly limiting, threating to make modernisation difficult the older the system becomes, as it is made incompatible with new technologies.

Ivar discussed the growing shift in application control, with cloud frameworks now moving from being controlled by IT departments to being delivered based on a corporate focused perspective. Ivar described the changing landscape with 60 percent of decisions on where the cloud should be employed now being taken based on corporate strategy. The shift shows that the business benefits of the cloud are now being realised at a management level, as users increasingly look to move away from in-house IT, and instead turn towards a buy-as-a-service model.

The steering committee in sharing experiences of the dangers of out-dated services, heard an example of a 23 year old system used by a well-known retailer. The architects of the archaic system who understood its unique operation at a core level wanted to retire, while the retailer wanted to expand into Europe. In failing to update the system over such a protracted period of time, the company was forced to employ specialist’s business analysts who then unpicked code allowing the outdated system to be outsourced and in the process updated.

The importance of integration

The common practice of acquiring new technological and application systems suggests that there is a lack of integration. Entire services are being scrapped and replaced, or being duplicated with new services, rather than finding alternative options, waste is being generated from a lack of effective integration.

With an expanding market leading to a wider portfolio of applications and services becoming available to businesses, Ivar highlighted the increasing necessity of integrating and rationalising services. The high cost of integration with future and existing service architecture, represented biggest challenge for users in a recent study by KPMG on cloud adoption.

Businesses need to develop a governance model that promotes flexibility and agility to ensure that systems which involve multiple forms of applications, tools and processes, which can often change, are effectively managed.

It is important that users understand the fine line between application integration and avoiding waste through needless new application acquisitions, and how cancellation can be vital in allowing for modernisation, cost and security. It is here that rationalisation comes to the forefront of any decision making process. More than 80 percent of IT executives said that they were in need of such rationalisation in a recent Capgemini survey.

Ivar discussed the growing shift in cloud control, now moving from being controlled by IT departments to being delivered through a corporate focused perspective. Ivar described how the landscape is changing with 60 percent of decisions on where the cloud should be employed, now being taken based on corporate strategy. The shift shows that the business benefits of the cloud are now being realised at a management level, as users increasingly look to move away from in-house IT, and instead turn towards a buy-as-a-service model.

Regulatory awareness

Users must be aware of the different form of regulation which surround application services, issues of compliance and how business partners intact with applications and shared services. As technological developments become part and parcel of businesses business law has come to reflect this. Developments such as cloud have been impacted by the need for data regulation and security. With ATOS’ move to application management issues such as data regulation were a less of an issue based on the choice for the geographic location of the stored data, with datacentres being situated in Ireland under EU law, while the data itself was not highly sensitive by only recording select information and avoiding blanket coverage.

Adrian Quayle of the NOA, described during a roundtable discussion, how data from applications is often requested as a viewable metric item by customers, wishing to understand how information retaining to them is processed. This is a request that is similarly made by business partners. Users need to understand the value of analytical capabilities in applications management and how control and analysis of in-house IT differs from remote services.

Sinead Lynch, Senior Associate at CMS Cameron McKenna, discussed the final hurdles of application contracts in: ‘The legal perspective’. Users of application management must have the foresight to address the exit phase, with clear principals and an exit plan that is maintained through the applications lifecycle. Key staff need to be involved at this stage, mirroring the beginning stages in having the relevant staff. Adrian Quayle, said: “There’s often a focus on the success of a project, while avoiding the thought of the end, failure or change of provider.”

Project management needs to include consistent meetings during a contracts lifecycle, alongside an individual who has final responsibility for the end phase throughout the whole of the contract.
In a fast moving IT environment, application management needs to abreast of the many obstacles that can potential de-rail a contract, in order to reap the rewards of a service that offers unparalleled cost-value, with increased agility and speed. Between the steering committee speakers the roundtable was presented with the key methods to ensuring good governance continues to deliver a modern and constant service from application management.


Wipro Infrastructure Engineering expects 25% revenues from aerospace, defence

March 29th, 2013

Wipro Infrastructure Engineering has set itself a target of generating a quarter of its revenues from the aerospace and defence industries – sectors it just entered by partnering with CESA, a subsidiary of European Aeronautic Defence and Space Co.outsourcing8

“In five years’ time, we want to have at least 25% of our revenues coming from these areas,” said Pratik Kumar, president of Wipro Infrastructure Engineering. “I think that is a fairly aggressive and ambitious target to set.”

With revenue of about 1,700 crore, the WiproBSE 0.31 % group company claims to be world’s largest independent manufacturer of hydraulic cylinders and pumps used in construction and mining equipment.

Wipro’s aerospace and defence focus comes at a time when local defence manufacturing industry is eagerly awaiting billions of dollars in offset-related business. Indian policy mandates that foreign companies winning defence contracts worth over 300 crore must spend least 30% of the contract value on local procurement of components and services.

“The understanding is that the offset programme will help outsourcing of hydraulic components since India has a strong base for the same,” said, Niju V, director for automation & electronics, South Asia & Middle East at Frost & Sullivan.

Founded in 1976, the infrastructure engineering unit is part of Wipro Enterprises, which include consumer care and lighting and medical diagnostics. These businesses are being demerged from the IT services business of Wipro LtdBSE 0.31 %.

Large aircraft manufacturers, including Boeing and Airbus, already have fairly established outsourced manufacturing relationships in China but are looking to geographically diversify their manufacturing bases as part of risk mitigation exercise and this works to the advantage of companies such as Wipro. Last month, the company started production at its new aerospace actuator manufacturing facility at Bangalore special economic zone with plans to double the initial investment over the next six years to expand capacity and add new product lines. The support of EADS was enlisted in mid-2011, to help build the manufacturing facility that just got completed.

According to Wipro, the global actuator systems market is estimated at about $3 billion ( 16,300 crore).


CMS to reduce scope of Integreon outsourcing deal

March 29th, 2013

CMS Cameron McKenna is scaling back its controversial back office outsourcing agreement with Integreon, with the news coming days after Osborne Clarke (OC) confirmed it was reducing the scope of its own agreement with the outsourcer.outsourcing7

CMS managing partner Duncan Weston said the firm was looking for an alternative third-party provider to take one part of the facilities services agreement it signed with Integreon in May 2010.
The firm would not confirm which part of the contract was being reviewed or how many staff could be affected by the plans.

At the same time as confirming the review of back office contract though it said Integreon would be increasing the amount of legal process outsourcing it carries out for the firm.

The news comes barely two years after the £600m contract, which covered virtually CMS’ entire UK back office function came into effect. At the time of announcing the deal CMS said it would cover a 10-year period.
Weston said in a statement:”Integreon remains a trusted and strategic procurement partner for us in delivering efficiencies for the firm and our clients. In collaboration with Integreon and as part of good business practice, we continually review all aspects of these services to ensure those efficiencies are maintained.

“We can confirm that we are currently considering the possibility of an alternative third party provider for one part of the facilities services currently provided by Integreon and they are leading the sourcing project to find us the best in class facilities provider. In addition Integreon is increasing the provision of legal process support for our firm and our clients.

“Employees have been informed and both CMS and Integreon are committed to confirming final decisions as soon as possible.”

Earlier this week (25 March) Bristol-headquartered OC announced it will see at least 65 staff return after deciding to bring a number of support functions back in-house from Integreon. OC originally sent 75 staff to the outsourcer as part of a deal agreed in 2009.


Software Company Imprezzio Global Helps Launch IT Innovation Days in Cluj, Romania

March 29th, 2013

As signs of spring began showing in the technopolis of Cluj-Napoca, a new initiative of the Cluj IT Cluster was born: Cluj IT Innovation Days–meant to strengthen the local IT community and develop business relations with international partners.outsourcing6

Imprezzio Global, a subsidiary of US-based Imprezzio Inc., is one of the main organizers of the event. Since 2008, Imprezzio’s European branch has specialized in enterprise cloud-based applications, software as a service, mobile applications, existing-system integration, contact and marketing management and embedded hardware solutions.
Cluj IT Innovation Days kicked off March 20 with speeches by US Embassy delegates and Romanian government representatives and a keynote address by Jean-Michel Corrieu, Director of IBM’s Business Solution Center in La Gaude, France.

During the “technology” portion of the event on March 21, Imprezzio Global’s Architect Nazmi Savga and Lead Developer Agota Radoi Riger gave a presentation entitled “Is NoSQL the Sequel to SQL?” Other experts included staff from Microsoft Romania, CISCO, IBM Romania and professors from the Technical University of Cluj-Napoca and Babes-Bolyai University.

Why the City of Cluj?

Over the decades following World War II, the second-largest city in Romania has steadily built itself into “the Silicon Valley of Eastern Europe.” Cluj currently boasts 100,000 square meters of office space along with a network of 64,000 km of optical fiber to support the 1,000+ IT&C companies registered there.

Recently, Imprezzio Global helped found the Cluj IT Cluster, a group of businesses and public institutions with over 20 years’ worth of experience in providing IT outsourcing services and products to customers worldwide. The Cluster boasts combined revenues of approximately 100 million Euros and a total of 3,500+ skilled IT specialists and support staff. Its goals include: promoting the “Cluj IT” brand in Romania’s public sector and internationally developing Cluj Innovation City, a 300 million Euro Community Project, meant to create an innovation area that will attract over 20,000 IT specialists in the next 15 years investing in R&D providing entrepreneurial plan development for start-ups
creating diploma-program internships and improving the tech skills of high school and university graduates working with government entities to promote best practices in IT services making Cluj IT Innovation Days an annual event becoming one of the most trustworthy IT service provider groups in Eastern Europe Says Tudor Armand Ciuleanu, Imprezzio Global’s Managing Director, “We have invested a lot of time and effort in the Cluj IT Cluster. With the support of the US Embassy and the Romanian Ministry of Development, we hope to increase brand awareness in local and global markets and succeed in accomplishing multiple R&D projects.

“We are positive about the concept of the Cluj IT Cluster and as the Cluj IT Innovations Days event was a real success, so we are certain that in time we will achieve all of the cluster’s goals.”


Strategic investments drive modest growth in IT spending

March 29th, 2013

The relatively stable economic climate has resulted in modest growth in IT investment, according to Gartner’s latest quarterly spending forecast.

Richard Gordon, a research vice-president at Gartner, said businesses are better prepared, in terms of managing budgets, than they were immediately after the banking crisis in 2008/9.outsourcing5

While there is still uncertainty in Europe over the economy, which has eroded business investment, organisations appear to be more comfortable with the economy than they were when the panic set in during 2008/9.

“Now we have an understanding of the problem, in terms of sovereign debt, and an understanding of what has to be done. But it will take a long time,” said Gordon.

For IT expenditure, this means there is low growth in most areas.

He noted that device spending is still growing fast, and is expected to reach $718bn in 2013, an increase of 7.9%.

“Devices spending took us by surprise,” said Gordon. “We are seeing continued spending, driven by high-end smartphones and tablets.”

Outside of device expenditure, other areas of IT saw modest growth driven by strategic IT investment, according to Gordon.

“It’s not about everyone chucking money at IT. There is a shift to cloud computing, social media, mobile technology and growth in information,” he added.

Gartner categorises cloud computing, social media, mobility and big data as a “nexus of forces” which can transform the way businesses operate.

These four areas represent essential spending that is strategically important to business. “There is a strategic imperative for enterprises to get ahead of the curve,” said Gordon.

Gartner predicted datacentre systems spending will grow by 3.7% in 2013, down 0.7% from its previous forecast. This reduction is largely due to cuts to the near-term forecast for spending on external storage and the enterprise in Europe.

There is also continued hesitation among buyers in IT outsourcing contracts, according to Gartner. This is fostering hyper-competition and cost pressure in mature IT outsourcing segments and reallocation of budget away from new projects in consulting and implementation, Gartner noted.


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