Efficient IT

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FOCUS ON OUTSOURCING

Joanne Frearson reports from New York on the Intelligent Assistants conference

November 2015

The new enemy: march of the cybermen

Ahead in the digital game Louis van Gaal’s Red and White army (all 659 million of them)

TIME TO START THE FIGHTBACK

TalkTalk is the latest big company to suffer a cyber-attack.

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November 2015

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Opening shots Shane Richmond

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HE NEW Hydro66 data centre in Boden, Sweden, is the first 100 per cent hydropowered co-location data centre in the world. Opened by the Swedish finance minister in late October, the new data centre sits beside the Lule river and draws its power from the hydropower station 500 metres away.

Together with northern Sweden’s cold climate, which helps to reduce the cooling power needed, the hydropower makes the new Hydro66 data centre one of the greenest available. That’s an important selling point, as the company’s chief executive, Andy Long, pointed out: “Conducting research into current and future requirements, we heard that CTOs have four key concerns: cost, carbon footprint, security and connectivity.”

Of course, parts of Britain have been known to experience a cold climate. Scotland’s first Tier III data centre, situated between Glasgow and Edinburgh, off the M8, will open in May next year. At 100,000 square feet it would fit into the world’s largest data centres several times over – the record holder, in Langfang, China, boasts 6.3million square feet – but it will be one of Britain’s largest. And, importantly, the company behind it, Colo DataVita, says it will be 100 per cent powered by renewable energy.

A green data centre is no longer just a “nice to have” and that is one reason why Nordic countries

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Why Britain may be left out in the cold when it comes to the data centre boom are proving so attractive as locations, as they offer a large amount of green electricity. So where does this leave the UK? Britain does well in the data centre market but its power strategy could be a threat.

Henrik Leerberg, marketing and strategy director for data centre managed service and software at energy firm Schneider Electric, said Britain’s cheap, fossil-fuelled electricity represents an obstacle to green data centres. He told Computer Business Review: “The challenge for data centre operators is that UK power is mainly generated by fossil fuels.”

He added: “UK-based co-location providers such as next generation data centres (NGD) offer to source power purely from Welsh hydro-electric supplies.

Some time ago, Infinity SDC proposed a data centre powered by bio-fuel generation. Other non-UK providers such as Green Mountain make similar nocarbon power offers. The fact remains that it is very Twitter: @ difficult to actually use green energy exclusively, shanerichmond

by virtue of the UK power grid’s architecture.” That means that as companies seek new data centres, their increasing environmental awareness will make Britain a less attractive option. A report by the Tariff Consultancy in June this year predicted the UK will be Europe’s largest market for data centres by 2020. The authors added that they expect data centre space and power in Europe to increase by nearly 20 per cent over the next five years.

Like all economies, Britain is increasingly internet-dependent and the growth in demand for green data centres will pose a challenge to UK businesses and to companies that want to site data centres here. The government recently turned to China to improve Britain’s nuclear energy capacity but the first of the three planned nuclear plants is not due to start generating until 2025. In the meantime, the data centre boom will have come and gone, with Britain left out in the cold.

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Technology and cloud topping the outsourcing table THE TECHNOLOGY and cloud sectors continue to remain attractive areas to outsource, as companies look for people who have specialist technical skills in these fields.

Melanie Longman, associate principal at LCP Consulting, says: “Outsourcing in the technology and cloud sector continues at pace.

We also see some of the high-end skill sets such as analytics being outsourced.”

But overall, Longman explains, businesses are taking a far more measured approach when it comes to outsourcing, and looking at it from a much more thoughtful and balanced perspective, regardless of whether the technical skills through outsourcing can add value to the firm.

According to Longman, there are certain things a company should consider before

outsourcing services to another firm. First of all, they should be very clear on what the rationale, goals and cost benefits are for choosing to outsource.

Secondly, they should examine whether or not they have the capabilities and technology to do the job and understand the risks associated with potentially

outsourcing it. Thirdly, there should be a focus on building skills to manage outsourced relationships. She says: “It is more than looking at the pure commercial elements, but how does this relationship work and what can we get out of it?

We see a lot of emphasis on how to manage outsourcing relationships better.”

Shorter, cheaper contracts on the up

By Joanne Frearson

ENTERPRISE BUYERS in the world’s major sourcing markets continue to push for shorter contracts at lower cost, according to data from ISG’s Outsourcing Index.

The index, which measures com merc ia l out sou rc i ng contracts with annual contract values of $5million or more, showed 344 contracts were signed in the third quarter, up nearly 20 per cent from the previous year, but down from the record 488 contracts signed in the second quarter of this year.

Figures for the third quarter also pushed the deals valued at less than $40million into record highs for the first nine months of the year. At the other end of the spectrum there were five mega-relationships (contracts valued at more than $100million annually), bringing the year-to-date total to 14.

Overall, the number of awards was at an all-time high of 1,094, up 8 per cent from the same period last year, even though annual contract value was down 11 per cent, to $16.8 billion.

John Keppel (above right), president and partner of ISG,

The inner geek

Moz & Bradders

said: “The market trend is continuing toward smaller deals, as enterprises increasingly buy specialised services from smaller niche providers, and avoid getting locked into big, long-term contracts to maintain the flexibility they need to take advantage of fast-changing technologies, lower pricing and evolving operating models.”

The value of new-scope contracts, totalling $3.8billion, was up 8 per cent from the prior year, while restructured contracts slid 13 per cent for the quarter, to $1.8billion. Year to date, both new-scope and restructured-contract annual contract values were down 11 per cent, largely attributable to a slowing manufacturing sector and a flat performance from financial services.

The third quarter also saw the rise of business process outsourcing (BPO), with annual contract values up 53 per cent to $2billion, fuelled in large part by a sharp increase in contact-centre outsourcing and industry-specific BPO. By region, the Americas continued its steady performance, logging its seventh consecutive quarter

John Keppel from ISG

of annual contract values above the $2billion mark.

The number of deals surged 31 per cent to 165, reflecting a continuing trend toward smaller contracts spread across a broad base of buyers. EMEA produced

$2.7billion in annual contract values for the quarter, while contract counts rose 7 per cent, to 139. It was the eighth time in the last nine quarters the region has topped the $2.5billion annual contract values mark.

Annual contract values in the Asia Pacific region rose 13 per cent, while contract counts jumped 25 per cent for the third quarter. “Looking forward, we expect an active finish to this year and a strong start to the next, with many awards in the Americas and EMEA,” said Keppel. “Deal values will remain small as businesses focus on areas such as security, digital and cloud.”

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Sourcing in the digital age: evaluate, disrupt and govern

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ear-to-date contract counts are at a global high, with contract awards up nearly 20 per cent. But while volumes are increasing, global annual contract values are down 11 per cent as smaller deals continue to drive market activity.1 Reports suggest this trend is a result of a seismic innovation wave. Disruptive technology promoting robotic process automation and digitisation is at its heart, and has the capacity to revolutionise the sourcing landscape. What does this mean for customers contracting for third-party services?

Increasingly, customers are opting for application-centric solutions and shared data centres, where specialised services are provided by niche providers. This has meant a definite shift away from traditional sole-source environments where large global vendors have a tower-centric, function-wide scope. Instead, customers are choosing vendors by service scope – leading to a multi-sourced environment within a given function. Smaller vendors with distinct capabilities and expertise in disruptive technologies are ready to capitalise on this shift.

Customers should be reviewing their sourcing portfolios to take advantage of these new service models. Evaluation will enable customers to assess their current sourcing environment, the

scope of their existing agreements and identify where automation can streamline processes, facilitate efficiencies and drive value.

The increase in (lower-value) deals is likely to cause customers to review the cost and time dedicated to each contract process, with more transactions done on vendor terms and conditions, reflective of a more standardised, as-a-service solution. Traditional comprehensive RFPs are likely to become less common, as customers demand more agile, immediate forms of vendor selection to keep pace with emerging technologies and dynamic business requirements.

Service integration and sophisticated governance will

become increasingly important as the multisource model becomes more prevalent and the complexity of the vendor/customer relationship intensifies. A multi-source environment with multiple IT interfaces, competitive forces and a complexity of roles and responsibilities sounds like a governance disaster waiting to happen. However, that complexity can be mitigated and, in fact, capitalised upon by vendors broadening their service management capabilities to promote governance as a core service offering.

Where an incumbent vendor does not offer specialist management capabilities and the customer is not capable (whether operationally or financially) of providing the governance function itself, there will be an opportunity for a new category of IT services professional: the service

broker. The service broker might design, source and provide a complete managed service with centralised governance and a heavy emphasis on data analytics to effectively manage a multi-sourced environment as a standalone specialist service offering. These contracts will raise their own unique challenges and the complexity of the sourcing relationship will increase for the customer. However, through their contract with the service integration specialist, the customer should be able to transfer some of the associated risks.

Although the increase in efficiencies and agility should outweigh the change in risk profile, it is critical that customers properly consider the contractual and operational risks associated with a multi-sourced environment. Although individual contract values will be lower, the underlying services will remain business critical and, therefore, customers must implement a robust governance model to address the growing complexity of their third-party relationships.

Peter Dickinson (inset) is a partner and Megan Paul is a senior associate at Mayer Brown’s corporate & securities group pdickinson@mayerbrown.com mpaul@mayerbrown.com 1. 20%Y/Y ISG Outsourcing Index Global 3Q15

Find facts fast: getting the legal team up to speed

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he digital revolution is far more significant than the invention of writing or even printing, according to American engineer Douglas Engelbart. Whether he overstated his argument or not is debatable but it’s certainly the case that the speed of technological change is dictating how we do business in the 21st century.

It’s a revolution which has left its imprint everywhere, especially on the corporate world where investigations are now an unfortunate part of business life.

And, when it comes to legal disputes, most of the information a firm will need to look at in terms of evidence is going to be stored on some sort of electronic device.

It might be in an email account, it might be on a smartphone, it might be on a tablet – wherever it is, because the volume of information held on all these devices

just keeps on growing, it would not be unusual for a company responding to a big investigation to have millions of documents to go through.

The legal world has never been noted for its speed of change but, as better technologies become available, meeting today’s e-discovery challenges requires legal teams to explore new options.

Traditionally, during a dispute or investigation, lawyers would go through tens or hundreds of thousands of pages, manually searching for evidence, which is then provided to the other party.

While the central role of lawyers has not changed, this part of their work can now be done with a mix of contract lawyers and advanced analytical technology.

“This combination of review expertise and sophisticated computer algorithms means we can provide the same high level of

expert service but more efficiently,” explains Craig Earnshaw (left), senior managing director in FTI Consulting’s Technology segment.

“The collection, preservation and review of these electronic documents is the key part of the process and, as with any evolution, you need to ensure that you maintain quality.”

Apart from providing documents to the other party, at the heart of every

e-discovery project is the search for key documents which contain the facts on which the outcome of a dispute or investigation might hinge.

These key documents not only drive review strategies but, more importantly, case strategies: find the facts late and a case suffers; find them early and a company will be on the front foot.

“We call it Find Facts Fast,” explains Earnshaw. “With Ringtail®, our

e-discovery software, you can dive into one or two million documents and, within a very short time, identify the core documents containing the key information, and are relevant to the case in hand, leaving the lawyers to focus on high-value strategic work in the matter.”

Just as data mining and artificial intelligence are changing other areas, the technology analyses the documents, visually grouping and summarising content by people, topics and time. This enables swift understanding of large volumes of information, zeroing in on documents with the critical content.

“Essentially, we are using the technology to understand the data rapidly,” concludes Earnshaw.

“If you put the facts at the beginning of the process, you can develop a stronger strategy and highlight any weak areas there may be in your case.”

For more infomation contact Craig Earnshaw on +44 (0)20 3727 1146 or Craig.Earnshaw@fticonsulting.com

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Matt Smith reports from Old Trafford

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O U I S VA N G A A L’ S Manchester United team have made a promising start to the new football season. The Red Devils are sitting near the top of the Premier League and have made it to the Champions League group stage after a year without European competition.

United boast Old Trafford, the largest club stadium in England, but each goal that hits the back of the net is not just celebrated by the 75,000 fans at the match – they are also cheered by a community of 659 million followers around the world keeping track of the action online. In September, the club announced a partnership with HCL Technologies to help bring its players, fans and sponsors closer together than ever before through the club’s website, its mobile app and other channels.

Manchester United group managing director Richard Arnold called the deal “a very important step” for the team.

“Through this collaboration we hope to change the way we interact with our fans around the world,” he said at a press conference on a rainy day at Old Trafford.

“We will work together to build digital platforms which enhance the ways in which fans experience the club and further enhance our digital presence.”

A key part of the partnership is the United Xperience Lab at Old Trafford, which will act as a base for the club to work with HCL to explore the ways in which it can improve its fans’ digital user experience. The lab is the first of its kind at a sporting club and only the seventh such initiative in the world.

Arnold said the club’s work with its first digital transformation partner would focus not just on the number of interactions it has with its fans, but on the quality of those contacts, too. He stressed the importance of this work to the future of the club. “Having a strong engagement with a family of fans as big as ours is a recipe for success,” he said.

“That success off the pitch is what drives the success on the pitch in a sustainable way. Those learnings are very, very important in driving that engagement.”

Former United defender Denis Irwin, who made 529 appearances and scored 33 goals for the club between 1990 and 2002, said the move was symbolic of technology’s increasing role in football for both players and fans. “The game has changed,” he said. “The experience for fans has changed. The majority of our fans cannot get to Old Trafford so we have to engage them. Technology is a huge part of the game now for the players, the media and the fans. It gets the fans involved and I am sure we will see a lot more of it. It is making the game more entertaining.”

Under the new partnership, fans

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Wayne’s World

(along with 659,000,000 mates)

Manchester United are connecting Rooney & Co with fans around the planet

United fans across the globe could soon be far closer to Wayne Rooney’s exploits on the pitch thanks to the club’s partnership with HCL; Below: manager Louis van Gaal

will play a key role in influencing the user experience of a new Manchester United website and mobile app, as well as exploring ways in which emerging technologies like the internet of things and wearables could be used. “As we think about wearables and other devices we can test that out in the lab and show what the value is before we set out,” said Jaco Van Eeden, global head of HCL’s Beyond Digital business unit. “We want to bring a better experience on a continuous basis.”

When it comes to which services and providers will be used to deliver that continually improving experience, efficiency and sustainability will be key factors in the decision. “When we go into public cloud computing we will consider how we are stepping up the efficiency and sustainability aspects,” explained Ashish Gupta, HCL’s executive

vice president and head of infrastructure services for the EMEA region.

But the initiative also needs to be able to grow and adapt to avoid the nightmare so many CIOs face: a legacy system that needs to be replaced to be improved. “We will have to make a choice of what is most scalable – the architecture and the way we will put it together,” Van Eeden said. “It is almost like little applets, so it becomes scalable. It is built in an agile, flexible way so it can connect to other services and applications.”

According to Van Eeden, analytics and capabilities will be high on HCL’s list of priorities, to ensure the setup is

efficient but also extendable, and able to incorporate any future features or technologies that emerge in the coming years.

“When we add something we have to be sure we have high capability and high performance,” he said, adding that the services offered will also be optimised to serve the most relevant and efficiently packaged Manchester United content to different users, depending on factors such as the nation they are connecting from and the type of phone they use.

“We will have to look at all of those aspects – different locations a nd d ifferent devices,” Gupta said.

“In some locations you will be able to

stream HD content, in some locations you will not be able to.”

The platform is following a wider movement towards efficiency in technology, and HCL hopes it will be able to adapt and incorporate new innovations and techniques to deliver the same output with less waste. “In general the trend in technology is less and less technology used to deliver more and more functionality,” Gupta said.

“The platform is built so it can continue to evolve. We can do open innovation. As long as we keep it open and evolve that as the technologies evolve we will continue to become more and more efficient.”

“That is why the lab is so important,” Van Eeden added. “Companies can talk [about becoming more efficient] but if you do not have a sandbox area with the environment set up, and if it is not built into the process, they just do not do it.”

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How Hudson disaster information security I

COMPANIES around the world are struggling to deal with the threats of cyber-security and data breaches. Only last month, news broke that TalkTalk, the phone and broadband provider, had been hit by a “significant and sustained cyber-attack”. The problems at TalkTalk confirmed what we at Business Reporter had known for some time – that businesses need to come up with better ways of countering cyber-threats.

That’s why we organised the R3 conference, bringing together some of the best minds in cyber-security for a day in London. This is what we learned…

T’S NOT OFTEN that Clint Eastwood is mentioned in the same breath as information security summits, but that was the case when the story of Chesley Sullenberger was retold at the R3 conference in September.

Chesley who? If you don’t remember the name you’ll no doubt remember the story when, back in January 2009, Sullenberger was the pilot on US Airways Flight 1549 when it hit a flock of Canada geese during take-off. Sullenberger kept his cool and landed on the Hudson River, saving the lives of all 155 passengers and crew on board. The story is now going to be made into a Hollywood film – hence Eastwood’s involvement – and it was used to draw parallels with the world of information security by Dr Adrian

Davies (below left), MD of (ISC)2, during his talk at Dexter House near Tower Bridge.

“More than 50 per cent of attendees believed their organisations were capable of quick and decisive action if an incident was detected, yet only 27 per cent had an incident management plan,” said Davies.

“And, despite believing their organisations could take decisive action, only a quarter of attendees had rehearsed their incident management plans.”

T hat’s why Davies highlighted Sullenberger’s story. “Drawing parallels to airline experience, we depend on the fact that pilots are trained to deal with incidents and emergencies, and practise their responses regularly,” he said. “Some pilots go further. Chesley Sullenberger was an air crash investigator, and read widely about air safety and crashes. He drew on a bank of experience, education and training when faced with an emergency.

While an information security incident may not be as dramatic, it can have the potential to ruin businesses and careers. Rehearsing such plans is an easy win and a valuable learning experience.”

Professor Dr Marco Gercke, director of the Cybercrime Research Institute, warned it was inevitable that even the companies with the most upto-date equipment will be hit by hackers at some point. “You can have the best technology but so many things can lead to a cyber-security incident,” he said.

“It could be an insider attacking from within

or someone losing their device.”

He explained firms need to know what to do in the first hour, day and week after an attack. In the first hour there is lots of uncertainty. Gercke said: “There should be limited decision-making and management should be careful on speaking to the press as you do not know what is happening. It is important to analyse and understand first. The biggest mistakes are made in the first hour.”

With thanks to our R3 sponsors

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could help specialists

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For m covera ore R3 sum ge of our www.b mit, go to report usinesser.co.u k

An integrated approach to security Captain Chesley Sullenberger’s successful crash landing on the Hudson River in 2009 was used as a good example of the kind of contigency planning that could also apply to IT security

And what are the guiding principles to good cyber security? Andrzej Kawalec, CTO, HP Enterprise Security Services is in no doubt. “It’s about protecting and enabling the business. You need to understand the risks and the scenarios affecting your organisation. You then need to prepare.

It takes a year to train for a marathon and it’s no different in this space. Those first two or three hours where you are expected to run at maximum capacity are vital and if you have not prepared as a team you are not going to respond well. The final piece is later on in the response phase; responding in real time, understanding the communications implications.”

When asked about their information security, a common question posed by small business owners is: “Why would anybody be interested in us?” It’s not a viewpoint with which Global Identity Foundation CEO Paul Simmonds agrees. “Even the most innocuous sites are targeted for a reason,” he says. “They can steal credentials that can be used to attack financial services and leapfrog into other systems. If they can get an email for you, there is a high chance you have used the same password on your email account. They can reset your password and gain access to your accounts.”

Rik Ferguson (inset, above left), global vice president, security research,

Why should a company have a security breach notification procedure?

Bridget Treacy, Managing Partner, Hunton & Williams “If you don’t know what to do next you can waste valuable time. It’s important to have a procedure and that procedure has been rehearsed. With plenty of EU data protection regulation coming over the horizon, the first thing companies need to do is understand the legislation and think about which issues are going to have most impact. It tightens the obligation on data controllers, it imposes additional obligations on data processors, it strengthens individual rights and harmonises the law to a great extent across Europe.”

Trendmicro, is certain the battle between the good guys and the bad guys is far from over. “It’s an arms race and the attackers are learning as much from the security industry as we are learning from them,” he says. “We take the tools, tactics and procedures of attacking organisations, whether that be state-sponsored activity, organised crime or hactivism, and make sure we modify what we do to take advantage of their tactical shifts. One of the biggest recent examples is how we have moved as an industry away from blacklisting and whitelisting into a more reputational-based system.

“There’s a perception that data breaches and targeted attacks are a US problem, but that’s because they have to notify. Within the EU if we begin to foster that culture of disclosure there will be more realisation this is not just a US problem – this is a global issue that seriously affects European

business and global business. There are some incredible technologies over the horizon – heads-up displays, tokenisation of payment information, artificial intelligence – but what we have to be sure of is that we begin to engage the wider community outside of traditional security.”

So is the UK’s legal system fit for purpose when it comes to taking on the cyber-criminals? Not according to Dr Richard Overill, senior lecturer in computer science at King’s College, London.

“The UK legal system as it affects cybercrime really only began to develop in the mid-1980s with the Computer Misuse Act, and was already out of date in 1990.

It had to be updated in 2006 and already that is out of date. It’s lagging something like 30 or 40 years behind the technology.

That’s the sad fact from the point of view of prosecuting cyber-crime.”

E

ver-expanding connectivity, digitisation and the Internet of Everything (IoE) are transforming our world, creating new business models focused on greater speed, efficiency, and agility.

To seize this growth opportunity, companies must be able to guarantee the integrity of the data and transactions taking place in this digital economy.

Security needs to become as pervasive as the IoE itself.

The challenge is not only having the right security tools, but the right processes to assure these tools are effective and interoperate. Unfortunately, it isn’t unusual to find organisations with 40 to 60 and more disparate security solutions.

The result of this fragmentation is the operational burden of maintaining these solutions and keeping them up-to-date, and potential vulnerabilities that result from when companies are not able to do it consistently.

Attackers take advantage of this scenario, and once inside

the network they may remain unnoticed for a long time.

The impact of successful attacks can be staggering.

If the data and telemetry from all these technologies could be correlated and analysed to define what “looks bad” consistently and in one place via a single visibility platform, a simultaneous and instant response could be applied across the entire infrastructure.

With an integrated approach security can truly be everywhere. Integration enables greater visibility and control over the extended network, which includes data centres, mobile devices, applications, endpoints and virtual systems.

Ultimately, companies should build a security strategy that focuses not only on stopping every threat, but also understanding the specific risks to their business and how they can mitigate the impact of any attacks and learn from previ ous incidents to further strengthen their defences.

Terry Greer-King (left) is director of security at Cisco Securitymarketinguki@cisco.com www.cisco.com/go/ security

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Business Reporter’s Joanne Frearson travelled to New York for the two-day Intelligent Assistants conference. Here are her exclusive reports.

Humans chatting with computers… why it’s becoming the norm

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HE FIRST time I was formally introduced to Nina was in New York, attending a conference about Intelligent Assistants. She was the friendly customer service agent who took our pizza orders. But after that first meeting, I realised I have come across her before. She is a woman of many guises and works for many companies around the world, helping people with their customer enquiries.

Nina is not a real person, of course – rather, a virtual assistant developed by tech firm Nuance. She works through a powerful set of algorithms which enables her to understand complex questions. She speaks 38 languages, has interactive voice-response technology and works across mobile and web.

It may seem like something out of a science fiction movie, humans chatting with computers to help them in their day-to-day lives, but today

Domino’s is using intelligent assistants to take pizza orders

it is becoming the norm. Companies have been outsourcing and hiring the services of outside technology firms so they can have an intelligent assistant like Nina.

Tony Lorentzen, general manager of Nuance On Demand, tells me: “Virtual agents are helping to cut costs. A company will spend more than $6 to $7 answering a call with a person. By using an automated voice, this cost will only be 10 to 15 cents.”

Nuance first introduced Nina in August 2012 and, since then, the intelligent assistant has been used by companies such as USAA, Domino’s and Jetstar Airways to improve the customer experience. By interacting with a virtual agent, Lorentzen explains, companies can help solve some of those enquiries quickly and efficiently

as the customer does not have to spend a lot of time searching a website or talking to someone over the phone.

He says: “Some 57 per cent of incoming calls emanate from a website because they cannot find the answer to a problem. If the answers to these calls can be solved immediately on the website through an intelligent assistant, it makes the company more efficient.”

The main reason why companies have been using Nina is because it reduces customer wait times. If wait times are decreased, companies become more efficient, costs fall and customer loyalty increases.

For example, Domino’s virtual assistant Dom, which is powered by Nina, can handle more than 14 million food combinations and has enabled people to order twice as fast. Dom has become so popular customers are now preferring ordering through it rather than talking to a human agent.

The team behind Nina is led by Andy Mauro, senior director at Nuance. He tells me: “What most of our customers actually care about is that automation is instant. Waiting in a queue to talk to someone to get something done is a profoundly disappointing experience. An automated experience that can deliver the outcome you want is really gratifying, and builds customer loyalty. It is less about saying, ‘Wow! I am talking to a robot’, more about, ‘I got this thing done right away’. Consumers are not demanding to know whether they are talking to a human or a virtual assistant.”

Although there has been a concern about virtual assistants replacing the need for human staff, Mauro does not believe this will be the case.

Instead, he explains they will just be used for the mundane tasks, leaving more time for the real customer service agents to spend on the things which need a human touch.

“There is the whole other mundane set of things that is not bringing an agent job satisfaction,” says Mauro. “What agents love doing is having an emotional connection with the callers. You are going to see agents having better jobs and having better job satisfaction because they get to focus on the human, emotionally resonant activities.

“Increasingly you will see a blended human agent and virtual assistant conversation happening, and the end result is that consumers are going to be as happy or happier because it is going to be instantaneous. They are not waiting for a human agent to deal with the two or three other people in the queue.

“The holy grail will be when virtual agents learn from people. What computers are really good at is knowledge retrieval.”

Some companies have already started using Nina internally to help their staff. JetStar’s virtual assistant Jess, another version of Nina, is being used by the airline’s customer contact agents to look up information internally, as it was easier to ask Jess questions than look it up independently.

Staff started to do this without the company introducing this as a service.

In the next 10 years, Mauro believes virtual assistants will become increasingly common, and will be able to use personalisation, and anticipate and predict behaviour when chatting to customers. They are likely not only to help us more and more, but also enable companies to be more efficient in the process.

How Nina’s welcome is h SWEDBANK IS using virtual assistant Nina to be able to deliver a faster service to its customers, increasing efficiency for the bank.

Martin Kedback, head of business development and support at Swedbank, says: “Our agents and advisers both in branches and contact centres were spending far too much time looking for answers to customer questions. A question would come in – for example, ‘How do I send this bill abroad?’

They would spend a lot of time talking to each other and searching a very poor intranet.”

Originally, Swedbank wanted to set up an internal Wiki page to help handle these requests, and sent out a request for proposals (RFP) to five or six different companies. But they were advised by Nuance to use a virtual

assistant instead, as it would reduce the amount of time agents needed to spend on the phone with customers.

The bank partnered with Nuance last year, and uses Nina to answer customer queries on its external website, while an internal version of the assistant has been set up to help keep staff up-to-date about the bank’s products.

Nuance provides technical support for Nina and is on-hand 40 hours per month at the bank to give advice.

The plan was to remove some of the common questions agents kept getting asked by customers over the phone. These included ‘Where is the nearest branch?’, ‘I need to order foreign currency?’ and ‘Where can I find cash?’ “It has made a big difference,” Kedback

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9

Invest in people, not the latest fad which claims to deliver massive savings Keil Hubert

I

helping a Swedish bank says. “We have about 1,600 conversations every day on the inner web, and out of those about 80 per cent are deflected or channelled through Nina. ‘Deflected’ means people get such a good answer that they do not need to get in touch with us at all, so problem solved; channelled is where we send them through another channel.

We are saving about eight million krona [about £612,000] a year.”

Kedback says that using Nina enables the real customer agents to spend a lot more time on face-toface meetings, which is more profitable for Swedbank. It has reduced the amount of time the staff search for information by a quarter of an hour.

When new issues arise for customers, Nina is being trained to answer some of their questions. After pension reforms were introduced in Sweden, Swedbank received a large number of calls which they did not anticipate. Staff were able to train Nina to answer some of the questions customers had.

Around 58 per cent of Swedbank’s customers are digital, and the bank is now looking to expand Nina to its mobile and iPad bank. “We are increasing the implementation of Nina,” says Kedback. “We are adding it to 52 more sites. The bank is made up of a lot of small, semi-independent savings banks.

We need Nina to say welcome in the location of the bank and be up to date in the offers or discount rates of the bank.”

’VE WEATHERED a bunch of “efficiency” drives, including Total Quality Management, ITIL, Six-Sigma, SEI CMM, and seven different “centralisation” initiatives. While each drive brought us some value, all of them ultimately failed because they misunderstood what it means for an IT shop to be considered efficient. Random House’s dictionary illustrates the problem: you can either define efficiency as (a) accomplishing a task with a minimum of time and effort, or (b) accomplishing a task with the least wasted time and effort. Those two definitions are not interchangeable in IT service delivery thanks to resiliency, stability, and progression factors.

Resiliency (in this context) represents the organisation’s ability to endure surges (increased workload) and strife (decreased capacity). One quality initiative declared that we’d pare down our staff to the absolute minimum engineers required to provide basic tech support. The plan promised to save a bunch of payroll, but would break the work unit: absolute minimum staffing meant that no one on the team could ever get sick, or have family issues, or take a holiday. Once you removed just one high-demand/low-density engineer from the schedule, support failed.

When a new product launched that required extra attention, support failed. You must buffer your staffing to accommodate the ebb and flow of business operations.

Stability represents the organisation’s ability to protect itself from known preventable harm. An executive once asked IT to give every user local admin rights over his or her company PC so that they wouldn’t have to wait on IT to install software, load device drivers, and so on. The executive swore to the heavens that no one would ever abuse their vastly increased power... We politely refused because we’d already caught the louse abusing his tier one augmentee rights to install videogames on his laptop.

Letting everyone have admin may

decrease helpdesk workload in 80 per cent of cases, seeing as most users are decent, honourable people. It’s the handful of rogues that drastically increase the workload of the much more expensive security department.

An efficiency gain that increases vulnerability is a terrible idea.

Progression represents the organisation’s ability to evolve beyond the status quo – to experiment with and deploy new and better solutions for the business. I’ve fought viciously against “right-sizers” who were convinced that two inexpensive tier one engineers were better value than one expensive tier two engineer.

Their logic was that we’d get save money by purging experienced senior staff; after all (they said), a junior tech with a solid checklist can solve the same tech problem as a senior tech working from memory, right? Wrong! Seasoned staff provide advanced troubleshooting skills, and also mentor junior staff on both tech work and tribal knowledge. Advanced engineers cost more because they’re worth keeping.

To be clear, I’m a huge fan of making processes lean and consistent.

I enjoy eliminating organisational waste. I want my IT departments to run smoothly, reliably, and free of drama. That being said, I also want my IT service capability to be as strong and as flexible as I can make it, so that we can consistently provide highquality coverage without the risk of being casually degraded by changes in the operating environment. The more efficient an IT organisation becomes on paper, the more brittle it usually becomes in practice.

That’s why I recommend being wary of any new fad or product that claims to deliver massive savings. If one of a solution’s steps involves eliminating your critical personnel, politely decline. The efficiencies gained won’t be worth the harm that’s inflicted. Invest in your people instead.

keil.hubert@gmail.com

November 2015

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5%

Strongly disagree

26%

33%

2% 25% 25%

36%

48% My company’s incident response team is adequately resourced

Agree

Disagree

in numbers

The company I work for is ready to act quickly and decisively if the is a breach

Strongly agree

cyber-security 2% 21% 77%

14%

24

62%

%

8% 42% 50%

The increasing number of smart devices will mean a big increase in cyber breaches

Cyber-attacks have never been more in the headlines. Business Reporter asked experts in cyber-security at our R3 summit five key questions. The answers reveal how far we still have to go…

| Follow us on Twitter: @biztechreport

My company is happy to share information regarding cyber breaches

Business Reporter

Investigation after a breach is just as important as recovery

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How data centres within a wider digital ecosystem can give you the edge

W

hat will the data centre of the future look like? One view is that it will be tall – perhaps very tall. Within the next few years, experts say, data centres could be driven by rail-based robotics capable of scaling your entire rack. This means data centre builders won’t be limited by horizontal expansion space, and could fashion efficient structures that scaled upwards, not just outwards. Deploying robots could also lead to less downtime, as every aspect of data centre management would be forecast and controlled.

And as robots can’t see, costly variables like lighting could simply be eliminated.

While we may not have arrived at the robot-driven, “lights out” data centre of the future quite yet, technology is moving at breakneck speed, putting IT teams under pressure to redefine their data centre strategies.

In the past, it’s likely that your organisation built its own data centre, tailored to its needs.

Your infrastructure team probably spent most of its time performing routine maintenance and upgrades, and firefighting the end-user problems arising from that centre. But not only do IT staff now have to provide a professional, solid-core infrastructure, they also have to deal

with their company’s need to succeed in an increasingly digital world. High-speed broadband, big data and analytics, mobility and the cloud have become the driving forces behind the rapid evolution of digital businesses.

If your organisation uses data to create differentiating value, this means no let-up for the IT team – quite the reverse. Technology teams can expect to continue allocating many resources to supporting their enterprise’s new digital initiatives, instead of focusing on core IT needs. Organisations won’t have a lot of time to act, either, because these changes to

a data-saturated, hyper-connected and broadband world are global – the ground is shifting under our feet.

The need to free up IT teams to focus on areas such as development and innovation has never been more pressing. But what if your data centre provider could help with that? What if you outsourced your data centre requirements to an innovation hub – a ready-made, rentable, scalable environment for planning, launching and refining long-term strategies? What if this “digital data centre” directly connected you to partners who shared synergies with your

business, so you could get expert support with implementation and guidance on managing infrastructure in convenient and secure locations?

Far-sighted digital businesses are recognising the implications of tapping into data centres that don’t just sell power, space and cooling facilities, but have transformed into digital ecosystems with powerful online tools and fast interconnections to data, business partners and essential services. They are realising that by placing themselves at the centre of these ecosystems and mastering new digital relationships with potential partners, they can scale up, achieve advanced agility and shape business outcomes in new ways.

Becoming a digital enterprise is no longer simply about becoming more efficient. It is also about operating in a smarter world where doing business looks very different. In this environment, proactive enterprises are letting market-leading specialists manage their IT infrastructure. This is allowing them to focus on their core business, manage costs and lower risk. Will your organisation be one of them?

Ricky Cooper is VP, Digital Realty @RickyCoop emea.digitalrealty.com

November 2015

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Inspector Dogberry THE INSPECTOR is a big fan of

Now the chips are so safe you can put them

group at FPL, has been developing

technological gadgets, and has a great

in the forest and fungus will degrade it.

sustainable nanomaterials since 2009.

interest in how these devices are made –

They become as safe as fertiliser.”

“If you take a big tree and cut it down

has included some fascinating scientific

Zhiyong Cai, project leader for an engineering composite science research

to the individual fibre, the most common product is paper. The dimension of the

papers about semiconductor chips and

fibre is in the micron stage,” Cai says.

computers.

“But what if we could break it down

Dogberry was fascinated to learn that

further, to the nano-scale? At that scale

a team at the University of Wisconsin-

you can make this material – very strong

Madison and the US Department

and transparent CNF paper.”

of Agriculture Forest Products Laboratory (FPL) were developing a semiconductor chip made

By Matt Smith, web editor

The Outsource Blog www.theoutsourceblog.com

Starting up the wood chipper

and his most recent kennel-side reading

11

Around for a decade, The Outsource Blog has been delivering news and updates on outsourcing and offshoring as well as providing a forum for discussion on all aspects of outsourcing. The site has a particular focus on providing a platform for industry professionals to collaborate, debate issues and exchange ideas.

Tests undertaken on the CNF-based

Horses for Sources

semiconductor has shown performance

www.horsesforsources.com

similar to existing chips. The team is

almost entirely of wood, while

hoping there will be widespread

perusing a paper published

adoption of these chips.

in the Journal Of Nature

“Mass-producing current

Communications.

semiconductors is so cheap,

The majority of wireless

and it may take time for

devices use gallium arsenide

the industry to adapt to our

microwave chips that are

design,” Ma says. “But flexible

environmentally toxic. But the

electronics are the future, and

research team has discovered the

we think we’re going to be well

support layer of the computer chip

Research body specialising in global business services, digital transformation and outsourcing, Horses for Sources provides analyst coverage of business practice and innovation, and is geared towards the governance and service strategy needs of business operations and IT leaders across multiple industries.

ahead of the curve.”

made from these non-renewable,

National Outsourcing Association www.noa.co.uk/blog Run by the UK’s leading association for the outsourcing industry and a part of the European Outsourcing Association, the NOA blog aims to advance the industry through driving awareness, education, standards and thought-leadership. The NOA is also a member association, providing training and developing policies to represent broader industry interests.

MicroSourcing Blog www.microsourcing.com/blog

non-biodegradable substances can be replaced with a flexible, biodegradable material made from wood called cellulose nanofibril (CNF).

Assistant.ai (Free – iOS/Android)

Zhenqiang “Jack” Ma, electrical and

A multi-lingual, cross-platform tool which can answer questions, find information, launch apps, set alarms and function with various web services.

computer engineering professor at UWMadison, says: “The majority of material in a chip is support. We only use less than a

Indigo Virtual Assistant (Free – iOS/Android)

couple of micrometers for everything else.

A cloud-based virtual assistant app, Indigo can mange pre-installed device apps including contacts, weather, maps, calendars and reminders.

Twitter: @dogberryTweets

I

T outsourcing is on the up in the UK, with £3.44billion spent last year – a 15 per cent increase year-on-year, according to the UK Quarterly Outsourcing Index.

A recent IDG report in collaboration with TelecityGroup UK found that 63 per cent of businesses have identified the implementation of managed IT services (the provisioning and maintenance of technology by a third party), as a chance to improve customer experience.

But, despite the benefits of managed IT services to the wider business, more than half of the UK organisations represented in the survey are still opting for in-house solutions managed wholly by internal staff.

For many organisations, managing technology is a necessity rather than a core element of their business, so outsourcing IT functions to expert providers is an increasing priority. Cutting down the time and costs associated with IT management has the potential to free up significant resources, which could be spent on business growth and more

Clearing the way to refocus on customer-centricity customer-centric initiatives, while reducing business risk.

The outsourcing of critical technology to a trusted partner is an effective enabler of improved customer experience. It puts IT in the hands of the subject-matter experts, leaving businesses to focus on what they do best. Time and energies can be dedicated to the development of new and improved services, expansion plans or increasing customer engagement, all to the benefit of the end-user.

Business transformation through cloud-based delivery models in particular, can help achieve cost savings, accelerate speed-to-market initiatives, support infrastructure

modernisation, and ultimately achieve digital enablement. To effectively manage IT provisioning for the digital age, it’s imperative for businesses to maximise the efficiency of their existing resources, while applying prudent expenditure on new deployments. As revealed in the IDG report, around a third of businesses will be doing just that, by turning to outsourcing in the near future to benefit from the advantages the cloud has to offer.

Download the full IDG report, Getting Started With Managed Services – What Do IT Buyers Really Want? at www.telecitygroup.com/ idgreport

Outsourcing blog from MicroSourcing, a specialist outsourcing and offshoring company working in the Philippines since 2006 to provide cost-effective business service solutions. Recent blog posts cover topics such as corporate social media strategy and the benefits of outsourcing routine accounting functions.

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How real estate earned its place in the shared services model

Smarts and execution beat insider knowledge in IT

D

o your IT partners need deep knowledge of your industry?

Conventional wisdom says yes.

When firms outsource IT projects, they typically look for companies with experience of their industry But conventional wisdom can be wrong. Outstanding programming and engineering skills, robust development processes, and very bright people can trump any level of embedded industry knowledge. “It’s critical to be able to acquire industry knowledge quickly. But it isn’t critical to have this knowledge from day one, and that’s a big departure for many companies,” says Valeriy Kutsyy (below), chief executive of managed IT services company Miratech. “What’s more important is your skills, capabilities and the maturity of your engineering processes.”

Kutsyy can point to a host of satisfied Miratech clients to support his claim.

And the firm has now won, together with Scandinavian financial services company Lindorff, the European Outsourcing Association’s IT Outsourcing Project of the Year.

“We had won a very large, significant outsourcing contract within the financial industry in Finland,” says Arttu Hollmérus, business

development director, Lindorff Finland.

“As part of our contract, we had to build a robust, modern financial application to enable service operations for one significant part of the contract. We recognised that we lacked the capability in-house to build such a complex application to such a tight timescale.

That’s why we turned to Miratech.”

The challenge, however, was formidable. Miratech had to write a completely modern financial system, with advanced functionality as well as secure web access for users. It had to be capable of handling thousands of concurrent transactions. They also had to migrate a huge 20 years’ worth of legacy data from the old in-house system into the new system. And they had to do all this without a single error.

Just to make things even more challenging there were only two time slots annually in which Miratech and Lindorff could make the data migration and the production rollout.

Get anything wrong and the next window of opportunity was far away, which would have put Lindorff’s whole outsourcing contract with their client at risk. In addition, the IT outsourcer had no industry knowledge of the receivables management

industry. Nor could any of its software developers speak Finnish.

But what the company did have was an approach to application development that emphasises speed, agility, robust engineering processes, and quality. Miratech brands this approach as the Managed Competence CenterTM, a proprietary framework for delivering services in environments that may span multiple regions, cultures, and organisations.

To make sure everything went according to plan, Miratech created a data migration tool to handle the legacy data and ensure there were no errors, as well as building the new financial application.

And in the run up to the production go-live date, Miratech and Lindorff carried out weeks of acceptance testing of both the new application and the migration tool.

In the event, it all went without a hitch.

Twenty years of legacy data was migrated with zero errors. The next day the new financial system went live. “How you manage your competencies, that’s the key,” says Kutsyy. “And a focus on increasing capabilities and skills that add value.”

“We have a saying,” says Lindorff’s Hollmérus. “The one who wants to do it, finds a way to do it.” + 46 8 5592 1656 info@miratechgroup.com

In a post-recession world, a global shared service organisation (SSO) has emerged as the ultimate streamlining and cost-saving tool

A

round the world, companies are creating standalone entities that take responsibility for delivering IT, HR, finance and Corporate Real Estate (CRE) services. This has become the “dominant operating model” for support services, according to a recent study from Accenture, which claims that more than 75 per cent of Fortune 500 companies have implemented shared services in some form.

Where CRE sits in the SSO model is still hotly debated and subject to change, but it’s evolution as a core component is undeniable. The economic crisis provided the impetus for change. As business became more competitive, the role of workplace and employee productivity changed the perception of CRE as a function with a real impact on profitability.

“It’s essential for all organisations to think about how their real-estate strategy is integrated with broader issues including people and talent,

which is increasingly a core driver of real estate strategy,” says John Duckworth, lead director of Occupier Services, JLL UK. One reason the C-suite has often ignored productivity in real-estate decision-making is that specific metrics proving property’s value to the business have not been readily available.

But this is changing.

Data and insight platforms can integrate CRE data with sales, workforce, finance, economic and other business data to give a holistic view of a property’s place within a business. “Businesses need to understand the HR demands being placed on the firm, as well as the financial goals and the IT plans,” adds Duckworth. “Real estate cannot operate in a vacuum anymore.”

According to JLL’s latest GCRE survey, respondents across the board expect real estate to become further integrated with other units over the next three years, particularly HR and finance.

Of respondents, 39 per cent claimed that CRE still sits as a standalone business line.

John Duckworth is lead director, Occupier Services, JLL UK John.duckworth@eu.jll.com

Outsourcing 4.0: make your property portfolio a paragon of productivity

C

Back-office automation can help major public sector transformation

W

hile automated processing is driving transformation and efficiencies across the business world, pick up of the technology across the public sector is yet to get off the ground, despite its potential to address some of the sector’s most pressing challenges.

However, driven by mounting financial challenges, major welfare reforms and increasing pressures on citizen-facing services, government organisations are becoming more receptive to innovative approaches. Encouraged by the ubiquitous use of digital channels across consumer markets, local councils are already making online the default channel to access more and more citizen-facing services. In addition, a growing number are pooling their resources and accessing economies of scale through shared service partnerships, with some exploring how property assets could be shared with other public bodies.

But transformational change is also needed behind the scenes, to ensure back-office processes and systems are as efficient as they can possibly be.

Following the example of the private sector, it’s in this arena that automated processing could make a real difference for local councils by introducing

innovation, new efficiency savings and service improvements.

To briefly summarise, automated processing technology uses software to mimic human interaction to complete repetitive tasks on back-office software, where speed and accuracy are critical factors. By creating a virtual workforce, the technology can free up teams to focus on more complex, strategic work, or refocus on frontline services.

The potential of the technology has been identified by a recent pilot project conducted by arvato with one of its local government partnerships. Using cutting-edge process automation software from developer Blue Prism, the arvato team successfully replicated a number of core transactional processes within the authority’s revenues department. The automated processes varied in complexity – from signing up people to direct debit payment for council tax, to indexing documents and assigning them to specific workflows – and typically involved laborious tasks, including scanning documents and manually uploading information into several disjointed back-office platforms. In conclusion, the pilot proved the processes could be handled virtually in the majority of cases, with 100 per cent

accuracy and a significant increase in speed.

It’s an important development because revenues collection is a critical aspect of local government finance and, in the wake of the major welfare reforms introduced in the last parliament, the process has become increasingly critical and more resource-heavy. While helping to speed up the collections process, automated processing also has the potential to alleviate the burden caused by the steep increase in more complex enquiries, redirecting some of the more mundane tasks to virtual resources and freeing up people to focus on more business-critical work. In the world of local authority revenues that means directing more time and effort towards helping citizens and, crucially, improving collection rates.

As the job of providing efficient public services becomes more demanding, forward-thinking public sector organisations will need to seek out new approaches and technologies. Automated processing is set to become an important part of the solution.

Debra Maxwell (left), is CEO, CRM & public sector, arvato UK & Ireland Twitter: @arvatoUK www.arvato.co.uk/telegraph

orporate real estate teams were once regarded as expensive, internal teams managing a large group of outside vendors. But a new model has emerged whereby a small internal staff works closely with a single strategic partner.

In this new evolution of CREoutsourcing –Outsourcing 4.0–sophisticated technology streamlines and standardises the way properties are managed. Data analytics offers insights into the company’s portfolio to reduce costs, improve productivity and stay ahead of workplace trends.

What does Outsourcing 4.0 mean for CRE? With the right type of partner, a company can upskill its internal team and rely on its outsourcing engagement partner for day-to-day operations. These partners are no longer just working on a tactical level, but taking a strategic command of the execution, costs and interaction with the business.

How does data analysis make a difference?

It has a big impact on workplace productivity, life cycle and capital asset planning and sustainability. For example, how are you capturing data around occupancy, equipment faults,

energy consumption and carbon footprint? Many firms are bringing in a partner because these things are increasingly important to their businesses.

How can Outsourcing 4.0 reduce risks?

Companies are looking for certainty in regard to their operating numbers, so they can make predictions.

They want to forecast and plan what their capital spend from their CRE looks like. They’re looking for a partner who’s got that expertise who can help them prepare that three-year to five-year plan.

What does Outsourcing 5.0 look like?

Look at Uber – the largest taxi company in the world owns no taxis; and Airbnb – the largest hotelier in the world has no hotels.

Something’s going to change in CRE. Facilities management alone is a trillion-dollar business.

Technology innovators, investors and businesses are seeing the opportunities in corporate real estate and new workplace models.

Maureen Ehrenberg is international director of JLL’s Global Integrated Facilities Management (IFM) business; Magnus Akerberg is managing director of IFM, EMEA Magnus.akerberg@eu.jll.com

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The future

Outsourcing is about value added, rather than a cost-reduction exercise

I

t’s a question that has been asked (and answered) many times in the last few decades: Onshore or Offshore? But actually, a new breed of BPO supplier is emerging that can offer a hybrid solution that will encompass the best of both worlds.

Most outsourcing decisions are made in answer to calls for cost reductions and efficiency improvements, but as experienced outsourcers look for further benefits, decisions are made to create more value through specialist services and expert knowledge. Nowadays, a good BPO supplier will discourage you from the old “lift and shift” scenario, and will help you to look at your process differently. Now, more than ever before, outsourcing is about collaboration and value added, rather than a pure costreduction exercise.

Onshore, offshore and indeed near-shore all come with their own benefits. Many would agree that the best solutions for client management and innovation are to be found onshore, where we can become embedded in the client’s businesses and understand their cultures, and meet face-toface at the same times during the working day.

There are also instances where data is legally unable to leave the EU or UK, for data-protection purposes, and so this also creates a need for processing onshore.

Offshore and near-shore generally offer higher skill-sets and education, knowledge transfer, agility and flexibility – not to forget multiple languages. Offshore and near-shore also allow you to extend the working day using the time zones in multiple locations, while still having local client management to be face to face when you need them.

So choosing a true hybrid BPO supplier, with both processing and client management

capabilities offshore, onshore and near-shore, will allow you to create the optimal solution for your business, while keeping any investment to a minimum. It also gives you a greater flexibility on growth, allowing your business to spend the right time on its true focus.

John Callachan is the solutions director at DDC Outsourcing Solutions, a hybrid business process outsourcing supplier and part of the global DDC Group Twitter: ddc_os www.ddcos.com

In focus David Cameron must show UK outsourcing the respect it deserves

W Video special

Technology has the potential to transform public services to meet the needs of our changing population and deliver efficiencies – find out more at http://bit.ly/1Fzwd9D

ere you aware the UK possesses the secondlargest and most mature outsourcing market in the world, employing more than three million individuals? Or that outsourced services are the UK’s number one export, accounting for more than 30 per cent of our country’s balance of trade?

David Cameron should be aware.

The coalition spent a whopping £120billion on outsourced public services, a resounding demonstration that Whitehall recognises the value outsourcing delivers. But despite this, the UK government does more publicly to harm the prospects of our outsourcing industry than it does to help it.

This must end. Today, the UK has the key ingredients required to become the global strategic hub of outsourcing: the English language, the perfect time zone, strong financial markets, a fantastic legal system and world-class consultants. As a result, the UK would lead global outsourcing projects, attracting FDI and increasing exports. Securing this leadership position would drive job creation and national productivity, result in sizeable economic growth and contribute billions to the treasury.

That’s why David Cameron must provide the UK outsourcing industry with some

long-awaited, much-needed support.

We need school-leavers better educated in digital and commercial skills, realistic immigration policies attracting the best foreign talent, and further infrastructure investment. The prime minister must tell the world that outsourcing works and demonstrate the extent to which it has benefited our country. The crown of global outsourcing leader is ours to lose, and we will lose it if the government continues to actively hinder the UK’s biggest, brightest industry.

Kerry Hallard (left) is CEO of the National Outsourcing Association admin@noa.co.uk www.noa.co.uk

Business Reporter · November 2015 · 15

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The changing trends in drivers of life sciences R&D outsourcing

O

utsourcing is not new in the life sciences sector. Clinical research outsourcing, contract sales forces and contract manufacturing have been a way of doing business since the 1980s. However, functional outsourcing in R&D, where individual processes or functions are outsourced, came later than in other industries.

This conservative approach was driven by concerns around intellectual property protection as well as regulatory accountability.

The sector is increasingly embracing the functional outsource model as confidence grows in its ability to deliver benefits in cost, capacity, and capability.

Cost, as in other industries, is one driver of outsourcing. The increase in regulatory requirements as well as the increasing complexity of R&D programmes mean R&D functions are faced with an increasing workload to be managed within the same or lower budgets. In Navitas’ experience working with life sciences companies, most with R&D centres based in high-cost geographies generate, at most, 5-10 per cent of cost savings from outsourcing to service providers based in similar locations. The key change to the model was “offshore outsourcing” or outsourcing processes to low-cost geographies, namely India, which delivers cost savings of more than

25 per cent – mainly due to the lower cost of personnel. Cost savings remain an important, but not the only, reason for outsourcing.

A number of Navitas’ clients have looked to outsourcing as a solution for the increasing requirement of flexibility in resource capacity.

Many functions within R&D – clinical development, pharmacovigilance, regulatory affairs and medical affairs – are staffed with highly skilled, high-cost scientific personnel.

Workloads in these functions fluctuate and are also difficult to forecast with certainty.

Outsourcing provides a way of managing such resource requirements, with the service providers ramping the team up and down

dynamically across multiple clients. In many such arrangements, the service provider has a core team which becomes an extension of the client’s internal team and fluctuations are managed through a floating pool.

In recent years, as workload requirements in R&D functions have increased, specific functions have faced a shortage of skilled scientific personnel. In the three functions that Navitas provides services in – clinical, regulatory and safety – there are specific processes where there is a continuing shortage of experienced personnel, such as biostatisticians, statistical programmers, regulatory writers, labelling specialists,

pharmacovigilance specialists, and so on.

In the absence of experienced personnel, companies are increasingly outsourcing these functions to service providers. The service providers in effect operate training academies in these functions, bringing in people with the right educational qualifications, training them and providing them with relevant experience under the guidance of more senior people.

Functional outsourcing is now an established way of doing business for most life sciences companies. As outsourcing service providers have gained experience in partnership with sponsor companies, many are looking for innovations within the delivery models. Navitas is among a small group of life sciences-focused service providers who combine capabilities in outsourcing, technology and consulting to cross-fertilise innovation. Specifically, this has resulted in “process outsourcing enhanced by technology”, where process outsourcing is combined with technology innovations within the process to enhance the efficiencies delivered to the sponsor.

Shalabh Kumar is global head of services, Navitas Life Sciences info.europe@navitas.net www.navitas.net

The secret sauce of IT efficiency T

he promise of increased efficiency is the very basis of today’s modern IT environment, with virtualisation offering improved server efficiency and the cloud providing highly available, scalable and cost-effective resources on demand.

Yet these technologies aren’t always the promised panacea to IT efficiency. In fact, quite the opposite. The cornerstone of driving real efficiencies is establishing a clear understanding of what you have today – something that is becoming increasingly challenging in today’s constantly changing, hybrid environments.

With a mix of on-premise and cloud-based IT resources, physical and virtualised, becoming the norm, the pace and level of complexity driven by a desire for rapid deployment often outpace any organisations’ ability to stay in control and react in a timeframe that’s relevant. It has become a complex challenge in itself just to maintain accurate, up-to-date visibility of what’s running and where, let alone to identify opportunities for optimisation. In fact, many organisations are finding it almost impossible to effectively rightsize for existing demand and plan for future business growth.

The cloud especially can have a converse effect on IT efficiency. While there’s no doubt it can deliver instant elasticity and scale, it needs to be managed correctly to provide the promised cost benefits, with the correct

amount and type of resources spun up, and spun down, as required. Recent research by Sumerian and Populus suggests this is where many are falling down, with a fifth of businesses (20 per cent) finding cloud computing costs higher than they budgeted for, and almost another fifth (17 per cent) suspecting they have over-provisioned.

As a result, a growing number of organisations are turning to capacity planning – an old discipline that is seeing a major resurgence in focus as a way of cutting through complexity, and driving new efficiencies from both existing and future technology investments.

Transitioning to the cloud By applying the latest capacity planning techniques, such as advanced predictive analytics, ahead of each migration step, organisations can provision cloud solutions that truly balance cost versus requirements.

Capacity planning insight can also inform the scope of a cloud services contract – for example, assessing the impact of change that the migration will have on systems and processes.

Accurately modelling for future growth The same techniques can be applied to modelling future business growth scenarios, ensuring organisations

only deploy the IT resources that they really need, at the right time and the right cost. Continuity plans can also be rapidly revalidated.

Assuring future service performance With nearly 30 per cent of critical outages resulting from capacityrelated issues that can be avoided, effective capacity planning is key to maintaining ongoing service performance. By identifying systems that are close to capacity, and most at risk from potential capacity issues, capacity planning helps to engender a proactive approach to IT service management, and assure future service performance.

As complexity and levels of change and automation continue to accelerate, capacity planning looks set to re-emerge as the secret sauce of ensuring IT efficiency.

0131 226 9300 sarah@sumerian.com