By Nick Heath
Published: 24 November 2009 13:00 GMT at silicom
http://services.silicon.com/itoutsourcing/0,3800004871,39661655,00.htm?s_cid=298
Outsourcing deals typically promise to deliver cost savings and increased efficiency - but all too often the promises fail to match the reality.
At the National Outsourcing Association's Sourcing Summit last week, two heads of IT shared their experiences of how to get the best out of outsourcing agreements and make sure they're delivering long-term value.
Highways Agency
Four years ago the Highways Agency - which is responsible for maintaining the UK's motorways and some A-roads - relied on more than 100 contracts with external companies to deliver a wide range of its IT services.
On joining the organisation in 2005, Highways Agency director of information Denise Plumpton inherited the whole portfolio of outsourcing deals - different contracts for helpdesk, different contracts for application support and different contracts for telecoms - along with a number of in-house staff.
"It was like looking at a bowl of spaghetti - it did not seem to have any coherence and it was not clear who was doing what," she told the conference.
Plumpton decided the best approach was to end its existing outsourcing deals, bring infrastructure management and business analysis roles back in house and to sign a deal with a single outsourcer Atos Origin to handle the rest.
The contract, struck in 2007, sees Atos Origin managing the Highways Agency's IT infrastructure, datacentres, telecoms, desktop and providing application support.
The deal costs the Highways Agency about £20m per year but has cut its annual IT spend by about 10 per cent, delivered a fast return on investment and "continues to deliver further savings year-on-year", according to Plumpton.
"I wanted to get simplicity, clear accountability for delivery and get efficiencies out of cost as well.
"It produced significant savings without reducing the quality of service," Plumpton said.
A large part of the savings is derived from the economies of scale that Atos Origin's operations can provide.
"For example, for the service desk, if we have a lot of calls then Atos Origin are able to roll out a bigger team to handle them without us having to pay for that larger team each time we need it," she said.
As a result of this flexibility, satisfaction levels with service desk support among the agency's 2,500 desktop and laptop users have also been rising, she said.
Tube Lines
By the end of this year Tube Lines - the company responsible for maintaining a large part of London Underground's rail network - is on course to have fewer than 24,000 calls to its service desk and a 95 per cent reduction in the number of severity one and two system faults.
It's a far cry from 2005, when Tube Lines racked up 75,000 calls to the IT helpdesk, with much of the blame being laid - unfairly - on outsourcers that were providing services to the company, and IT opex was 40 per cent higher.
According to head of IT at Tube Lines Adrian Davey, the problem lay with the way Tube Lines handled the outsourcing contract. "We were not committed to making it work," he said.
The turnaround began with Davey holding meetings with Tube Lines' internal IT team every morning to discuss 'severity one' computer faults to discover what was going wrong with the organisation's systems.
He then set about improving Tube Lines' relations with its outsourcers and reviewed the outsourcing contract line by line, replacing technical goals with business service targets.
"It was about ensuring the quantity and quality of the information reaching the end user and not the server uptime," he said.
Davey found that as the efficiency improved he needed less and less people to manage Tube Lines' wholly outsourced IT infrastructure and was able to reduce the internal IT team, from 50 people in 2005 to just six today.
Giannis Giataganas
IT related
Monday, 7 December 2009
Thursday, 8 October 2009
The Crisis, a Case of Shortsightedness
Economic policy: those who look farther down the road know when it’s time to slow down
by Franco Bruni, Professor of Monetary Theory and Policy, Università Bocconi
The international economic crisis is largely due to myopic behavior and lack of foresight. We have been shortsighted about looking into our past: we forgot about past crises and we extrapolated only from the boom years of the recent past. And we have been shortsighted looking into the future, riding booms and bubbles as if they could have gone on for ever. We have valuated risk taking into account exceedingly short time horizons.
Among the most important measures to help avoid a repetition of the crisis are recipes which steer us toward a long-run approach rather than short-termism. There is a growing sense that the main task of macroeconomic policy is no longer to help navigate the economy from recession to recovery in the shortest possible time, but to stabilize long-run performance, by moderating the upswings and mitigating the downswings of the business cycle.
The central idea is to properly coordinate fiscal and monetary policies. Monetary policy is well known in its tools and effects, but its anticyclical stance must be made more timely and rigorous. The crisis was born out of the excessive monetary expansion on interest rates and credit, through which, not only in the US, boom years and the accompanying speculative bubbles were financed. When the time came to pull the brake on monetary policy, the accelerator was pushed instead.
The other form of policy is new and its instruments and objectives are yet to be precisely defined. It’s called macro-prudential policy and is about measuring and containing the level of risk across the whole financial systems. In addition to transparent and integrated statistical monitoring, with international policy collaboration and standardization of oversight all over the world, macro-prudential policy calls for anticyclical policy moves regarding certain regulated parameters. Some already exist, like the minimum capital requirements of banks, others need to either be invented or globally diffused, like a ceiling on the degree of leveraging in financial institutions.
These are parameters that need to become restrictive when the credit cycle is on the up and vice versa. The existing regulation of financial risks tends to do the opposite; it’s too permissive when thigs go well and belatedly too prudent when things to bad and the risk of insolvency mounts. Macro-prudential policy is about preventing wild cycles in credit.
Both the EU and US are moving in this direction. But there is unfortunately hesitation. Some fear giving too much power to central banks. But it should be evident than only central banks are able to intervene timely and in a coordinated fashion with policies of cyclical stabilization. In order for central banks to do well their job, their independence from political and market pressures is crucial. It’s not easy to spoil the party when the economy booms, and impose prudence and foresightedness to effervescent markets!
The approach oriented to stability across the cycle of money, credit and financial risk has been long preached by the Bank of International Settlements in Basel, a prestigious but not much-heeded international agency. Its annual report, published this summer, reminds us how shortsightedness has always historically been at the root of international financial crises.
Giannis Giataganas
IT related
by Franco Bruni, Professor of Monetary Theory and Policy, Università Bocconi
The international economic crisis is largely due to myopic behavior and lack of foresight. We have been shortsighted about looking into our past: we forgot about past crises and we extrapolated only from the boom years of the recent past. And we have been shortsighted looking into the future, riding booms and bubbles as if they could have gone on for ever. We have valuated risk taking into account exceedingly short time horizons.
Among the most important measures to help avoid a repetition of the crisis are recipes which steer us toward a long-run approach rather than short-termism. There is a growing sense that the main task of macroeconomic policy is no longer to help navigate the economy from recession to recovery in the shortest possible time, but to stabilize long-run performance, by moderating the upswings and mitigating the downswings of the business cycle.
The central idea is to properly coordinate fiscal and monetary policies. Monetary policy is well known in its tools and effects, but its anticyclical stance must be made more timely and rigorous. The crisis was born out of the excessive monetary expansion on interest rates and credit, through which, not only in the US, boom years and the accompanying speculative bubbles were financed. When the time came to pull the brake on monetary policy, the accelerator was pushed instead.
The other form of policy is new and its instruments and objectives are yet to be precisely defined. It’s called macro-prudential policy and is about measuring and containing the level of risk across the whole financial systems. In addition to transparent and integrated statistical monitoring, with international policy collaboration and standardization of oversight all over the world, macro-prudential policy calls for anticyclical policy moves regarding certain regulated parameters. Some already exist, like the minimum capital requirements of banks, others need to either be invented or globally diffused, like a ceiling on the degree of leveraging in financial institutions.
These are parameters that need to become restrictive when the credit cycle is on the up and vice versa. The existing regulation of financial risks tends to do the opposite; it’s too permissive when thigs go well and belatedly too prudent when things to bad and the risk of insolvency mounts. Macro-prudential policy is about preventing wild cycles in credit.
Both the EU and US are moving in this direction. But there is unfortunately hesitation. Some fear giving too much power to central banks. But it should be evident than only central banks are able to intervene timely and in a coordinated fashion with policies of cyclical stabilization. In order for central banks to do well their job, their independence from political and market pressures is crucial. It’s not easy to spoil the party when the economy booms, and impose prudence and foresightedness to effervescent markets!
The approach oriented to stability across the cycle of money, credit and financial risk has been long preached by the Bank of International Settlements in Basel, a prestigious but not much-heeded international agency. Its annual report, published this summer, reminds us how shortsightedness has always historically been at the root of international financial crises.
Giannis Giataganas
IT related
Monday, 5 October 2009
The State of Business Process Reengineering: A Search for Success Factors
Total Quality Management
Vol. 16, No. 1, 121–133, January 2005
DAVID PAPER & RUEY-DANG CHANG
BISE Department, Utah State University, Logan, USA, Department of Business Management,
National Sun Yat-Sen University, Taiwan, Republic of China
In the early 1990s, business process reengineering (BPR) came blazing onto the business scene as the saviour of under-performing organizations. Early advocates of BPR (e.g.Harrington, 1991; Davenport, 1993; Hammer & Champy, 1993) touted it as the next revolution in obtaining breakthrough performance via process improvement and process change. However, BPR has failed to live up to expectations in many organizations (Davenport,1993; Hammer & Champy, 1993; Kotter, 1995; Bergey et al., 1999). Some of the reasons include adoption of a flawed BPR strategy, inappropriate use of consultants, a workforce tied to old technologies, failure to invest in training, a legacy system out of control, IT architecture misaligned with BPR objectives, an inflexible management team, and a lack of long-term commitment (Bergey et al., 1999). As one can see from this list, it seems obvious that many organizations failed to realize the scope and resource requirements of BPR.
Clark et al. (1997) offered a five-component star model featuring people skills, structure, reward systems, processes, and change-ready IT capabilities. The components ‘structure’ and ‘reward systems’ fall into the ‘environment’ category developed by Paper (1998a). The component ‘strategy’ falls into the ‘vision’ category developed by Paper (2001). Paper (1999) extended the model to include IT capabilities. Paper et al. (2001) further extended the model to include vision that weaves the other components together with a ‘top-down’ imperative. Since the component ‘process’ is what organizations are attempting to change to improve performance (Broadbent et al., 1999; Davenport & Stoddard, 1994; Harkness et al., 1996; Kettinger et al., 1997; Nissen, 1998; Paper, 1999), we felt that it should not be a part of our theoretical lens.
Methodology Success Factors
Methodology provides a guiding blueprint for successful transformation. Methodology
success factors include appropriate guiding principles, buy-in, direction, continuous monitoring, graphical process map, and customer support. Transformation cannot be accomplished in the absence of fundamental guiding principles(Hammer & Champy, 1993; Tapscott & Caston, 1993). Existence of such principles allows people to challenge existing assumptions, recognize resistance to change, and establish
project buy-in (Kettinger et al., 1997). Also of critical importance is direction from top management (Paper&Dickinson, 1997),which is essential to identifying information-technology
opportunities, informing stakeholders, setting performance goals, and identifying BPR
opportunities. Direction can be formalized in the form of a process model (Harrington,1991; Davenport, 1993; Paper & Dickinson, 1997). A process model provides a graphical representation of the targeted processes and a starting point for measurement-driven inference(Nissen, 1998). We now articulate methodology success factors:
A customized BPR methodology (process map) facilitates business and contingency
planning for process transformation (Kettinger et al., 1997). It also provides a ‘stepby-step’ map of activities and resource-allocation requirements (Paper & Dickinson, 1997). Hence, a detailed methodology for addressing change must be devised and customized by management prior to undergoing change.
A process map, however, only maps tasks and activity requirements. It fails to provide high-level support and direction. Management is thereby responsible for budgeting along mapped activities, directing (redirecting) process workers, and exhibiting visible support. A map is just a blueprint. Management must lead change.
The process map must be based on sound business principles and be appropriate for each business. That is, it should be customized. As such, an organization’s map
should incorporate business-specific principles and undergo continuous refinement
based on current and ongoing business needs.
A BPR methodology is not a ‘turn-key’ program and should not be purchased as such. Each organization has its own special needs, environment, and business culture.
The process map should be represented as a graphical blueprint that depicts what needs to take place at each phase of a project so that everyone involved understands his or her role in the transformation (Paper, 1999). A graphical map makes it much easier for everyone to ‘see’ the phases and conditions necessary for success.
The customer should be the focus of any change event. Hence, the process map should reflect this focus. That is, customer demand should ‘pull’ the change plan.
The BPR methodology (process map) acts as a rallying point to keep people engaged
and to help management continuously monitor the transformation as it unfolds. Buy-in
of course is critical as management at all levels and people involved in change along
the process path need to understand and believe in its potential for success. Top management and project leaders must offer direction, as it is very easy for transformation projects to glide off track. Finally, customer support must be part of the change plan as they are the reason for transformation in the first place. An organization would not need to change if customers were already delighted. Given the cross-functional and radical nature of process redesign, a lot is learned by process workers (Paper & Dickinson, 1997). Further, new knowledge is created by those involved (El Sawy & Bowles, 1997). However, the organization can lose this valuable
knowledge through attrition if an effort is not made to capture the knowledge on an
organizational basis. As a result, the BPR methodology must move to a higher order of
analysis to formalize the way in which the ‘process’ learns during the redesign process. Thus, interactions between people, management, and the environment are necessary to enact a process map.
Giannis Giataganas
IT related
Vol. 16, No. 1, 121–133, January 2005
DAVID PAPER & RUEY-DANG CHANG
BISE Department, Utah State University, Logan, USA, Department of Business Management,
National Sun Yat-Sen University, Taiwan, Republic of China
In the early 1990s, business process reengineering (BPR) came blazing onto the business scene as the saviour of under-performing organizations. Early advocates of BPR (e.g.Harrington, 1991; Davenport, 1993; Hammer & Champy, 1993) touted it as the next revolution in obtaining breakthrough performance via process improvement and process change. However, BPR has failed to live up to expectations in many organizations (Davenport,1993; Hammer & Champy, 1993; Kotter, 1995; Bergey et al., 1999). Some of the reasons include adoption of a flawed BPR strategy, inappropriate use of consultants, a workforce tied to old technologies, failure to invest in training, a legacy system out of control, IT architecture misaligned with BPR objectives, an inflexible management team, and a lack of long-term commitment (Bergey et al., 1999). As one can see from this list, it seems obvious that many organizations failed to realize the scope and resource requirements of BPR.
Clark et al. (1997) offered a five-component star model featuring people skills, structure, reward systems, processes, and change-ready IT capabilities. The components ‘structure’ and ‘reward systems’ fall into the ‘environment’ category developed by Paper (1998a). The component ‘strategy’ falls into the ‘vision’ category developed by Paper (2001). Paper (1999) extended the model to include IT capabilities. Paper et al. (2001) further extended the model to include vision that weaves the other components together with a ‘top-down’ imperative. Since the component ‘process’ is what organizations are attempting to change to improve performance (Broadbent et al., 1999; Davenport & Stoddard, 1994; Harkness et al., 1996; Kettinger et al., 1997; Nissen, 1998; Paper, 1999), we felt that it should not be a part of our theoretical lens.
Methodology Success Factors
Methodology provides a guiding blueprint for successful transformation. Methodology
success factors include appropriate guiding principles, buy-in, direction, continuous monitoring, graphical process map, and customer support. Transformation cannot be accomplished in the absence of fundamental guiding principles(Hammer & Champy, 1993; Tapscott & Caston, 1993). Existence of such principles allows people to challenge existing assumptions, recognize resistance to change, and establish
project buy-in (Kettinger et al., 1997). Also of critical importance is direction from top management (Paper&Dickinson, 1997),which is essential to identifying information-technology
opportunities, informing stakeholders, setting performance goals, and identifying BPR
opportunities. Direction can be formalized in the form of a process model (Harrington,1991; Davenport, 1993; Paper & Dickinson, 1997). A process model provides a graphical representation of the targeted processes and a starting point for measurement-driven inference(Nissen, 1998). We now articulate methodology success factors:
A customized BPR methodology (process map) facilitates business and contingency
planning for process transformation (Kettinger et al., 1997). It also provides a ‘stepby-step’ map of activities and resource-allocation requirements (Paper & Dickinson, 1997). Hence, a detailed methodology for addressing change must be devised and customized by management prior to undergoing change.
A process map, however, only maps tasks and activity requirements. It fails to provide high-level support and direction. Management is thereby responsible for budgeting along mapped activities, directing (redirecting) process workers, and exhibiting visible support. A map is just a blueprint. Management must lead change.
The process map must be based on sound business principles and be appropriate for each business. That is, it should be customized. As such, an organization’s map
should incorporate business-specific principles and undergo continuous refinement
based on current and ongoing business needs.
A BPR methodology is not a ‘turn-key’ program and should not be purchased as such. Each organization has its own special needs, environment, and business culture.
The process map should be represented as a graphical blueprint that depicts what needs to take place at each phase of a project so that everyone involved understands his or her role in the transformation (Paper, 1999). A graphical map makes it much easier for everyone to ‘see’ the phases and conditions necessary for success.
The customer should be the focus of any change event. Hence, the process map should reflect this focus. That is, customer demand should ‘pull’ the change plan.
The BPR methodology (process map) acts as a rallying point to keep people engaged
and to help management continuously monitor the transformation as it unfolds. Buy-in
of course is critical as management at all levels and people involved in change along
the process path need to understand and believe in its potential for success. Top management and project leaders must offer direction, as it is very easy for transformation projects to glide off track. Finally, customer support must be part of the change plan as they are the reason for transformation in the first place. An organization would not need to change if customers were already delighted. Given the cross-functional and radical nature of process redesign, a lot is learned by process workers (Paper & Dickinson, 1997). Further, new knowledge is created by those involved (El Sawy & Bowles, 1997). However, the organization can lose this valuable
knowledge through attrition if an effort is not made to capture the knowledge on an
organizational basis. As a result, the BPR methodology must move to a higher order of
analysis to formalize the way in which the ‘process’ learns during the redesign process. Thus, interactions between people, management, and the environment are necessary to enact a process map.
Giannis Giataganas
IT related
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