Conspectus Direct Newswire

Issue 2

4 December 2002

This issue is sponsored by:

ATOS ORIGIN

This issue agenda

1. Buyers' analysis: contact centre management
2. Market opinion: e-business is back in fashion
3. Service sector update: India's IT firms take on the world
4. Research today: consultancy industry changes shape
5. News analysis: IBM leads push into 'on-demand'
6. Further information - feedback/forward to a colleague/unsubscribe

Sponsor

ATOS ORIGIN

Atos Origin is an international information technology services provider. Its business is turning client vision into results through the application of consulting, systems integration and managed operations, including outsourcing and on-line services. In August 2002, Atos Origin acquired KPMG Consulting in the UK and The Netherlands, which now trade as Atos KPMG Consulting. The company generates annual revenues of EUR 3.3 billion and employs 30,000 staff in 30 countries.

For more information about Atos Origin please click here

1. ** BUYERS' ANALYSIS **

PMP continually tracks the buying intentions of thousands of UK companies. Field research manager Julie Welch highlights the key trends revealed.

The days of the traditional multi-point contact between companies and their customers are waning. In an increasingly competitive marketplace, with a reduced number of 'big players' in many industry sectors, the need to have an outstanding relationship with customers is paramount.

Customers themselves demand that their queries and purchases are dealt with via an array of communication channels and expect that the company should integrate all of these channels to create a detailed picture of their buying needs.

To adapt to this new environment, companies' IT requirements have to change in a number of ways. Increasingly, there is a move towards contact centres where there is a single point of contact for any enquiry by a customer, by any means, and where all the resulting information can be compiled, stored and accessed.

There is a move to make the customer feel that they have a customised and personal interaction, by the use of tailored web pages, and caller ID systems that bring a customer's details up immediately a call is received by an operative. Technologies such as CTI and VOIP are becoming more recognisable on buyers' wish-lists, as well as a desire to achieve the all-elusive single view of the customer.

While 'cost benefit' is the buzzword business driver on most IT directors' lips, CRM and contact centre management - with all the resulting integration issues - is a hot topic requiring immediate investment in today's buyers' climate.

2. ** MARKET OPINION **

Pat Sweet reports on the latest findings from Conspectus' regular survey of UK IT end users.

Despite the dotcom doldrums, many organisations remain optimistic about online working. Nearly 40% of the companies polled in a recent Conspectus survey reckon to have made money out of their e-business efforts so far, and more expect to do so in future.

Although 18% maintain that the financial impact of e-business to date has been negative, the majority of these companies anticipate seeing a positive financial gain within the next 12 months.

Companies from a range of industry sectors and with turnovers of between £10 million and over £1 billion took part in the annual Conspectus e-business report.

One of biggest issues to emerge is the difficulty many companies have in integrating new online applications with other operational systems. Almost half (48%) said that their e-business website is not integrated with their transactional back-end systems at all, while only 16% claim to have achieved that elusive 'single view of the customer'.

Companies view portal technology as the solution, with two-thirds (66%) either already using such technology or actively considering it. The main advantage they cite is having a single point of access to information and systems.

Take-up of web services, the other new e-integration option, is slower with only 38% of the sample currently using this technology.

3. ** SERVICE SECTOR UPDATE **

Sarah Underwood focuses on events in the IT services marketplace.

US and Indian outsourcing providers are set to collide, as the established American firms struggle to hold their ground while the emerging Indian companies expand their presence in the global market.

In response to plunging profits, 5,000 job cuts and lost deals, the US's EDS is moving 1,500 jobs off-shore and has created Best Shore, an integrated on-shore, near-shore and off-shore global delivery structure for application services and business process outsourcing (BPO).

Best Shore application development and delivery services will be supported by 90 EDS solution centres worldwide, while contact centre services - including helpdesk functions and BPO - will be sourced from a new centre in Mumbai, India, which is due to come onstream next spring.

Moving in the other direction, Indian IT services and solutions firm Wipro Technologies has made its first acquisition outside India, buying the global energy practice of American Management Systems in a cash deal worth $26 million. The acquisition will add 90 staff in the US and Europe to Wipro's 1,000-strong energy and utilities team.

Analysts view Best Shore as little more than an attempt by EDS to cut costs, but suggest that Wipro's acquisition is a sign of things to come as India's leading IT providers - including Tata Consultancy Services and Infosys Technologies - build on their reputation as off-shore service providers to develop broader portfolios that can compete against US suppliers such as EDS, IBM Global Services and CSC.

4. ** RESEARCH TODAY **

Comment by Neil Ferguson, director of PMP Research.

In 2002, the global consultancy industry has changed shape dramatically. For decades, the industry has been dominated by combined international accounting/consultancy firms. By early next year, all accountancy/consultancy links will have been severed, in a series of upheavals catalysed mainly by the Enron accounting scandal.

This separation presents tough challenges, as the business consulting practices which have relied so heavily on their audit partners for board-level access no longer have that luxury. As standalone entities, they now have to extend beyond their existing client bases.

One result of this is that they are aligning with their IT services counterparts to offer a one-stop-shop for business and IT consulting needs.

This change is likely to affect consultancy buyers in a number of different ways. Some will still look to these 'aligned organisations' for their general business consulting requirements, while others will turn to tier-two organisations and strategic consultancies such as McKinsey and Bain for strategic direction. Some may even revisit the original accounting/advisory practices for mainstream business consultancy - and thus may the wheel turn full circle.

PMP, publisher of consulting industry reports such as Management Consultants' News and Consultants' Advisory, is now carrying out a primary research study to explore the impact of industry developments on purchasers of consulting services, and we will report the results in Conspectus & ITSS Direct as they become available.

5. ** NEWS ANALYSIS **

By leading IT industry watcher Sarah Underwood.

IBM is pushing further into the services market with the formation of two consultancy groups and a strategy called 'e-business on demand'.

The first consultancy unit, IBM Business Consulting Services (BCS), is the result of its $3.5 billion acquisition of PwC Consulting and boasts 30,000 IBM and 30,000 PwC Consulting professionals. IBM claims it is the world's largest services organisation with operations in 160 countries.

The second creation is On Demand Innovation Services (ODIS), a consultancy that groups together 200 engineers and scientists from IBM's 3,000-strong global research division to deliver high-end technology consulting directly to clients or in partnership with BCS.

According to IBM Research director Paul Horn: "On Demand Innovation Services represents a fundamental shift in the IT industry's research agenda. The role of IT research and the kinds of problems researchers should be solving must change as the industry enters a services-led, on-demand era."

IBM intends to be at the forefront of on-demand - or utility - services and is backing its 'e-business on demand' strategy with a $10 billion investment that will cover R&D, design centres where customers can pilot on-demand projects and funding for relevant acquisitions. IBM Business Consulting Services will bring the strategy to market, initially offering on-demand assessments to companies wanting to set up utility services.

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