MCN Direct Newswire

Vol. 2 No. 25, 30 June 2003

This issue is sponsored by:

IBM and Formscape

This issue news

1. MoD selects shortlist for $8bn IT project
2. Xansa cuts financial loss
3. IBM registers $252 million win in Sweden
4. EDS and CGEY secure additional funding
5. MCA adds Turner & Townsend
6. Further information - feedback/forward to a colleague/unsubscribe

Sponsor

IBM

In October 2002, IBM's CEO Sam Palmisano announced his vision of computing in the future. He called it e-business on demand. Your clients have questions around the initiative and you can help answer them. But to do that you need to understand it. Here's your opportunity to hear about it from IBM. Get the details - click here

According to a new report from META Group, business and IT alignment is back at the top of the CIO's agenda. IBM's new z990 server could well be a key component of the business optimised data centre. Find out how - click here

1. EDS CUTS 2,700 JOBS IN STRATEGY SHIFT

MoD SELECTS SHORTLIST FOR $8BN IT PROJECT The Ministry of Defence (MoD) has shortlisted all of the four industry consortia bidding for its $8 billion project to replace the military's IT systems - promising a true competition with no advantage to incumbent suppliers.

Announcing the shortlist for the Defence Information Infrastructure (DII) project, defence procurement minister Lord Bach confirmed reports about the intended bidders (MCN Direct 2-20 and 2-23) - naming the four consortia as:

* Atlas, comprising EDS, Fujitsu, Cogent, General Dynamics and LogicaCMG.

* IBM, comprising IBM, BAE Systems, Computacenter, Steria, NTL and Echelon.

* Lockheed Martin, comprising Lockheed Martin, Deloitte Consulting, Hewlett-Packard, Qinetiq, SAIC and Unisys.

* Radii, comprising CSC, BT, Cap Gemini Ernst & Young and Thales e-security.

Lord Bach commented: "This project will help streamline the business and the operational capability of the MoD and we are delighted with the level of interest from industry. We look forward to a tough competition between the four industry groups, which all have strong UK connections. We fully expect that this competition will result in a solution that offers excellent value for money."

Countering suggestions that DII will follow the pattern of past government IT project failures, the MoD said it had a clear understanding of its requirement and that it intends to deliver the capability incrementally - subject to business case approval and continued good performance of the delivery partner.

It also noted that, other than office automation capability, the supplier will not be required to deliver applications and associated business process changes. Instead, it will be limited to providing an infrastructure service that will host or provide access to applications separately procured and managed.

MoD project manager Bob Quick explained: "In delivering a single information infrastructure to the MoD, we are seeking to use commercially available technology and although it is a large and complex project, it is, therefore, not novel. It is the ability to maintain business continuity and then the associated business and process change that will be challenging."

2. XANSA CUTS FINANCIAL LOSS

Xansa has narrowed its pre-tax financial losses from $844.2 million in 2002 to $262.4 million in the year to 30 April 2003. But turnover in the 12 months dropped 12% to $758.1 million.

The business and IT consulting and services firm's pre-tax profit fell 40% to $46.5 million (excluding restructuring costs of $42.1 million and charges of $260.7 million). Its operating margins also dropped from 9.5% in 2002 to 6.3%, primarily due to old contracts with higher margins reaching their natural conclusion.

Orders at the close of the year were up 10% at $950 million - strengthened by the company's $418 million business process outsourcing (BPO) contract with BT, won in June 2002. Employee numbers were cut by 502 through the year, leaving a total workforce of 5,583.

The UK accounted for 91% of Xansa's total revenues, including its BPO operations which achieved revenues of $77 million in their first year.

Elsewhere, growth was elusive, with recruitment revenues down 23% and Xansa's businesses in continental Europe, Asia-Pacific and the US all showing a loss on falling revenues. Only the company's Indian operations proved profitable, gaining 3% in operating profit to $25.2 million on turnover flat at $52.6 million.

Hilary Cropper, who will step down as chairman in September (MCN Direct 2-22), said: "I am pleased to report a year of progress in the fundamental competitiveness of Xansa despite its first setback in revenues and operating profits since the last recession. This decline is due to the same market conditions that have affected all our competitors."

"The most important aspect of the last year has been the creation of a new executive team under Alistair Cox as chief executive. Xansa's entry into the BPO market is the second most important aspect of the financial year and I am very pleased that before I retire we have achieved this key objective. This market, which is forecast to grow dramatically, plays to all Xansa's strengths."

Sponsor

Formscape

FormScape improves the flow, presentation and delivery of business information throughout organisations. Our solutions reduce costs and increase business process efficiency - enabling consultants to implement projects more quickly and more efficiently.

For more information, please email info.acf@formscape.com or contact Valerie Chua on 01252 618619.

Alternatively, learn more about FormScape at: click here
or visit click here

3. IBM REGISTERS $252 MILLION WIN IN SWEDEN

IBM Global Services has secured a $252 million, six-year outsourcing deal with Posten, Sweden's national postal service. IBM will manage and enhance Posten's IT and telephony infrastructure, subcontracting the management and development of the company's wide area network and telecom platforms to TeliaSonera.

IBM will take on around 180 Posten staff by September, and will outsource three data centres which house 600 servers and helpdesks supporting 180 applications. Posten will use IBM's on-demand services in a bid to cut its costs and improve flexibility, based on committed service level agreements with IBM and the use of one supplier for both IT and telephony services.

Posten chief information officer Mats Engstrand commented: "This agreement with IBM represents an important step in the company's strategic management decision to focus on core business. After a rigorous review process, it was clear that IBM stood out from the rest. IBM has the right attributes to meet our needs, enabling us to turn fixed costs into variable costs."

Leif Lindqvist, general manager of IBM Global Services in the Nordic region, added: "Posten needs to be able to respond to the peaks and troughs in demand for service, which is why our on-demand solutions are attractive."

IBM's win in Sweden follows a recent success in Finland, where the company's Business Consulting Services unit has been selected for a $645 million, 10-year business transformation contract by paper supplier M-real (MCN Direct 2-23).

4. EDS AND CGEY SECURE ADDITIONAL FUNDING

EDS and Cap Gemini Ernst & Young (CGEY) have turned to the financial markets to raise funds for their flagging businesses.

EDS has issued $1.1 billion worth of senior notes, due in 2013, and $600 million of convertible senior notes, due in 2023 - an increase on the $500 million previously announced - to fund general corporate activities.

In France, CGEY has raised $528 million through the issue and take-up of a convertible bond issue, including a 15% over-allotment option. CGEY said the proceeds of the issue will be used "to strengthen financial and operating flexibility", adding that the issue takes advantage of favourable financial market conditions allowing capital to be raised on attractive terms. The bonds carry a fixed annual interest rate of 2.5% and will be redeemed at par on 1 January 2010.

Analysts said they were not concerned by liquidity at CGEY, but they remain cautious about the company's ability to achieve its stated intent of raising operating margins from 1.6% last year to 5% this year.

5. MCA ADDS TURNER & TOWNSEND

The Management Consultancies Association has added Turner & Townsend Management Solutions (TTMS) to its roster of members.

TTMS is the management consultancy division of the Turner & Townsend Group. It employs 70 staff in the UK and provides specialist consultancy services in areas such as change management, project management and outsourcing to clients across industry sectors.

Simon Wallace, head of management consultancy at TTMS, said: "We are a highly successful, rapidly growing management consultancy - in the true sense. We supply a broad range of business consultancy services across all market sectors."

Customers include HBOS where TTMS is providing programme management, and the Home Office where it is supplying risk management for the construction and commissioning phase of the department's new Westminster headquarters.

Commenting on MCA membership, TTMS managing director Clive Porter said: "Having a successful parent means that sometimes people fail to appreciate your own capabilities. Our membership of the MCA demonstrates to everyone that TTMS is a major player in management consultancy."

The Turner & Townsend Group was founded in 1946 in the construction industry and has gone on to develop business units in project management, cost management, contract services and management consultancy. With over 1,000 staff worldwide, the group has annual revenues of $124 million.

6. FURTHER INFORMATION - FEEDBACK/FORWARD TO A COLLEAGUE/UNSUBSCRIBE

• For more information or if you have any feedback on MCN Direct, please email editor@pmp.co.uk
• To unsubscribe from MCN Direct, simply send a reply to mcndirect@pmp.co.uk. In the BODY of the message please type MCN DIRECT UNSUBSCRIBE

Please visit http://www.pmp.co.uk to view any of these publications, all of which are fully searchable and represent thousands of pages of information relevant to the consultant community.

Publications include:

Management Consultants' News

Consultants' Advisory

International Consultants' Guide

International Consultants' News

Copyright 2012 PMP (UK) Ltd.