MCN Direct Newswire

Vol. 3 No. 5, 2 February 2004

This issue is sponsored by:

Cedar Software and Onyx Software

This issue news

1. EDS considers more job cuts
2. Xansa BPO head Allan Wood quits
3. LogicaCMG wins £20m British Council contract
4. Accenture masters BPO contract at Deutsche Bank
5. E-government growth slows across Europe
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. EDS CONSIDERS MORE JOB CUTS

EDS is assessing the need for further job losses as it struggles to meet its target of cutting costs by 25% in three years. Any further reductions would add to 5,200 jobs cuts made last year (MDN Direct 2-41, 2-24), but they are not expected to be on a similar large scale.

EDS chairman and CEO Michael Jordan acknowledged the need for "any company to take opportunities to generate productivity" at an analysts' briefing in Texas last week, where he also said EDS is half-way through its turnaround plan.

In recent months, EDS UK has failed to secure any contracts in the NHS awards for the National Programme for IT and has lost the Inland Revenue Aspire contract to Cap Gemini Ernst & Young.

Yet the company continues to proffer good news, most recently business process and IT outsourcing contracts worth £55 million in the financial services sector.

While none of these contracts gets close to the major deals EDS needs to secure financial growth, they reflect its global reach by including an eight-year agreement with Banca Popolare Di Sondrio in Italy and a five-year extended agreement with Société Générale in France, as well as US outsourcing and hosting contracts.

2. XANSA BPO HEAD ALLAN WOOD QUITS

Xansa has decided to integrate its business process outsourcing (BPO) unit into its mainstream business, forcing the resignation of its BPO managing director and 11-year Xansa veteran Allan Wood.

Wood became managing director of BPO in 2002 when Xansa reorganised to concentrate on geographic regions rather than strategic business units - but maintaining BPO as a separate operation with a view to "establishing a leading position in this service on a worldwide basis" (MDN Direct 55).

The company's decision to make BPO part of an integrated operation and consolidate accountability for BPO and IT follows its recent decision to withdraw from overseas markets and concentrate on delivering BPO and IT outsourcing from centres in the UK and India (MDN Direct 3-4, 2-46).

As a result, Wood chose to resign from the Xansa board with immediate effect and will leave at the end of this month to pursue other career opportunities.

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3. LOGICACMG WINS £20M BRITISH COUNCIL CONTRACT

LogicaCMG has signed a £20 million, six-year outsourcing contract with The British Council. The contract covers management and support of the Council's UK IT infrastructure, an upgrade of its wide area network and improved service targets that must be met by July. It also allows for the future provision of extra services such as applications development, applications hosting and management consultancy.

Chris Hawkins, director of corporate IT at the British Council, said: "We were looking for a partner that could support our global business and IT requirements. This partnership with LogicaCMG offers us considerable commercial and financial flexibility. We now have access to a much wider technical skills base in addition to delivering cost savings."

The Council's decision to look for an IT partner was driven by its five-year plan, Strategy 2005, which aims to exploit information and technology to provide services to the Council's global customers and internal users. In total, the Council has more than 7,000 employees in 110 countries dedicated to building lasting relationships between the UK and the rest of the world.

* UK companies have the potential to outsource 46% more of their work by 2008 and gain £1.7 billion in additional profits, according to a report commissioned by LogicaCMG and researched by the Centre for Economic and Business Research. The report, 'The Potential Economic Impact of Increased Outsourcing', claims that GDP could also rise by £16 billion if more companies outsource over the next five years. If companies fulfil the 46% increase reported to be open to them by 2008, they could then increase productivity levels by 2.7% and cut the UK's 28% productivity gap by 10%, claims the report.

4. ACCENTURE MASTERS BPO CONTRACT AT DEUTSCHE BANK

Accenture and Deutsche Bank have signed a master services agreement under which Accenture will provide business process outsourcing (BPO) services for the bank's corporate purchasing and accounts payable worldwide.

The terms of the contract were not disclosed, but this deal with the IT bellwether of German banking may release pent-up BPO demand in the sector.

Late last year, Deutsche Bank set the pace in the German banking market when it signed a £1.4 billion, 10-year outsourcing agreement with IBM, aiming to save £550 million a year. The agreement included the transfer of 900 employees to IBM and the creation of a data centre in the Rhine-Main region to serve both Deutsche Bank and other IBM customers.

The Accenture contract will support Deutsche Bank's entire procure-to-pay process, with the global framework agreement being followed by individual country agreements supporting local processes through 2004.

Deutsche Bank is not handing over decision making in the procurement process, however, and will retain responsibility for supplier selection, as well as approvals and authorisations for purchasing and payment activities.

5. E-GOVERNMENT GROWTH SLOWS ACROSS EUROPE

The development of e-government across Europe slowed last year, with more progress being made in online services for businesses than for citizens, and governments keener to e-enable the collection of taxes than provide services to users.

Cap Gemini Ernst &Young's fourth annual survey of the adoption of electronic public services across Europe, undertaken on behalf of the European Commission, shows that the pace of development slowed between 2002 and 2003, despite significant financial investment in public sector IT projects.

According to the survey, the level of online sophistication across Europe rose 7% in 2003 to reach 67%, as against 60% in 2002 and 45% in 2001.

Sweden led in terms of the sophistication of its online services, while Denmark offered the greatest number of fully available online services. In the UK, which ranks sixth out of the 18 countries studied, only 50% of services are currently online - just a year before the government's 2005 target for total e-government availability.

As in previous years, almost every country made more progress in providing online services for businesses rather than for citizens, with businesses reaching a total score of 79% for online sophistication and 63% for transaction-based online services. Services for citizens remained at 58% in terms of online sophistication, with only 32% of services fully available online.

Progress has been made in creating two-way interaction, with most countries now achieving the level of sophistication only noted in Denmark, Sweden, Ireland and Finland in 2002. The achievement of fully transactional online services remains poor, however, with 45% of services fully available online.

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