MCN Direct Newswire

Vol. 3 No. 17, 4 May 2004

This issue is sponsored by:

Plumtree Software, IFS UK Ltd and The UK Consulting Industry Report 2003/4

This issue news

1. EDS turnaround takes shape
2. Record numbers at Annual Consultants' Forum
3. NHS defends £6bn IT programme
4. IBM wins $575m Morgan Stanley contract
5. Liberata names new leader
6. Further information - feedback/pass on to a colleague/remove from mailing list

Sponsor

Plumtree Software

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1. EDS TURNAROUND TAKES SHAPE

EDS is inching back to profitability, although it is not gaining market share in its battle for IT services revenues with IBM.

EDS has announced a first-quarter net loss of $12 million (£6.8 million) - compared to a massive $1.4 billion loss in last year's comparable quarter - and claims to be "pleased with the progress made in the quarter".

Revenue in the quarter rose 4% to $5.4 billion, excluding UGS PLM Solutions which is being sold for $2 billion as part of EDS' plan to concentrate on core business (MCN Direct 3-12).

New contracts signed in the quarter totalled $4 billion, up from $3 billion a year ago - but well short of the $10 billion worth of new signings claimed by IBM at the close of its first quarter (MCN Direct 3-15).

While IBM says that its client base is increasing, EDS admitted its new sales in Q1 came primarily from existing customers and rising interest in its business process outsourcing services.

EDS made an operating loss of $145 million on its troubled US Navy Marine Corps contract, but says it has stabilised the project. It also took an operating loss of $94 million against an unnamed contract on which it hopes to reach a negotiated settlement.

EDS consultancy subsidiary AT Kearney reported first-quarter revenue down 6% compared to last year's comparable period at $215 million, and operating profit down 77% at $2 million - reflecting "continued market and pricing pressures".

Commenting on the overall results, EDS chairman and CEO Mike Jordan said: "We met our financial commitments, finalised our leadership team and began to generate sales momentum. While there is work to be done, we have the financial resources, the service offerings and the commitment to aggressively compete in the market. 2004 will be a year of execution where we continue to build EDS."

EDS is forecasting second-quarter revenue of $5.1-5.2 billion and full-year revenue of $20-21 billion.

2. RECORD NUMBERS AT ANNUAL CONSULTANTS' FORUM

The Annual Consultants' Forum - already established as the largest gathering of consultants in Europe - set new attendance records when it was held in London last month.

The event, organised jointly by the Management Consultancies Association and MCN Direct publisher PMP, attracted over 380 delegates who heard a series of high-level speakers on the theme of 'Captivating Clients'.

The biggest current issue for the consultancy industry is how to develop new business whilst retaining clients. The Forum aimed to help consultants understand how to engage and captivate their clients to create real value.

It focused on three major themes: the new shape of the market, from a UK and US perspective; whether consulting brands work; and whether clients need consultants.

Barclays Solutions director Allan Barr asked UK consultancies to stop substituting the good people that clients buy into with lesser-skilled staff.

In a similar vein, US market commentator Tom Rodenhauser said clients there are no longer accepting the introduction of lesser-skilled consultancy staff and are increasingly mandating that skilled staff remain on their projects. This means the cost overhead of the larger firms is not sustainable and they are moving to leaner structures and networks of associates who come in and out as required.

Bob Worcester, chairman of pollster MORI, outlined the results of MORI's Captains of Industry annual research, which measures business leaders' perceptions of their consultants.

From a peak in favourable opinion in 1994, MORI has tracked a steady decline which means consultants are now enduring their lowest-ever rating - behind PR, advertising, law and accounting firms. The need for improved brand perception is therefore an immediate task for consulting professionals, Worcester said.

ANNUAL CONSULTANTS' FORUM - Presentations

The presentations are now available on the Conference website: click here

Sponsor

IFS UK Ltd

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3. NHS DEFENDS £6bn IT PROGRAMME

The NHS' £6 billion National Programme for IT (NPfIT) has hit back against allegations that this bid to revolutionise the health service is fundamentally flawed.

A leaked report, written at the end of March by Peter Hutton, then chairman of the project's National Clinical Advisory Board, says there is no clear timeframe for when key inter-dependent items of the programme will take effect. It suggests that some systems will be unworkable without others being developed to a similar stage.

The report says some contract specifications "could usefully be reconsidered" and warns that any deviation from a recognisable national set of applications could cause "major safety and training implications".

It also claims that suppliers are unclear about how uniformity will be achieved and accuses the programme of secrecy, with the NHS workforce cut off from the development.

The NPfIT has responded fully to the allegations, describing how systems will work together as they are developed and stating: "The programme is fully aware of both short and long-term inter-dependencies and is dynamically managing the programme accordingly. The programme continues to identify key inter-dependencies and manage its many streams of activity to ensure the effective delivery of the programme."

In terms of contract specifications and solutions, a programme executive said reviews continue with contractors, as is common practice in all major projects. He said the programme is delivering a recognisable national set of applications and "continues in its aim to have an immediately recognisable screen layout and system functionality, wherever the systems and services are installed".

Peter Hutton's report followed the appointment of deputy chief medical officer Aidan Halligan as joint director general, working alongside NHS IT director general Richard Granger to promote the system in the clinical environment (MCN Direct 3-13). Hutton has subsequently resigned.

Commenting on the report's suggestion that the NPfIT is too secretive, the programme executive said: "The national programme is moving into a new phase where it will deepen and broaden stakeholder engagement. Aidan Halligan has been appointed to lead on work to engage doctors and other clinicians to ensure NHS IT is user-friendly and supports the government's top priority of putting the interests of patients first."

Sponsor

The UK Consulting Industry Report 2003/4

"This is the definitive report on the UK management consultancy industry, making it essential reading for all who need a comprehensive understanding of the subject." Alan Russell, Consulting Director, Atos Origin.

This unique report on the UK consulting market was launched at the Annual Consultants' Forum 2004 on 27 April 2004.

The beginning of 2003 saw the UK consulting industry in the depths of an economic downturn, with many firms struggling to restructure in the face of shrinking markets and over-capacity. Yet consulting firms ended the year with order books looking stronger than at any point since 2000. Confidence is on the rise - but is it justified?

The UK Consulting Industry 2003/4 report provides around 100 pages on the latest data of consulting fee income by sector and service line and other key operational metrics, as well as analysis of the prospects for the most important markets.

Published jointly by the Management Consultancies Association (MCA) and PMP and written by Fiona Czerniawska, a leading commentator on the consulting industry, this report provides an authoritative picture of the world's second largest consulting market. Also included are insights from over 30 industry leaders including Nick Owen, Head of Market and Service Programmes at Deloitte, Bruce Tindale, CEO, PA Consulting Group and Laurence West, Head of Consulting Services, UK and Ireland at Cap Gemini Ernst & Young, and a section on award-winning best practice case studies.

For further information about the report and how to purchase a copy (either electronic or hard copy), please click here.

4. IBM WINS $575M MORGAN STANLEY CONTRACT

IBM Global Services has secured a $575 million global contract with financial services firm Morgan Stanley to provide on-demand computing power.

The contract extends an existing IT services agreement between the firms, and gives Morgan Stanley automatic access to a shared pool of data centre resources for its Individual Investor Group and its Discover financial services business.

Morgan Stanley will pay only for the back-end computing power it uses and hopes to realise millions of dollars in savings as a result.

The contract also includes a managed services element under which IBM will provide helpdesk and desk-side support to 20,000 Morgan Stanley users in the Individual Investor Group.

John Schaefer, president of the Individual Investor Group, explained: "Technology lies at the heart of modern business and that's why it's so important for Morgan Stanley to have a hand-in-glove working relationship with a technology provider that intimately understands how our business works."

5. LIBERATA NAMES NEW LEADER

Business process outsourcing specialist Liberata has parted company with chief executive officer Glenn Timms and appointed ex-EDS UK head Tom Butler as its new CEO.

The surprise departure of Timms - who left to "pursue new opportunities" - follows a four-year period in which he led Liberata through acquisitions to add private sector work to its public sector core, rebranded the business and made a number of senior appointments to strengthen the management team.

Under Timms' watchful eye, Liberata grew revenues from £84 million to £180 million and achieved significant profitability.

Geoff Unwin, ex-Cap Gemini Ernst & Young CEO who became chairman of Liberata last October (MCN Direct MCN Direct 2-41), said Timms "built the operations and the platform necessary for continued growth" and went on to describe Butler as "the ideal person to lead the company through its next stages of growth".

Butler has a long history in the IT services market and has worked for companies including Hoskyns, Accenture and EDS, where he was head of the UK in his last role. Since then he has held various executive positions at European IT companies, including executive chairman at payroll processing company Rebus HR.

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