MCN Direct Newswire

Vol. 3 No. 22, 7 June 2004

This issue is sponsored by:

OutsourceWorld London 2004 and The UK Consulting Industry Report 2003/4

This issue news

1. BT 'named and shamed' by NHS
2. Accenture clinches $10bn US security deal
3. Fujitsu Services off to flying start
4. Air traffic control system under fire
5. Anite remains cautious
6. Further information - feedback/pass on to a colleague/remove from mailing list

Sponsor

OutsourceWorld London 2004

15-17 June, Earls Court 2, London

OutsourceWorld London 2004 is Europe's definitive outsourcing conference and exhibition, offering visitors a unique learning platform about the cost and resource benefits of implementing outsourcing solutions. Already in its 3rd year, OutsourceWorld London is widely regarded as the most valuable learning and networking platform in Europe.

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1. BT 'NAMED AND SHAMED' BY NHS

BT has become the first casualty in the £6 billion programme to overhaul the National Health Service's IT systems. The company must pay a six-figure sum in damages to the NHS after failing to meet two deadlines in its initial rollout of a UK-wide health service network.

BT secured the £530 million N3 contract - to install a broadband network linking every NHS site in the UK - in February. However an executive at the NHS National Programme for IT said: "BT has met all but two of 56 milestone deliverables within the first phase of this work. The authority has therefore requested that BT pay an appropriate sum in compensation. The sum is still under discussion and it is not appropriate to speculate about the amount."

BT also holds the £620 million national application service provider contract and a £996 million local service provider contract covering the London area (MCN Direct 3-8).

While BT is reported to have missed targets on these latter two contracts, NHS IT director Richard Granger said penalty payments would not be imposed in the interests of getting the programme delivered.

Despite the hiccup, Granger claimed that "most things are going extremely well" within the programme, pointing out that things will inevitably go wrong in such a large project and that his interest is in getting them fixed. This may not be the start BT had hoped for, but the compensation claim is probably as much a warning to other suppliers in the programme as a severe penalty for at BT.

* BT has won a £25 million Ministry of Defence contract to deliver the Defence E-Learning Delivery and Management Capability. Under the terms of the 10-year deal, BT will provide online training and learning facilities through a defence learning portal to more than 300,000 MoD users.

2. ACCENTURE CLINCHES $10bn US SECURITY DEAL

Accenture has won its biggest contract to date - and one of the largest deals ever awarded in the global IT services market - from the US Department of Homeland Security.

The five-year contract, with an option to extend for a further five years, could be worth up to $10 billion (£5.5 billion) over the total period, with Accenture expected to garner revenues of $72 million from the deal in fiscal 2004.

The Accenture-led Smart Border alliance - including US defence companies Raytheon and Titan, and US IT services group RSA - beat consortia led by Lockheed Martin and CSC to the contract, which is to design and implement the US Visitor and Immigrant Status Indicator Technology programme or US-Visit.

The scheme includes a system to record the entry and exit of non-US citizens to and from the US, using digital finger scans and digital photos captured at ports of entry. Ultimately, US-Visit will be deployed at over 400 air, land and sea ports, but the US Congress has mandated that it must be installed at the top 50 US land ports of entry by the end of this year, marking the Smart Border Alliance's first major deadline.

Sponsor

The UK Consulting Industry Report 2003/4

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3. FUJITSU SERVICES OFF TO FLYING START

Fujitsu Services has celebrated the start of its new financial year with a £60 million, 10-year IT services contract win at bmi, the UK's second largest scheduled airline.

Fujitsu is to run bmi's business applications, servers, voice and data networks, desktops and websites at airports in the UK and flight destinations across mainland Europe.

The contract specifies transaction-based payments, with Fujitsu receiving payment for every seat booked online at flybmi.com and bmibaby.com. This alternative to a fixed-cost contract gives bmi more flexibility in a cut-throat market by aligning payment with booking levels.

Richard Dawson, bmi IT director, said: "Fujitsu was the logical choice for us. Its recommendations on how best to align IT with our business strategy provided us with clear and measurable goals."

The win is a welcome start to fiscal 2005 for Fujitsu Services, after it reported gains in its most recent financial year. Pre-tax profit for the 12 months to 31 March soared 62% to £50.4 million, on revenue falling 7% to £1.7 billion. The company only returned to profitability in 2003 after some years in the wilderness.

CEO David Courtley said: "I am delighted to be able to report, yet again, another good performance. I am particularly pleased to see an exceptionally strong order book at £5.5 billion, which gives us an excellent start to the next financial year. Our business is now more adaptive to future market dynamics and based on this we will focus on the continuing growth of Fujitsu Services in the commercial sector."

Public sector wins in 2004 included the DVLA, the NHS and, with Capgemini, the Inland Revenue.

4. AIR TRAFFIC CONTROL SYSTEM UNDER FIRE

The future of the National Air Traffic Services' (Nats) IT systems has been called into question after a software problem caused cancellations and severe flight delays at UK airports last Thursday.

A Nats executive said an investigation into what went wrong is centred on bespoke software that supports flight data processing. This runs on an IBM 390 mainframe, which is not part of the investigation. The software, which supplies flight data to the air traffic control centre at Swanwick, failed when it was switched back to operational use in the morning after being used to test revises and upgrades overnight.

While the Government blamed the disaster on previous administrations' reluctance to invest in air traffic control infrastructure, and the opposition said the problems were yet another example of government incompetence, Nats pointed out that the failure was the first in two years. It said the system crash was not caused by a problem in the operational software per se, but by a glitch created during testing that caused restart problems.

The long delays to air travellers were exacerbated by Nats' failure to have an electronic back-up system and its retreat to manual procedures that cannot match the capacity of the computer system.

Nats sought to reassure passengers that air safety was not compromised by the computer crash and said a major upgrade to the system is due later this year.

5. ANITE REMAINS CAUTIOUS

Anite Group has issued a trading update for its fiscal year to 30 April, suggesting it is on the mend but will not show substantial gains for the year.

The update precedes Anite's full disclosure of its results in July and follows the appointment of Steve Rowley as CEO last November (MCN Direct 2-38). Rowley took over from John Hawkins, who was ousted earlier in the year, leaving Rowley with the task of consolidating and cost cutting in an attempt to return the IT services and solutions group to profitability.

According to the update, trading for the year before exceptional items was in line with expectations of an improvement in the second half and a return to profit in the company's public sector business.

Provisions against loss-making contracts took their toll however, with £4 million booked against the development of Anite's Pericles council tax and benefits software, and £10 million charged against a contract with Australia's State of Victoria, a contract that Rowley said should never have been signed.

Restructuring costs of £6 million for the year were also higher than expected, but were offset by annualised overhead reductions of a similar sum. Order intake in the year was £206 million, up 4% on the previous year.

Rowley commented: "We have made considerable progress with the consolidation, integration and cost-cutting initiatives commenced last year, as well as eliminating legacy contract issues. Most of our businesses are now performing satisfactorily and the recovery in public sector business continues in line with plan, excluding the State of Victoria contract. As a result, the board remains cautiously optimistic about Anite's future."

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