MCN Direct Newswire

Vol. 3 No. 18, 10 May 2004

This issue is sponsored by:

WRQ, Staffware PLC and IBM

This issue news

1. MoD seeks consultancy for £6bn project
2. BBC names final three in £2bn contract race
3. BearingPoint steadies in Q1
4. HP and BT hook up to fish in European pond
5. IBM shuffles top management
6. Further information - feedback/pass on to a colleague/remove from mailing list

Sponsor

WRQ

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1. MoD SEEKS CONSULTANCY FOR £6bn PROJECT

The Ministry of Defence has made a surprise decision to appoint a technology consultancy to lead the two-year assessment phase for a £6 billion programme to build next-generation armoured fighting vehicles.

This departure from the MoD's routine practice of assessment and development programmes being run by defence manufacturers signals its desire for advice independent of product or manufacturing capability, and its intent to increase the integration of equipment into its digital networks.

Consultants reported to be interested in the Future Rapid Effect System (Fres) project include EDS, IBM, LogicaCMG, PA Consulting, Qinetiq, WS Atkins and Science Applications International.

The MoD said the assessment work will be won on a competitive basis and hopes to have a contract in place late this year.

The winning supplier will be selected for its programme management, risk management and systems engineering capabilities. Its role will be to provide an objective view of the range of technology and potential solutions available for Fres and to harness a broad range of industrial capability.

Minister for defence procurement Lord Bach said: "I am confident that the systems house approach is the best way forward for this phase of the Fres programme. It will enable us to access the widest possible supply chain as well as retain flexibility of procurement options for the future phases."

2. BBC NAMES FINAL THREE IN £2bn CONTRACT RACE

The BBC has chosen Accenture, CSC and a Siemens team led by Siemens Business Services as final bidders for a £2 billion contract involving a 10-year outsourcing deal and the purchase of its BBC Technology subsidiary (MCN Direct 2-45, 3-7).

EDS, Capita, IBM, LogicaCMG and HP failed to make the final shortlist. Fujitsu - also among the eight firms 'long-listed' in February - subsequently pulled out of the bidding, while Siemens, apparently not on the February list, was waiting in the wings but declined to be named. A final bidder will be selected this autumn, with work expected to start before the close of the year.

As well as outsourcing the BBC's IT services - a move the corporation believes will generate annual savings of £20-30 million - the winner will take on BBC Technology and fulfil the company's vision of technology-led programme innovation.

John Varney, chief technology officer at the BBC, commented: "We have been impressed by the quality of the bids, both in technology skills and delivery of services. The shortlisted bidders have shown their ability to invest in technology innovation and enable us to revolutionise the way we make programmes over the next 10 years. They have also shown a cultural alignment with the BBC that is one of the most important parts of this contract."

Sponsor

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3. BEARINGPOINT STEADIES IN Q1

BearingPoint has recovered from a disastrous fourth quarter to show a return to profitability in the first three months of 2004, despite continuing pressure in Europe.

The consultancy hit bottom in the last quarter of 2003 when it reported a $117 million (£65.3 million) net loss as the result of a goodwill impairment charge of $120 million against its European business (MCN Direct 3-9).

Results from its operations in EMEA continued to sag in the quarter to 31 March, but the dramatic loss was cut to a 2.3% drop in year-on-year revenues to $153.9 million.

Elsewhere, BearingPoint's international operations increased revenue and North America turned in a stellar performance to boost total revenues to $861 million, a gain of 5.1% on last year's comparable quarter. Net profit in the quarter was $1.6 million, down from $4.1 million a year ago.

The company highlighted strong growth in its public services and financial services business units, but saw revenue fall in communications and content, and in its consumer, industrial and technology division.

Utilisation rates improved from 64% a year ago to 66%, leading chief financial officer Bob Falcone to acknowledge the need to continue utilisation improvement and reduce reliance on subcontractors.

BearingPoint chairman and CEO Rand Blazer said: "Our results show a solid start to 2004 with year-on-year revenue growth in many of our business units. We remain focused on growth and improvement in the key operational metrics of our business."

Sponsor

IBM

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4. HP AND BT HOOK UP TO FISH IN EUROPEAN POND

HP and BT have agreed to outsource IT infrastructure to each other and build a strategic alliance targeting the European IT services market.

The pact includes managed services agreements worth $1.5 billion (£836 million) over seven years. HP will manage BT's mid-range and desktop IT infrastructure in the UK, while BT will run HP's voice and data network plus product support call centres in the EMEA region. Some 290 staff will move from BT to HP as part of the deal, with 40 moving from HP to BT.

The companies will initially focus on implementing the managed services agreements while developing the longer-term alliance. This is expected to start in the summer, first targeting European enterprises plus the UK mid-market and small and medium-sized UK businesses.

While the alliance is a positive development for HP - it has a communications expert to hand when needed - it may be more problematic for BT if the major consultants and systems integrators it works with take offence at its close relationship with HP and look elsewhere for a communications partner.

The alliance, spearheaded by the global services division of BT, also raises the question of how the company's other IT services businesses, including BT Syntegra, will be developed.

5. IBM SHUFFLES TOP MANAGEMENT

IBM has shifted the head of its global services business, Doug Elix, to lead sales and distribution, replacing him with chief financial officer John Joyce.

IBM said the changes were "straightforward" and aimed at meeting changing customer requirements and accelerating the company's strategic growth plans. But analysts believe the appointment of a financial expert at the helm of IBM Global Services may reflect margin issues in the business and slower revenue growth than in IBM's hardware and software divisions.

In the first quarter, Global Services' revenue rose 9%, behind hardware on16% and software on 11% (MCN Direct 3-15).

IBM said: "Elix has grown our services business into the global market leader. As head of sales and distribution, he will increase the teamwork and collaboration between sales, industry sectors and services, which is vital to serving our clients' needs."

The company added: "Joyce has extensive operational experience and this, together with his financial expertise and discipline, makes him ideally suited to lead IBM Global Services and further enhance is leadership position."

The changes were triggered by IBM's loss of sales and distribution head Michael Lawrie to Siebel Systems, where he became chief executive, replacing Tom Siebel who remains as chairman.

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