MCN Direct Newswire

Vol. 3 No. 35, 11 October 2004

This issue is sponsored by:

Sage, and The Consulting Industry Report 2003/4

This issue news

1. MoD $6bn consulting contract goes to Atkins
2. Xansa joins Department of Health in BPO venture
3. Charteris back in the black
4. LogicaCMG beats EDS to Portuguese contract
5. Allan Wood takes top seat at WCI
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. MoD $6bn CONSULTING CONTRACT GOES TO ATKINS

Atkins has beaten EDS and Qinetiq to become the preferred bidder for a £6 billion Ministry of Defence assessment contract. The two-year deal is part of an MoD programme to build next-generation armoured fighting vehicles.

Early interest in the Future Rapid Effect System (Fres) assessment project came from EDS, IBM, LogicaCMG, PA Consulting, Qinetiq, Science Applications International and Atkins (MCN Direct 3-18), with Atkins, EDS, Qinetiq and PA Consulting - which later pulled out of the bidding - reaching the shortlist.

According to the MoD, Atkins was chosen for its ability to "offer the best solution and represent the optimum mix of capabilities to take the Fres assessment phase forward while securing best value for defence". Atkins and the MoD are now negotiating final terms, with a view to signing a contract before the end of the year.

The project is significant in choosing a systems house rather than a defence manufacturer to carry out the Fres assessment phase. An initial MoD plan to award the design and manufacturing contract to a consortium of BAE Systems and Alvis was scrapped after it failed to make headway.

Lord Bach, minister for defence procurement, commented: "We believe that a systems house - independent of product - is the most effective means of impartially reviewing the broad range of technologies and potential solutions for Fres across the marketplace. This approach will give us access to the widest possible supply chain to ensure value for money and enable us to retain flexibility of procurement options for future phases."

2. XANSA JOINS DEPARTMENT OF HEALTH IN BPO VENTURE

Xansa has been chosen by the Department of Health (DoH) as its preferred partner in a 50:50 joint venture to offer finance and accounting services to the NHS.

Xansa faced Atos Origin in the final play-off for the business process outsourcing (BPO) deal.

While the contract is subject to approval by the DoH board, it is expected to get underway on 1 April 2005. The DoH did not detail its reasons for selecting Xansa - the smallest of the companies bidding - but Xansa's experience in running shared services centres and its knowledge of the finance and accounting function is likely to have been influential.

Xansa and the DoH will base the joint venture around existing DoH shared financial centres in Leeds and Bristol, which currently provide services to 35 out of 663 NHS organisations and DoH agencies. Some 230 staff will transfer to Xansa, which will have operational control of the centres.

While the contract has no definitive value - and Xansa must attract more NHS users if it is to increase revenue from the venture - the company has estimated it could be worth £250 million over 10 years on the basis of attracting 40-50% of the potential NHS market.

Xansa chief executive Alistair Cox said: "This opportunity sits at the heart of our strategy to grow in the government sector and reinforces our existing leadership position in the provision of finance and accounting services."

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3. CHARTERIS BACK IN THE BLACK

Business and IT management consultancy Charteris has returned to profitability on the back of a three-year strategic plan to broaden its business base.

A pre-tax profit of £541,000 for the year to 31 July reversed a loss of £625,000 in 2002/3. Revenue for the year rose 13% to £13.8 million.

Charteris has rebalanced its business, with its financial services and media practices - which were hit hard by poor markets - contributing 31% of revenue, down from 49% the previous year.

Conversely, services developed under the strategic plan grew, with Charteris' retail, manufacturing & services practice accounting for 39% of revenue - up from 29% - and the government & legal practice contributing 30% - up from 22%.

Company chairman David Mann said: "In accordance with the strategic plan, our aim is now to continue growing the business across the broader base, focusing on those segments of the market that display strong growth potential."

Charteris' strategy includes both organic and acquired growth. It made its first acquisition, The Mandelbrot Set, in 2001 but financial recovery suggests it will be back on the acquisition trail. According to Mann: "The pursuit of other suitable acquisition opportunities is moving higher up our agenda."

4. LOGICACMG BEATS EDS TO PORTUGUESE CONTRACT

LogicaCMG has reached agreement with utility company Electricidade de Portugal (EDP) to act as its preferred outsourcing partner and acquire a 60% interest in EDP's IT services subsidiary Edinfor.

LogicaCMG beat EDS, which already has an outsourcing centre in Spain, to the contract which will be finalised shortly and covers the transition of Edinfor employees, customers and partners to LogicaCMG.

Neither LogicaCMG nor EDP would disclose the financial details of the deal, but it will be a fillip to LogicaCMG's energy & utilities practice, which accounts for about 15% of its revenue. Most of this income comes from the UK, with clients including Powergen and Elexon - making the EDP deal a major step into southern Europe.

LogicaCMG described Edinfor as a "leading services provider in the Portuguese market that is developing its business in Spain" and noted that it could be a "significant opportunity" for the company.

5. ALLAN WOOD TAKES TOP SEAT AT WCI

Allan Wood, former managing director of business process outsourcing at Xansa, has been appointed CEO of management and technology consultancy World Class International (WCI).

Wood resigned from Xansa when the company decided to integrate its BPO unit into its mainstream business early this year (MCN Direct 3-5). During his tenure as head of BPO, he helped Xansa's growth through wins at clients including MyTravel and Thames Water. Before this, he had responsibility for Xansa's enterprise solutions consulting business - essentially the Druid Group business that was acquired by FI Group in 2000 and later rebranded as Xansa.

At WCI, Wood takes over the CEO role from Paul Collins, who founded the consultancy in 1986 and recently retired.

Commenting on his appointment, Wood said: "Managed services, IT outsourcing and BPO contract styles have encapsulated the shift to shared responsibility and there are real opportunities for those service providers that can provide solutions to suit their clients' new business model. I believe WCI has the competencies to deliver such solutions."

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