MCN Direct Newswire

Vol. 3 No. 2, 12 January 2004

This issue is sponsored by:

Cedar Software and Joint Security Industry Council Conference

This issue news

1. LogicaCMG takes SMS services to Iraq
2. NHS pricing pushes out IBM
3. Germany's Triaton under offer
4. CSC earns further $700m from Swiss Re
5. Former E&Y partners build ALS Consulting
6. Further information - feedback/forward to a colleague/unsubscribe

Sponsor

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1. LOGICACMG TAKES SMS SERVICES TO IRAQ

LogicaCMG is playing a key role in rebuilding Iraq's infrastructure by supplying a short messaging service (SMS) centre and an IP messaging architecture to Asia Cell Telecommunications, one of three service providers to be awarded a GSM licence in Iraq.

LogicaCMG was selected for the contract by prime contractor Siemens Mobile Networks and Asia Cell on the basis of its leading position in the global messaging infrastructure market and its experience in developing advanced messaging technologies for operators worldwide.

Bhanu Sud, director and general manager of LogicaCMG's wireless networks business in the Middle East and North Africa, said: "With the current marketing penetration of mobile phones at almost zero, Iraq is set to be the fastest growing market in the Middle East as its infrastructure is rebuilt. We welcome our role in providing mobile communications in Iraq."

Asia Cell CEO Ziad Shatara added: "By working with leading service providers such as LogicaCMG and Siemens Mobile Networks we are confident that we will be able to meet the Coalition Provisional Authority's challenging deadlines and bring Iraq's mobile infrastructure online."

2. NHS PRICING PUSHES OUT IBM

IBM's failure to win any of the seven contracts within the NHS's $8 billion National Programme for IT (NPfIT) could be a blessing in disguise, with industry insiders suggesting that winning suppliers have been pushed so hard on price they will achieve only "wafer thin" margins.

With six out of the seven NPfIT contracts awarded - and IBM not in the running for the final local service provider deal covering the south east and south west region - IBM is believed to be deeply disappointed not to have won anything, but took the view that the risks were far too high.

IBM was on the shortlist for the national application service provision (NASP)contract, covering the set-up and running of the NHS Care Records Service, as well as the shortlists for the local service provider contracts covering the London region and the west Midlands and North west.

Lockheed Martin pulled out of the bidding for the NASP contract last September, reportedly because of the demanding performance targets and costly penalty payments associated with the contract (MCN Direct 2-32), leaving IBM facing BT in the final contest.

BT secured the 10-year contract at $1.1 billion, giving it an estimated margin of 5-7%, compared to about 30% on its traditional business.

Early indications that IBM was the front-runner in the bidding for the London local service provider contract were also scuppered by BT, which is believed to have made a significant cut in its prices as the bidding neared the end of its allotted time.

According to insiders, bidders for all the contracts had to repeatedly trim and resubmit their best and final offers, leading one to comment: "We kept telling the national programme that was our best and final offer and it said 'Oh no it isn't'."

BT took the $1.7 billion, 10-year contract to provide access to the NHS care records service and local IT support in the London region in alliance with Perot, beating IBM in a consortium with Cerner and Atos KPMG Consulting.

IBM was also in the race for the west Midlands and north west regional contract, but here it lost to a consortium led by CSC which secured the contract for $1.7 billion in conjunction with Hedra, iSoft and IT lifecycle management specialist SCC.

In a company statement, IBM would only say: "IBM is committed to the UK public sector and remains one of its leading suppliers of technology, consultancy and IT services."

Sponsor

Joint Security Industry Council Conference

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3. GERMANY'S TRIATON UNDER OFFER

Cap Gemini Ernst & Young, CSC, IBM and Deutsche Telekom subsidiary T-Systems remain in the running to buy Triaton, the IT services subsidiary of German industrial group ThyssenKrupp, after final bidding closed last week.

But India's Tata Consulting Services - previously rumoured to be in the line-up - said it had no intention of bidding for the business as a way of increasing its European presence.

ThyssenKrupp announced last May that it intended to sell Triaton along with other non-core subsidiaries. Formed in 2000 from the amalgamation of IT units within Thyssen, Krupp, Hoesch and Hoechst, Triaton is profitable with revenues of about $422 million in 2002/3 and some 2,300 staff.

In a country market without a dominant independent and indigenous player, the new owner of Triaton's German business will become a force to be reckoned with among international IT services firms.

ThyssenKrupp is expected to make a decision on the sale and detail its own ongoing need for IT services next month.

4. CSC EARNS FURTHER $700M FROM SWISS RE

CSC has signed a $700 million, 10-year business process outsourcing (BPO) agreement with Swiss Re Life & Health.

The contract builds on an existing outsourcing relationship between CSC and Swiss Re that began in 1995. The new contract requires CSC to provide life and health insurance policy processing services for Swiss Re in the UK - following the acquisition of the Zurich Life closed book - and in the US.

CSC claims to be one of the world's largest BPO providers to the insurance sector with a network of processing centres serving 150 clients and employing 2,500 staff across the UK, US, Mexico, France, South Africa and India.

5. FORMER E&Y PARTNERS BUILD ALS CONSULTING

Three former Ernst & Young partners are building a management consultancy that they claim eschews the 1990s ethos of the partnership model.

Describing the consultancy's approach, Simmonds said: "We have an impressive network of individuals working with us for our portfolio of major clients. Outsourcing advice is not the domain of gifted amateurs, but of experienced professionals. We are fortunate in that we can attract the best by providing them with choice and quality engagements. The changing attitude of top consultants is really good news for firms like ours and for our clients."

ALS Consulting was set up a year ago by ex-E&Y partners Nick Andrews, Tim Lloyd and Rick Simmonds as a specialist in outsourcing. It claims that 95% of its work comes from blue-chip clients and that it is three months ahead of business plan targets, with turnover expected to exceed $3.6 million this year.

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