MCN Direct Newswire

Previous Issue: Vol. 3 No. 13, 29 March 2004

This issue is sponsored by:

SPSS, Harvey Nash, Offshore Consulting: Benchmarking Future Success and Annual Consultants' Forum - 27 April 2004

This issue news

1. SAP moves further into IT services
2. NHS takes IT programme to next level
3. Capita digs deep into business process market
4. ITNet wins Coventry contract
5. LogicaCMG recalls Jim Yates to build US business
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. SAP MOVES FURTHER INTO IT SERVICES

German software giant SAP is planning to strengthen its IT strategy consulting capabilities, raising fears that it could compete with its global consultancy partners.

SAP intends to buy back the 30% of IT services business SAP Systems Integration (SAP SI) it does not currently own and combine this with its existing consultancy operation.

The company is offering SAP SI shareholders a 35% premium for their shares and has the backing of the SAP SI executive board for the transaction.

SAP said the move would enable it to strengthen its global IT strategy consulting capabilities and offer customers, especially in Germany, Switzerland and the US, a one-stop shop for consulting and IT integration services around its own products and non-SAP solutions.

The company went on to state that "co-operation with its global consulting partners will not change as a result of this step" - but SAP-accredited consultancies and integrators are bound to be worried about losing IT services work to the vendor.

Explaining the rationale behind the buy-back, SAP CEO Henning Kagermann said: "Customers need to be able to implement their business strategies quickly and flawlessly. At the same time they need to reduce both their total cost of ownership and the complexity of the IT infrastructure. SAP SI is a proven success story in the area of consulting and IT services. With its contribution and the SAP NetWeaver integration technology, SAP will be in an even better position to bring future-oriented solutions to its customers."

SAP SI has about 1,850 employees worldwide and turned in fiscal 2003 revenues of 280.3 million euros (£188 million).

2. NHS TAKES IT PROGRAMME TO NEXT LEVEL

The NHS is pushing forward its £6 billion National Programme for IT (NPfIT) through the appointment of a joint director general with a clinical background and a warning to NHS trusts that if they fail to invest in implementing the technology they will not get early benefits.

After awarding all the NPfIT contracts, director general Richard Granger must now share his role with deputy chief medical officer Aidan Halligan.

Halligan will lead work with doctors and clinicians to make sure NHS IT is user-friendly and supports the priority of putting patients first. Granger will continue to be responsible for the implementation of the new IT systems across the NHS. They are joined by a third director, Department of Health delivery chief John Bacon, who will chair the NPfIT board. Bacon will be responsible for making sure the IT programme plays a part in wider NHS reforms and that NHS managers help with its delivery. All three directors will report to NHS chief executive Nigel Crisp.

Commenting that "the shopping trip is now over", Halligan said: "The vision I hold for the NHS is where healthcare is safe, knowledge-driven and governed by uniformly high-quality service and standards, where patients are at the very centre of their own care and where clinicians are supported by world-class IT. We will ensure that quality and safety improvements are built into all aspects of the IT systems to support more effective clinical working practices."

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3. CAPITA DIGS DEEP INTO BUSINESS PROCESS MARKET

Capita is proving the strength of its business process capabilities through the acquisition of Aon Health Solutions and a £70 million storage management contract with the Department of Work and Pensions.

Capita will pay an undisclosed cash sum for Aon Health Solutions, a division of the Aon insurance group that provides occupational health services - including health assessments of job applicants, assessment of fitness for work following illness and injury, and advice on long-term sickness to both private and public sector organisations.

The business will be renamed Capita Health Services when the acquisition is completed next month and will add revenues of £15 million, assets of £2 million and 232 staff, including 145 healthcare professionals, to the company.

In a win-win situation for Capita, the Aon group has also awarded it an initial two-year, exclusive contract to provide occupational health services for its UK businesses and staff.

Commenting on the acquisition, Capita executive chairman Rod Aldridge said: "This provides Capita with considerable scale and depth, firmly establishing the group in the market for workplace-related health services. There is increasing demand for occupational health programmes to pre-empt health issues and achieve swifter rehabilitation back to work, and organisations are increasingly seeking outsourcing partners to deliver such programmes rather than build further inhouse capacity."

Capita's contract at the Department of Work and Pensions is valued at £70 million over seven years and will help the department improve access to and tracking of 60 million social security and disability benefit claim forms, in line with the Freedom of Information Act that comes into force early next year.

Sponsor

Offshore Consulting: Benchmarking Future Success

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4. ITNET WINS COVENTRY CONTRACT

ITNet has notched up another win in local government, this time sealing a £30 million, five-year deal with Coventry City Council.

The contract goes live on 1 April and involves ITNet taking responsibility for the IT and communications functions supporting 4,000 users within the council, as well as helping extend the organisational network to all council sites across the city.

The key aim is to transform the delivery of services to citizens in line with Coventry's modernising government agenda.

Commenting on the selection of ITNet, cabinet member and councillor Jack Harrison said: "We were looking for a business partner with a strong track record in local government, as well as a partner with whom we could have a close working relationship. In ITNet we have found a skilled, efficient business partner that can provide the expertise and experience we are looking for."

For ITNet, the win confirms its commitment to the local government sector, which in 2003 contributed £91.7 million to total revenues of £188.5 million (MDN Direct 3.8).

Sponsor

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"Captivating Clients" is this year's theme, reflecting the critical issues facing the consulting industry of how to develop new business whilst retaining existing clients.

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5. LOGICACMG RECALLS JIM YATES TO BUILD US BUSINESS

LogicaCMG is re-hiring Jim Yates, former head of Logica's North American operation, to fill the post of CEO at the merged company's headquarters in Lexington, Kentucky.

A 30-year veteran of the IT industry, Yates was chairman and CEO of Logica in North America until 1998 when he left to set up Network Magic, an IT consultancy providing software development and network support to clients in Florida.

On his return, he will fill the gap left by former CEO Mike Meyer earlier this year. Yates will focus LogicaCMG's North American resources on wireless telecoms, energy and utilities, financial services, industry, distribution and transportation, and outsourcing.

Commenting on his appointment, John Coleman, chief executive of international business at LogicaCMG said: "The fact that we've brought on board a leader of Jim Yates' calibre demonstrates LogicaCMG's determined effort to significantly grow its US assets. Jim brings proven success in growing and managing multi-sector organisations."

LogicaCMG has about 500 employees in North America, which proved to be a "solid performer" in 2003 but has yet to be broken out in the company's financial results. The region remains in the 'rest of the world' category, along with Australia and Asia-Pacific, which contributed 7% of total 2003 revenue of £1.6 billion.

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