MCN Direct Newswire

Vol. 4 No. 13, 9 May 2005

This issue is sponsored by:

InterSystems, Geac and The 5th Annual Consultants' Forum

This issue news

1. IBM takes axe to services
2. Capgemini makes ground in first quarter
3. Accenture appoints technology and delivery chief
4. Government offers £1bn services project
5. Xansa builds BPO business
6. Further information - feedback/pass on to a colleague/remove from mailing list

Sponsor

InterSystems

Build Competitve Edge Through Innovation - The InterSystems UK Symposium 2005

MCN Direct publisher, PMP, is the media partner for this event being held at Thorpe Park on June 23-24. PMP believes the content offers a real opportunity for attendees to understand the impact of innovation on business in the light of real business benefits. PMP is delighted to offer the first 10 PMP readers to register, quoting reference "PMP01", a special discounted ticket price of £45 for each day attended. For more information and to register please click here or email tresilian.segal@InterSystems.com.

1. IBM TAKES AXE TO SERVICES

IBM's European IT services business is expected to bear the brunt as the company restructures and cuts 10,000-13,000 jobs worldwide.

Some 80% of the job losses are expected to be across IBM Global Services operations in the UK, Germany, France and Italy, where the company says profitability needs to be addressed. IBM has a total of about 100,000 employees in the EMEA region.

IBM also plans to axe its pan-European management team based in Paris - replacing it with a number of smaller, local operating units in Europe aimed at increasing direct client contact.

Worldwide, the company intends to improve the efficiency of its services operations by consolidating service delivery into fewer locations. It also wants to shift resources to high-growth markets such as business performance transformation.

IBM says full details of the cuts will be divulged when it finalises negotiations with labour unions. In the UK, unions fear a disproportionate number of job cuts because of the relative ease of the redundancy process compared to other European countries.

IBM's decision to restructure was flagged last month, when it turned in first-quarter results short of Wall Street expectations (MCN Direct 4-10). While revenue from global services rose 6% year on year to $11.7 billion (£6.2 billion), pre-tax margins fell from 8.4% to 7.6%, leading CEO Sam Palmisano to admit that "appropriate measures" were needed to sharpen the company's execution.

2. CAPGEMINI MAKES GROUND IN FIRST QUARTER

Capgemini has turned in a 16% gain in first-quarter revenue of €1.7 billion (£1.2 billion) and claims to be "on the way to recovery" - a route that will take in a shake-up of its troubled North American operations.

Capgemini said revenue growth in the quarter was particularly strong in Europe. The region recorded a 22% gain, with the UK forging ahead on the strength of the Inland Revenue Aspire contract. North America also showed growth, with revenue rising 8%.

Across the board, outsourcing contributed a larger share of revenue, representing 36% of total in the first quarter, against 28% in the first half of last year.

According to Capgemini: "This is the third consecutive quarter of growth at constant rates. Set in a context of slightly improving market conditions, this trend confirms that the group is on the way to recovery."

But Capgemini still has work to do to build a sturdy outsourcing business and stem its losses in North America. While first-quarter bookings totalled €1.4 billion, Capgemini said delays in contract signings meant first-quarter outsourcing bookings were down by €212 million to €276 million.

In North America, Capgemini group chief operating officer Pierre Danon has taken the helm and announced his so-called 'booster plan', which includes a change in management of the US business and a focus on accountability and operational rigour. The business will be restructured into a simpler operating model and there will be a drastic reduction in the cost base to lower the breakeven point and enable a return to growth.

About 200 managers will be cut from the regional workforce of 6,700 and there will be a 30% reduction in the use of subcontractors.

The plan is expected to cost €127 million over two years and generate annual savings of €125 million as it pushes the business back into profitability in 2006.

Sponsor

Geac

From strategy to reality: The key role consultants play

The latest issue of Management Consultants' News is now available and sponsored by Geac. In this issue we discuss ways in which management consultants have a key role to play steering clients' strategies and how they can help make them work by deploying performance management applications. We look at how an organisation's compliance obligations can present consulting opportunity, and feature a report on a market search for performance management software that offers the key feature of 'strategy management'.

To download the latest MCN PDF click here.
To request a copy of the Butler Group Technology Audit: Geac Strategy Management click here.
To view a short online webshow for Geac's Compliance Management solution click here.

3. ACCENTURE APPOINTS TECHNOLOGY AND DELIVERY CHIEF

Accenture has taken to heart the need for operational efficiency and customer service excellence with the creation of a new position entitled group chief executive - technology & delivery.

The role is part of Accenture's office of the CEO, which includes the chief executive and chief operating officer. The move reflects CEO William Green's view at the end of the second quarter that Accenture had made "great progress in operational challenges" and would remain focused on further operational improvements (MCN Direct 4-9).

Karl-Heinz Floether, chief executive of Accenture's financial services group, has been given the new title - clearing the way for Adrian Lajtha, managing partner of Accenture's financial services practice in the UK and Ireland, to step into the global role. Lajtha, who has spent his entire career in Accenture's financial services operating group since joining in 1979, also joins the company's executive leadership team.

Floether, who has been with the company since 1979, will take responsibility for all of Accenture's technology, quality and delivery capabilities, including the 40 delivery centres on five continents that make up its global delivery network. Green said: "We have created this new position to further enhance our technology capabilities and our excellence in delivery, which are hallmarks of the company."

Sponsor

The 5th Annual Consultants' Forum

We are very pleased to announce that the 5th Annual Consultants' Forum, run by the MCA and PMP, will take place on 29th September 2005 at One Great George Street, London SW1.

Attendees to the this year's Forum are also invited to the MCA Annual Reception which will take place the same evening.

Guest speakers at the forum include:
• Ian Watmore, Head of e-government
• Richard Granger, Director General, NHS IT
• Andrew Gowers, Editor, Financial Times
• John Tiner, Chief Executive, Financial Services Authority
• Jim Steele, Director, SI Group, Peak Performance Strategies
• Richard Kimber, Chief Executive, first direct
• Fiona Czerniawska, Author and commentator on the consulting industry.

For more information and to register visit our webpage: click here.
Or contact the conference office on: Tel: +44 (0)1494 732839.
Fax: +44 (0)870 134 0428. Email: forum@pmp.co.uk.

4. GOVERNMENT OFFERS £1bn SERVICES PROJECT

The Government has opened the bidding for a £1 billion, 10-year programme to create an IT system embracing all elements of the UK judicial system.

Managed by the Department for Constitutional Affairs (DCA), the so-called Development, Innovation and Support Contracts (DISC) programme will replace IT contracts set up by the Lord Chancellor's Department as they expire. DISC will create a common infrastructure not only for the DCA's headquarters, but also its regional operations, crown courts, magistrates courts and other front-line offices.

As well as the infrastructure component, an application service element will consolidate 70 applications into 50 and provide opportunities for enhancements. The entire system will underpin services to over 25,000 desktops across 700 sites in the UK.

Potential suppliers can bid alone or in consortia. Requests to participate must be submitted by 30 May, with the DCA planning to issue invitations to tender to between three and eight selected candidates on 25 July.

The contract will be awarded in Spring next year, with the winner being chosen, according to the DCA, on the basis of "the most economically advantageous tender" meeting its criteria.

Most of the existing IT contracts across the judicial system end in 2007, with incumbents including Fujitsu Services, Liberata and CSC, which is leading a maintenance and support consortium, expected to bid for the DISC programme.

5. XANSA BUILDS BPO BUSINESS

Xansa has won BPO contract extensions from AXA Sun Life and MyTravel worth £37 million and appointed a finance director to replace departing director Peter Gill.

Xansa, which has worked with AXA Sun Life since 2000, has been awarded a five-year, £27 million extension to an ongoing outsourcing contract to support AXA's life and pensions systems. It will also use both its UK and Indian bases to support AXA's mainframe and business applications covering finance, marketing, HR and management information services.

Xansa's six-year, £10 million contract extension at MyTravel builds on a year of delivering finance & accounting services to the company.

Orchestrating the revenue from such contract wins will be finance director Gordon Stuart, previously FD of London Bridge Software. Other notable employers on his CV include PricewaterhouseCoopers, McKinsey and Dell.

Stuart will join Xansa and its board of directors on 1 August. Peter Gill will vacate the FD's post at the end of this month to work for a company seeking a London listing. In the interim, Mark Thurston, Xansa's director of financial control and treasury, will assume responsibility for the finance function.

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