MCN Direct Newswire

Vol. 5 No. 3, 6 February 2006

This issue is sponsored by:

Maconomy

This issue news

1. EDS main winner in $15bn General Motors outsourcing
2. Axon ahead of expectations
3. Management consultants get top marks
4. LogicaCMG expands utilities business
5. Charteris wins Ealing project
6. Further information - feedback/pass on to a colleague/remove from mailing list

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Maconomy

Creative services agencies are being forced to adopt stricter management processes in the face of pressure from purchasing, finance and client-side compliance demands, according to Agency ProfitWatch 2005.

Top-line findings include:
• Compliance drives control - 62% agree that client processes are evolving in response to compliance and regulatory control, such as Sarbanes-Oxley.
• Procurement and finance strengthens role - 81% of respondents agree that the role of procurement and finance is increasing within the client/agency relationship.
• The screw turns on profitability - two-thirds of respondents believe that increased client-side compliance is influencing agency reporting and billing practices.

To receive copies of this report please email info@maconomy.co.uk inserting "Requesting ProfitWatch" in the subject line.

1. EDS MAIN WINNER IN $15bn GENERAL MOTORS OUTSOURCING

General Motors has named the winners in the first phase of a $15 billion (£8.5 billion) outsourcing plan that will support its global business over the next five years. The initiative, one of the largest commercial bidding processes in IT history, was undertaken before a 10-year master services agreement with EDS - a former GM subsidiary - expires in June.

The first-phase awards are worth about $7 billion. EDS has won the lion's share, gaining $3.8 billion worth of new contracts, but losing about a third of the business it holds under the 10-year contract. New contracts cover product development, manufacturing, purchasing and supply chain, business services and mainframe and server operations systems.

Behind EDS, Hewlett-Packard won $700 million of IT services business over five years and Capgemini and IBM both secured contracts worth $500 million. Indian outsourcing supplier Wipro took $27 million worth of contracts, while Compuware Covisint picked up a contract that was not valued to provide business-to-business supply chain collaboration to GM.

With about 50% of its total five-year budget allocated to systems integrators and service providers, GM said the second phase of the $15 billion project would be awarded later this year when its telecoms contracts expire, with any remaining funding being used over the five years on required developments.

As part of the process to re-source its IT, GM broke down the work into 40 segments and insisted that IT suppliers develop standardised work processes that will provide a common approach and greater efficiency in delivering services.

Chief information officer Ralph Szygenda said: "This is a significant milestone for General Motors. Of critical importance is the focus we have had on driving innovation and supporting future globalisation and digitisation of the company. Over the next five months, we will focus our efforts on assuring a smooth transition. Our primary goals are to avoid any business disruption and ensure our efforts fully support the company's global operations."

2. AXON AHEAD OF EXPECTATIONS

Business transformation consultancy and SAP specialist Axon Group has released estimated 2005 results that exceed market expectations and show a 50% increase in group revenue.

In a trading update ahead of its full financial report on 7 March, Axon said its pre-tax profit for 2005 would be at least £9.6 million, up from £7 million in 2004. Revenue is expected to exceed £91 million, up from £60.3 million in 2004.

Axon chairman and CEO Mark Hunter commented: "In 2005, we continued our journey towards becoming the leading independent global provider of SAP-enabled business transformation services. We have also made a good start to this year and, based on current trading, we believe that market expectations for 2006 can be exceeded by around 10%."

The consultancy has built a workforce of over 1,000 employees and now has bases in the UK, US, Malaysia, Australia and the Middle East. Most recently, it expanded its US operations through the acquisition of TUI Consulting, a provider of SAP consulting services to US utilities and public sector organisations. This followed an initial US acquisition last April when Axon bought Feanix, a SAP specialist in aerospace and defence and a former MBO of Xansa's SAP practice in the US.

3. MANAGEMENT CONSULTANTS GET TOP MARKS

UK managers are satisfied with the work done by management consultants and expect to increase their spending on consultancy in line with their organisations' growth plans.

According to a Management Consultancies Association (MCA) survey of 84 UK private and public sector managers, 51% are completely satisfied with work carried out by management consultants and a further 47% are partially satisfied.

Some 80% would use the same consulting firm again. However, procurement methods are changing - while over 60% of organisations have preferred supplier lists and a similar proportion have framework agreements with their suppliers, 10% are using electronic channels, such as e-auctions, to procure consultancy services.

The MCA study found that 70% of managers use consultants to get access to specific skills that are not available internally, countering any notion that consultants are used to rubber-stamp internal decisions. The survey respondents said the attributes of a good consulting firm include: the knowledge, experience, behaviour and values of the consultants; the firm's approach to work; the values of the firm; and the results of the work done.

David Bailey, MCA president and joint managing director of Impact Plus, commented: "The satisfaction this survey demonstrates has been achieved through MCA members working in close collaboration with their clients to ensure that management skills and knowledge are transferred for the long-term benefit of the company."

Looking to future consultancy demand, the MCA found that 48% of managers working in organisations that spend more than £5 million annually on consultants think expenditure will grow in line with their own growth and the need to access new skills.

• The MCA has named industry veteran Peter Hill as its new chief executive. Hill replaces Karen Birch, who joined the MCA last July but decided to leave after a short tenure in the chief executive's role. Hill has worked for companies including Deloitte, Haskins & Sells, Butler Cox and its acquirer CSC Index, and has been an independent management consultant since 2002.

4. LOGICACMG EXPANDS UTILITIES BUSINESS

LogicaCMG has broadened the scope of its energy and utilities business through the acquisition of Texas-based Worksuite, a work management, scheduling and mobile computing solutions company working in the utilities industry.

The acquisition will add 60 staff to LogicaCMG's total of 430 in North America and will create an installed customer base of 50 North American utilities serving 125 million end users. It will also extend LogicaCMG's solutions portfolio for enterprise asset management in the global utilities market.

Commenting on the deal, Brad Kitterman, president of LogicaCMG's North American energy and utilities division in Houston, said: "This transaction joins two leading technology providers with more than 60 years of combined experience in the energy and utilities industry. The combination will generate a number of new solutions and the result will be the leading integrated work and asset management solution for the energy and utilities industry."

5. CHARTERIS WINS EALING PROJECT

Charteris has won an £800,000 IT services contract from Ealing Council, supporting the consultancy's strategy of focusing on market segments with growth potential - and augmenting its first-half revenues.

Charteris said it made good progress with business development in the six months to 31 January, despite market conditions that are "generally still challenging". The win in Ealing involves Charteris in implementing new technology and services that will underpin the council's social services as part of its 'Making a World of Difference' initiative.

As well as developing its business with local authorities, Charteris focused in the first half on working with Microsoft Business Solutions to find a market for the Microsoft Dynamics AX ERP solution. Charteris believes the adoption of Dynamics AX represents a major market opportunity for the company, which is already a Microsoft gold certified partner. Initially, Charteris is trying to sell multi-channel Microsoft-based solutions to the retail sector.

Looking ahead, and in line with its first-half plans to invest in management and business development, Charters said its profits are expected to be skewed towards the second half, but it remains on track to meet its expectation for the full financial year.

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Written by Sarah Underwood. Copyright 2010 PMP (UK) Ltd.