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Irene Pimentel

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Irene Pimentel is an IBRS analyst who focuses on news and information on the global IT Outsourcing market. Irene provides IBRS clients with up to date information on all outsourcing deals that are taking place helping our clients understand who is winning business in what markets. With over 10 years experience as a management consultant, Irene has worked with some of Australia's largest blue chip companies and public sector organisations. Irene has also worked as a research manager for an IT sourcing consultancy, providing clients with targeted intelligence and advice for their specific IT sourcing transactions.

This month, there has been a lot of discussion regarding cloud computing services, in particular new offerings launched by a number of companies globally. More interesting for outsourcing however is talk around technical, legal and administrative vulnerabilities when contracting out IT services. The continuation of the Queensland Health Payroll review, which has flagged problems that can arise when procurement processes are not properly scrutinised, is just one example of these problems.It is clear that many of these vulnerabilities are still not properly considered by companies when outsourcing or off-shoring and are often caused by a failure to properly monitor vendors.


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Especially interesting this month was the start of the Queensland Health Payroll System Commission of Inquiry, which is investigating outsourcing arrangements with IBM and the system’s failure that caused significant havoc and extreme cost overruns. Initial findings indicate there were some serious problems with several areas of the procurement process, including insufficient time to review IBM’s proposal, no verification of the technologies that IBM founded the payroll system on, and a failure to effectively monitor the procurement process. This highlights the dangers, and extreme roll-on effects a lack of planning and management in the procurement process can have on an outsourcing arrangement, and re-emphasises that exercising tight management control, including thorough reviews, is just as critical at the beginning of the contract process as after the agreement has commenced.


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Prominent in the news this month were announcements of plans to cut contractor and employee numbers in a range of ICT services companies, such as ASG and Sensis. Along with cutbacks, companies also plan to restructure business processes, change strategic focuses and find ways to increase efficiency. While this is not new, increased reports of budget cuts and changes brought on by new technologies and improved business structures really does give rise to a sharper focus which should result in more targeted, careful and more successful programs, as opposed to simple staff cuts to save on IT spend. This is definitely a positive for the industry because as businesses evolve they will implement better ICT service provision frameworks


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January saw a noticeable increase in tender offers and project announcements, and forecasts for the coming year. There has been a particular focus on growth in big data solutions, cloud computing and mobile devices. More interesting though were the high number of reports on criminal prosecutions, regulatory actions and internal and external protests in the IT industry, as well as commentary on potential problems. This indicates that people and companies are paying closer attention to their contracts and technologies, which is definitely a good thing where there are outsourcing agreements and a need to keep up to date on external forces that could possibly impact on arrangements.


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This month’s IT news has been especially interesting with a lot of discussion around vendor transformation, in particular, vendor restructures, business unit purchases and sales and market expansion. Vendors have also been discussing changes to their strategic focuses, business priorities and service offerings. These developments clearly reflect recent trends and growth forecasts in business demands for IT outsourcing with vendors rebalancing their offerings in an effort to cater to these demands. While this is nothing new the number of vendors making significant internal changes across so many areas has never been so visible indicating shifts in IT priorities and strategic focuses for businesses in general. These are issues that will be fascinating to observe as they unfold.


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This month, there has been a lot of discussion around mobile technologies and BYOD practices. What’s especially interesting is a shift in focus from actual technology adoption and reasons for growth in this area, to the need for systems and solutions that can support the adoption of these devices, including device management systems and applications, company protocols as well as user identification and control tools. This indicates a broader perspective of a growth area that goes down several levels to management solutions and company practices which does not typically happen in the industry. It also indicates this could be an emerging area for vendors supplying outsourced support systems, and device management services.


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October has seen a significant rise in IT outsourcing deals many of which are more interesting than usual and with a more noticeable engagement of smaller, very specialised IT service providers. This move confirms last year’s forecasts regarding the need for more focused services in light of a rise in the types of divergent technologies being deployed by companies, as well as system consolidation and the need for customisation. This month has also seen a lot of significant industry forecasts and the publication of interesting research results as the end of the year becomes closer.


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While there were no new projects or tenders announced this month, outsourcing deals are finally becoming a little more significant, with the Royal Adelaide Hospital network deal being especially interesting. The forecasts for outsourcing are currently excellent and there are grounds for optimism in the future.


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There were only a few deals this month with one very interesting contract between Perpetual and Fujitsu which came through towards the end of the month. This contract is a complete, infrastructure agreement, which used to be quite common but now really stands out in the current environment where customers prefer to outsource to multiple, smaller vendors. This agreement may indicate that the consolidated, single supplier arrangement could be coming back into popularity.


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While outsourcing deals were a little thin in July there was a lot of discussion around the risks for companies with “BYOD” policies, and the opportunities for service providers to manage solutions. The failure of Peru’s One Laptop per Child initiative (“OLPC”), which has been hampered with problems such as insufficient skills and school resources to make use of the computers, highlights problems that arise when there is a serious mismatch between ideas, strategies and reality. This is a common problem with outsourcing arrangements in general Illustrating that great initiatives and solid implementation plans are not sufficient if external influences, such as the human element, are not taken into consideration.


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