FT.com / Companies / IT - LogicaCMG sees strong growth in Europe
LogicaCMG sees strong growth in Europe
By Alan Cane
Published: November 5 2007 08:51 | Last updated: November 5 2007 08:51
LogicaCMG, the Anglo-Dutch computing services group, said it expected full-year revenue growth for 2007 to be about 3 per cent at constant currency after strong performances in France and the Netherlands offset continuing weakness in the UK and Asia. Last year the company reported full-year revenues of £2.6bn.
In a generally cautious interim statement, the first it has issued under the new reporting requirements, the company predicted that growth in demand for IT services in Europe in 2008 would be broadly comparable with the current year at about 4 to 6 per cent. The Andy Green, a BT executive, takes over as chief executive at the beginning of next year, following the retirement of Martin Read.
The company, which has made a number of controversial acquisitions in the past few years, also said it intended to use the single brand name Logica from next year, a transition that will involve incremental costs of about £5m. The change, it said: “will help us to enhance our brand recognition internationally amongst customers, partners and employees”.
Turnover for the nine months of the year to September 30 was £2.24bn compared with £2.15bn for the comparable period last year, with revenues in the third quarter at £710.5m (£683.4m) representing growth of 4 per cent on a pro forma constant currency basis.
Jim McKenna, interim chief executive, said revenue growth above the market in France, the Netherlands and the Nordic region was partially offset by weaker performances in the UK and in the company’s international business: “In the UK, we remain focused on improving operational performance in our commercial business and were pleased with the return to growth in the energy and utilities sectors in the third quarter,” he said.
Revenues in France were up 17.1 per cent to £136.7m on a pro forma basis. The company said it continued to win new cross selling orders and was awarded an SAP governance and risk compliance project to be delivered out of France and Belgium together with a €7m project for the French postal service.
International revenues, however, were down 3.4 per cent at £74m and the company said it expected broadly similar results in the fourth quarter with some impact on margins compared with last year.
It has now completed a £130m share buyback scheme. It has not seen any material impact on its financial services business from the recent difficulties in the capital markets and the recruitment market remains competitive with high demand for specialist IT skills, the statement said.
Copyright The Financial Times Limited 2007
Tuesday, November 06, 2007
Monday, November 05, 2007
FT.com / By sector - Study urges IT valuation rethink
FT.com / By sector - Study urges IT valuation rethink
Study urges IT valuation rethink
By Pan Kwan Yuk in Paris and Philip Stafford in London
Published: November 4 2007 23:52 | Last updated: November 4 2007 23:52
Companies need to dramatically rethink the way they manage and value their information technology assets if they are to extract better returns from these investments, according to a study published on Monday.
Describing IT hardware and software as the “last remaining hidden corporate asset”, the study, commissioned by Micro Focus, a UK software developer, said core IT assets should be valued with the same rigour and discipline as other corporate assets such as brand and goodwill.
Insead, the Paris-based business school that carried out the research, said that while IT now plays a vital role in driving corporate performance, companies have continued to treat their IT not as assets for value creation but as an expense item to be minimised.
“It’s astounding,” said Soumitra Dutta of Insead.
“While firms have long focused on creating value from physical assets such as factory or store space and intangible assets such as brands, IT assets as a vehicle for value creation have remained largely ignored.”
One problem, according to Prof Dutta, is that even though companies spend billions on IT every year, few boardrooms know the value of their hardware and software and the contributions that they make to their business.
In a study released last month, Micro Focus and Insead found that of the 250 chief information officers and chief finance officers surveyed from companies in the US, UK, France, Germany and Italy, fewer than half had tried to value their IT assets, while 60 per cent did not know the worth of their software.
“When it comes to technology, people tend to get lost in jargon and focus on the new and shiny,” said Stephen Kelly, chief executive of Micro Focus. “Very little thought goes into the benefits that result from the new system and almost none to deriving maximum value from it.”
Yet Prof Dutta said that the potential savings for companies who take the time to analyse the value of their software assets could be huge.
“Think of a house,” he says.
“Would you knock down an entire house when what you need is to update the kitchen? No.
“Yet we see companies spending millions of dollars to build a new IT system every other year when, in many cases, what they needed was just to update the existing one.”
One way Prof Dutta says companies can measure the business value of their core IT assets is through conjoint analysis, a statistical technique used in market research in which people make trade-offs across different attributes.
Copyright The Financial Times Limited 2007
Study urges IT valuation rethink
By Pan Kwan Yuk in Paris and Philip Stafford in London
Published: November 4 2007 23:52 | Last updated: November 4 2007 23:52
Companies need to dramatically rethink the way they manage and value their information technology assets if they are to extract better returns from these investments, according to a study published on Monday.
Describing IT hardware and software as the “last remaining hidden corporate asset”, the study, commissioned by Micro Focus, a UK software developer, said core IT assets should be valued with the same rigour and discipline as other corporate assets such as brand and goodwill.
Insead, the Paris-based business school that carried out the research, said that while IT now plays a vital role in driving corporate performance, companies have continued to treat their IT not as assets for value creation but as an expense item to be minimised.
“It’s astounding,” said Soumitra Dutta of Insead.
“While firms have long focused on creating value from physical assets such as factory or store space and intangible assets such as brands, IT assets as a vehicle for value creation have remained largely ignored.”
One problem, according to Prof Dutta, is that even though companies spend billions on IT every year, few boardrooms know the value of their hardware and software and the contributions that they make to their business.
In a study released last month, Micro Focus and Insead found that of the 250 chief information officers and chief finance officers surveyed from companies in the US, UK, France, Germany and Italy, fewer than half had tried to value their IT assets, while 60 per cent did not know the worth of their software.
“When it comes to technology, people tend to get lost in jargon and focus on the new and shiny,” said Stephen Kelly, chief executive of Micro Focus. “Very little thought goes into the benefits that result from the new system and almost none to deriving maximum value from it.”
Yet Prof Dutta said that the potential savings for companies who take the time to analyse the value of their software assets could be huge.
“Think of a house,” he says.
“Would you knock down an entire house when what you need is to update the kitchen? No.
“Yet we see companies spending millions of dollars to build a new IT system every other year when, in many cases, what they needed was just to update the existing one.”
One way Prof Dutta says companies can measure the business value of their core IT assets is through conjoint analysis, a statistical technique used in market research in which people make trade-offs across different attributes.
Copyright The Financial Times Limited 2007
Tuesday, August 14, 2007
Monday, August 06, 2007
Tuesday, July 03, 2007
FT.com / Home UK / UK - Tata's IT wing moves into manufacturing network
FT.com / Home UK / UK - Tata's IT wing moves into manufacturing network
Tata's IT wing moves into manufacturing network
By Peter Marsh in London
Published: July 3 2007 03:00 | Last updated: July 3 2007 03:00
Tata Consultancy Services, one of India's largest information technology consultancies, is planning to move into manufacturing by fixing up "supply networks" in India to make parts and engineering goods for western companies.
The company - part of the Tata industrial group - is working with about 190 India-based engineering businesses which appear to have the potential to win orders with much larger businesses in the US and western Europe which are already TCS clients.
Under its plans, the consultancy could earn additional income by acting as a "supply chain manager" for its clients through introducing them to potential partner businesses in India which would become the clients' suppliers. TCS hopes it will be able to improve what it offers its existing stable of customers.
TCS would leave the western companies and the Indian suppliers to work out the details of specific contracts for themselves. It would collect fees only from the western businesses that are already its clients, not the Indian suppliers.
However, it would play a role in advising both sets of businesses as to how best they could work with each other.
S Ramadorai, TCS's chief executive, said the efforts by his company to establish a role in manufacturing was an "experiment" that could eventually lead to a new source of business in a relatively high value area of consultancy services.
Like most of the established Indian IT consultancies - which have grown strongly in the past decade on the back of outsourcing contracts awarded by US and European groups - TCS is trying to broaden out the scope of its services and focus on new areas.
The amount of income that TCS - which in 2006/07 had worldwide revenues of $4.3bn - hopes to get from its manufacturing service has not been disclosed, but it is believed to be aiming for extra revenues of a few tens of millions of dollars a year over the next few years.
Aniruddha Gokhale, head of sourcing solutions at TCS, said so far 20-30 TCS clients, mainly in the US, UK, Germany but also Australia, had expressed interest in linking up with India-based suppliers that the consultancy might be able to identify for them.
Copyright The Financial Times Limited 2007
Tata's IT wing moves into manufacturing network
By Peter Marsh in London
Published: July 3 2007 03:00 | Last updated: July 3 2007 03:00
Tata Consultancy Services, one of India's largest information technology consultancies, is planning to move into manufacturing by fixing up "supply networks" in India to make parts and engineering goods for western companies.
The company - part of the Tata industrial group - is working with about 190 India-based engineering businesses which appear to have the potential to win orders with much larger businesses in the US and western Europe which are already TCS clients.
Under its plans, the consultancy could earn additional income by acting as a "supply chain manager" for its clients through introducing them to potential partner businesses in India which would become the clients' suppliers. TCS hopes it will be able to improve what it offers its existing stable of customers.
TCS would leave the western companies and the Indian suppliers to work out the details of specific contracts for themselves. It would collect fees only from the western businesses that are already its clients, not the Indian suppliers.
However, it would play a role in advising both sets of businesses as to how best they could work with each other.
S Ramadorai, TCS's chief executive, said the efforts by his company to establish a role in manufacturing was an "experiment" that could eventually lead to a new source of business in a relatively high value area of consultancy services.
Like most of the established Indian IT consultancies - which have grown strongly in the past decade on the back of outsourcing contracts awarded by US and European groups - TCS is trying to broaden out the scope of its services and focus on new areas.
The amount of income that TCS - which in 2006/07 had worldwide revenues of $4.3bn - hopes to get from its manufacturing service has not been disclosed, but it is believed to be aiming for extra revenues of a few tens of millions of dollars a year over the next few years.
Aniruddha Gokhale, head of sourcing solutions at TCS, said so far 20-30 TCS clients, mainly in the US, UK, Germany but also Australia, had expressed interest in linking up with India-based suppliers that the consultancy might be able to identify for them.
Copyright The Financial Times Limited 2007
Tuesday, June 19, 2007
IT Firms in Green Initiative Must Also Look at Themselves
IT Firms in Green Initiative Must Also Look at Themselves
The Climate Savers Computing Initiative will raise awareness of IT power consumption issues and set aggressive energy efficiency targets. Consider the advice, but question what the firms involved are doing themselves.
The Climate Savers Computing Initiative will raise awareness of IT power consumption issues and set aggressive energy efficiency targets. Consider the advice, but question what the firms involved are doing themselves.
Thursday, June 14, 2007
IBM to Gain Strength in Development Tools With Telelogic Deal
IBM to Gain Strength in Development Tools With Telelogic Deal
In buying Telelogic, IBM will boost its position in the embedded-development tool market and fill gaps elsewhere in its life cycle management offerings. Customers should expect few short-term product-line changes.
In buying Telelogic, IBM will boost its position in the embedded-development tool market and fill gaps elsewhere in its life cycle management offerings. Customers should expect few short-term product-line changes.
Tuesday, June 12, 2007
FT.com / Companies / IT - IBM launches cash bid for Sweden's Telelogic
FT.com / Companies / IT - IBM launches cash bid for Sweden's Telelogic
IBM launches cash bid for Sweden's Telelogic
By Robert Anderson in Stockholm and Richard Waters in San,Francisco
Published: June 12 2007 03:00 | Last updated: June 12 2007 03:00
IBM launched on Monday a Skr5.2bn ($743m) recommended cash offer for Tele-logic of Sweden, a seller of software development tools used for creating the "embedded" software used in aircraft, automobiles and other complex systems.
The deal is set to boost the technology group's position in a fast growing and high margin part of the corporate software business, while complementing a string of other recent software acquisitions it has made to try to entrench its broader position in industries such as telecommunications and automobile manufacturing.
The Skr21-a-share offer represents a 21 per cent premium on the closing price on May 31. Yesterday, Tele-logic shares were flat at SKr21.50.
IBM plans to generate half its profits from software by the end of this decade, compared with 40 per cent last year, as it moves away from old-style hardware and reduces its reliance on its large technology services.
While its 2003 acquisition of Rational Software made IBM a leader in development tools for traditional IT systems, the Telelogic deal will push it further into thefaster-growing market for embedded systems, which are "baked into" equipment at the time it is produced, according to Kristof Kloekner, head of strategy for IBM software.
"IBM's IT business management facilities are already pretty strong, however Telelogic brings good products that deepen their capabilities without there being a massive amount of overlap," said Bola Rotibi, analyst at Ovum Data-monitor.
"They have developed a portfolio that is very complementary to IBM's existing product portfolio, especially within the Rational brand," said Mike Laurie, IBM business development executive.
A spin-off from theSwedish national telecommunications operator, Tele-logic has been growing fast by acquisition, particularly since it went public in 1999. Last year it had net income of Skr159.9m on sales of Skr1.52bn, up 18 per cent on the year before.
However, the company's share price failed to benefit from acquisitions, while potential targets became more expensive, prompting the company to appoint investment bank UBS to examine its options.
Copyright The Financial Times Limited 2007
IBM launches cash bid for Sweden's Telelogic
By Robert Anderson in Stockholm and Richard Waters in San,Francisco
Published: June 12 2007 03:00 | Last updated: June 12 2007 03:00
IBM launched on Monday a Skr5.2bn ($743m) recommended cash offer for Tele-logic of Sweden, a seller of software development tools used for creating the "embedded" software used in aircraft, automobiles and other complex systems.
The deal is set to boost the technology group's position in a fast growing and high margin part of the corporate software business, while complementing a string of other recent software acquisitions it has made to try to entrench its broader position in industries such as telecommunications and automobile manufacturing.
The Skr21-a-share offer represents a 21 per cent premium on the closing price on May 31. Yesterday, Tele-logic shares were flat at SKr21.50.
IBM plans to generate half its profits from software by the end of this decade, compared with 40 per cent last year, as it moves away from old-style hardware and reduces its reliance on its large technology services.
While its 2003 acquisition of Rational Software made IBM a leader in development tools for traditional IT systems, the Telelogic deal will push it further into thefaster-growing market for embedded systems, which are "baked into" equipment at the time it is produced, according to Kristof Kloekner, head of strategy for IBM software.
"IBM's IT business management facilities are already pretty strong, however Telelogic brings good products that deepen their capabilities without there being a massive amount of overlap," said Bola Rotibi, analyst at Ovum Data-monitor.
"They have developed a portfolio that is very complementary to IBM's existing product portfolio, especially within the Rational brand," said Mike Laurie, IBM business development executive.
A spin-off from theSwedish national telecommunications operator, Tele-logic has been growing fast by acquisition, particularly since it went public in 1999. Last year it had net income of Skr159.9m on sales of Skr1.52bn, up 18 per cent on the year before.
However, the company's share price failed to benefit from acquisitions, while potential targets became more expensive, prompting the company to appoint investment bank UBS to examine its options.
Copyright The Financial Times Limited 2007
Wednesday, May 16, 2007
Saturday, May 12, 2007
FT.com / Companies / IT - Atos in talks with possible bidders
FT.com / Companies / IT - Atos in talks with possible bidders
Atos in talks with possible bidders
By Peggy Hollinger
Published: May 12 2007 03:00 | Last updated: May 12 2007 03:00
Management at Atos Originis to spend the weekend in negotiations with prospective bidders for the French IT services group, aiming for a decision by Monday.
The company's shares were suspended after news of the talks began to leak into the market. Atos was forced to accelerate discussions as a result.
The company said it expected to make an announcement early on Monday, although originally it had no such intention. People close to the situation said the outcome was still far from certain.
In March, Atos confirmed that it had received a number of approaches. People close to the situation said these included a potential €4bn ($5.4bn) bid from Permira and Centaurus, the British buy-out firm and hedge fund. Eurozeo and PAI, the French private equity groups, are also understood to have expressed interest, while Atos rival CapGemini pulled out of the running.
Atos has in the past said that it continues to "support the execution of [its] transformation plan" and "further the group's development", implying strongly that it wanted a buyer who would keep the company in one piece. Peggy Hollinger
Copyright The Financial Times Limited 2007
Atos in talks with possible bidders
By Peggy Hollinger
Published: May 12 2007 03:00 | Last updated: May 12 2007 03:00
Management at Atos Originis to spend the weekend in negotiations with prospective bidders for the French IT services group, aiming for a decision by Monday.
The company's shares were suspended after news of the talks began to leak into the market. Atos was forced to accelerate discussions as a result.
The company said it expected to make an announcement early on Monday, although originally it had no such intention. People close to the situation said the outcome was still far from certain.
In March, Atos confirmed that it had received a number of approaches. People close to the situation said these included a potential €4bn ($5.4bn) bid from Permira and Centaurus, the British buy-out firm and hedge fund. Eurozeo and PAI, the French private equity groups, are also understood to have expressed interest, while Atos rival CapGemini pulled out of the running.
Atos has in the past said that it continues to "support the execution of [its] transformation plan" and "further the group's development", implying strongly that it wanted a buyer who would keep the company in one piece. Peggy Hollinger
Copyright The Financial Times Limited 2007
Wednesday, May 09, 2007
FT.com / Technology - TECHNOLOGY LITE: The shrinking IT department
FT.com / Technology - TECHNOLOGY LITE: The shrinking IT department
TECHNOLOGY LITE: The shrinking IT department
By Dan Ilett
Published: May 9 2007 11:36 | Last updated: May 9 2007 11:36
Business leaders are learning a few lessons about IT. After spending small fortunes on equipment and technical specialists over the last decade or so, many have started to realise that a lack of cost savings and profit avenues from these investments means a shake-up is required.
In a bid to reset the IT profit model, larger businesses are now starting to mimic smaller ones by contracting specialist IT companies to service their technology while they focus on selling their product.
“You’ve now got the virtualised server environment where you can host things remotely,” says Mark Kobayashi-Hilary, author of Global services – moving to a level playing field. “With that, all the grunt work is then taken away from the office. It’d be better to stick to what you’re best at, write down your technical requirements and ask someone else to do it.”
Several services are now on offer that remove the burden of administration from the IT department. For example, some companies opt for software as a service, such as Google’s spreadsheet and word-processing applications that can be used over an internet browser. More commonly in larger companies, this type of hosted service involves customer relationship management (CRM) programs from providers such as Salesforce.com.
“You can also outsource IT maintenance by paying a retainer or an hourly rate to another company,” adds Mr Hilary. “Smaller companies do that because it’s cheaper than the salary of an engineer. All this means you have a virtualised IT department.”
Such actions to shrink the IT department’s staff and equipment have been coined as moving to an “IT lite” environment – a trend that has been noticed in some of Europe’s largest companies. The Corporate IT Forum (CIF), a CIO-end-user organisation for big companies, said its members are now employing more business-minded people to negotiate outsourcing contracts.
“[Our members] were all experiencing the same thing,” says David Roberts, CEO of the CIF. “We found there’ll be fewer people in the IT department but they’ll spend higher amounts of money and will be much more commercially aware. The corporation really has to have these skills to compete with the Accentures of this world.”
Mr Roberts explains that CEOs are also pressuring the IT department to find ways of profiting the business, which requires a radical shift in thought from simply saving the company money and time – a move which could see the IT department slim down considerably.
“These models are threatening the old establishments,” he says. “This has been a long time coming, where technology alone can build a profitable business. You’re therefore going to need business people for IT who can procure and you can now procure almost anything from the other side of the globe.”
Yet some outsourcing companies have been waiting for this moment for years. For example, companies based in China and India, which recruit tens of thousands of highly qualified technical people every year, have based their entire business models on this very shift. Now jobs such as programming, support and administration could soon be offshored to these firms while project managers and architects will remain safely employed internally.
“The need for programming is reducing as this is not an essential skill to have in house,” says Ian Campbell group CIO of British Energy. “If you look at new companies, they’re being more virtual in IT, but British Energy is coming from a traditional position – if it was new, I would go for that new model.
“The role of the CIO is to understand the business and provide added value. But to do that you need commercial IT managers who can sort contracts. IT people don’t come with these skills and I’m spending a reasonable amount of my time working on relationship management.
“I’ve seen one or two organisations that have gone from hundreds of people in the IT department to 50. They are really going for it while others are waiting for it to become standardised.”
Of course outsourcing IT jobs could also spell turbulent times for people with technical skills. While many can design databases, build back-end offices and speak programming languages to each other, businesses are starting to require commercial knowledge and better communicative skills. On the other hand, IT recruitment agencies are having difficulty in finding the next generation of IT worker.
“The salaries can be anything up to £200,000 because of these trends,” says Albert Ellis, CEO of recruitment firm Harvey Nash. “These people are a mixture of project managers and business analysts. One of the interesting things about this is they not only need understanding of technology and offshoring but sales, cultural issues and how to manage expectations for the board and the customers. This is all new territory.”
Research from US employment IT analyst Foote Partners backs this up. It claims employers are “desperate for employees who have more than just technical skills”. Capgemini’s Global CIO report also urges CIOs to move away from IT-centric management.
The IT director of European catering firm Elior Alastair Fuller changed the staff on his IT team in a bid to improve the business: “The sector we work in is changing so the IT needed to change,” he says. “What was apparent was that the 20 people in the IT department were clearly not fit for purpose. Now we have almost a new team and only have four of the original.
“The new people have brought a much broader set of skills on board. For the IT departments in some organisations it’s about doing the minimum. In the same organisations you can see the self-sustaining interest in IT.”
Copyright The Financial Times Limited 2007
TECHNOLOGY LITE: The shrinking IT department
By Dan Ilett
Published: May 9 2007 11:36 | Last updated: May 9 2007 11:36
Business leaders are learning a few lessons about IT. After spending small fortunes on equipment and technical specialists over the last decade or so, many have started to realise that a lack of cost savings and profit avenues from these investments means a shake-up is required.
In a bid to reset the IT profit model, larger businesses are now starting to mimic smaller ones by contracting specialist IT companies to service their technology while they focus on selling their product.
“You’ve now got the virtualised server environment where you can host things remotely,” says Mark Kobayashi-Hilary, author of Global services – moving to a level playing field. “With that, all the grunt work is then taken away from the office. It’d be better to stick to what you’re best at, write down your technical requirements and ask someone else to do it.”
Several services are now on offer that remove the burden of administration from the IT department. For example, some companies opt for software as a service, such as Google’s spreadsheet and word-processing applications that can be used over an internet browser. More commonly in larger companies, this type of hosted service involves customer relationship management (CRM) programs from providers such as Salesforce.com.
“You can also outsource IT maintenance by paying a retainer or an hourly rate to another company,” adds Mr Hilary. “Smaller companies do that because it’s cheaper than the salary of an engineer. All this means you have a virtualised IT department.”
Such actions to shrink the IT department’s staff and equipment have been coined as moving to an “IT lite” environment – a trend that has been noticed in some of Europe’s largest companies. The Corporate IT Forum (CIF), a CIO-end-user organisation for big companies, said its members are now employing more business-minded people to negotiate outsourcing contracts.
“[Our members] were all experiencing the same thing,” says David Roberts, CEO of the CIF. “We found there’ll be fewer people in the IT department but they’ll spend higher amounts of money and will be much more commercially aware. The corporation really has to have these skills to compete with the Accentures of this world.”
Mr Roberts explains that CEOs are also pressuring the IT department to find ways of profiting the business, which requires a radical shift in thought from simply saving the company money and time – a move which could see the IT department slim down considerably.
“These models are threatening the old establishments,” he says. “This has been a long time coming, where technology alone can build a profitable business. You’re therefore going to need business people for IT who can procure and you can now procure almost anything from the other side of the globe.”
Yet some outsourcing companies have been waiting for this moment for years. For example, companies based in China and India, which recruit tens of thousands of highly qualified technical people every year, have based their entire business models on this very shift. Now jobs such as programming, support and administration could soon be offshored to these firms while project managers and architects will remain safely employed internally.
“The need for programming is reducing as this is not an essential skill to have in house,” says Ian Campbell group CIO of British Energy. “If you look at new companies, they’re being more virtual in IT, but British Energy is coming from a traditional position – if it was new, I would go for that new model.
“The role of the CIO is to understand the business and provide added value. But to do that you need commercial IT managers who can sort contracts. IT people don’t come with these skills and I’m spending a reasonable amount of my time working on relationship management.
“I’ve seen one or two organisations that have gone from hundreds of people in the IT department to 50. They are really going for it while others are waiting for it to become standardised.”
Of course outsourcing IT jobs could also spell turbulent times for people with technical skills. While many can design databases, build back-end offices and speak programming languages to each other, businesses are starting to require commercial knowledge and better communicative skills. On the other hand, IT recruitment agencies are having difficulty in finding the next generation of IT worker.
“The salaries can be anything up to £200,000 because of these trends,” says Albert Ellis, CEO of recruitment firm Harvey Nash. “These people are a mixture of project managers and business analysts. One of the interesting things about this is they not only need understanding of technology and offshoring but sales, cultural issues and how to manage expectations for the board and the customers. This is all new territory.”
Research from US employment IT analyst Foote Partners backs this up. It claims employers are “desperate for employees who have more than just technical skills”. Capgemini’s Global CIO report also urges CIOs to move away from IT-centric management.
The IT director of European catering firm Elior Alastair Fuller changed the staff on his IT team in a bid to improve the business: “The sector we work in is changing so the IT needed to change,” he says. “What was apparent was that the 20 people in the IT department were clearly not fit for purpose. Now we have almost a new team and only have four of the original.
“The new people have brought a much broader set of skills on board. For the IT departments in some organisations it’s about doing the minimum. In the same organisations you can see the self-sustaining interest in IT.”
Copyright The Financial Times Limited 2007
FT.com / Technology - Outsourcing is more than just saving money
FT.com / Technology - Outsourcing is more than just saving money
Outsourcing is more than just saving money
By Kim Thomas
Published: May 9 2007 11:36 | Last updated: May 9 2007 11:36
Large organisations have grown used to outsourcing their IT function to a single supplier. This supplier not only manages every aspect – software development, infrastructure, networks, help desk – but also innovates at the same time. And all for a lower price than could be achieved in-house.
However, a new report argues that this model is on the way out. According to sourcing advisory firm Morgan Chambers, businesses in the UK – although the same issues apply everywhere – are facing “outsourcing turmoil”, with nearly £7bn worth of deals up for renewal by March 2008.
The report, Outsourcing Service Provider Performance 2006, was based on a survey of 500 top executives across Europe, and it found little loyalty to existing providers.
The large outsourcing providers who have dominated the market for the past 10 years will see their high-value contracts broken up and distributed among a number of providers.
Why is this happening?
“There is a sea-change in the marketplace,” says Phil Morris, chief executive of Morgan Chambers. “Clients are thinking: ‘We know there is a much broader choice, and the services we have today are more portable than when we did our original outsourcing’.”
With hindsight, there are obvious flaws with the traditional model. It takes a long time, perhaps nine months to a year, says Claudio Da Rold, vice-president of sourcing at analyst Gartner, to negotiate and transfer a function to another supplier.
Once responsibility is in the hands of a outsider, it is much harder for the IT function to respond to the changing needs of the business. While the client organisation wants to look forward, an outsourcing deal is usually about fixing problems from the past, says Mr Da Rold.
Many deals founder because of the focus on cost, says Jimmy Harris, managing director of infrastructure outsourcing at Accenture: “Many of the ‘disasters’ we have seen are a function of the client getting exactly what they asked for.”
Companies increasingly recognise that they need more from an outsourcer than an ability to save money. IT has to be able to respond to the changing requirements of the business, and that requires a set of skilled individuals who can innovate, not just a pool of software coders and support teams.
As Sanjiv Gossain, managing director of outsourcer Cognizant puts it: “We’re moving from arbitrage of labour to arbitrage of intellect: where can I get the smartest brains for my money?”
As a result, the outsourcing market is changing rapidly. Indian offshore companies, such as TCS, Wipro and Infosys, are now challenging the established giants such as EDS, Accenture and IBM. Once concerned exclusively with providing cheap low-level services such as software maintenance, they are now offering high-end functions, often in the client’s home country.
These companies, says Mr Morris, “are competing on innovation, value-add, closeness of relationship and absolute focus on customer needs”.
At the same time, the large providers are taking advantage of cheap labour in places such as India, China and eastern Europe to provide offshore services. Clients now expect global delivery to be part of the outsourcing deal, says Mr Harris.
Accenture supplies infrastructure management services from delivery centres in India, China, eastern Europe, the Philippines and South America, for example.
Because software is increasingly standardised, it is easier for clients to switch between suppliers. Smaller companies offering specialised services have emerged to take on part of the IT function, giving clients the opportunity to take a best-of-breed approach.
Businesses can also opt for software-as-a-service, as offered by salesforce.com, in which a third party hosts a software application and delivers it over the internet.
British Airways has taken advantage of the increasingly competitive nature of the outsourcing market to implement deals that match its business requirements.
“Five years ago, we saw a need to be more flexible with resourcing,” explains Mike Croucher, head of IT delivery at BA. “We didn’t want to expand our headcount. We wanted to be able to flex resources, both skills and technology, depending on business demands.”
BA approached two providers it already had dealings with: the large Indian outsourcer Tata Consultancy Services (TCS) and a smaller Indian provider, Navayuga Infotech (NIT).
Rather than set up a single five-year contract, it asked the companies to tender for each piece of work. “One minute I might need a lot of resource in an Oracle environment, and the next I might need a lot of resource in a Java environment,” says Mr Croucher.
As a result, the company now has framework agreements with its two main suppliers: “It’s a very simple framework that allows my project managers to contract with them quickly around the piece of work they want to do. The basic framework gives all the terms and conditions and the payment schedules. None of that has to be reinvented each time – it’s simply the work we require and the price for that work.”
The model has worked well, says Mr Croucher, and has enabled BA to increase the number of projects it carries out without taking on more staff. Its own staff, meanwhile, have had the opportunity to move out of software development and support work and into different roles, such as business analysis.
A pick-and-mix approach may offer greater flexibility than the old one-stop shop model, but its complexity provides new challenges. Businesses need to tackle the problem strategically, says Mr Da Rold: “Multisourcing is not about selecting a number of providers. It’s about managing internal and external providers.”
Before entering into outsourcing relationships, a company needs to understand exactly what it wants from them and how it is going to manage them – and how the providers are going to work with each other.
“You need an architecture and a strategy in which everyone knows exactly what they are expected to do, and the requirements and boundaries between different providers are defined.
“On top of that, you need to have a strategy when you select the service providers so that they sign up not only to deliver their own piece of work, but to co-operate with other providers and internal IT to manage their end-to-end service,” says Mr Da Rold.
A common approach is to have a strategic relationship with one key supplier, says Ollie Ross, head of research at the Corporate IT Forum: “At that level, there is a great understanding on both sides of what that partnership is about and what it’s going to deliver to both parties, and what risks and effort it will take to deliver that.”
That key supplier can then manage the relationships with the other, smaller suppliers. ING Bank, which has recently outsourced its infrastructure management to four providers, is using this approach.
IT outsourcing has come a long way in the past 15 years, but it is still evolving. If the unwieldy model of outsourcing the IT function to one provider is nearing extinction, then its replacement still needs some fine-tuning.
“Multisourcing is a reality: the practices to nail it down and get the best out of it are still a work in progress,” says Mr Da Rold.
●FT Global Outsourcing and Offshoring Conference in London, May 14-15: www.ft.com/conferences
Copyright The Financial Times Limited 2007
Outsourcing is more than just saving money
By Kim Thomas
Published: May 9 2007 11:36 | Last updated: May 9 2007 11:36
Large organisations have grown used to outsourcing their IT function to a single supplier. This supplier not only manages every aspect – software development, infrastructure, networks, help desk – but also innovates at the same time. And all for a lower price than could be achieved in-house.
However, a new report argues that this model is on the way out. According to sourcing advisory firm Morgan Chambers, businesses in the UK – although the same issues apply everywhere – are facing “outsourcing turmoil”, with nearly £7bn worth of deals up for renewal by March 2008.
The report, Outsourcing Service Provider Performance 2006, was based on a survey of 500 top executives across Europe, and it found little loyalty to existing providers.
The large outsourcing providers who have dominated the market for the past 10 years will see their high-value contracts broken up and distributed among a number of providers.
Why is this happening?
“There is a sea-change in the marketplace,” says Phil Morris, chief executive of Morgan Chambers. “Clients are thinking: ‘We know there is a much broader choice, and the services we have today are more portable than when we did our original outsourcing’.”
With hindsight, there are obvious flaws with the traditional model. It takes a long time, perhaps nine months to a year, says Claudio Da Rold, vice-president of sourcing at analyst Gartner, to negotiate and transfer a function to another supplier.
Once responsibility is in the hands of a outsider, it is much harder for the IT function to respond to the changing needs of the business. While the client organisation wants to look forward, an outsourcing deal is usually about fixing problems from the past, says Mr Da Rold.
Many deals founder because of the focus on cost, says Jimmy Harris, managing director of infrastructure outsourcing at Accenture: “Many of the ‘disasters’ we have seen are a function of the client getting exactly what they asked for.”
Companies increasingly recognise that they need more from an outsourcer than an ability to save money. IT has to be able to respond to the changing requirements of the business, and that requires a set of skilled individuals who can innovate, not just a pool of software coders and support teams.
As Sanjiv Gossain, managing director of outsourcer Cognizant puts it: “We’re moving from arbitrage of labour to arbitrage of intellect: where can I get the smartest brains for my money?”
As a result, the outsourcing market is changing rapidly. Indian offshore companies, such as TCS, Wipro and Infosys, are now challenging the established giants such as EDS, Accenture and IBM. Once concerned exclusively with providing cheap low-level services such as software maintenance, they are now offering high-end functions, often in the client’s home country.
These companies, says Mr Morris, “are competing on innovation, value-add, closeness of relationship and absolute focus on customer needs”.
At the same time, the large providers are taking advantage of cheap labour in places such as India, China and eastern Europe to provide offshore services. Clients now expect global delivery to be part of the outsourcing deal, says Mr Harris.
Accenture supplies infrastructure management services from delivery centres in India, China, eastern Europe, the Philippines and South America, for example.
Because software is increasingly standardised, it is easier for clients to switch between suppliers. Smaller companies offering specialised services have emerged to take on part of the IT function, giving clients the opportunity to take a best-of-breed approach.
Businesses can also opt for software-as-a-service, as offered by salesforce.com, in which a third party hosts a software application and delivers it over the internet.
British Airways has taken advantage of the increasingly competitive nature of the outsourcing market to implement deals that match its business requirements.
“Five years ago, we saw a need to be more flexible with resourcing,” explains Mike Croucher, head of IT delivery at BA. “We didn’t want to expand our headcount. We wanted to be able to flex resources, both skills and technology, depending on business demands.”
BA approached two providers it already had dealings with: the large Indian outsourcer Tata Consultancy Services (TCS) and a smaller Indian provider, Navayuga Infotech (NIT).
Rather than set up a single five-year contract, it asked the companies to tender for each piece of work. “One minute I might need a lot of resource in an Oracle environment, and the next I might need a lot of resource in a Java environment,” says Mr Croucher.
As a result, the company now has framework agreements with its two main suppliers: “It’s a very simple framework that allows my project managers to contract with them quickly around the piece of work they want to do. The basic framework gives all the terms and conditions and the payment schedules. None of that has to be reinvented each time – it’s simply the work we require and the price for that work.”
The model has worked well, says Mr Croucher, and has enabled BA to increase the number of projects it carries out without taking on more staff. Its own staff, meanwhile, have had the opportunity to move out of software development and support work and into different roles, such as business analysis.
A pick-and-mix approach may offer greater flexibility than the old one-stop shop model, but its complexity provides new challenges. Businesses need to tackle the problem strategically, says Mr Da Rold: “Multisourcing is not about selecting a number of providers. It’s about managing internal and external providers.”
Before entering into outsourcing relationships, a company needs to understand exactly what it wants from them and how it is going to manage them – and how the providers are going to work with each other.
“You need an architecture and a strategy in which everyone knows exactly what they are expected to do, and the requirements and boundaries between different providers are defined.
“On top of that, you need to have a strategy when you select the service providers so that they sign up not only to deliver their own piece of work, but to co-operate with other providers and internal IT to manage their end-to-end service,” says Mr Da Rold.
A common approach is to have a strategic relationship with one key supplier, says Ollie Ross, head of research at the Corporate IT Forum: “At that level, there is a great understanding on both sides of what that partnership is about and what it’s going to deliver to both parties, and what risks and effort it will take to deliver that.”
That key supplier can then manage the relationships with the other, smaller suppliers. ING Bank, which has recently outsourced its infrastructure management to four providers, is using this approach.
IT outsourcing has come a long way in the past 15 years, but it is still evolving. If the unwieldy model of outsourcing the IT function to one provider is nearing extinction, then its replacement still needs some fine-tuning.
“Multisourcing is a reality: the practices to nail it down and get the best out of it are still a work in progress,” says Mr Da Rold.
●FT Global Outsourcing and Offshoring Conference in London, May 14-15: www.ft.com/conferences
Copyright The Financial Times Limited 2007
Friday, April 13, 2007
FT.com / World - Germany in push to set G8 emissions target
FT.com / World - Germany in push to set G8 emissions target
Germany in push to set G8 emissions target
By Alan Beattie in London and Hugh Williamson in Berlin
Published: April 13 2007 03:00 | Last updated: April 13 2007 03:00
Germany, this year's chair of the Group of Eight rich countries, has pushed the group to set a tough target for reducing carbon emissions, the first time it has been asked to commit to an explicit reduction.
But environmentalists said the World Bank, which the G8 has asked to finance the shift away from carbon use in the developing world, was continuing to ramp up lending for oil and gas.
A February draft of the final communiqué of the June heads of government meeting, obtained by the Financial Times, says: "Global warming caused largely by human activities is accelerating . . . beyond a temperature increase of 2 degrees C, risks from climate change will be largely unmanageable."
The draft said the G8 would "contribute our fair share" to limit global warming by ensuring global greenhouse gas emissions peaked in the next 10-15 years and then cutting them 50 per cent by 2050 from 1990 levels.
The US has dismissed calls for limits as "rhetoric". People in Berlin familiar with the German position said the 2°C limit to global warming remained in more recent drafts of the communiqué, but was facing "extremely strong opposition" from Washington, which was fighting its inclusion in the final draft.
The Germans and the British "would like to retain this language, but it will be very difficult", one person said.
The G8 has in the past called on the World Bank to fund greener energy generation in the developing world. Analysis of the bank's data for its lending in 2006 by the Bank Information Center, a Washington-based campaign group, showed lending to the fossil fuel industry rose by 93 per cent in 2006, compared with an increase of only 46 per cent in lending for renewable energy and conservation projects.
"There is a disconnect between what the G8 keeps saying and what the World Bank is doing," said Graham Saul, director of international programmes at the BIC. "Funding the expansion of the oil industry is a role the bank has played since the 1970s and it has been a great cash cow for them."
Jamal Saghir, director of energy for the World Bank, said the upward trend in the share of the bank's lending for control of carbon emissions was clear.
Renewable energy and energy efficiency projects had risen to 37 per cent of the World Bank Group's energy portfolio from just 14 per cent in 1994. "The bank is a world leader in lending for renewable energy and energy efficiency," he said. It had matched and beaten the target it had been set of increasing such lending by 20 per cent a year, Mr Saghir said.
The bank group as a whole includes its private sector arm, the International Finance Corporation, which has funded several controversial oil and gas pipelines in the developing world.
The G8 heads of government meet in June to discuss climate change, the world economy, trade and foreign policy. The communiqué also contains a strongly worded attack on "investment protectionism", which it says is imperilling the continued integration of the global economy.
Copyright The Financial Times Limited 2007
Germany in push to set G8 emissions target
By Alan Beattie in London and Hugh Williamson in Berlin
Published: April 13 2007 03:00 | Last updated: April 13 2007 03:00
Germany, this year's chair of the Group of Eight rich countries, has pushed the group to set a tough target for reducing carbon emissions, the first time it has been asked to commit to an explicit reduction.
But environmentalists said the World Bank, which the G8 has asked to finance the shift away from carbon use in the developing world, was continuing to ramp up lending for oil and gas.
A February draft of the final communiqué of the June heads of government meeting, obtained by the Financial Times, says: "Global warming caused largely by human activities is accelerating . . . beyond a temperature increase of 2 degrees C, risks from climate change will be largely unmanageable."
The draft said the G8 would "contribute our fair share" to limit global warming by ensuring global greenhouse gas emissions peaked in the next 10-15 years and then cutting them 50 per cent by 2050 from 1990 levels.
The US has dismissed calls for limits as "rhetoric". People in Berlin familiar with the German position said the 2°C limit to global warming remained in more recent drafts of the communiqué, but was facing "extremely strong opposition" from Washington, which was fighting its inclusion in the final draft.
The Germans and the British "would like to retain this language, but it will be very difficult", one person said.
The G8 has in the past called on the World Bank to fund greener energy generation in the developing world. Analysis of the bank's data for its lending in 2006 by the Bank Information Center, a Washington-based campaign group, showed lending to the fossil fuel industry rose by 93 per cent in 2006, compared with an increase of only 46 per cent in lending for renewable energy and conservation projects.
"There is a disconnect between what the G8 keeps saying and what the World Bank is doing," said Graham Saul, director of international programmes at the BIC. "Funding the expansion of the oil industry is a role the bank has played since the 1970s and it has been a great cash cow for them."
Jamal Saghir, director of energy for the World Bank, said the upward trend in the share of the bank's lending for control of carbon emissions was clear.
Renewable energy and energy efficiency projects had risen to 37 per cent of the World Bank Group's energy portfolio from just 14 per cent in 1994. "The bank is a world leader in lending for renewable energy and energy efficiency," he said. It had matched and beaten the target it had been set of increasing such lending by 20 per cent a year, Mr Saghir said.
The bank group as a whole includes its private sector arm, the International Finance Corporation, which has funded several controversial oil and gas pipelines in the developing world.
The G8 heads of government meet in June to discuss climate change, the world economy, trade and foreign policy. The communiqué also contains a strongly worded attack on "investment protectionism", which it says is imperilling the continued integration of the global economy.
Copyright The Financial Times Limited 2007
FT.com / Companies / IT - Infosys quarterly profit jumps 70 per cent
FT.com / Companies / IT - Infosys quarterly profit jumps 70 per cent
Infosys quarterly profit jumps 70 per cent
By Reuters Apr 13 06:12:49
India’s second-largest software exporter, Infosys Technologies Ltd., reported a forecast-beating 70 per cent rise in consolidated quarterly profit as outsourcing by foreign clients surged, but predicted more modest earnings growth for this fiscal year.
The company said per share earnings, before exceptionals, for the current fiscal year were expected to grow by 20-22 per cent to between 80.29 and 81.58 rupees, which traders said was muted by its standards.
That compared to a 53.5 per cent surge in per share earnings before exceptionals to 69.11 rupees for the fiscal year that ended on March 31.
”Our liquidity position continues to be strong with cash and cash equivalents reaching $1.4bn,” V. Balakrishnan, chief financial officer at Infosys said in a statement.
Nasdaq-listed Infosys, which develops applications, designs supply chains and offers back-office services, said on Friday its consolidated net profit was 11.44bn rupees ($267m) in the three months ended March, versus 6.73bn in the same period a year ago.
That compared with a mean net profit of 10.31bn rupees in a Reuters poll of 14 brokerages.
Analysts say the software and back-office services industry, which earns nearly 90 per cent of its revenue from overseas clients, will win more outsourcing jobs in the coming months from foreign firms that are looking to cut costs at home.
India’s large pool of English-speaking engineering workforce and cheaper wages of nearly one-fifth of Western salaries have helped to attract outsourcing. But the services firms’ ability to raise billing rates to offset higher wages and other costs may be limited because of the spectre of a U.S. economic slowdown, said analysts.
Top exporter Tata Consultancy Services Ltd. and third-biggest Wipro Ltd. are expected to report their profits grew 47.8 and 29 per cent respectively, the Reuters poll showed. TCS is due to report on Monday and Wipro on April 20.
India’s software services exports are expected to have risen 33 per cent to $31.3bn in 2006/07, and are targeted to hit $60bn by 2010 as firms such as Infosys and TCS take advantage of low-cost labour to grab global outsourcing.
Shares in Infosys, which counts ABN AMRO and Goldman Sachs among its clients, fell around 10 per cent in the March quarter, compared to more than a 7 per cent decline in the IT sector index and 5 per cent dip in the main BSE index.
© Reuters Limited Click for restrictions
Infosys quarterly profit jumps 70 per cent
By Reuters Apr 13 06:12:49
India’s second-largest software exporter, Infosys Technologies Ltd., reported a forecast-beating 70 per cent rise in consolidated quarterly profit as outsourcing by foreign clients surged, but predicted more modest earnings growth for this fiscal year.
The company said per share earnings, before exceptionals, for the current fiscal year were expected to grow by 20-22 per cent to between 80.29 and 81.58 rupees, which traders said was muted by its standards.
That compared to a 53.5 per cent surge in per share earnings before exceptionals to 69.11 rupees for the fiscal year that ended on March 31.
”Our liquidity position continues to be strong with cash and cash equivalents reaching $1.4bn,” V. Balakrishnan, chief financial officer at Infosys said in a statement.
Nasdaq-listed Infosys, which develops applications, designs supply chains and offers back-office services, said on Friday its consolidated net profit was 11.44bn rupees ($267m) in the three months ended March, versus 6.73bn in the same period a year ago.
That compared with a mean net profit of 10.31bn rupees in a Reuters poll of 14 brokerages.
Analysts say the software and back-office services industry, which earns nearly 90 per cent of its revenue from overseas clients, will win more outsourcing jobs in the coming months from foreign firms that are looking to cut costs at home.
India’s large pool of English-speaking engineering workforce and cheaper wages of nearly one-fifth of Western salaries have helped to attract outsourcing. But the services firms’ ability to raise billing rates to offset higher wages and other costs may be limited because of the spectre of a U.S. economic slowdown, said analysts.
Top exporter Tata Consultancy Services Ltd. and third-biggest Wipro Ltd. are expected to report their profits grew 47.8 and 29 per cent respectively, the Reuters poll showed. TCS is due to report on Monday and Wipro on April 20.
India’s software services exports are expected to have risen 33 per cent to $31.3bn in 2006/07, and are targeted to hit $60bn by 2010 as firms such as Infosys and TCS take advantage of low-cost labour to grab global outsourcing.
Shares in Infosys, which counts ABN AMRO and Goldman Sachs among its clients, fell around 10 per cent in the March quarter, compared to more than a 7 per cent decline in the IT sector index and 5 per cent dip in the main BSE index.
© Reuters Limited Click for restrictions
Thursday, April 05, 2007
FT.com / Companies / IT - EU blow to Microsoft on Windows
FT.com / Companies / IT - EU blow to Microsoft on Windows
Microsoft will be forced to hand over to rivals what the group claims is sensitive and valuable technical information about its Windows operating system for next to no compensation, according to a confidential document seen by the Financial Times.
Microsoft will be forced to hand over to rivals what the group claims is sensitive and valuable technical information about its Windows operating system for next to no compensation, according to a confidential document seen by the Financial Times.
Friday, March 16, 2007
Linux on the Desktop
Linux on the Desktop - Week of 03/15/2007
When computer maker Dell responded to a high volume of requests for open source solutions on its products by saying, "We are listening," speculation was raised that the company had plans to release consumer-level desktop PCs with Linux. Unfortunately for those whose hoped were raised, it was a misunderstanding; the note referred to certifying the hardware for being ready to work with Novell SUSE Linux, it was not an announcement that computers would be loaded and sold with the operating system. That Dell was moving towards Linux on the desktop may have provided the impetus for the numerous articles which followed the news, but the idea itself is not completely new, either in the press or the industry. While much of the press which appeared around the time of Dell's note focused specifically on Dell, many articles commented on the viability of Linux desktops for the masses in general. Those in the latter category reported that Linux interest and adoption is growing; Dell's customers requested it, Hewlett Packard has noted this as well, and analysts point out the same. However, the move to Linux desktops is not likely one Dell or others are going to make soon. Jim Zemlin, executive director of the newly formed Linux Foundation (of which Dell is a member) says, "Linux has a long way to go before it has the same market demand as Windows."
While they may be requesting Linux, BusinessWeek points out that customers, "have also complained about poor support and technical problems." Linux, better support, and technical problems could add up to trouble, at least as far as the bottom line is concerned, for any supplier of a Linux desktop PC. Sources have noted the necessary expenses in supporting the move to Linux desktops; BusinessWeek points out that suppliers would need to, "sign expanded support contracts with Linux suppliers like Red Hat and Novell, or train its own customer service reps on open-source technologies." Paul DeGroot, an analyst at the consulting company Directions on Microsoft, says, "After the second or third call, they've lost money on the machine." In regards to technical issues, BusinessWeek states, "to make Linux for consumers fly, the vendor would need to invest in engineering to ensure the software works with popular graphics chips and wireless modems." Dell is doubtless aware of these factors, as are others; Hewlett Packard has made similar conceits.
PCWorld quotes Doug Small, HP's worldwide director of open source and Linux marketing, "the number of indicators we look at—the noise level, the interest in the products on the market, the interest in our forums—are all tending to heat up for Linux during the last six months or so." Though one executive at HP sees, "the Linux desktop nearing critical mass," the tipping point has yet to be reached. Among the reasons for holding off at this point, much of the current interest in desktop Linux is coming from enterprises, most of them outside the U.S. and North American markets. To meet these needs, "HP says it has recently signed deals -- on an ad hoc, custom basis -- to provide Linux PCs to large customers," says the Wall Street Journal; Dell provides similar offerings to some if its enterprise customers as well. There may be a growing base of small- to medium-sized businesses asking about desktop Linux, but it just does not warrant the investment. With both Dell and HP waiting, it seems likely that it may be a while before Linux finds its way to the desktop of everyman. However, that it will come seems equally as likely; Dell and HP are not the only ones noting the rise in interest among users.
In an article entitled, "Is a Linux desktop avalanche coming?" DesktopLinux.com says, "Slowly, ever so slowly, the Linux desktop has been picking up momentum. It keeps getting better and better, but Microsoft's monopoly has kept many PC users from realizing that there really is a viable alternative to Windows. However, that's about to change." The Wall Street Journal concurs, their article, "Linux Starts to Find Home on Desktops" states, "The much-hyped notion that Linux would be viable software to run desktop and notebook PCs seemed dead on arrival a few years ago. But the idea is showing some new vital signs." The Journal reports that, "market researcher IDC said licenses of both free and purchased versions of Linux software going into PCs world-wide rose 20.8 percent in 2006 over the previous year and forecast that licenses will increase 30 percent this year over last. That compares with 10.5 percent growth in 2004, according to IDC." Even so, Microsoft's Windows still runs on over 90 percent of PCs sold each year, which leads the Journal to conclude, "Almost no industry experts expect Linux to make much of a dent against Microsoft on the desktop and laptop any time soon." According to BusinessWeek many experts agree, "Even high-profile Linux proponents admit the operating system isn't ready for mass-market use."
When computer maker Dell responded to a high volume of requests for open source solutions on its products by saying, "We are listening," speculation was raised that the company had plans to release consumer-level desktop PCs with Linux. Unfortunately for those whose hoped were raised, it was a misunderstanding; the note referred to certifying the hardware for being ready to work with Novell SUSE Linux, it was not an announcement that computers would be loaded and sold with the operating system. That Dell was moving towards Linux on the desktop may have provided the impetus for the numerous articles which followed the news, but the idea itself is not completely new, either in the press or the industry. While much of the press which appeared around the time of Dell's note focused specifically on Dell, many articles commented on the viability of Linux desktops for the masses in general. Those in the latter category reported that Linux interest and adoption is growing; Dell's customers requested it, Hewlett Packard has noted this as well, and analysts point out the same. However, the move to Linux desktops is not likely one Dell or others are going to make soon. Jim Zemlin, executive director of the newly formed Linux Foundation (of which Dell is a member) says, "Linux has a long way to go before it has the same market demand as Windows."
While they may be requesting Linux, BusinessWeek points out that customers, "have also complained about poor support and technical problems." Linux, better support, and technical problems could add up to trouble, at least as far as the bottom line is concerned, for any supplier of a Linux desktop PC. Sources have noted the necessary expenses in supporting the move to Linux desktops; BusinessWeek points out that suppliers would need to, "sign expanded support contracts with Linux suppliers like Red Hat and Novell, or train its own customer service reps on open-source technologies." Paul DeGroot, an analyst at the consulting company Directions on Microsoft, says, "After the second or third call, they've lost money on the machine." In regards to technical issues, BusinessWeek states, "to make Linux for consumers fly, the vendor would need to invest in engineering to ensure the software works with popular graphics chips and wireless modems." Dell is doubtless aware of these factors, as are others; Hewlett Packard has made similar conceits.
PCWorld quotes Doug Small, HP's worldwide director of open source and Linux marketing, "the number of indicators we look at—the noise level, the interest in the products on the market, the interest in our forums—are all tending to heat up for Linux during the last six months or so." Though one executive at HP sees, "the Linux desktop nearing critical mass," the tipping point has yet to be reached. Among the reasons for holding off at this point, much of the current interest in desktop Linux is coming from enterprises, most of them outside the U.S. and North American markets. To meet these needs, "HP says it has recently signed deals -- on an ad hoc, custom basis -- to provide Linux PCs to large customers," says the Wall Street Journal; Dell provides similar offerings to some if its enterprise customers as well. There may be a growing base of small- to medium-sized businesses asking about desktop Linux, but it just does not warrant the investment. With both Dell and HP waiting, it seems likely that it may be a while before Linux finds its way to the desktop of everyman. However, that it will come seems equally as likely; Dell and HP are not the only ones noting the rise in interest among users.
In an article entitled, "Is a Linux desktop avalanche coming?" DesktopLinux.com says, "Slowly, ever so slowly, the Linux desktop has been picking up momentum. It keeps getting better and better, but Microsoft's monopoly has kept many PC users from realizing that there really is a viable alternative to Windows. However, that's about to change." The Wall Street Journal concurs, their article, "Linux Starts to Find Home on Desktops" states, "The much-hyped notion that Linux would be viable software to run desktop and notebook PCs seemed dead on arrival a few years ago. But the idea is showing some new vital signs." The Journal reports that, "market researcher IDC said licenses of both free and purchased versions of Linux software going into PCs world-wide rose 20.8 percent in 2006 over the previous year and forecast that licenses will increase 30 percent this year over last. That compares with 10.5 percent growth in 2004, according to IDC." Even so, Microsoft's Windows still runs on over 90 percent of PCs sold each year, which leads the Journal to conclude, "Almost no industry experts expect Linux to make much of a dent against Microsoft on the desktop and laptop any time soon." According to BusinessWeek many experts agree, "Even high-profile Linux proponents admit the operating system isn't ready for mass-market use."
Thursday, March 15, 2007
FT.com / Companies / IT - Permira and Centaurus in €4bn approach for Atos
FT.com / Companies / IT - Permira and Centaurus in €4bn approach for Atos
By Delphine Strauss in Paris and James Mackintosh in London
Published: March 15 2007 23:23 | Last updated: March 15 2007 23:23
Permira and Centaurus, the British buy-out firm and hedge fund, have approached Atos Origin, the French IT services group, with a potential €4bn ($5.3bn) takeover, two people familiar with the situation said.
Atos confirmed Thursday it had received an approach after its shares surged, but did not say from whom. The group also said there was no formal offer and it was “not engaged in any financial operation with respect to its share capital”. Yet its shares, suspended before the statement, rose further after the denial, closing up 25.2 per cent at €49.50.
Permira, Britain’s biggest private equity group, and Centaurus, an activist hedge fund and Atos’s biggest shareholder, are understood to have asked for access to financial information to carry out due diligence before mounting a formal bid. It is unclear if Atos will agree, but it is thought to be considering the request.
People close to the situation said the Permira-led approach was priced at €58 a share, a 46 per cent premium to Atos’s previous close – a level some analysts said was hard to justify. Centaurus and Permira declined to comment on the approach, first reported by Dow Jones.
It is the second time Atos has damped rumours of a private equity approach in recent months, after denying in October it was in talks with Blackstone.
Bernard Bourigeaud, Atos chief executive, has made it clear it is open to a private equity deal, following two sales warnings last year, but he is thought to feel any bid must fully factor in gains expected from a restructuring programme.
One analyst said he found it difficult to justify a valuation above €50, although the prospect of spinning off its joint venture managing Euronext’s IT system, or Atos Worldline, its financial outsourcing arm, could attract private equity.
Copyright The Financial Times Limited 2007
By Delphine Strauss in Paris and James Mackintosh in London
Published: March 15 2007 23:23 | Last updated: March 15 2007 23:23
Permira and Centaurus, the British buy-out firm and hedge fund, have approached Atos Origin, the French IT services group, with a potential €4bn ($5.3bn) takeover, two people familiar with the situation said.
Atos confirmed Thursday it had received an approach after its shares surged, but did not say from whom. The group also said there was no formal offer and it was “not engaged in any financial operation with respect to its share capital”. Yet its shares, suspended before the statement, rose further after the denial, closing up 25.2 per cent at €49.50.
Permira, Britain’s biggest private equity group, and Centaurus, an activist hedge fund and Atos’s biggest shareholder, are understood to have asked for access to financial information to carry out due diligence before mounting a formal bid. It is unclear if Atos will agree, but it is thought to be considering the request.
People close to the situation said the Permira-led approach was priced at €58 a share, a 46 per cent premium to Atos’s previous close – a level some analysts said was hard to justify. Centaurus and Permira declined to comment on the approach, first reported by Dow Jones.
It is the second time Atos has damped rumours of a private equity approach in recent months, after denying in October it was in talks with Blackstone.
Bernard Bourigeaud, Atos chief executive, has made it clear it is open to a private equity deal, following two sales warnings last year, but he is thought to feel any bid must fully factor in gains expected from a restructuring programme.
One analyst said he found it difficult to justify a valuation above €50, although the prospect of spinning off its joint venture managing Euronext’s IT system, or Atos Worldline, its financial outsourcing arm, could attract private equity.
Copyright The Financial Times Limited 2007
Tuesday, March 13, 2007
Linux Starts to Find Home on Desktops - WSJ.com
Linux Starts to Find Home on Desktops - WSJ.com
Wall Street Journal, March 13, 2007
The Linux operating system, having made inroads into corporations' backroom server computers, is showing hints of inching into a much broader market: employees' personal computers. The much-hyped notion that Linux would be viable software to run desktop and notebook PCs seemed dead on arrival a few years ago. But the idea is showing some new vital signs.
Wall Street Journal, March 13, 2007
The Linux operating system, having made inroads into corporations' backroom server computers, is showing hints of inching into a much broader market: employees' personal computers. The much-hyped notion that Linux would be viable software to run desktop and notebook PCs seemed dead on arrival a few years ago. But the idea is showing some new vital signs.
Thursday, March 08, 2007
Follow the Money: Seed/Startup VC Trends Mirror Strong Overall Software Trends | AMR Research
Follow the Money: Seed/Startup VC Trends Mirror Strong Overall Software Trends | AMR Research
Seed and startup segment venture capital investment trends are mirroring overall venture capital spending trends. In the second half of 2006, VC firms invested in some particularly interesting nascent companies. Here, our research team comments on those seed and startup companies that attracted the most venture dollars.
Seed and startup segment venture capital investment trends are mirroring overall venture capital spending trends. In the second half of 2006, VC firms invested in some particularly interesting nascent companies. Here, our research team comments on those seed and startup companies that attracted the most venture dollars.
Follow the Money: 2007 Should Be Banner Year for VC Software Investment | AMR Research
Follow the Money: 2007 Should Be Banner Year for VC Software Investment | AMR Research
Recent data from PricewaterhouseCoopers and the National Venture Capital Association shows total venture capital investment hit a post-2001 peak of $25.5B from 3,416 deals in 2006. This is a 12% jump in capital invested from the 2005 level and a 10% increase in the number of deals year to year. Seed and early-stage companies received more financing in 2006, and first-time deals also hit a post-2001 peak, with 1,093 companies attracting $5.8B. The average deal size was $7.46M.
Recent data from PricewaterhouseCoopers and the National Venture Capital Association shows total venture capital investment hit a post-2001 peak of $25.5B from 3,416 deals in 2006. This is a 12% jump in capital invested from the 2005 level and a 10% increase in the number of deals year to year. Seed and early-stage companies received more financing in 2006, and first-time deals also hit a post-2001 peak, with 1,093 companies attracting $5.8B. The average deal size was $7.46M.
Wednesday, March 07, 2007
Monday, February 12, 2007
Tuesday, January 30, 2007
Sunday, January 21, 2007
Wednesday, January 17, 2007
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