ZDNet Must Read:
Analyst: News Corp.'s Google saber rattling really about MySpace
News Corp.'s alleged dance with Microsoft's Bing and Rupert Murdoch's big plan to de-index from Google is likely to be nothing more than saber rattling to secure a semi-respectable MySpace... Continued »
Category: Outsourcing
September 1st, 2009
SmartPlanet: 3 of 4 executives say outsourcing necessary to maintain bottom line
Three out of four executives believe outsourcing is imperative for helping companies hold up their bottom line in the current economy, according to a new study.
Nearly the same amount agree that money saved by switching some processes to an outsourcing partner — IT, finance, human resources, customer service, etc. — can be applied toward growth.
Three of five execs indicate that outsourcing could make businesses more “agile and flexible.”
Agree or disagree? Read the whole article on SmartPlanet’s Business Brains blog, then sound off.
August 26th, 2009
IBM, Wipro, Tata, Infosys win BP IT outsourcing deal
IBM and a band of Indian outsourcing companies have won a 5 year contract to manage and run BP’s enterprise applications.
The financial terms of the deal were not disclosed in a statement, but BP, a large oil and gas company, is handing out multiple IT contracts in a move to improve business processes.
IBM officials maintain they won the largest chunk of the contract and appears to be responsible for SAP maintenance across BP as well as the company’s integrated services desk.
We’re told that IBM will handle maintenance for BP’s SAP apps. Accenture had touted running BP’s SAP apps, which essentially run the oil company. Accenture will maintain SAP development responsibility. BP CIO Dana Deasy said in a statement that IBM was selected as a strategic vendor for SAP maintenance and system development.
BP spent the last year consolidating its IT vendors for application development and maintenance.
Among the other winners of the BP deal:
August 20th, 2009
Accenture lays off senior execs
Accenture said Thursday that it will thin its ranks of senior executives.
The company, which announced the layoffs in a statement, said it will cut its senior executive ranks by 7 percent. Accenture will take a charge of $128 million to cover severance and other layoff costs.
In another cost cutting move, Accenture said that it is cutting its office space to save on real estate. That move will result in a charge of $119 million.
Accenture CEO William Green said the senior executive layoffs will ensure the company “has the right people, skills and capabilities, at the right levels and in the right places.”
The cost cuts are expected to be complete in the fiscal first quarter. Accenture also stuck with its fourth quarter revenue target of $5 billion to $5.2 billion.
August 13th, 2009
Ask the Leadership Coach: Outsourcing from both sides of the divide
Leadership coach John M. McKee addresses the effects of global outsourcing. He answers emails from a dedicated employee who was recently let go, and a CEO who is trying to balance the costs and benefits. For more posts like this see TechRepublic’s IT Leadership blog.
After 17 years with the same company, I was recently terminated. I was told it was part of a company-wide downsizing; but many of us who were affected think it’s more about sending more business overseas where people will work for like $8 a day. I know this is going on across many industries. Here’s my question: Don’t business owners realize that they’re only hurting themselves with this kind of action? Consumers support the companies they believe in and who care about their communities. At some point nobody’s going to be left working in this country any longer. Who will buy their products then? Why is this so hard for CEOs to understand?
Paul in Chicago
July 13th, 2009
HP aims to pitch print services with payback guarantee
HP on Monday rolled out a payback guarantee for its managed print services and a bundle to better control departmental printing in the enterprise.
HP, which has talked up managed print services in the last few years, is looking to get companies off the fence with its guarantee. If a “qualified enterprise” doesn’t hit its printing savings target in 12 months of implementation HP will make up the shortfall (statement). In the fine print, HP says it “will credit the difference between projected and actual cost savings against future invoices.”
Add it up and HP is looking to get enterprises off the fence about managed print services. In this arrangement, companies basically farm out the printing function to HP. Xerox is among HP’s biggest competitors in the managed print services (MPS) market.
The company’s Page Plan is also another effort to entice companies to move toward full-blown printing outsourcing. Page Plan is a bundle due in September of access control and accounting software to better track printing and pages. The ultimate goal is to reduce printing costs by nuances such as requiring PIN authentication if need be. The customer would operate the software. HP says Page Plan is for customers “who are not ready for a full-scale MPS engagement.”
July 9th, 2009
Sprint outsources network maintenance and operations to Ericsson
Sprint on Thursday said it would outsource its network to Ericsson in a seven-year deal valued at $4.5 billion to $5 billion.
The deal (statement, Techmeme) allows Sprint to offload the costs associated with running its network. Sprint will transfer 6,000 employees to Ericsson. Ericsson will now handle all the day-to-day operations, maintenance, climbing cell towers and other items. The transfer of the network and the employees that go with them will happen in by the end of the third quarter.
Steve Elfman, Sprint’s president of network operations and wholesale, said on a conference call that Sprint still owns its network and is responsible for strategic plans and investments. Elfman added that the goal was to improve the quality of the network and deploy next-generation technologies. Sprint will keep its customer service operations.
Sprint didn’t disclose exact numbers on savings. Elfman said Sprint expects to cut cost per labor unit. Sprint will also avoid investment in the tools that Ericsson already has. Economies of scale will enable Sprint-Ericsson to cut costs on software licenses and other expenses. Those savings will be invested in expanding network coverage.
Among other key parts of the deal:
- Sprint chooses technology platforms and vendors;
- Ericsson maintains Sprint’s wireless and wireline networks;
- Ericsson will optimize Sprint’s inventory of network assets;
- Ericsson and Sprint will focus on improving processes;
- No layoffs are anticipated due to the deal and Ericsson will set up shop in Overland, Kansas, Sprint’s headquarters.
In many respects, the Sprint deal is a straightforward outsourcing pact. However, such deals are rare in the wireless world.
Clarification: My U.S.-centric lens got the best of me. These wireless pacts are common abroad. Camille Mendler, an analyst at the Yankee Group, said:
Outside the United States, deals like Sprint and Ericsson’s are commonplace. Since 2002, wireless operators worldwide have spent $29 billion on network-related outsourcing and managed services deals. It just hasn’t happened in the rather backward US market until now.
July 2nd, 2009
Tailoring Web technology to a bespoke dress shirt business
It’s not easy to mix up the monotony of putting on a shirt and a tie every day for work, but what if the shirt was made-to-order, with details of your own choosing?
Fashion startup ShirtsMyWay allows you to spruce up your tired work uniform and customize your own dress shirt from nearly-limitless options — from the color of the stitching around buttonholes to the shape of the breast pocket — and ships it to you for the price of an off-the-rack shirt from Brooks Brothers.
Always liked the look of the white-collar, blue-body banker dress shirt, but preferred the reverse? It can be done in two clicks. Like to keep things on the outside crisp and white, but prefer to have a little private bling on the inside? A few more clicks and you’ll have brown and white “French Rails” lining your collar and cuffs (see image below).
Or better yet, 20 copies of your new favorite shirt.
I spoke with Shanghai, China-based founder Michael Yang on how his startup is addressing the increased demand for custom clothing on the Web.
What gave you the idea for ShirtsMyWay?
Michael Yang: [Co-founder] Peter [Crawfurd] and I both wanted to start a company, and we had both been to Asia and had shirts made there for ourselves. The idea evolved over a very long process: we did some research online and saw that the customization wave was going up and online clothing sales were going up and put two and two together. We looked online and realized that people were only doing online tailoring, and no one was really doing design.
There are so many components to a shirt, and we thought you should be able to customize them all. You have the collar, the cuffs, the contrast fabric inside the cuffs, the sleeve, the placket, the yoke, the pocket, and you can go on. So we made every component customizable, down to the buttonhole thread.
That level of customization sounds daunting. How do you help the average customer choose?
MY: A lot of people simply love the level of customization — and some people are overwhelmed by the amount of options. We have a shirt model on the site that helps a lot with the visualization, so they can see what, say, a placket actually is.
Right now we’re working on a “shirtpedia,” where we try to educate people who don’t know so much about shirts. What kind of customers are we looking for? People who are interested in tailored or custom-fit shirts. We’re aiming for mass customization so that the average person can go in and do this. It’s a trend that’s going to spread to habit – rather than go to JCPenney or another offline store.
Your focus is only on men’s dress shirts. Is there interest in expansion to women’s shirts or pants?
MY: The natural progression that not only would come to mind would be to expand into customizing a whole wardrobe – shoes, pants, shirts, blazers, suits and so on. But it’s difficult to say right now. Originally that was our vision, but right now we see that there are things happening in our market — we’ve shaken it up a bit — and we probably have to take it as it comes.
We only launched in February, so we don’t have any pre-global economic downtown basis to compare to. Surprisingly, we are doing very well. The amount of sales we’re able to generate actually corresponds to our original goals. How is the economic downturn affecting the online industry? I’ve been looking at reports and some numbers indicate that online commerce hasn’t gone down.
So we’re already looking to expand. Right now we’re still tossing ideas around. We are currently shipping internationally — [North] America, Europe, Australia, Asia — but we pick certain countries because of the shipping costs. We have a policy of free shipping for most countries, so we’re already doing that.
You mentioned a “trend” in online custom clothing and a push away from brick-and-mortar stores. Is that really true?
MY: There are a lot of men who go online to buy clothing, and our initial idea was that men can’t be bothered to go into stores and shop around. There are a lot of men who want to just do it and get the package shipped to their door.
The current discussion right know concerning expansion is if the next step is to target women or to diversify into another product. Women buy practically 90 percent of the items in the household. We have gotten quite a few requests from women to make dress shirts for women. It’s quite a complicated process to diversify into women’s clothing. Peter and I have only have experience in men’s, rather than women’s, clothing. So we’ll possibly stick to what we’re good at. But you never know – my sister’s a clothing designer; maybe I’ll take lessons from her.
You and Peter are based in Shanghai, but you’re both from Denmark. How do you navigate the right channels to keep your business afloat?
I’m of Chinese origin; my parents are Chinese. They moved to Denmark and I was born and raised in Denmark. Peter and I went to high school together in Denmark and then the same university. I studied computer science and business administration and Peter studied international business. He worked in India for some time and I was in Denmark. As we started to itch, that entrepreneurship, we put our heads together in Denmark and moved to Shanghai to do the groundwork.
I speak Shanghainese, the native dialect, and I also have quite a big family here, around 20 family members, and they’re all entrepreneurs themselves. Beyond that, we have a consulting company here that is helping us with legal and accounting issues.
Peter supervises the operations and does the marketing, and I do the IT and supervise the accounting. We work quite differently, Peter and I — he does day-to-day work, while I do project work.
How does ShirtsMyWay function in the background? What happens behind the scenes?
MY: We use open source, which was a relatively natural choice for us. We run on PHP. When we started doing this there was a choice between Flash and AJAX, I picked AJAX. AJAX makes more sense if you want to do SEO — Flash is hard to control. AJAX is sort of like a lego box that you can piece anything together however you like it.
How does it work? People go online, customize their shirt, put in in the shopping cart and click order. We save the details so they can be retrieved later — users will be able to retrieve their own data soon. We have a back-end system that pulls up the order and sends it to the factory. We have an alliance with one factory that we’ve been working very closely with, which has only been getting better and better. They produce the shirt, quality control it and give it to us. We actually go in and quality control it ourselves. If it’s OK, we ship it out. If it’s not, we send it back to the factory.
We source our own fabrics because we don’t want to just put whatever the factory has up on our site. A lot of those fabrics are not so good, so we go out and handpick high-quality and stylish fabrics.
We’ve had around 0.2 percent or even lower return rate. For every 500 shirts we sell, maybe only one is returned. People are pretty happy.
The U.S. is our biggest market, for good reason. I think that in the States, people are quite far ahead on the innovation curve in order to be able to embrace the kinds of things that we’re doing. In terms of customizing your own clothes online, certainly I think that more people in the States do and would love do do these kinds of things than, say, Europe or Australia or other parts of the world. We do have a pretty good market in those other areas, but combined. The factor of embrace in the States is equal to the rest of the world put together. That’s the feeling that we get.
June 30th, 2009
Helping corporations leverage the Web, using open source and the cloud
What do open source and cloud computing have in common?
For Navid Safabakhsh, principal at San Francisco and Philadelphia-based interactive web development agency Freshout, it’s that both technologies are low-cost, high-yield solutions to help corporations leverage the customer data they collect on the Web.
I spoke with Safabakhsh about how his company’s mix of open source, collaboration and the cloud helps companies innovate by plugging into the Web — and their customers.
June 25th, 2009
With drop.io, real-time collaboration in the cloud
Is cloud computing a load of bull or the real deal?
For drop.io founder and CEO Sam Lessin, it’s everything…literally. Without it, his company and its eponymous service — which allows two-click sharing of anything with anyone, privately — might not exist.
I spoke with Lessin about drop.io (pronounced: drop-eee-oh) to find out how his New York-based tech startup helps businesses collaborate in real-time, all from the comforting arms of the cloud.
ZDNet: First things first: you named your company after your flagship service. What is drop.io?
Sam Lessin: drop.io is simple private sharing and real-time collaboration. A unit of exchange — a “drop,” a private URL — every drop has its own phone number, its own location, et cetera. It’s a place to collect media. The cool part about it is the technology behind it: one aspect of it is file conversion, the other is real-time messaging.
June 11th, 2009
U.S. CTO: Infrastructure growth needs private sector investment
The technology backbone of the United States needs a major overhaul and government alone can’t do it, the nation’s first chief technology officer said today. It’s going to take a cooperative effort, including a massive influx of “hundreds of billions” of private capital dollars, for the U.S. to catch up to its global peers.
CTO Aneesh Chopra delivered a keynote address this morning at the Consumer Electronics Association’s Digital Downtown event in New York City. The U.S., he said, is “dead last” on the global stage when it comes to the tech infrastructure and yet bandwidth usage in the U.S. is expected to increase five-fold by 2013.
“We’ve stood still while the rest of the world has caught up or exceeded us,” he said.
The U.S. is going to have to bring “all stakeholders to the table” for this discussion, he said. “We want equity, growth, application value…we have multiple public priorities, and the bulk of capital [investment]…will be a private sector endeavor.”
In his keynote, Chopra outlined the four areas, or “pillars,” of growth in need of attention: harnessing the potential for economic growth; innovation and policy reform in areas such as energy and education; increasing secure connectivity across the nation; and using “retail 2.0″ strategies in government efforts, such as in employment and social services.
June 10th, 2009
Wrangling banks' security architecture to allow transactions anywhere
If only bank websites were as simple and easy to use as an iPhone app.
Believe it or not, that wish isn’t far from fruition.
Earlier this year, banking provider Waterfield Technologies and application infrastructure guru WorkLight teamed up to offer secure, widget-based banking solutions for financial institutions and their customers.
Combining the WorkLight Application Platform with Waterfield’s financial know-how, the companies are enabling consumer banking — such as tracking account balances, transferring funds, paying bills and more — in the Windows Vista Sidebar, Mac OS X Dashboard, Facebook, iGoogle, Twitter, Apple iPhone and other channels.
I sat down to chat with John Marino, the president of Tulsa, Okla.-based Waterfield Technologies, about how his company plans to wrangle financial institutions’ security architecture to make secure banking possible from almost anywhere.
June 1st, 2009
CSC gets into cloud services game
CSC on Monday rolled out a series of cloud computing services.
The services are designed to complement the service provider’s integration and IT management offerings.
Specifically CSC is launching the following:
- Cloud orchestration services: These are designed to monitor, audit and manage hybrid cloud computing environments. Roughly speaking the service coordinates the cloud.
- Trusted cloud services: Here CSC is focusing on securing the cloud on demand.
- Cloud consulting: CSC will enable business models for the cloud.
Overall, CSC’s moves are an extension to its existing data center services. After all, the data center is now dubbed the “private cloud” by many vendors.
April 22nd, 2009
Report: Fraud and deception at Satyam was deep
The fraud and deception at Satyam Computer Services in India was so in-depth that it included dual accounting books, thousands of forged invoices, thousands of unnecessary employees and dozens of fake bank statements, according to court records analyzed by the New York Times.
Through the deception, managers, auditors and an adviser were able to create a perception that the company was “carrying out huge volumes of business” so it attract potential customers and investors, according to the NYT. All the while, cash was flowing into the hands of those who architected the deception.
In January, Satyam co-founder B Ramalinga Raju resigned from the company - India’s fourth largest outsourcing company - after admitting that this was an estimated $1 billion cash hole in the company’s balance sheet. Within days, Raju’s brother and company co-founder Rama Raju had been arrested, as well, and the company’s full board of directors were let go.
In addition, the company’s auditors are also facing charges. The Times, quoting from the court documents, reports:
The company’s auditors, S. Gopala Krishnan and Srinivas Talluri, who have been suspended from PricewaterhouseCoopers, both received figures from Satyam’s banks that were in “great variance with the figures provided by the management” but certified Satyam’s accounts anyway, the bureau said. In return, the bureau claims, the auditors received an “exorbitant audit fee” over and above the market rate.
Earlier this month, Satyam was sold to Venturebay Consultants, a subsidiary of Indian outsourcing firm Tech Mahindra. Venturebay Consultamts will pay $352 million for new shares representing a 31 percent stake in Satyam. From there, Satyam will make a public offer to buy another 20 percent of shares to reach a 51 percent controlling stake.
April 13th, 2009
Satyam sold: Tech Mahindra highest bidder
Satyam Computer Services, which had been rattled by accounting fraud, has been sold to a unit controlled by Tech Mahindra, an Indian outsourcing firm.
Satyam had put itself up for auction a few weeks ago. The company installed new management following at $1 billion accounting fraud. Venturebay Consultants, a subsidiary of Tech Mahindra, will pay $352 million for new shares representing a 31 percent stake in Satyam. From there Satyam will make a public offer to buy another 20 percent of shares to reach a 51 percent controlling stake.
In a statement, Satyam chairman Karin Karnik said:
On behalf of all Satyamites and their families, we congratulate Tech Mahindra on being the highest bidder. The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the Company in its progress towards stabilization and growth. We hope this will infuse greater confidence and comfort amongst customers, who continue to be happy with Satyam’s excellent service delivery. This event ought to dispel the anxiety of all stakeholders as it re-positions the Company’s commitment to revival and good governance.
Satyam’s next big challenge is keeping its customers in the fold. For sure, Satyam is more stable today. According to the auction orders, which were overseen by an India judge and that country’s equivalent of the Securities and Exchange Commission, Tech Mahindra was chosen because it met the following requirements:
- Good corporate governance;
- Social responsibility;
- Experience managing an IT services firm;
- A track record managing distressed operations;
- And a profitable strategic plan.
Satyam said that no bid was within at least 90 percent of Tech Mahindra’s bid. Tech Mahindra, which is controlled by utility vehicle giant Mahindra & Mahindra, now becomes India’s fourth largest IT firm.
Also see Bloomberg’s report on the sale.
April 4th, 2009
SaaS: Outsourcing out-of-control?
SaaS is effectively the same as outsourcing - you’re handing control over business processes to a third-party service provider. However, while SaaS delivery shares many similarities with outsourcing as a delivery model, there are serious caveats customers need to consider.
For today’s business executive, it’s easy to get excited by the potential of SaaS-based offerings. The low-cost upfront investment and pay-by-the-drink pricing can quickly get you the business services you need without the painful customization and implementation impediments of yesteryear. There is no more fretting whether your IT department has the expertise or resources to implement, develop and maintain the application. Bottom-line, SaaS creates a business utility service that is revolutionizing the software and outsourcing industries, especially in the worlds of the manufacturing, marketing and HR executive.
So what are the similarities and differences between SaaS and Business Process Outsourcing?
SaaS is like outsourcing because you’re handing over control of service-delivery to a third-party and relying on it to look after the day-to-day operational delivery. You’re also not paying anything for housing your data. But does low-cost mean low-risk?
Data concerns: What concerns me with SaaS delivery is the lack of provisions for compliance, business continuity, security and privacy of data. Moreover, there is often a far-reduced level of control over data and processing, for which a well-crafted outsourcing contract caters. Outsourcing goes to great lengths to stipulate where data resides, how it is protected, who has access, which measures are in place to accomodate political or natural disaters, and how data management complies with regulations. In addition, outsourcing providers are SAS 70 compliant, but are all SaaS providers? With SaaS, data is being processed in the Cloud. But does the Cloud have parameters? Does a SaaS contract have any reference to where cloud is located? These are questions you must ask when exploring these models.
Governance concerns: The massive appeal of SaaS to outsourcing service providers is the reduction in customization for new customers, which makes their services less appealing from a price perspective. The outsourcing Holy Grail is the one-to-many model where they can delivery common processes to multiple clients in a standard format. SaaS delivers that model in spades. If outsourcing service providers can acquire successful SaaS applications, they could hit a home-run with a utility delivery model, especially for business processes where buyers are willing to standardize onto a vendor model, for example payroll, general accounting, performance management, or CRM.
Hence, customers looking to procure SaaS will have to change their business processes to fit with a SaaS offering. They do all the transformation at their end, hence this entails a very different focus on transition into a managed service model.
SaaS is too easy: what worries me is the lack of any upfront investment and how that impacts their governance over that business process. It is a serious step for companies to enter into an outsourcing engagement, with significant change mangement required to establish governance over those outsourced processes.
With SaaS, companies can sign up, flip a switch, and they’re up and running with zero upfront investment. Does this mean they are going to invest nearly as much attention on governing these processes? My experience so far is no. Companies move into SaaS because it is cheap and easy, and often overlook the internal business transformation then need to go through to manage these processes effectively in an outsourced environment.
Outsourcing is a big investment, and the customer has to earn its savings overt time, while the service provider needs to earn its investment over time. SaaS is not a big investment for the service provider, but it should be treated as the SAME investment for the customer. If not, you could end up with an outsourced environment with no controls… not something that is going to be healthy for your business in this market.
April 1st, 2009
Forrester's U.S. IT spending forecast cut: Will 2010 show a rebound?
Forrester Research is now projecting 2009 IT spending to fall 3.1 percent, compared to the 1.6 percent decline the research firm had projected.
Forrester Research—along with Gartner—is the latest to cut its projections for 2009 following bleak fourth and first quarters (see full report). In many respects, the economy is confirming Forrester’s subdued outlook. As expected computer equipment is expected to take the biggest spending hit in 2009. In fact, the only positive growth area in Forrester’s forecast is outsourcing (and that’s because it cuts costs).
The wild-card here is Forrester’s assumption that there will be a late 2009 and 2010 rebound. Forrester analyst Andrew Bartels writes:
Computer equipment purchases will continue to bear the brunt of cutbacks in tech investment, but purchases of network equipment, software licenses, and IT consulting services will also drop. As the US economy starts to recover in late 2009, IT purchases will revive strongly, with strong growth projected for 2010.
Given that IT budgets are almost monthly and companies have no shot at providing guidance can a 2010 rebound really be on the table? After fall, Forrester has cut its U.S. IT spending forecast four consecutive quarters.
Here’s a look at Forrester’s money slide and my notes:
A few nuggets from Forrester’s view behind the numbers:
- The credit crunch is killing IT capital expenditures. Forrester writes:
Companies large and small have been shut out of credit markets, and even those that still have access to bank loans, markets for commercial paper, or corporate bonds often have had to pay much higher interest rates. Businesses have responded by going into a cash-hoarding mode, with big and dramatic cutbacks in all forms of capital investment. Since many IT goods are in the capital budget, IT markets have taken a disproportionate share of the capital investment collapse.
- Computer and communications equipment spending in the U.S. will decline 6.7 percent and 7.7 percent, respectively, in 2009.
- Software purchases will decline slightly. Forrester sees all three categories rebounding.
- There was a breakdown of computer equipment revenue among key vendor in the fourth quarter. Only NEC showed revenue gains, up 7 percent. Storage is expected to recover quickly.
- For communications equipment only Cisco showed a gain in the calendar fourth quarter. Video conferencing and next-gen (4G, 3G) networks will be a bright spot.
- Software vendors mostly showed revenue gains in the fourth quarter. Hot software areas include: Virtualization, IT asset management, business intelligence and business process management tools.
- And the final item on Forrester’s report can be summed up in one word: India. Forrester’s recap of the outsourcing market shows Infosys, Tata Consultancy, ACS, Accenture, CSC, Wipro and IBM global services as showing revenue gains. You can argue that all of those players are big India players—the only difference is that some of the companies call India their home field.
March 30th, 2009
Fujitsu America CEO makes mid-market enterprise bet
Fujitsu America will kick off April 1 as an integrated IT systems player with a game plan to target mid-market enterprise customers and large corporations in industries such as retail, financial services, government, manufacturing and health care.
Last September, Fujitsu announced plans that it would create Fujitsu North America Holdings to aggregate its consulting, systems and transactions units together into an IT services, software and hardware company.
The combination makes Fujitsu America more an IT services player in the U.S., Canada and Latin America. Parent company Fujitsu, based in Japan, is one of the top four IT services companies in the U.S. and roughly on par with Accenture in terms of revenue.
We caught up with Fujitsu America CEO Farhat Ali (right) ahead of the move. Here are some snippets of our conversation:
First off, Ali wasn’t able to discuss the Sun-IBM merger chatter. If you recall, Fujitsu has been rumored to be the most likely buyer of Sun’s server business. After all, Fujitsu manufactures Sun’s servers, sells systems that run on Sun’s Sparc chip and may be an ideal buyer should IBM want to unload a commodity hardware business.
With that tidbit off the table, here’s a look at Fujitsu America’s game plan.
March 27th, 2009
Accenture: Some clients are operating without annual budgets
For a few months now, it seemed as if enterprise technology spending was a month-to-month affair. Accenture confirmed that theory, noted that “some clients are still operating without approved annual budgets” and cut its outlook for the rest of the year.
Simply put, uncertainty reigns. A quarter of 2009 is gone and the annual budget is still in flux at some companies.
Accenture operating chief Steve Rohleder made the annual budget comments on its fiscal second quarter earnings conference call. The company reported earnings of 63 cents a share in its fiscal second quarter, a penny better than Wall Street estimates (statement). However, Accenture’s revenue was $5.27 billion, below estimates of $5.54 billion. Rohleder said:
Clearly the global marketplace has shifted dramatically over the past few months. Beginning in January we saw heightened marketplace uncertainty which led to a systemic pause in certain segments of the market. This resulted in three factors affecting our consulting business.
First, clients have started differing decisions about new work which has resulted in a slow down in converting our pipeline to revenue in the quarter.
Second, the small extensions and add-ons that normally come through each quarter did not come through at the rate we have seen historically in fact some clients are still operating without approved annual budgets.
And third, in some cases clients have asked us to work with them on reducing the run rate on existing consulting projects.
Accenture’s read on its client base goes something like this:
- Consultants are being used for “sustained cost reduction and operational improvement.” CEOs are driving these efforts.
- Big custom projects have been delayed, but there is demand for SAP and Oracle services.
- Customers are looking to cut IT infrastructure costs and data security and privacy, compliance and cost cutting are en vogue.
- Application outsourcing remains strong. In fact, outsourcing demand overall is strong. Seven of Accenture’s top 10 bookings in the quarter for outsourcing were with existing clients.
Simply put, there is a lot of IT work that needs to be done, but there’s a mass pause. Accenture CEO Bill Green added:
When people came back to work after the holiday in January and things just slowed down. If you would look at what happened from mid-December through the beginning of January as it relates to the economy it was very profound and there is a whole life going on this, people came back to work, people just took a pause and the pause that had been I think what we described last time was during the headlights became sort of an institutional thing as everybody said they are uncertain about what direction the economy was going to go in.
And one of the comments Steve made is, some of our clients they don’t even have their ‘09 budgets finalized yet. So, if you think about that, really what we are trying to account for here is that, that just the plain uncertainty.
Green continued:
To be perfectly blunt about it, I was shocked at the difference between January and December. December was a very good month, frankly. The difference between, you know, December and January, and if you have talked to companies across industries, you will find this out by talking to everybody. It was profound.
When asked whether things have improved in March Green noted that companies are now recasting their 2009 priorities. Meanwhile, many clients have laid off workers and that makes priorities—and who will actually do the work—fuzzy.
Given the cross currents it’s not surprising that Accenture is expecting fiscal 2009 revenue growth to be flat to up 4 percent. Earnings for the year are now expected to be in the range of $2.60 a share and $2.67 a share. Accenture had forecast $2.78 a share to $2.85 a share for the year.
March 25th, 2009
Union: IBM layoffs accelerating as employees vent
IBM’s employees’ union is delivering blow-by-blow accounts of Big Blue’s layoffs tonight.
The Wall Street Journal reported earlier Wednesday that IBM is looking to cut about 5,000 positions mostly in its global business services unit as it shifts work to India (Techmeme).
According to the Alliance@IBM site, 1,674 jobs have been cut in application services with employee reports filtering in. IBM’s employee union reckons that 4,000 U.S. jobs are on the chopping block.
Among some of the notable comments:
A letter regarding the transition of work in the Hartford Insurance account:
“Starting next week several Hartford delivery teams will be working directly with fellow IBM team members from India to begin the second phase of our Global delivery solution planned for the Hartford account. The teams will be engaged in a multi-week effort to facilitate knowledge transfer to prepare for migration of specific work activities to global delivery counterparts later in 2009. Your continued support and leadership is critical to ensure our overall success and to ensure we continue to deliver high quality cost effective solutions that IBM committed to the Hartford. Please ensure you and your teams actively support this effort.”
And.
I work for IBM Asia Pacific Region and currently with IBM Australia - a 26-year veteran with IBM. Just been told that I am terminated along with many others here, although the region kept reporting increase in business results!
And.
1st line manager confirmed last week that there will considerable pressure to cut jobs, regardless of current staffing levels, workloads etc. Even if a dept. is under budget they will have to cut staff. Hope they remember to be generous with those severance packages - especially considering some of the directions given to us by our managers.
And.
I’m an IBM employee who is often frustrated by the secrecy at the top and IBM’s unwillingness to be honest about the layoffs…. err, resource actions. However, I don’t think IBM is immune from the global economic forces that are leading to a more global workforce, the shifting of jobs from high-paying countries to lower-paying companies,etc. Do you really expect IBM to be the only company not having layoffs in this economy?
March 17th, 2009
India paper: Satyam has lost 46 customers
Satyam has reportedly lost about 46 customers out of 600 since its massive financial fraud surfaced.
India’s Economic Times reports that these Satyam customers have moved to rival outfits. The news isn’t unexpected as a few CIOs had mentioned their intentions to ZDNet off record.
The paper reported that customers such as Abu Dhabi Bank, Applied Materials, State Farm Insurance and Sony are some of the big names that have moved out projects or are in the process of leaving Satyam, which has been rocked by financial fraud.
These disclosures are likely to surface as potential buyers conduct due diligence on Satyam, which is seeking to sell a 51 percent stake in the company.
While losing 46 customers isn’t trivial, Satyam appears to be hanging on to most of its base. For perspective, Satyam became India’s Enron and only lost about 8 percent of its customers. It’s unclear whether that customer loss tally speaks to the difficulty getting out of outsourcing deals or faith in Satyam.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
Subscribe to Between the Lines via Email alerts or RSS.
SponsoredWhite Papers, Webcasts, and Downloads
- Why Isn't Server Virtualization Saving Us More? A Few Small Changes May Dramatically Increase Your Efficiency VMware Companies have rapidly adopted server virtualization over the past few ... Download Now
- VMware Infrastructure: A Guide to Bottom-Line Benefits VMware Frustrated by the costs of maintain ever larger data centers?or building ... Download Now
- Three Steps You Need to Know to Stop Data Loss Varonis Sensitive data exposed to misuse or loss... it is the stuff of nightmares ... Download Now
Recent Entries
- HP reports Q4; raises outlook for 2010
- Analyst: News Corp.’s Google saber rattling really about MySpace
- Google to beef up display ads with acquisition of Teracent
- Apple’s Schiller defends app approval process; misses the point
- LinkedIn’s platform debut: Late but important
Blogs From Our Sponsors
Most Popular Posts
- Verizon to AT&T: "Our ads are true and the truth hurts"
- My scareware night and how McAfee lost a customer
- Netbooks dead? Not when sales are up 264 percent
- Intel to pay AMD $1.25 billion as companies end litigation war; Is it a new chip era?
- Memo to AT&T: When you're in a hole, stop digging
- Live from Googleplex: Chrome OS details revealed
Top Rated
- Verizon to AT&T: "Our ads are true and the truth hurts"+44 votes
- Yes, Ubuntu can absolutely be the default Windows alternative+42 votes
- L.A. votes to "Go Google"; pressure shifts to Google and the cloud+31 votes
- Intel to pay AMD $1.25 billion as companies end litigation war; Is it a new chip era?+27 votes
- My scareware night and how McAfee lost a customer+25 votes
- New York AG files antitrust charges against Intel; alleges bribery, coercion+24 votes
- Netbooks dead? Not when sales are up 264 percent+21 votes
- AT&T launches Verizon counter-punch ad, keeps digging that hole+14 votes
Premier Vendor Content Whitepapers, webcasts & resources from our Power Center Sponsors
- The best support in the Linux business
-
If Linux is going to power your mission-critical applications, you'd better have the best support known to business. Novell was rated the top provider of Linux technical support.
- Learn more >>
- New Online Dashboard for IT Leaders
-
Read about top issues IT decision-makers face every day, plus get cost-effective solutions to real-life IT problems.
- Learn more >>
- The more you simplify, the more you save
-
When you transition from your existing Red Hat environment to SUSE Linux Enterprise from Novell, you can recognize dramatic cost savings, perhaps as much 50%
- Learn more >>
- Learn more about tools to grow your business
-
The Business Essentials Guide provides you useful tools and templates to help grow your business and save you time with automated shipping solutions.
- Save time with the UPS Business Essentials Guide
Archives
Favorite Links
Favorite Sites
- Ars Technica
- Deal Journal
- Engadget
- Enterprise Irregulars
- GigaOm
- Google Blogoscoped
- Horses for Sources
- Mac Rumors
- Mashable
- Official Google Blog
- Read/WriteWeb
- Scobleizer
- Seeking Alpha
- TechCrunch
- Techdirt
- Techmeme
- The Ponderings of Woodrow
- The Unofficial Apple Weblog (TUAW)
- Valleywag
- ZDNet: Latest blogs and news
ZDNet Blogs
- All About Microsoft
- The Apple Core
- Between the Lines
- BriefingsDirect
- Collaboration 2.0
- Dev Connection
- Digital Cameras & Camcorders
- Ed Bott's Microsoft Report
- Emerging Tech
- Enterprise Web 2.0
- Forrester Research
- Googling Google
- GreenTech Pastures
- Hardware 2.0
- Home Theater
- iGeneration
- Irregular Enterprise
- IT Project Failures
- Laptops & Desktops
- Lawgarithms
- Linux and Open Source
- Managing L'unix
- The Mobile Gadgeteer
- On Sustainability
- Rational Rants
- The Semantic Web
- Service Oriented
- Smartphones and Cell Phones
- Social Business
- Social CRM: The Conversation
- Software & Services Safari
- Software as Services
- Storage Bits
- Team Think
- Tech Broiler
- Technology and the Global Supply Chain
- Tom Foremski: IMHO
- The ToyBox
- Virtually Speaking
- The Web Life
- ZDNet Education
- ZDNet Government
- ZDNet Healthcare
- Zero Day
White Papers, Webcasts, and Downloads
- Reducing Server Total Cost of Ownership with VMware Virtualization Software VMware VMware virtualization enables customers to reduce their server TCO and ... Download Now
- Why Isn't Server Virtualization Saving Us More? A Few Small Changes May Dramatically Increase Your Efficiency VMware Companies have rapidly adopted server virtualization over the past few ... Download Now
- The True Costs of Virtual Server Solutions VMware In an economic environment that is repeatedly heralding the message "do ... Download Now
Meet Doc
-
-
Here to help you with your Document Management Needs
- Doc is an enigma. Born to a Russian ballerina and a German electrical engineer, he grew up in various locations in the United States. He’s seen the insides of more brands, versions, and generations of printer and printer-related hardware than almost anyone.
- To learn more about this mysterious figure check out his blog on ZDNet and his Workspace on TechRepublic. You’ll be glad you did.
-
Produced by
ZDNet and -
