By Anthony Doesburg

With $725 million in sales and 3400 staff, this may be the biggest success story you’ve never heard of.

Overseas sales will provide a rising share of Datacom’s income, says chief executive Jonathan Ladd (left), with NZ head Greg Davidson. Photo / Anthony Doesburg

Ask customers of any high-street computer store to name the country’s leading IT companies and it’s a safe bet that IBM, Hewlett-Packard and Apple will come up time and again.

Yet the outfit that processes the pay for tens of thousands of us every week, that enabled ASB Bank to take its services online, and that answers our technical questions when we phone the Microsoft helpdesk remains practically unknown.

That company is Datacom, whose very name sounds as though it was carefully chosen to ensure anonymity.
Alert visitors to the Auckland and Wellington central business districts may have seen the Datacom sign on half a dozen substantial buildings. But in the words of a long-time computer industry figure, the very boringness of the white on blue logo makes it virtually invisible.

Invisibility would seem to be no bad thing in an industry where the stars have a habit of burning brightly, then sputtering out. There are legions of big names that shone for decades – Burroughs, Sperry, Digital Equipment, Data General, ICL, Compaq, Sun Microsystems – then faded into history.

If those were all United States or British companies, there are plenty of New Zealand examples too: Progeni, Paxus, Cardinal, CCL and Computerland.

But Datacom, which happened along before many of those one-time big names, continues to prosper as a low profile privately owned company with sales in the past year of $725 million. It has a blue-chip customer list and expertise in software development, technical support provision, systems and business process outsourcing and IT consulting.

From its origins in Christchurch in 1965, it has expanded into nine New Zealand centres, most of the Australian state capitals and Malaysia and the Philippines. It has about 3400 staff – 1900 of them in New Zealand – and at its present growth rate will be a $1 billion business within three years.
It is also one of three companies vying for a piece of the action as the Government looks towards the clouds for its future IT needs. The so-called infrastructure-as-a-service (IaaS) contract is just weeks from being awarded, is expected to last decades and could be worth billions of dollars.

Datacom is the model of a successful IT services company, says John Blackham, who has had to revise his opinion of the firm that gave him his first job here after he migrated from Britain in the early 1970s.
“Datacom, or CBL as it then was, brought me out here,” says Blackham, who did not stay at the company long, winding up working for a Wellington-based payroll services competitor CCL.

“Back then I viewed it as pretty stodgy. CCL was a dynamic place whereas Datacom was as boring as its blue logo – that’s the way it came across.

“However, it worked under cover to get a solid stable of government accounts.”
After selling his own successful software business in 1990, he worked for several years in North America. In 1996 he returned to Auckland, where he soon renewed his acquaintance with Datacom.

“I’d been back a week and went to a Northern Club dinner where Frank Stephenson, Datacom’s chief executive, explained his philosophy for running a successful software business.

“It was very simple and was along the lines that you never did any work that took longer than six man-months. By keeping all the pieces of work small you could deliver on time and on budget, and I think that was the key to Datacom’s success.”

Paul Muckleston, the head of Microsoft New Zealand – a customer of and supplier to Datacom for two decades – says it’s a no-frills company, without a huge marketing department, that flies below the radar.

“But I think people are often surprised at the breadth and depth of what it does. It is one of the few soup to nuts systems integrators.”

The company’s stealth style of operating seems to work.

It was described as a “revenue and profit machine” and “in a class of its own” by the judges in last year’s Hi-Tech Awards, who included Dell founder Michael Dell. They named it company of the year.

In 2009 it was in the top 60 companies in the country by revenue, staff and profit. And the TIN100 ranking of technology companies last year listed it as the second-highest revenue earner, behind Fisher & Paykel Appliances.

Rasika Versleijen-Pradhan, who analyses the $2.8 billion New Zealand IT services market for IDC, says Datacom may have a low profile outside the IT sector, but within that field it is an acknowledged leader.

“For anyone who’s looking for IT services, Datacom is on the list,” says Versleijen-Pradhan. That’s particularly so for government and large enterprises.

Its key New Zealand customers include NZ Post, ASB Bank, Air New Zealand, Fletcher Building, the Customs and Justice departments and, since April, Land Information New Zealand.

Its exact ranking on the IT services supplier list is a little hard to ascertain in a market that is already feeling ripples from Telecom’s impending split.

According to IDC, last year’s top five providers were Telecom-owned Gen-i, Hewlett-Packard, Datacom, IBM and Dimension Data.

But Datacom does the numbers differently. By deducting the substantial portion of Gen-i’s revenue that comes from telecommunications services, it puts itself at No2, behind HP.

And it points out that HP’s revenue will take a hit of up to $180 million after changes signalled last December to its decade-old outsourcing contract with Telecom, brought about in part by the telco’s planned division into separate network and retail companies.

Versleijen-Pradhan agrees that represents a big chunk of HP’s business. Further clouding the picture is the sale of Gen-i’s 110-strong software solutions arm in the middle of the year to Indian company Infosys, although lost revenue may be offset by a partnership between the two.

Those changes, combined with Datacom’s faster growth than its competitors, should continue to push up its market share, which went from 6.5 per cent in 2009 to 7.5 per cent last year. And that is just in New Zealand. Although firmly rooted in this country, in the past year Datacom’s overseas sales topped what it made in New Zealand, at $380 million compared with $345 million.

The difference will only widen, says Jonathan Ladd, the Sydney-based chief executive of Datacom Group, as overseas growth accelerates.

“Growth in New Zealand is steady – it hasn’t maxed out yet – but outside New Zealand it is exponential.

“We’re No 5 or 6 in the Australian IT services market, with sizeable businesses in every capital city bar Hobart and we’re also in Kuala Lumpur and Manila.”

The company has 940 Australian staff. In Asia, meanwhile, contact centre operations – no longer just answering phones but also interacting with customers via social media – employ 600.

At the present growth rate, Ladd says, the billion-dollar mark isn’t far off.

“If you look at our growth curve and extend it upwards, we should cross it in the next three years or so.”

Minding the IT shop of government agencies and big businesses is just part of what Datacom does. It provides payroll services to 4000 small to medium-sized New Zealand organisations, runs overseas helpdesks for numerous big technology companies, undertakes large software projects such as developing Statistics NZ’s online census system and carries out business processing – handling claims, for instance – for the likes of superannuation companies.

Ladd describes its activities as “running right across the stack” of services.

Greg Davidson, Auckland-based head of Datacom New Zealand, says each of the regional offices operates in a largely standalone fashion, catering to local customers and drawing on group resources as required.

For all its size and diversity, says Ladd, the company responds in a “family” way to events such as the 2007 death from cancer of Frank Stephenson, by that time Datacom chairman.

Stephenson played a pivotal part in establishing Datacom’s consulting, outsourcing and software development offerings during the 1990s, says Davidson. The project management disciplines he instilled, emphasising getting an accurate handle on project scope, are still followed by the company’s 700 software developers.

The Stephenson model seems to work. Datacom can claim a string of project hits, having written the ASB’s online banking system, Air New Zealand web sales software and PostShop’s counter system.

If there have been misses, they’ve been well hidden.

“You’d have been reading about us more if our software development reputation wasn’t solid, wouldn’t you?” Davidson points out. Microsoft’s Muckleston says it would be difficult to find an unhappy Datacom customer.

“It’s a good competent operator – you don’t find a lot of bad projects around.”

He says Datacom’s approach is to put in whatever resources are needed to bring projects to a satisfactory end, and if they turn out to be less profitable than expected, to take it on the chin.

Last year the company again had to contend with the sudden demise of a key figure when group chief executive Michael Browne died at the age of 47. Ladd, a non-executive director, took over as group head.

“It was a huge shock – he was there Friday and gone Monday,” says Ladd.

Browne is credited with getting the company off the ground in Australia in the 1990s after an attempt a decade earlier failed. Success came by building the business on top of a Microsoft support contract that had already got Datacom across the Tasman.

It branched into outsourcing in Australia through a deal with P&O Services, of which Ladd is former chief executive, commissioning a data centre in Sydney. Several years and acquisitions later – a departure from its usual organic growth strategy – it has three Australian data centres and operations in most states.

The one recent blemish on its performance record was the closure in the past year of Relate, a Sydney software development business bought in 2007, costing the company $3.2 million and contributing to a 26 per cent profit fall.

“We tried to pull that up into a fully fledged software services business but it didn’t go according to plan in a high-cost geography like Sydney,” Ladd says.

On what is possibly the biggest IT contract ever to be awarded in this country, Ladd and Davidson have little to say.

Datacom is one of three companies still in the running for inclusion on a government panel of infrastructure-as-a-service (IaaS) – or “cloud” – computing providers. The other two contenders are IBM and Revera, a smaller New Zealand IT hosting company, while a bid by Gen-i has already been rejected.

The successful bidders were to have been named this month, but the Department of Internal Affairs, which steers government IT, now says an announcement will be made next month.

If Datacom misses out, it can expect to see the gradual erosion of its state-sector business. The Government made it clear in an ICT roadmap last year that IaaS will be the “operational foundation” for its future computing requirements.

That will see government departments giving up their own computing facilities and paying cloud providers for the IT services they use – in much the same way that they pay for electricity and other services.

“We have a lot of business in Wellington so this is important both for protecting what we’ve got and if we want to move into the new paradigm,” Ladd says.

To some extent Datacom’s success in getting business from state agencies might be attributable to the company’s ownership. Although 54 per cent of Datacom is in the hands of Evander Management, a private investment company belonging to the family of rich-lister John Holdsworth (see story, right), the next-largest stake – 35 per cent – is NZ Post’s (staff and directors own the remaining 11 per cent).

As well as being a part owner, NZ Post is also one of Datacom New Zealand’s three biggest customers.
The relationship between the two is unlikely to do Datacom any harm in drumming up other state-sector business, according to IDC’s Versleijen-Pradhan.

As a shareholder, NZ Post’s chief executive, Brian Roche, and finance chief, Mark Yeoman, sit on the Holdsworth-chaired Datacom Group board, which cycles its meetings around the cities in which it operates.
John Blackham, who today runs Auckland software company Xsol, has not changed his mind about the company’s dull exterior. But these days he sees that as a virtue.

“To me, Datacom has maintained that understated presence. There’s no question it is the most powerful and persistent IT company in New Zealand.

“It’s the only one I wouldn’t have doubts about. When all about are curling up their toes and dying, Datacom has created a really solid business.”

COMPUTERS’ PROMISE SPOTTED WAY BACK IN ’60s

It was the swinging ’60s, and young Kiwi accountant Paul Hargreaves was working in the City of London.

Sex, drugs and rock’n'roll weren’t the only sources of excitement; Hargreaves was also witness to the start of the computer era.

He had an assignment at industrial giant English Electric, one of the first organisations with a computer services bureau.

That started him thinking his hometown Christchurch, also home of family accounting firm Hargreaves & Felton, would be the ideal place to start a computer bureau.

“It seemed to me a bureau sort of a town because IBM at that time was chasing around trying to sell Christchurch companies a computer of their own but they shied away from that.

“There was big money involved and there were few people around with the skills to manage such an operation, let alone write software.”

Aged 26, he returned home to look for a collaborator, roping his former accounting teacher, Bernard Battersby, a partner at Pickles, Perkins & Hadlee, into the idea.

They persuaded their respective firms to back what would be a pioneering Kiwi computing venture.

“This was right at the beginning. I think the Treasury had a computer and one or two of the computer companies had something in the way of a bureau, but that was all.

“It was literally the ground floor.”

In 1965 they founded Computer Bureau (CBL) with £30,000 in capital, leased a computer from ICL and waited for a British dock strike to end so they could take delivery of their new acquisition.

In the meantime, Hargreaves says, they made the big investment decision to double the memory of the room-sized machine from 32K to 64K, about the same amount as a modern hand-held scientific calculator.

Demand for the bureau’s services saw it expand northwards so that by 1971 it had computer centres in Christchurch, Wellington, Hamilton and Auckland, and was doing $1 million of business, with Hargreaves and Battersby playing key executive roles.

Battersby died in 1987 of pancreatic cancer and Hargreaves resigned from the Datacom board in 2006 when he was diagnosed with the same disease.

“Unlike Bernard, I had the good fortune to subsequently make a complete recovery.”

In 1984 CBL was renamed Datacom and in 1989 it merged with CCL, whose owner, John Holdsworth, through family investment company Evander Management, today has a 54 per cent stake in Datacom. NZ Post is the second-biggest shareholder, with 35 per cent.

Holdsworth, who debuted on the NBR Rich List this year with assets of $150 million, declined to be interviewed. He was appointed an Officer of the NZ Order of Merit in this year’s New Year honours, the same honour received by Hargreaves in 2007.

In 2006 Datacom was rumoured to be on the point of being sold to either IBM or Hewlett-Packard, but Greg Davidson, who heads the company’s New Zealand operations, says he’s “quite sure” there’s no truth to the story.

Source: NZ Herald

IBISWorld

Recruitment was one of the first business processes outsourced by industry and it is tied to the cyclical nature of the business cycle. As an extension we will see growth in employee benefits administration. Australia bypassed the worst of the global financial crisis, which meant its effect on the Australian employment placement services industry was mild compared with its international counterparts.

Australia’s rise in unemployment was small and quickly began to reverse, with demand for employment placement services continuing to grow in 2010-2011 and expected to continue in 2011-2012.

IBISWorld estimates that industry revenue has increased at an average annualised rate of 0.6% during the past five years.

In 2011 the industry is expected to generate $2 billion in revenue, up 4.5% on the year prior. Profit will climb by 4.0% to $59 million.

Following the economic downturn revenue grew 2.2% for 2010-2011.

Despite uncertainty among international global clients and reduced business confidence the employment placement services industry will grow as it anticipates increased demand in permanent recruitment services and an increase in client-paid net fees.

As the Australian economy hits full health industry revenue growth will accelerate to average 2.9% per year over the next five years and is forecast to total $2.3 billion by 2016-17.

That will be driven by increased economic activity, a strengthening labour market and the potential for providing services online.

Industry Outlook

With the Australian economy having held up well amid the global financial crisis and unemployment remaining relatively low growth in the employment placement services industry will continue to strengthen in 2012-13, with revenue forecast to rise by 2.7%.

Although declines in unemployment tend to lag behind growth when an economy is emerging from a downturn the composition of unemployment tends to move more toward people who are switching jobs, while the proportion of people that have been laid off or are long-term unemployed declines.

Continued solid growth is anticipated during the five years through 2016-17 as unemployment gradually decreases. By 2016-17 IBISWorld estimates that industry revenue will reach $2.3 billion.

Job vacancies and new hirings will increase as the economy begins to achieve relatively strong results. Businesses will again turn to employment placement service providers as their recruitment needs expand and the right applicant becomes more difficult to find as competition for workers heats up.

During the five years through 2016-17 industry revenue is forecast to increase at an average annual rate of 2.9%.

Aside from the level of unemployment and general economic conditions other factors driving growth, once the recovery begins it will include the expansion of major operators into new services such as employee process outsourcing and administering WorkCover, superannuation and other compulsory and statutory payments to employees on behalf of clients.

Outsourcing recruitment by business and government will continue. IBISWorld expects profit margins to remain low due to ongoing high levels of industry competition.

After-tax profit is forecast to grow at an average rate of 2.9% per annum to $79.4 million over the five years through 2016-17. Profit will be more volatile than revenue as it comes off a lower base following the downturn.

A strong recovery in profit is expected as margins recover although overall that remains a relatively low margin industry due to its highly competitive nature.

International risks and opportunities

The Australian economy has dodged the worst of the global economic downturn so far but risks of further global financial shocks remain.

When many nations’ governments bailed out financial institutions and increased spending to stimulate their economies the effect was a shift of some private sector debt burden onto government balance sheets.
Many governments were already heavily indebted prior to the crisis and the additional burden, coupled with investors’ reluctance to continue to provide cheap credit, have strained the finances of some nations, particularly Greece, Spain, Italy, Ireland and Portugal.

Any problems in global credit markets will potentially affect Australia’s banks, which are heavily reliant on offshore funding. That may flow through to Australia’s economy and the employment placement services industry.

The industry has a small but growing number of large companies with international links and many small operators, some providing niche services in specialist industries or markets.

Some providers are now critically dependent on government contracts under the Job Services Australia program.

A shake-up of those contracts occurred as part of the transition to Job Services in mid-2009, with some providers losing contracts and others gaining them. That led to office closures and staff lay-offs among those who lost contracts.

It is expected that major domestic operators will expand internationally due to limited revenue growth opportunities in the domestic market.

Further growth opportunities still lie with providing online services to employers and job applicants, and with expanding into providing a totally outsourced human resources service to clients, covering aspects from staff selection to payrolls and claims for Workcover.

Recruitment broker firms that sign up a number of recruitment agencies then offer their databases to client firms are a growing sub-segment in the United States and Australia.

Key Success Factors

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Having contacts within key markets: Developing contacts in a wide variety of companies and industries is essential for identifying suitable job candidates.

Ability to communicate and negotiate effectively: Good communication and interpersonal skills combined with industry knowledge are important to retain clients and for interviewing job applicants.
Production of premium services: Maintaining quality staff, service and high client satisfaction levels are important in retaining and attracting clients.

Capacity to objectively assess new investments: Medium and large companies need funds to acquire other companies in the industry.

Effective product promotion: The capacity to present a professional image and to market to appropriate clients is important in attracting and retaining clients.

Access to the latest available and most efficient technology and techniques: It is important for companies to be completely computerised and to have databases containing information on people and clients. The ability for e-mail lodgement of resumes and for clients to access them online is very useful for placing employees.

Production of goods currently favoured by the market: Companies must understand the work environment and culture of clients’ workplaces. Ultimate success will come from continually identifying and selecting the most suitable people for vacant positions.

Source: Smart Company

Posted by: Doug Lubin

With the CWS Summit right around the corner, we’re working hard to prepare our team and yours to get as much value out of the event as possible. With that in mind, while you’re at the show and thinking about what’s new and different, be sure to take a look at the changing landscape of recruitment process outsourcing (RPO).

Here are some themes to keep an eye on:

• Cost is no longer the most important driver of RPO adoption. Like many early iterations of a new business model, cost savings motivates early adoption. However, over time, these businesses must adapt beyond cost to add value and innovation as well as meet market demands. This is where we are with RPO. Clients need more strategic alignment. They’re looking for workforce planning and management platforms, improved metrics, and the potential to expand into new markets and countries.
• Scalability and specialization are much more prominent. The market is split. While we have many workers unemployed, we also still have a gap of over three million open positions across the U.S. Why? Because skills shortages still exist across fields like technology, bio-tech, energy, aerospace, etc. As long as these gaps exist, companies will seek a competitive advantage recruiting them. RPO provides valuable services, including talent mapping, specialized sourcing, social media expertise, talent community building, and coordination.
• Reach is important, but ability to execute locally is paramount. No matter how good your strategies or presentations are, actions speak louder than words. Providers need established operations, knowledge of localized practices, solid networks and relationships, and brand recognition in the market in which you’re hiring.
• RPO is not just for the enterprise. In some ways, mid-market companies can benefit from RPO more than larger enterprises. Scalability and unpredictability are big concerns for any company, but even more so for small and mid-sized organizations. RPO provides an opportunity to scale and broaden reach, leverage platforms with greater economies of scale, and strengthens focus. Your company might not be able to buy a tech platform or deliver a process as effectively for single use. But an RPO can maximize its effectiveness because it serves many clients with repetitive process management.
• Technology and methodology continue to evolve and consolidate. More RPOs have taken on the attributes of the managed service provider model. Simply put, clients want more productivity out of their employees and providers. RPOs are managing more processes, partners, and relationships across the U.S. and the globe. People want solid program management. Not just recruitment process execution.
• Integrated talent management is becoming more real every day. Metrics, performance management, forecasting … Companies need real-time, just-in-time scenario planning. RPOs have these competencies and access to market data that is extremely valuable.
• Don’t overlook point of service RPO models. Clients benefit tremendously from partnering to manage candidate screening, recruitment coordination, talent community building, offer administration, onboarding, etc. But many RPOs can unbundle their services and offer a single or multiple point of service model for ongoing or project-based recruiting. It doesn’t have to be all-or-nothing.
• Avoid the hype! Great marketing and thought leadership is fantastic, but execution trumps everything. Just because you’ve heard of an RPO provider or seen them at an event, doesn’t mean they’re a great fit for your organization’s needs.
• Beware the behemoth. The biggest RPO provider isn’t always the best. You could get lost in the sea of the largest clients.

Program management is the ultimate success factor. Make sure your RPO has a solid program management foundation, maturity, methodology, and experienced talent.

Shruti Agrawal, Arpita Bansal, Sayan Chatterjee, Rajesh Ranjan

INTRODUCTION

Benefits Administration Outsourcing (BAO) is one of the largest and most mature markets in HRO. However, due to healthcare reform, rising benefits cost, the need to drive greater employee engagement in an uncertain economic environment, and service provider consolidation, this market continues to remain dynamic. Buyers are increasingly turning to outsourcing service providers, to help them navigate the complex legislations and compliance requirements in addition to achieving cost reductions. The rapidly changing service provider landscape, technology advancements, and global sourcing are making both new and existing buyers look at their options afresh. On the other hand, solutions that meet buyers’ current and future needs and are differentiated offerings in hyper-competitive environment are key contributors to the service providers’ success.

In this research, we analyze the BAO market across various dimensions:

• Market overview and key business drivers
• Buyer adoption trends
• Current transaction characteristics
• Service provider landscape
• Implications for buyers and service providers

SCOPE OF ANALYSIS

• All BAO contracts where at least one of the following core-benefits areas is included – Health and Welfare (H&W), Defined Benefits (DB), and Defined Contribution (DC), as a stand-alone outsourcing service with buyer employee size of 3,000 or more
• This study does not include those arrangements where only technology is outsourced (similar to ASP/SaaS model) or one-time project-based support services are required
• Coverage across 11 service providers that have signed at least one BAO transaction including ACS, ADP, Aon Hewitt, Ceridian, Fidelity, Infosys, ING, Mercer, iGATE Patni, Secova, and Towers Watson

CONTENT

This research report provides a comprehensive coverage of the BAO market and analyzes it across various dimensions such as market overview and key business drivers, buyer adoption trends, transaction characteristics, and service provider landscape. It also identifies key implications of the research findings for buyers as well as service providers. Some of the findings in this report, among others, are:

• In 2011, the global BAO market witnessed a healthy growth of 12.5 percent to reach US$5.4 billion in annualized revenue
• While the pension market (DB & DC) is three times larger than H&W, the latter is growing almost four times higher than the former
• Notwithstanding the North America dominance, BAO adoption in Europe is on the rise
• Large market witnessed increased BAO adoption during 2010-2011
• Buyers’ preference towards a phased adoption approach led to the decline in average deal size in 2010-2011
• Global sourcing leverage increased in 2010-2011 with more complex work moving to low cost locations
• Technology innovation increased the value proposition of BAO
• The BAO service provider landscape continues to consolidate as a result of significant mergers and acquisitions
• Overall, Aon Hewitt and Fidelity lead the market in terms of market share. However, the service provider landscape is intensely competitive with several providers building capabilities through organic and inorganic means

Services providers in the BAO space have created their area of specialization by either focusing on geography or process scope

Source: Everest Group

By Lia Timson

Commonwealth Bank executives make use of mobility at the bank’s new Darling Quarter premises in Sydney. Photo: Louie Douvis

Apple is set to become the biggest beneficiary of the bring-your-own-device to work trend that is creeping into Australian workplaces.

Companies that have trialled or adopted BYO computing are finding that, given a choice, 80 per cent of employees opt for Apple notebooks and laptops over standard corporate-issued hardware.

Information management giant EMC recently concluded a global volunteer trial of BYO computing among 2500 employees. Clive Gold, chief technology officer Australia and New Zealand, said 8 in 10 workers taking part chose either a MacBook Air or a MacBook Pro as their hybrid personal-work computer.

BYO computing is gathering pace as companies realise they can save hardware costs and improve employee motivation by allowing them to work on devices they choose. There is an expectation that support costs will also be lower if employees choose more intuitive and familiar devices.

Enterprises have traditionally been dominated by Windows-compatible computers, a legacy from IBM and IBM-clone PCs of yesteryear. Apple’s biggest workplace inroads to date had been in creative industries such as graphic design and advertising.

Gold said finding that enterprise employees also want Apple was somewhat expected.

“It wasn’t a level playing field. They opted into the program because they wanted to use Apple in the first place or wanted something with more grunt. The tendency is that people who will go for BYO will be the more technical people or those who want to have something different.”

EMC will roll out optional BYO computing to all employees from early 2012. It already allows BYO smartphones. Employees will receive an allowance to purchase the device.

“I expect a lot more of the technical people will take that up. It’s the nature of the beast,” Gold said.

At Jetstar workers are also choosing Apple devices over others. Its Japanese subsidiary began with only a BYO policy in place. No company machines were issued.

“(There) we have mostly Apples – more than 80 per cent,” said Stephen Tame, CIO and head of IT.
He said in Australia Apple was also the choice of the majority of workers in the optional BYO program.

“This mix may well vary when the policy is phased in and mandated,” Tame said.

He said manufacturers like Toshiba, Dell and Samsung would likely benefit from the trend as they have adopted a “certain Apple look and feel”. Android would benefit in tablets and phones for being Apple-like but a more open platform.

However, traditional enterprise providers could lose a large chunk of their revenue if they are overlooked by employees who succumb to Apple’s lure.

Dell used to provide EMC’s corporate-issued Latitude laptops before being replaced recently by Lenovo. It is also the supplier of desktops to the Commonwealth Bank. The bank revealed this week it will be adopting Apple MacBook Airs in its new 6000-staff head office in Sydney.

Bernie Kelly, Dell general manager, public sector and large enterprise, said BYO was not threatening the company’s business.

Its Australian large enterprise revenue grew 7.5 per cent year on year, he said. But the small and medium business (SME) sector revenue grew faster at 13 per cent last year, followed by the public sector at 11 per cent.

“It is a fact this is a topic of some interest for some of our customers. We are having some discussions, but we haven’t seen any (downward) trends in our business,” Kelly said.

“We are seeing very small adoption and often as a supplement to core desktop or company-issued notebooks.”

He said through the recent acquisition of SecureWorks, cloud integrator Boomi and systems management appliance maker KACE Networks, Dell would cater for the virtualisation, system and software management, and enhanced security needed in conjunction with BYO computing.

Its new range of thinner, more stylish devices also had potential to benefit from the trend, he said.

“Vendors who would (achieve) the most success in a BYO device environment are the ones who understand that combination.”

Steve Hodgkinson, research director at research firm Ovum, said a move to user-choice would unleash frustrated enthusiasm for different and more modern devices.

“It is fair to say that the majority of large enterprise locked-down standard operating environments are based on desktops and laptops running Microsoft Windows – some of which are XP. So a move to a user-choice or BYO model will favour Apple laptops and tablets. Apple has become one of the largest IT companies in the world purely on the quality of its design and usability, so is not surprising that enterprise users would want to find out what all the fuss is about,” Hodgkinson said.

Enterprises remain committed to the Windows operation environment, however, with BYO early-adopters such as Jetstar, EMC and the Commonwealth Bank running virtualization software to deploy Windows on Apple machines.
Leanne Ward, vice president, IT outsourcing and support services, Unisys Asia Pacific, said many clients were opting for Apple, despite challenges in security, support, data ownership and standardisation.

“Employers are recognising it is an employee retention and attraction (strategy). It increases employee satisfaction,” Ward said.

“There is certainly an opportunity for companies not to spend money providing corporate-issued devices that aren’t of high value in the employees’ minds.”

A global study of information workers and IT department managers conducted by IDC for Unisys and released this month found a third of Australian employers were considering introducing a discount or stipend scheme in the next 12 months to assist employees in purchasing their own devices.

Ward expects IT support costs to decrease if Apple products are widely adopted.

“Apple do design their devices to be more intuitive. We anticipate eventually there may be less calls coming into the support desk,” Ward said.

Hodgkinson said IT departments will need to either explicitly include Apple devices in their standard operating environments or implement desktop virtualisation to make core applications device agnostic.

“Both these actions will create some new Apple-specific support costs but not necessarily increase IT costs overall because BYO and peer-support behaviours, coupled with user productivity and ‘feel good factor’ benefits, tend to create offsetting efficiencies vs. a traditional fully locked-down enterprise SOE.”

Source: Sydney Morning Herald

• Sharon Williams ABPOA board member and CEO of Taurus Marketing have won another prestigious NSW State Golden Target Award for PR Excellence. Taurus received the Public Relations Institute of Australia award in the Environment category for the 2011 Clean Up Australia Day campaign. In addition Sharon Williams was accepted into The College of Fellows for the Public Relations Institute of Australia.
• Catalogue king Salmat (ASX:SLM) seems to be as unpopular as many find its letterbox fillers. The company has been through a turbulent time in the past year, losing a call centre contract and struggling to find growth in a tough business market (it also provides contact centre and business process outsourcing services). While both revenue and earnings per share fell, the share price is down 40 per cent from its 52-week high. On a single-digit price/earnings ratio, and with a trailing dividend yield of over 8 per cent, not much needs to go right from here for investors in Salmat to do well.
• Blue Coat Systems today introduced enhancements to its Web security solutions that provide advanced application controls, more granular content ratings and actionable intelligence to deliver detailed visibility into, and precise control over, Web-based applications on the network. With these updates, Blue Coat enables businesses to utilise the power of Web-based applications while mitigating the risk of data loss or lower employee productivity.

By Mark Atterby – Senior Staff Writer

The cloud promises the delivery of computing resources and capacity that readily scales to meet the required demands of users. For enterprises this means that they can expand or reduce the level of IT resources needed to run the business, without then need to maintain and alter internal infrastructure and staffing levels. Ultimately providing easier, faster and cheaper IT solutions to businesses

However, the cloud represents more than a chance to reduce IT costs, according Russell Ives, Director, Business Process Outsourcing for IBM ANZ. He Says, “Too often cloud’s vast potential is unmet because cloud is being used to make IT easier, cheaper and faster. Cloud is not just about rethinking IT; it is also about reinventing the business”.

Ives acknowledges that the primary driver for organisations currently experimenting with the cloud are looking to reduce IT costs and administration, he comments, “Many companies are experimenting with cloud computing as a way to reduce the cost and complexity of delivering traditional IT services”.

“Businesses today are under tremendous pressure driven by a number of shifts in the workplace including the workforce becoming increasingly mobile and the push for greater productivity. Companies are feeling the pressure to accommodate these trends”.

Harnessing the cloud does assist companies to keep pace with ever increasing consumer expectations and competitive pressures. Consolidation, data centre efficiency and lower costs are some of the drivers that lead to early cloud adoption.

However, as Ives elaborates, “Leading companies are looking to unlock the deeper potential of cloud as a way to manage IT as well as the business. Businesses are discovering how cloud can help to create new marketplaces, smarter business services and profitable revenue streams. Providing these services to innovators can profoundly change the way a company is experienced by customers, partners and society”.

By giving business faster and scalable access to IT resources under the collaborative environment of the cloud, particularly to smaller organisations, offers the opportunity for quicker development, testing and deployment of new products and services. The rise of cloud computing alongside the evolution of outsourcing, means the modern enterprise must, at some stage, fundamentally re-evaluate its sourcing equation, (whether that’s for people, processes or technology) to become or remain viable.

Unlike traditional outsourcing of IT, cloud computing will provide agility and control that traditional outsourcing cannot match for the most part. However, tying cloud computing with a BPO model, can deliver significant cost savings from lower-cost labour combined with increased process efficiency.
“It also offers outsourcers greater flexibility in delivering complex solutions and the ability to ramp up capacity quickly”, says Maickel Sweekhorst, Managing Director, Financial Services, Capgemini Australia. Large organisations may have sufficient resources internally to accommodate routine business requirements. But should a need arise to quickly ramp up a business unit or product line, cloud offers a very cost effective means to do so.

According to the report The Essential CIO 2011 by IBM, where 3000 global CIOs were surveyed, both cloud computing and outsourcing have become critical tools for organisations to reallocate internal resources from routine system maintenance toward tasks that are most valuable to their organisations. Master data management, customer analytics, data warehousing and visual information dashboards are CIOs’ top priorities for turning data into insights that lead to better and faster business decisions.

It’s likely that the full impact of the cloud will not be felt for some years yet, but that impact will be felt widely and deeply across a range of industries and businesses.

Asia-Pacific’s business process outsourcing (BPO) market will reach revenues of US$17.47 billion in 2015, a compound annual growth rate (CAGR) of 9.3 per cent from the US$11.18 billion it hit in 2010, predicts Ovum in a new report.

The independent technology analyst finds that strong growth in emerging economies such as India, Greater China (includes Taiwan and Hong Kong) and South Korea is driving the global market forward, as businesses in these regions wake up to the benefits of BPO.

According to Ovum’s forecast, the BPO market in Greater China will increase at a CAGR of 16.1 per cent from over the forecast period (the end of 2010 to the end of 2015). Meanwhile India and South Korea’s market will increase by 15.7 and 14.6 per cent for the same period, respectively. Among the developed economies in Asia-Pacific, Australia and New Zealand’s BPO market (ANZ) shows the most traction with a CAGR of 7.4 per cent over the forecast period.

The global business process outsourcing (BPO) market will reach revenues of $93.4 billion in 2015, a compound annual growth rate (CAGR) of 5.4 per cent from the $71.92 billion it hit in 2010.

Ovum analyst Hansa Iyengar commented: “In the post-recession business environment, it has become imperative for enterprises to keep costs under tight control to maintain competitiveness. BPO eliminates the need to invest in people and systems to manage non-core processes, potentially reducing costs and increasing efficiency. By outsourcing these processes, enterprises can focus their resources on growing their core business.

“Moreover, BPO is also gaining ground in areas such as HR, engineering design, and research and development outsourcing. Enterprises are realising that outsourcing these areas can be an effective way to reduce costs, increase efficiency, and speed up go-to-market for new products, much in the same way that outsourcing back-office processes can.”

According to Iyengar, it will be developed economies that will exploit these new BPO areas the most, with emerging markets newer to the arena choosing to test the water with first-generation outsourcing such as customer care, payroll processing, and helpdesks.

The markets in North America and the UK and Ireland will also see growth, albeit at slower CAGRs of 2.7 per cent and 4.1 per cent, respectively. Iyengar commented: “The marginal growth in North America during Ovum’s forecast period is due to the maturity of the region’s market, with enterprises there having embraced BPO decades ago. North America’s slow recovery from the global recession and subsequent cautious spending by enterprises are also having an impact.”

According to Iyengar, to take advantage of the predicted growth in outsourcing vendors will need to be aware that pricing of contracts is the major issue at the negotiating table. She added: “Enterprises are moving away from multi-billion-dollar, single-vendor deals and spreading out their investments and risks.

“Meanwhile, the small and medium-sized enterprise segment is rapidly opening up to outsourcing. Vendors need to be prepared with a game plan to meet the demands of this market. Mainly these are for low-priced, highly flexible and scalable solutions, which are accompanied by the option to customise offerings and personalised customer service.”

Source: Times of India