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Julian David, Intellect - managed services

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Presentation on managed services (aka outsourcing) presented to the annual conference of the public sector IT management organisation, Socitm, on 11 October 2010

Presentation on managed services (aka outsourcing) presented to the annual conference of the public sector IT management organisation, Socitm, on 11 October 2010

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  • 1. Managed Services Changes Julian David Intellect Board Member
  • 2. What I am going to cover The business context Why Managed Services Traditional Managed Services Choices Outsourcing Joint Ventures Off shoring Shared Services New Approach to Managed Services Cloud Computing Concluding thoughts
  • 3. Total Expenditure and Current Receipts as a percentage of GDP £83bn
  • 4. Local Government – the pressures and the options Top slice Back office 20% ? Saving 2% ? - Is the activity essential to meet Government priorities? - Does the Government need to fund this activity? - Does the activity provide substantial economic value? - Can the activity be targeted to those most in need? - How can the activity be provided at lower cost? - How can the activity be provided more effectively? - Can the activity be provided by a non-state provider or by citizens, wholly or in partnership? - Can non-state providers be paid to carry out the activity according to the results they achieve? - Can local bodies as opposed to central 10-15% of government provide the activity? Borough jobs The Spending Review Framework Total Place ? Reduce costs by 20% to 30% New shape ? JLP Council ? over 3 years ? Easy Council ? Investment in ICT Commissioning model ? Cut services ? Less for less
  • 5. The scale of the savings challenge Staff saving (%) Increased Savings through 100 staff reductions Major savings to be delivered with 30 Improved / sustained services % 80 sa vi n g 60 Increased savings through managed services 40 20 % sav ing 20 0 10 20 30 40 Procurement Saving (%)
  • 6. UK Public sector S/ITS market growth by activity, 2008–2013
  • 7. There are various Managed Services Models In- house Outsource Joint Venture Cloud On-shore Off-shore P/P Shared Public / Private Service Pros Pros Pros Pros Pros Pros Cons Cons Cons Cons Cons Cons
  • 8. In all the Managed Services Models there is always a lot left in-house - Knowledge of the local area and - Innovation in business and technology the needs of residents - Transformation and commercial - Specific skills in local authorities e.g. social care and education service delivery expertise - Guardianship of Value for - Experience of many types of Money and stewardship of partnership working around the globe safety and well-being for - Capacity and financial investment customers One shared goal
  • 9. There are various Managed Services Models In -house Outsource Joint Venture Cloud On-shore Off-shore P/P Shared Public / Private Service Pros Pros Pros Pros Pros Pros Cons Cons Cons Cons Cons Cons
  • 10. Managed Services - Traditional Outsourcing Tomorrow Complete - Strengths Outsourcing: – Can reduce costs “Your mess – Can provide access to investment – Can provide access to skills for less” – Can improve service levels – Can provide a better career for staff – Can make staff happier - Weaknesses – (The opposite of the above) – Takes a long time to procure – Much resource in procuring • Cost • Your best staff • Disruptive – Considerable overhead • Intelligent client – Formal service levels – Potential loss of control • Outsource the thinking? Today – Both sides committed to it? – What happens at the end of the contract?
  • 11. Managed Services - Off Shoring Your Skills/Costs - Labour arbitrage for Ours – Local resource, near shore, off shore Tomorrow – Find the right mix – Politically easier than next door? – Halve or more labour costs - Availability of skills - Greater need for planning, requirements definition - Potentially a waning asset – Greater automation will replace staff – Lean processing moves resources to the front line with less back office – User requirements definition is becoming a larger part of application build Today
  • 12. Managed Services - Shared Services Tomorrow Together we are better - Examples round the country - Typically they are all one-offs - They take time to set up – Many partnership and stakeholder issues – Particularly hard with County and Districts – Possibly easier with different agencies in a locality with the same customers - Savings can be small - Often trying to protect jobs or building on the best of each partner’s skills - No National model to roll out at scale & pace Today - Not sold their services elsewhere - Not seen by Coalition as the way forward ??
  • 13. Managed Services - Joint Venture Public + Private = Better - Combines public sector ethos & private sector efficiency - Often start as a political necessity / fudge – Tied to development agenda or job saving Tomorrow – Objective is often ill-defined - Create a new company – With a board of directors, company reporting – High costs - Who will own it? – Private / Public • Majority private / majority public? – Public / Public • Ability to trade? - “Fat” or “Thin” ? - Trading company – Sells it services elsewhere? Today – Evidence of success? - Secondment or TUPE?
  • 14. Cloud: Consumption & Delivery Models “Cloud” is a new consumption and delivery model inspired by consumer Internet services. Cloud enables: Self-service Cloud Services Sourcing options Economies-of-scale Cloud Computing Model “Cloud” represents: The Industrialisation of Delivery for IT supported Services Multiple Types of Clouds will co-exist: Private, Public and Hybrid Workload and / or Programming Model Specific
  • 15. And a number of layers of what can be provided over a cloud Components supply Business services Business Process Services as a Service (BPaaS)1 Software as a Service (SaaS)2 Software Infrastructure services Platform as a Service (PaaS)2 Hardware Infrastructure as a Service (IaaS)2 1. Sourced from Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, Gartner, March 18, 2009 modified by IBM/BCG 2. Sourced from National Institute of Standards and Technologies; Draft NIST Working Definition of Cloud Computing, May 14, 2009 modified by IBM/BCG
  • 16. Traditional Outsourcing Transformational Outsourcing “Downsize” Complete your own Outsourcing: house “Your mess for less” Tomorrow & use the Today local modern amenities
  • 17. High Cost of Traditional Data Centers source NIST - 11.8 million servers in data centers - Servers are used at only 15% of their capacity - Data centers typically consume up to 100 times more per square foot than a typical office building - Number of servers doubled from 2001 to 2006 - 800 billion dollars spent yearly on purchasing and maintaining enterprise software - 80% of enterprise software expenditure is on installation and maintenance of software
  • 18. Cloud Economics are unchallengeable - “If you move your data centre to a cloud provider, it will cost a tenth of the cost.” – Brian Gammage, Gartner Fellow - Use of cloud applications can reduce costs from 50% to 90% - CTO of Washington D.C. - WIPRO Published figures saying use of Cloud resources cut development and implementation time from months to days/weeks - Preferred Hotel in the USA small scale implementation – Traditional: $210k server refresh and $10k/month – Cloud: $10k implementation and $16k/month
  • 19. There are a number of Cloud Delivery Models Private Cloud Shared Private Public Cloud Cloud Customer/IBM owned IBM owned and IBM owned and Enterprise owned Enterprise owned; and IBM operated operated operated 1 and operated 2 IBM operated 3 (single tenant) 4 (multi-tenant) 5 (multi-tenant) Enterprise Enterprise Enterprise Enterprise A User User User Data Centre Data Centre Enterprise B A B C Private Managed User User Enterprise C Cloud Private Cloud D … IBM Operated Hosted Shared Private Cloud Public Cloud Private Cloud Hosting Center Hosting Center Cloud Cloud Cloud Services Cloud Services delivered privately to delivered publicly to Enterprises / virtual end users / secure, separation of tenants enterprise-class Customer owns and pays for infrastructure Service provider owns infrastructure and and has unlimited exclusive access customer has shared access and pays by usage
  • 20. Transforming the organisation – First phases Strategy & policy Strategy & policy Customer services Customer services Customer services Commissioning and Joined-up working performance managemen Joined-up working Service delivery Back office // admin Back office admin Back office / admin Partners External providers External providers 20 Commercial in Confidence
  • 21. Transforming the organisation – Next phases Strategy & policy Strategy & policy Customer services Customer services Common Common Commissioning and Democracy Democracy Joined-up working Professions Professions assessment assessment performance managemen Service Service Performanceworking Performance Joined-up Commissioning Service delivery Commissioning delivery delivery management management Back office // admin Back office admin Partners External providers External providers 21 Commercial in Confidence
  • 22. A CEO View of how this can work A standardised process and technology package for local government Mgmt /influence by REIPs? DATA DATA CLOUD CLOUD (run by (run by PORTAL third party) third party) Standardised Local Gov’t processes Application Service Enables CENTRAL Shared  Shared IT GOVERNMENT R and D Enables Level up  Low cost of change /  performance to  Lower cost  Enables MBOs barriers to entry the best Development  “Shared  SME challenge  Lower TCO Micro‐businesses /  to big players Services” commissioning PROCESS HARMONISATION AND LOWER COSTS AS MOVE THIS WAY Ian Trenholm, RBWM, June 2009
  • 23. The G-Cloud “The G‐Cloud brand provides confidence in services you can trust – reliability,  security, value for money, contractual probity, adherence to standards and  enables Government ICT Strategy.”
  • 24. G Cloud - What will it look like? Network Consolidation Supplier Consolidation Government Apps Store SME Explosion Data Centre / G-Cloud Public Sector Network Quick wins • Data centre space and systems capacity brokerage service • Apps Dev environment as a service prototype for new work • Initial Apps Store for cross government COTS at best prices
  • 25. How will the ASG work? - There will be a Certified Zone and an Open Zone – Services in the Certified Zone will have been "pre- procured” – Innovation encouraged in the Open Zone - Products available in a standardised, simple and low cost way whilst maintaining legal compliance. - Price and Performance Rating will be visible for comparison, promoting competition and service excellence. - You can search or advertise for new applications and services. - Services at “Latest Best Price”
  • 26. G Cloud Intended Changes to Contracting
  • 27. Partnership Slides from Andrew Unsworth, CIO of Edinburgh CC
  • 28. Implications for local government Ian Trenholm Chief Executive, Royal Borough of Windsor and Maidenhead ‘A systematic sector wide effort to share processes will create a market for standardised web based ICT systems sold as application services. Benefits include; increased contestability, the creation of opportunity for SMEs and innovative commercial arrangements, maximising council cost effectiveness......and ultimately creating better, cheaper services for residents.’ SOCITM Paper on Cloud Computing ‘It is imperative that your operation embraces this approach else be left behind by commerce. New start-ups that will exploit these approaches to offer low cost and very easily reconfigurable services will change public expectations of responsiveness.’
  • 29. Managed Services in the cloud - examples NVM – Cloud based Call Centres Wecomm – Cloud Mobile Solutions Northgate Cloud PAYG Infrastructure Memset Cloud Infrastructure Azeus Cloud Social Care Solutions Google Apps ....... Lotus Live Cloud Collaboration EGS Cloud Marketplace and PTP Cloud Infrastructure and Service Management will allow Local Authorities to buy  individual services delivering specialised, fit for purpose solutions which are  flexible and scalable, one‐off or PAYG from a range of suppliers including SMEs