Julian DavidIntellect Board Member

Managed Services Changes

What I am going to coverThe business context Why Managed ServicesTraditional Managed Services Choices

OutsourcingJoint VenturesOff shoringShared Services

New Approach to Managed Services Cloud Computing

Concluding thoughts

Total Expenditure and Current Receipts as a percentage of GDP

£83bn

Local Government – the pressures and the options

10-15% of Borough jobs

- 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

government provide the activity?

Top slice Back office 20% ?

Total Place ?

New shape ? JLP Council ?

Easy Council ?

Commissioning model ?

Cut services ? Less for less

The Spending Review Framework

Reduce costs by 20% to 30% over 3 years ?

Saving 2% ?

Investment in ICT

The scale of the savings challenge

Increased savings through managed services

30

20% saving

100

80

20

0

60

40

10 4020

Staff saving (%)

Procurement Saving (%)

30% saving

Major savings to be delivered with Improved / sustained services

Increased Savings through staff reductions

UK Public sector S/ITS market growth by activity, 2008–2013

There are various Managed Services Models

In- house Joint VentureOutsource Cloud

P/P Shared Service

Public / PrivateOn-shore Off-shore

Pros

Cons

Pros

Cons

Pros

Cons

Pros

Cons

Pros

Cons

Pros

Cons

In all the Managed Services Models there is always a lot left in-house

- Knowledge of the local area and the needs of residents

- Specific skills in local authorities e.g. social care and education

- Guardianship of Value for Money and stewardship of safety and well-being for customers

- Innovation in business and technology- Transformation and commercial

service delivery expertise- Experience of many types of

partnership working around the globe- Capacity and financial investment

One shared goal

There are various Managed Services Models

In -house Joint VentureOutsource Cloud

P/P Shared Service

Public / PrivateOn-shore Off-shore

Pros

Cons

Pros

Cons

Pros

Cons

Pros

Cons

Pros

Cons

Pros

Cons

Managed Services - Traditional Outsourcing

Complete Outsourcing:“Your mess for less”

Tomorrow

Today

- Strengths– Can reduce costs– Can provide access to investment– Can provide access to skills– 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?– Both sides committed to it?– What happens at the end of the contract?

Managed Services - Off Shoring

Your Skills/Costs for Ours

Tomorrow

Today

- Labour arbitrage – Local resource, near shore, off shore– 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

Managed Services - Shared Services

Together we are better

Tomorrow

Today

- 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- Not sold their services elsewhere- Not seen by Coalition as the way forward ??

Managed Services - Joint VenturePublic + Private = Better

Tomorrow

Today

- Combines public sector ethos & private sector efficiency- Often start as a political necessity / fudge

– Tied to development agenda or job saving– 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?– Evidence of success?

- Secondment or TUPE?

“Cloud” is a new consumption and delivery model inspired by consumer Internet services.

Cloud enables:

Self-service Sourcing options Economies-of-scale

“Cloud” represents: The Industrialisation of Delivery for IT supported Services

Multiple Types of Clouds will co-exist: Private, Public and HybridWorkload and / or Programming ModelSpecific

Cloud: Consumption & Delivery Models

Cloud Services

Cloud Computing Model

Components supplyComponents supply Business servicesBusiness services

Services

Software

Hardware

And a number of layers of what can be provided over a cloud

Infrastructure servicesInfrastructure services

Business Process as a Service (BPaaS)1

Platformas a Service (PaaS)2

Software as a Service (SaaS)2

Infrastructureas 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

Traditional Outsourcing Transformational Outsourcing

Complete Outsourcing:“Your mess for less” Tomorrow

Today

“Downsize”your own house

& use the local modern amenities

1

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

1

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

Enterprise

There are a number of Cloud Delivery Models

EnterpriseData Centre

Private Cloud

EnterpriseData Centre

IBM Operated

Managed Private Cloud

Hosting CenterHosting Center

Hosted Private Cloud

Enterprise A

Shared Private Cloud

Cloud

Enterprise owned and operated

Enterprise owned and operated

Enterprise owned; IBM operated

Enterprise owned; IBM operated

Customer/IBM owned and IBM operated

(single tenant)

Customer/IBM owned and IBM operated

(single tenant)

IBM owned and operated

(multi-tenant)

IBM owned and operated

(multi-tenant)

Enterprise B

Enterprise C

1 2 3 4

Public Cloud

Cloud

IBM owned and operated

(multi-tenant)

IBM owned and operated

(multi-tenant)5

User A

User B

User C

User D

User …

Private Cloud Shared PrivateCloud

Public Cloud

Cloud Services delivered publicly toend users / secure, enterprise-class

Cloud Servicesdelivered privately toEnterprises / virtualseparation of tenants

Service provider owns infrastructure and customer has shared access and pays by usage

Customer owns and pays for infrastructureand has unlimited exclusive access

Commercial in Confidence20

Transforming the organisation – First phases

Strategy & policyStrategy & policy

External providersExternal providers

Customer services

Service delivery

Back office / admin

Commissioning and performance managemenJoined-up working

Joined-up working

Customer servicesCustomer services

Back office / adminBack office / admin

Partners

Commercial in Confidence21

Transforming the organisation – Next phases

Customer servicesCustomer services

Strategy & policyStrategy & policy

External providersExternal providers

Back office / adminBack office / admin

Service delivery

Commissioning and performance managemenJoined-up working

Joined-up working

DemocracyDemocracy Common assessmentCommon

assessment ProfessionsProfessions

Service deliveryService delivery

Performance managementPerformance management CommissioningCommissioning

Partners

A CEO View of how this can work

A standardised process and technology package for local government

Level up performance to 

the best

Ian Trenholm, RBWM, June 2009

Standardisedprocesses

PORTALLocal Gov’tApplication

Service

DATA CLOUD (run by

third party)

DATA CLOUD (run by

third party)

CENTRALGOVERNMENT

Enables

EnablesShared R and D

“Shared Services”

Shared IT

Lower cost Development 

Enables MBOs

Lower TCO Micro‐businesses / commissioning

SME challenge to big players

Low cost of change / barriers to entry

Mgmt /influence by REIPs?

PROCESS HARMONISATION AND LOWER COSTS AS MOVE THIS WAY

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.”

G Cloud - What will it look like?

Public Sector Network

G-Cloud

Government Apps Store

Dat

a C

entre

/

Net

wor

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onso

lidat

ion

Sup

plie

r Con

solid

atio

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SM

E E

xplo

sion

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

- 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”

How will the ASG work?

G Cloud Intended Changes to Contracting

Partnership Slides from Andrew Unsworth, CIO of Edinburgh CC

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.’

Managed Services in the cloud - examples

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

NVM – Cloud based Call Centres

Wecomm – Cloud Mobile Solutions

Lotus Live Cloud Collaboration

Memset Cloud Infrastructure Azeus Cloud Social Care Solutions

EGS Cloud Marketplace and PTP

Northgate Cloud PAYG Infrastructure

Google Apps .......