A Logica Progression
This article originally appeared in Outsource Magazine Issue #24 Summer 2011
Andrew De Cleyn is MD, UK Outsourcing at major IT, BPO and consultancy provider Logica. We caught up with Andrew to get his take on changes in the space, shifting customer behaviour – and of course the impact of cloud…
outsource: Andrew, what’s on Logica’s agenda right now?
Andrew De Cleyn: The world is changing pretty quickly right now; there are a lot of market changes – in terms of the disruptions caused by the downturn and recent global events such as the impact on manufacturing of the Japanese earthquake – which have had consequences across our client base. Plus, we have a significant amount of business in the public sector, so we have had to get to grips with the ramifications of the spending reviews going on there; an area that didn’t really see the same level of change in previous periods of economic uncertainty.
I laugh to myself once in a while that, coming out of the Millennium, I thought IT was probably going to be quite boring: it was all going to become a commodity and of course that absolutely hasn’t happened. We have a whole new range of things happening in the industry, and the expectations of our clients are changing, so our focus is on making sure we are able to support the needs of our clients’ business across all their business drivers not just their IT systems. Our clients are telling us that sustainability and security are high on their agenda so this is a focus for Logica as well as making the most of the opportunities cloud technology can offer.
o: One of those things happening in the industry is the increasing focus on IT not just in terms of cost-reduction activity but as a revenue-generator in its own right – as a profit centre, not a cost centre. How far is this the case for you?
ADC: I absolutely agree. If you go far back enough in the history of outsourcing, the objective was always around costs. Today we are much more aligned with our clients’ business. Part of that is because of the shift for CIOs to be aligned with business these days, as technology becomes a critical element of all organisations rather than a purely back-office function. We are involved nowadays, I would say, at a number of different levels. One is at a pure ‘historic’ outsourcing level – be it the AM, IM, or be it as a service integrator – and I would say that all three of these are working generally with the IT director or with the CIO. Then there’s the whole BPO piece, working with the COO, CFO, CIO and CEO – and that’s focusing solely on the end business results. We recently won a £300m deal with Shell to provide their corporate fuel cards. This isn’t just a traditional outsourcing deal; we have responsibility for making sure their corporate clients can buy fuel across 35 countries.
I have been in Logica for some 13 years now: when I started, we were a projects and IT services company but our business has transformed to become a business and technology company, where understanding our clients’ business is our most important asset. Our clients are increasingly asking for outcome-based ways of doing business. They don’t necessarily want to get inside the technology of what we do: they want to sit outside and understand how they can benefit from it. One example of that is in telco, in the area of voice and broadband provisioning. Although what we have done is take over an infrastructure estate, we have reviewed it and put it in a cloud-like environment. We have taken the applications, rationalised them, put them offshore, and taken on BPO. Having said that, a large element of how the client has contracted with us is around customer retention and new business – so again a direct connection with the business.
o: You mentioned a “cloud-like environment” – can you go into a bit more detail about what cloud means for Logica?
ADC: ‘Cloud’ is one of those great terms that everybody will apply differently in their own world. We have a virtualised environment from an infrastructure point of view; it is effectively `pay as you go’ from an ERP perspective – and we have lots of clients using that service, and it’s all sitting in a Logica cloud environment. And then we also have a secure cloud environment for government. So it’s not “one size fits all”.
o: A lot of people have been talking about a great game with the cloud, but actually are they really doing what they are saying they are doing – or what they could be doing?
ADC: My – perhaps flippant – comment on that is: if you are thinking about what a supplier is saying about the cloud, then see how much SharePoint Exchange or similar they currently have in their data centres. And this will tell you how interested they are in the cloud – because they have sunk investments into that capability and they are eating their own lunch. Certainly if I were a CIO, then that would be the line of questioning that I would have.
o: Moving on to a more macro view: it seems like we are in a slightly happier place economically now than we were a year and half ago. How has this translated into work for you?
ADC: It’s been relatively steady. In some cases because of the pressures of the downturn, client employee numbers have reduced impacting our HR services – but we’ve secured more business from other areas of existing clients which has balanced things out. One of the advantages of having a cloud or virtualised environment is that we have got more comfort about huge growth – or indeed huge reduction. You don’t have to plan for it in the old ways – I don’t have to buy a new mainframe in order to cope – and this gives us and our clients a great flexibility.
o: So have your customers been working very closely with you to ensure that flexibility and take advantage of it?
ADC: Obviously one of the necessities we have as a business is continuous innovation, and whilst I have a driver like any other business to increase my revenue, I also have a driver to reduce my costs as well. So over the last few years we have been able to bring costs benefits to clients. For example we start off with shared service, and then move through nearshoring, offshoring and automation – we go through various pieces of business process management. One of the opportunities we have as an outsourcer is to make investments in tools, in order to automate what would otherwise have been fairly labour-intensive tasks. So we are able to deliver that back to our clients, where possible and appropriate.
We work very closely with clients to look at what they will need next. I believe Business-Process-as-a-Service will be a strong growth area as clients continue to move away from labour arbitrage to deliver real business value. Today at Logica the areas that are hot spots for our clients are security, carbon management and future IT and cloud, so it is these we are focusing on.