Category Archives: 2012

2012 and beyond (part 5)

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I know, I know, this flurry of blogging activity is more than you can keep up with. Don’t worry, it’ll ease off in the New Year. I blame Techmarketview for running their 2012 predictions in five parts. This is the fifth and final part of their series in which John O’Brien does business process services (BPS). You know the routine by now: my edu-speak comments in blue… 1. ‘BPS’ term will become mainstream – The term ‘business process services’ (BPS) will replace the outdated acronym ‘BPO’, very much associated with old era ‘lift and shift’ and delivering ‘your mess for less’. ‘BPS’ in our view, is BPO coming of age, using technology as an enabler, to help drive business process change, and delivering measurable service outcomes back to the customer.

In K12 education, the traditional provider of most business process services has been the Local Authority. The current economic pressure on the public purse combined with acceleration in the number of schools breaking free of the Authority by converting to Academies, means some Local Authorities are losing their advantage of scale. The creation of Free Schools is relevant because, as new schools, they usually have to scale slowly to full capacity and therefore need services to scale with them. It is also a general truth that LAs are often less competitive and agile than they’d have us believe. The consequence for schools is that they’re having to take decisions about how they procure services more efficiently and they’re trying to work out who the successors to Authorities will be. I think we will see a small but perfectly formed proliferation of education-specific BPS providers in 2012 and beyond.

2. Market leaders will cede share – Newer and more agile platform-based BPS players will see their market shares grow. Indian tier ones will continue to gain momentum through new platform innovations, and specialists such as Diligenta and The Innovation Group (TIG) in hot areas such as life and pensions and general insurance will gain further market share. However we expect a fight back by the ‘old guard’ as they embrace M&A in both vertical and platform capability, and flex their muscles on new business and renewals. 

The large BPS providers like Capita and Northgate already have a strong foothold in education but their current offerings are products of a previous world that is rapidly slipping away. Their lack of agility may well leave room for other education-specific BPS offerings to proliferate in 2012 and beyond, delivering value into areas such as Management Information Systems, HR, payroll, Learning Support and CPD. 

3. ‘Unusual suspects’ will disrupt the market – The construction sector is now looking to partner or acquire support service and BPS capability for ‘bundled’ BPS deals, notably in local government and the broader public sector. Costain and Interserve made moves on Mouchel during 2011, although in the end pulled out after spotting ‘something under the covers’. Nonetheless, there are plenty of other partner or M&A opportunities, so we expect one of these ‘unusual suspects’ to make their first big move in 2012. 

In education, the Building Schools for the Future (BSF) programme was instrumental in forcing those Authorities and schools who were involved to look at the lifecycle costs of running schools. Towards the end of the programme, we saw the ‘Facilities Management’ and ICT offerings broadening their scope to include BPS as a way of driving down the overall lifecycle cost of schools. Once again, this is all about scale. The Local Education Partnerships (LEPs) created through the BSF programme were supposed to act as points of aggregation to generate the scale required for more effective procurement of a range of services. The termination of the BSF programme put paid to that ambition. In the ensuing vacuum, there is yet to emerge a clear pattern of aggregation and this will act as a brake on the adoption of BPS. 

4. ‘Big will eat small’ – The big players will look to buy up platform-based BPS rivals as they attempt to close the gap. Insurance specialist TIG, and HR and public sector player Northgate will find themselves subject to M&A approaches. Weak players are also likely to be approached, albeit at far lower valuations. Embattled Mouchel for instance, is likely to sell off larger, more attractive chunks of its business in 2012 in an effort to stay afloat. 

I refer my esteemed reader to (2). Ever has it been thus that big players look to absorb the small in an effort to stabilise their borders. In the education space, I think the players are still feeling their way and so it will be a while before a clear map for BPS in education emerges. After a generation of labour education policies, the upheaval in the political landscape has brought an equivalent upheaval in education. Nevertheless the ‘more for less’ mantra will drive activity. 

5. Perfect storm of disruption – These trends will create a perfect storm of disruption for the UK BPS market in 2012. The risks to large BPS incumbents like Capita, Xchanging and Serco will only increase as a result, making new business wins and retaining client relationships at renewal a far tougher prospect. ‘Staying relevant’ amidst all of this change has to be the number one priority in 2012.

I think I’m in danger of trying to say the same thing in a slightly different way if I give this prediction an education context. Perhaps I’ll just summarise by saying there’s everything to play for. There’s political disruption, economic disruption and, if the 2011 UK riots are anything to go by, social disruption. Against this backdrop, schools are trying to work out how to do the best by their young people. But they’re not business specialists and learning and teaching should be their central focus. Even though the adoption of BPS makes real sense for schools, it will no doubt take both schools and the market some time to work out how to make it work.

2012 and beyond (part 4)

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Here we go again with my edu-speak interpretation of the next  flock of predictions from Techmarketview. Flock? What is the collective noun for predictions? I checked here but it’s not yet listed although I did like “an annoyance of mobile phones.” Perhaps I could propose “an inaccuracy of predictions.” Anyway, I digress. This time Phil Codling picks out the headlines for the UK infrastructure services market. My comments in blue…1. Cloud-based infrastructure services will grow at double digit rates – But where cloud is replacing an existing service, it’s a more-for-less substitution that is shrinking the overall market. 2012 is another year of clients putting costs first.

Cloud is a paradigm shift in technology that represents a partial displacement of existing spend. The effect of cloud is to improve utilisation and efficiency while driving down management overheads. Sometimes though, on-premise is the right answer. Optimising the blend of off and on-premise infrastructure will be the evolutionary trend of 2012 and beyond. A consequence of moving off-premise is an increasing requirement for high quality bandwidth. Taken in the round, we may be seeing a redistribution of budget spend rather than an absolute decrease in 2012 but as scale bites, the overall cost-base should be driven down leading to lower prices. What is clear is that the economic climate is helping to drive the speed of transition to cloud services in business and this trend is beginning to emerge in the education sector too. Technology delivery in education, particularly in K12 is often highly inefficient with inadequate local technical support. Cloud infrastructure and services offer schools a real chance to shift their focus away from managing technology to managing learning while at the same time reducing IT budget, if not immediately, then certainly over time. Bring it on!

2. Public cloud won’t make it to the mainstream – Private cloud remains the preferred option in 2012. Small businesses and niche/non-critical applications provide the exceptions to this rule.

A public cloud is one in which a service provider makes resources such as storage and applications, available to the general public over the Internet. The term ‘public cloud’ arose to differentiate between this standard model and the private cloud, which is a proprietary network or data centre that uses cloud computing technologies, such as virtualisation. A private cloud is managed by the organisation it serves. A blended model, the hybrid cloud, is a combination of cloud services managed by both internal and external providers. In fact it is this latter category that will, I think, emerge as relevant to education in 2012 and beyond. Scale is all important here and clearly it is SMEs and education-equivalent organisations that benefit from public clouds because private isn’t really an option. However, larger educational aggregations such as the Regional Broadband Consortia (for example SWGfL) do provide the scale for private clouds. Thus education organisations will probably find themselves in a blended environment.

3. Bring Your Own Technology becomes a market opportunity – Forward-thinking players will seize the chance to help CIOs turn BYOT [Bring Your Own Technology] into a positive for their organisation. Meanwhile the technology in question will include a major new entrant, as Amazon “Fires up” competition in the tablet space.

I’ve already blogged on BYOT and I make no secret of the fact that I believe education is ripe for this trend. The benefits of personally owned tech, for the organisation and the individual, are numerous and profound. Addressing the issue of equal access in education is the challenge. The mention of the Amazon Fire tablet does however give me an opportunity to evangelise about a parallel trend that I think is just around the corner: eTextbooks. Having a 14 year old daughter as I do, I know how many textbooks she lugs around the place. Not only that, but her teenage brain is adept at forgetting most things, including textbooks, at crucial moments, such as the day before an exam. One of the huge benefits of personally owned technology would be anywhere, anytime access to eTextbooks. I find it astounding that it has not taken off. Not only would eTextbooks offer a better quality of experience including multimedia assets and links to extended or remedial resources, but they would be available whenever and wherever a learner required them. It would be possible for teachers and learners to annotate them and otherwise add value. As electronic documents they could also be subject to the range of social tools, such as reviews and rating. Imagine as well being able to measure how a young person used their textbook. That data would be extremely valuable in identifying patterns and trends for understanding learning and timely interventions. The list goes on and on. Yet it hasn’t happened. Perhaps 2012 is the year…

There were a couple of other predictions too but they were very tech-infrastructure-sector-specific and I couldn’t see how I could add any edu-value. So there you have it for this instalment.

2012 and beyond (part 2)

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Here’s the second instalment of 2012 predictions from the Techmarketview team, this time from Georgina O’Toole and Tola Sargeant with a focus on the public sector tea leaves. My education-speak translation comments are in blue…

1. Government ICT strategy will languish as new CIO team is put in place: The search is underway for a new UK Government CIO [Chief Information Officer] (to replace Joe Harley by spring 2012) and a new UK Government Deputy CIO (position currently vacant). When in place, the new Cabinet Office team will face an enormous task with a myriad risks threatening to hamper the implementation of the UK Government ICT [Information & Communications Technology] strategy (not least the threat of a hiatus as the new CIO team finds its feet).

If you haven’t read the UK’s Government ICT Strategy then I can summarise it for you in a familiar phrase: “More for less.” The diagram to the left here represents the core themes. It’s the Government’s deep seated belief that technology can and will drive enormous efficiency and that a leaner public sector is one of the foundations of economic recovery. Whether or not you agree, their strategy is built upon this thesis and education leaders would do well to understand the big picture because the “common ICT infrastructure” is something that they will need to factor into their plans. The lack of a CIO at the helm is acting as a brake at the moment but expect the process to accelerate in 2012.

2. A peak in renewals will result in radical contract restructuring: 2012 is the start of two years in which we will see a peak in the number of contracts coming to their natural conclusion. Contracts will be radically restructured on renewal as UK Government moves from a vertically-siloed model to a horizontal model.

In part, this refers to the “common ICT infrastructure” and in part, the procurement strategy. The phrase  “horizontal model” refers to a more joined-up (across sectors) approach to technology procurement that  benefits from increased aggregation and improved competition. The common ICT infrastructure is part of the mechanism by which this can be achieved, i.e. standardisation. Again the key for education is awareness and planning. Cloud technology is an important element of the approach to scaling and standardisation and education leaders would reap rewards from understanding the direction of travel.

3. Megaplayers will retain lion’s share of major contract renewals: Leading suppliers have worked hard to support the UK Government ICT strategy and many have ‘come off the naughty step’. In times of austerity, and a propensity for low-risk options, organisations will stick with ‘the devil they know’ if there is sound reason to do so. Suppliers will likely find their wallet share from existing clients eroded but will have the opportunity to broaden their client base by offering successfully implemented horizontal solutions to a wider range of organisations.

In summary, big players like Capita have allowed the Government to renegotiate contract terms in recognition of the difficult economic climate. In return for playing ball with the Government, they will likely be treated as favoured partners and retain big contracts. I think there is truth in this statement but I’d also point out that “megaplayers” tend to be a little slow on the uptake and that significant shifts in the ICT landscape offer opportunities for more agile players to grab market share. Taken in tandem with the trend for consumerisation of enterprise IT, I think we’ll see the emergence of new names offering great value to education customers. As a general observation, if you’re an education customer taking services under contract from a company, now is a good time to negotiate better terms. It’s a buyers’ market.

4. Shared services will really take off: 2012 and 2013 will be remembered in the UK public sector as the period when shared services really took off. The trend towards ‘tower-based’ procurements will give departments and agencies more flexibility to buy from shared services centres in the future. The competition to be involved in the handful of hosting organisations that will eventually emerge as shared services centres will be intense.

This is all about efficiency. Aggregation drives efficiency and a shared service is a way of creating that aggregation. For example, if all the schools in an Authority choose to procure payroll services in one block, that drives down the cost-base for the service provider and means a keener price for schools. Over time the market for shared services will shake down to a “handful of hosting organisations” because the more aggregation, the lower the cost-base (up to a point). In my opinion, education leaders could save their organisations very large sums of money by collaborating with organisations with similar needs to procure shared services. It still amazes me how many education organisations run themselves as islands, trying to do everything in-house. It is not only expensive but it is a distraction from their core function: learning.

5. SMEs will establish beachhead in government shared services: SMEs  [Small and Medium size Enterprises] will have more opportunities as contracts are broken down, particularly where niche requirements, for example, security, are separated out and procured separately. The most successful suppliers will be those that focus on being best of breed in one or a handful of niche service lines that can be shared horizontally across multiple organisations.

This final point is linking together two of the previous ones, i.e. (4) shared services and (2) contract re-structuring. Successful suppliers are ones that add the most value for the lowest cost. Given that aggregation is one of the keys to efficiency, SMEs that focus in on elements of the technology where they not only add more value, but also leverage scale by offering that value horizontally across a variety of sectors, will find opportunities emerging as contracts come up for renewal and the Government’s “horizontal” strategy bites. If you are an education leader, my advice would be to analyse the way in which your organisation conducts its business (and business of education) functions. Use this analysis to work out whether you’re really better off doing everything in-house. A useful concept in this context is ‘opportunity cost’. This may be defined as “the cost of any activity measured in terms of the value of the best alternative that is not chosen.” For example, you may choose to manage your technology in-house because it is 15% cheaper than a managed service delivered by a 3rd party as measured in pounds/dollars. However the opportunity cost of not choosing a managed service is that you may find you/your staff are 25% more tied up in technology-related issues with a knock-on degradation in learning outcomes. This is just one scenario but one I have come across similar ones on a regular basis. Technology can be a distraction and my advice if you are an organisation in the business of education, is to shed distractions and focus, focus, focus on your core business: learning.

2012 and beyond (part 1)

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Around this time of year I’m always interested to see what the technology pundits predict for the following year. The advantage of being in a sector for a while is that you work out who’s worth listening to. Richard Holway from Techmarketview is a seasoned oracle with a great track record. Education is not his thing but it’s worth reading what he predicts for technology in 2012. Just replace “business” with “school” and “2012” with “2015+”! I jest, but it is true that trends in business often feed into education in time. I’ve added a few lines (in blue) after each item offering my education-speak version of his prediction.

1. “It’s the economy, stupid” – Although what happens in the general economy – UK, Europe, US and globally – has always had some impact on UK SITS [software and information technology scene], it has often been minimal. Indeed, UK SITS has often thrived in downturns – indeed, growth has been spurred by the need to cut costs/change business models etc. But the UK faces the possibility of an unprecedented downturn which is just bound to affect the UK SITS sector and, indeed, consumer tech too. The Governor of the Bank of England was recently asked “What will happen to the economy in 2012?” and replied “I don’t know what will happen tomorrow, let alone next year”. So, the greatest driver for our markets in 2012 will be the economy. The greatest problem facing the executives in the UK SITS sector will be uncertainty. Nobody – not the Governor of the BoE or any TMV [True Market Value] analyst – can accurately predict what will happen.

The impact on the education sector of the economic downturn in the UK is already being felt and the termination of the Building Schools for the Future was an early indication of this. Traditionally education is fairly resistant to economic cycles but I think the situation is sufficiently dire to send waves out across the entire public sector, and indeed the country, with increasing pressure to do more for less.

2. Consumerisation of Enterprise IT – Consumerisation of Enterprise IT is already an established trend but will become mainstream from 2012 providing huge threats and similarly huge opportunities. This will particularly apply to mobile, social and tablets.

Consumerisation of Enterprise IT means users finding and using their own technology tools to meet their day to day requirements in work rather than being enterprise driven. Thus the power-base of enterprise IT companies is being diluted as users create their own ecosystem of technology to meet their needs, e.g. iPhone, FaceBook, LinkedIn, Twitter etc. This trend is inevitable and desirable in the education sector too. It promotes a self-personalised experience as well as rapid innovation and diversity while reducing the management overhead for organisations.

3. Bring Your Own Tech – Similarly, BYOT will also go mainstream. Enterprises supplying tech items such as mobiles, laptops etc to employees will become as uncommon as the supply of company cars. BYOT will spur major growth in security systems and in desktop virtualisation. However, supply and support channels will be adversely affected by the BYOT trend in much the same way as manufacturers and suppliers of company cars were affected in the last decade or so.

BYOT is an extension of the consumerisation of enterprise IT. Again it’s about self-service, self-personalised technology solutions that meet the specific needs of the individual and remove the management and control of edge devices away from the organisation. It not only removes the management overhead from organisations but it also increases personal responsibility and utilisation. This is an important step to take in education in order to improve utilisation of, and therefore access to, technology.

4. Social media bubble bursts – Consumer social networks have already peaked. The winners are in place. Valuations were always in bubble territory and that bubble has also burst. However, just like the Internet bubble of 1999/2000, the world has changed. Social networks will have a huge effect on the next 10 years just as the Internet has had on the last decade. The real opportunities are now the adoption of social networks in the Enterprise.

The key point here for education is in the last sentence. There is a huge amount of potential tied up in social learning, both formal and informal, and most education organisations have resisted the integration of these platforms into their cultures. Adoption of social networks in and across education organisations will revolutionise when, where and how learning happens. It may not be 2012 for education organisations but young people are there already – in their tens of millions. We should take notice of them.

5. IT as a utility. “It’s business not IT, stupid” – For as long as I can remember, pundits have suggested that IT will become a utility – like the supply of electricity. They have made the point that nowadays nobody has an “Electricity Supply Director”. So, why do we have IT directors? Or even why do we have CIOs [Chief Information Officers]? The acceptance of BPS means that in many companies that day has already arrived. Much of the previous IT budget is now controlled by user departments. Decisions are taken for business not IT reasons. CIOs are probably a dying race. The same might well apply to some SITS companies. The need to supply a business solution already supersedes the need to supply an IT solution. I remember Paul Pindar has long objected to me ever referring to Capita as an IT company. –I suggest most other companies will object in similar fashion in the future.

This is a key one for schools in particular. Even now, all round the world (and especially in secondary education and above) network managers and technicians have created stand-alone IT empires that are mostly about the technology. They are usually characterised by being non-standard, difficult to support, lacking in scalability and  dreadfully inefficient. Technology paradigms such as the ‘cloud’ are offering great opportunities to deliver IT services from an off-premises location, increasing standardisation, availability, consistency and driving down cost. The consequence? More focus on learning in learning organisations. “It’s education not IT, stupid.”