Is outsourcing a viable solution for large-scale IT organisations in Australia? We ask George Bell, CEO of CSC Australia, for his views on how the company plans to grow in today's tough market.
Has the outsourcing business changed significantly over the last year?
Historically, Australia has maintained a strong outsourcing market. Government policy has been one of the main reasons; it may also be that the size of organisations in this region has an effect on this trend. Companies are smaller than in the US and Europe and are less likely to be the headquarters of multinational operations. Therefore, on a global comparative basis, Australian organisations are less likely to have the resources and IT expertise for in-house IS management and development and tend to look to engaging external IS service providers.
It appears that the nature of outsourcing is now shifting from the traditional pure infrastructure management to a whole new gamut of services driven by the increasing demand for Internet-based e-business solutionsâ€"supply chain, procurement. The Internet is also strongly accelerating the trend in business process outsourcing. While the traditional reasons for outsourcingâ€"reducing operating costs, improving IS flexibility and increasing efficiencyâ€"still drive the market, other factors are also leading companies to seek outside services. Companies are increasingly turning to outsourcing for strategic reasonsâ€"creating partnerships, broadening infrastructure, extending operational reach, keeping up with new technology, and overcoming the skills shortage.
Currently, the areas most likely to be outsourced by organisations in Australia include:
- Applications development/installation/maintenance (57 percent)
- Network-related activities (50 percent)
- Web hosting (45 percent) (Source: CSC's 2001 Critical Issues Survey)
Are customers becoming more demanding in their requirements?
Yesâ€"and they have the right to because as international competition increases, the demand on each individual is heavier. That places more pressure and expectations on vendors. CSC shares the same commitment as the vendorâ€"demonstrable results and improved service.
The economic reality is that business is becoming more competitive only as technologies converge. That means an increasing challenge for companies to re-invent themselves and keep ahead of trends.
Do you have any comment on BHP Billiton's decision to outsource its WAN to Equant instead of CSC?
BHP Billiton chose to tender out its entire Wide Area Network. This represents only a very small portion of CSC's outsourcing agreement with BHP Billiton. CSC has a highly successful relationship with BHP Billiton and continues to support the overall management and governance of the network environment.
Do you think there is a trend against large-scale government outsourcing in Australia? How would this affect CSC?
There is certainly a strong view that these key decisions need to be made by the executives of the department and we agree with that. I do think we will see much more -smartsourcing" where departments have more than one supplier. There is no -one size fits all" in outsourcing. The key is to work with a client to build a successful relationship and achieve the required results.
Are you concerned about initiatives such as the WA Government's SPIRIT project, which lists among its aims -to support local industry" in IT outsourcing?
Not at allâ€"in fact, part of CSC's operating philosophy is to help nurture and develop the Australian IT industry. Look no further than CSC's activities in the Northern Territory, where we are actively committed to increasing IT skills and working alongside locally based companies on our government contracts.
And in WA, CSC is a local presence that has been operating in the state for over 10 years and currently employs more than 500 local staff.
CSC is always on the lookout for local partners who can add value to the services we provide to our WA customers and who in turn we can help with their growth and sustainability. Two current examples of this are Pretzel Logic and TUSK.
The Spirit procurement system allows purchasing agencies to buy small parcels of IT&C services with the idea that local SMEs can bid for and win this business in their own right. While the intent is good, it remains to be seen how evenly distributed the award of contracted services will beâ€"or whether a few of the larger local players win the lion's share of the business. We would urge the WA State Government to strike a suitable balance of promoting local industry growth, but also making sure there's a place for the multinationalsâ€"since they're the companies who bring most of the new IP to the local market through their global practices.
The challenge is in the implementation. If Spirit is not used in line with the original intent, local industry will simply fragment into a body shop market bringing little or no additional value to WA.
What can CSC offer small and medium-sized businesses?
CSC has an active four phased support program for SMEs: SME Partnering: CSC has multiple SME associations on its major Federal and State/Territory Government and Defence contracts which generally achieve at least 20 percent contract participation for SMEs.
SME Access to leading edge business and technology information: CSC supports associated SMEs with regular access to its prestigious CSC Research Services, which identify and extend world's best practices in three principal areas:
- Business innovation using information technology;
- Transforming the IS (Information Systems) function;
- Transforming the technology base.
Facilitate SME access to new business opportunities: CSC sponsors a tender information database developed by the OIC (Open Interchange Consortium) which offers bi-weekly analysis of e-commerce related tenders issued by Federal and State/Territory Governments to promote teaming and consortium bidding by SMEs. The service is free to associated SMEs.
Facilitates SME access to expansion capital: CSC sponsors seminars around the country presented by a leading merger and acquisitions company which give SMEs insight on -How much is my business worth" and -Raising Capital for Growth". CSC also does a facilitation service for SMEs to present their credentials to a Venture Capital company.
CSC recently completed a series of security seminarsâ€"what is unique about CSC's approach to security?
Commercial and government computer systems are more vulnerable to attack and disruption than ever beforeâ€"and they're beginning to realise how exposed they are.
Protecting e-commerce on the Web involves understanding the nature of the risks to e-commerce, including the general risks of being connected to the Internet and some Web-specific dangers.
Traditionally companies aimed to protect the perimeter of their networks, often using little more than Internet-facing firewalls. A few also addressed security at a system or host level, but they were in the minority.
The true risks of connecting to the Internet were not well understood and the cost of a proper defence system was perceived to be higher than expected loss through security breaches. As a result, many network security defence strategies have been extremely basic.
That's now changing because of the vastly increased nature of threats and some well-publicised attacks in the past year or so. And as the costs of recovering from a denial-of-service, widespread virus or system compromise attack have grown, so has interest in more extensive prevention and protection.
But organisations are still vulnerable. It is simply too easy for an intruder to get through a single line of defence like a firewall. There are a number of common areas where organisations are allowing easy access for hackersâ€"default software installations, little or no security on a server or operating systems, older version applications open to penetration, and weak passwords.
CSC's approach is based on protecting IT infrastructure across its entire lifecycle.
We also promote full infrastructure monitoringâ€"rather than just a perimeter defence approachâ€"and the need to combine a solid defence with an active monitoring program.
Companies should be regularly testing their computer systems for internal and external vulnerabilities to protect vital business information.
Insiders can pose even greater threats than outside hackers and are harder to detect. To fight the internal security leak, CSC offers the new FirstLook and QuickLook network scanning services, which efficiently identify internal and external vulnerabilities.
FirstLook evaluates external network security, focusing on the defensive perimeter of the network and devices such as firewalls and routers which protect against outside attacks. QuickLook is an internal network scan, which assesses configuration and implementation weaknesses.
CSC also offers a Defence-in-Depth model for Internet risks. It features perimeter defences, system level controls, along with user authentication, access control mechanisms, data encryption services, vulnerability management, monitoring, auditing, and incident responses.
Defence-in-Depth is highly flexible and can be incorporated into a more secure network architecture. The selection of particular protective mechanisms, processes and products to implement and enforce security policies, can be matched to the assets being protected, to the risks and resources available to protect them. A Defence-in-Depth security architecture can include typical security controls such as perimeter firewalls coupled with hardened systems, good user authentication, and thorough system administration and auditing.
What are the key points of CSC's recently launched Vista portal for superannuation? Which companies in Australia are using it?
One of the great frustrations for any superannuation fund managerâ€"and indeed fund membersâ€"is the time-consuming and manual backroom processes which have to be carried out. CSC Vista does away with those. It's a portal which acts as an information and contribution clearinghouse. CSC Vista can give superannuation fund administrators and members immediate answers by fast-tracking back office activitiesâ€"substantially reducing cheque processing, letter writing, and other paper-based administration.
Like Internet banking, super fund members can access all the relevant information about their accounts 24x7. CSC Vista provides real time information and services, straight through processing, and substantial reductions in administration costs.
In practical terms, that means fund managers can focus on improving their client services and making their businesses more competitive, while fund members have instant access to the information they need.
Through CSC's association with Australia's leading payroll service provider, ADP, CSC Vista also manages the entire process of salary and contributions deductions. It can be integrated with corporate administration systems such as human resources and finance and automates deductions including insurance premiums, child support payments, union fees, and taxes.
And the Internet portal has the added advantage of being powered by CSC's e3 reusable architecture, which has a highly secure hub. The e3 architecture has been integrated by a large number of CSC customers, including BHP, Sony, and HSBC, and we're in negotiations to extend this to the Vista portal.
What R&D work does CSC do in Australia? Has much of this work found its way into the marketplace, locally or worldwide?
CSC's R&D concentrates on pragmatic, business focused research into the implementation of technology. Pure R&D is not carried out in Australia. Instead, Australia feeds into CSC's global research services.
Several product developments have originated from CSC in Australiaâ€"among them the e3 global reference architecture. The CSC team in Canberra came up with the original idea of the e3 framework and it was then developed in collaboration with CSC's R&D experts in the UK and US. It is now a global reference standard for e3 enablement and provides the architectural framework, methodologies, and management plans for end-to-end enterprise applications. BHP Billiton has adopted the e3 architecture to consolidate its e-business infrastructure and over the past year 15 other organisations have switched to e3.
We also participate in the Leading Edge Forum, a company-wide global initiative. The Forum, comprising leading CSC technologists, provides a CSC point of view on the technology marketplace and serves as a focal point for stimulating technology thought leadership, innovation and collaboration. The LEF Associate for 2002 is Geoff Brehaut, Lead Solutions Architect in Australia. Associates participate in all LEF programs and lead the research and writing of LEF reports. Last year the LEF awarded a technology grant to Professor Eric Tsui our Chief Research Officer for Asia Pacific, who has recently released an industry paper on portals.
About CSC Australia
CSC has been serving Australia's business and technology needs with consulting, systems integration, infrastructure outsourcing, application services, labour supply, and domain knowledge capabilities since 1970.
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