Articles Posted in Industry Trends

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It seems intuitive that, by and large, employees prefer to use their own mobile devices, carrying only a single device for personal and work purposes, and having choice over the device to be used (please don’t take away my iPhone). There has also been a hypothesis that there could be cost savings for companies that allow employees to BYOD because of the ability to defer the cost of the devices and service to the employee.

In fact, maintenance of a BYOD program (we have previously reported on legal issues surrounding Bring Your Own Device and the importance of BYOD policies), including the need to manage across non-standard devices and platforms, may actually result in a BYOD program being more costly than having a standard corporate-liable program. Add to those costs a recent California ruling that requires companies to reimburse employees for wireless service. Although the case raised more questions than it answered about what level of reimbursement is required, it seems clear that companies will bear a larger portion of the cost of BYOD programs than they had previously borne.

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With the number of (internet) connected devices rapidly surpassing the number of internet people (actually, all people whether or not connected), we take this opportunity to explore some of the legal complexity brought about by all of this connectivity.

First, some background:

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Database marketing outsourcing is a strategic transaction for retailers. This type of outsourcing can facilitate the integration of diverse marketing channels e.g., web, social media, catalog and in-store sales) and enable more targeted and effective marketing to consumers.

Database marketing encompasses a potentially broad array of services, including:

  • Implementation and hosting of a CRM database marketing solution;

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“How does a large software project get to be one year late?  One day at a time!”  

-Fred Brooks, former IBM employee and OS/360 developer

 

2013 was not a stellar year for public sector outsourcing.  As we reported in an earlier blog article, Indiana is appealing judgment in an ongoing court battle with IBM over a troubled welfare claims processing project.  Agencies in Pennsylvania, Massachusetts and Australia also hit the news. 

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In a look forward at 2014, Joe Nash commented in Stephanie Overby’s CIO.com article on what to expect in the year head. He said:

At the very least, expect an increase in automation generally. ‘With the cost benefits of labor arbitrage being largely harvested and labor costs inevitably on the rise, CIOs will need to look for alternative opportunities to reduce or contain operating costs,’ says Joe Nash,

principal in Pillsbury’s global sourcing group. ‘That means looking for ways through automation to reduce the amount of work it takes to complete an IT function or service, not the cost of the labor to do it.’

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Labor arbitrage has long been a feature of ITOs . With off-shore to on-shore staffing ratios in the 65:35 to 75:25 range, suppliers have long used arbitrage to deliver significantly lower pricing. IT organizations have made many a CFO happy when recommending deals featuring 20%+ savings, especially done under the pressure of corporate “blood” drives to cut costs. Unescapably, however, corporate “blood” drives are a lot like the girl scout cookie sales season, just when you think you gotten everyone happy, here comes the next guy trying to boost his kid’s financial performance.

Unfortunately, our one trick pony is also a one-time pony, especially with deals where off to on shore ratios have been maximized. When the CFO next comes calling, our pony is fresh out of tricks; there is no more arbitrage to be had — at least not from the same delivery market. What is next? Shall we pack our bags in Bangalore and head off to a Chinese Model City or perhaps see what kind of benefit stream enrichment can be had in Ghana or Mauritius? Most buyers, we suspect, will not find this an appealing prospect when viewed through an operating risk management lens.

Maybe it is time for a change in approach. Instead of continuing to try to derive benefit from pushing on the P lever, maybe some answer can be found by putting pressure onto the Q factor in the equation. Rather than buying cheaper labor, how about we find a way to use less labor. One way to reduce labor demand is to gain leverage through standardization (ala Google and Amazon), but heterogeneous installed bases, which reflect most of our clients’ environments, are notoriously resistant to standardization efforts. Good idea, best practice even, just not responsive to the CFO demand for results sooner rather than later. So then why not turn to the reason why we have computers in the first place — to do things faster and cheaper than people can do them. How about the shoemaker’s children taking some of their own medicine and using their own technology on themselves? Why not use technology to automate IT business processes and reduce the number of people needed to operate these complex infrastructure configurations? Assuming we can keep labor rates in roughly the same range, fewer people equals a lower labor cost, which equals lower prices, which means happier CFOs. And happier CFOs are a good thing for CIOs.

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In a look back at 2013, Mario Dottori commented in Stephanie Overby’s CIO.com article on grading our initial 2013 IT Outsourcing predictions that we discussed last December.

Third-Generation Deals Enter Uncharted Territory It was true that many of the latest generation of outsourcing deals were more complex. But the advantage did not go to the incumbents. Quite the opposite came to pass. “Incumbents are always ‘sticky’ because of high — or perceived high — barriers to exit,” says Mario Dottori, partner in the global sourcing practice at law firm Pillsbury. “However, we have seen more movement away from incumbents where there are lower barriers to exist. Customers are balancing the switching costs and risks with significant improved service delivery and meaningful reduction in spend.”

Check out the full article in CIO.com

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October 1st marked the beginning of open enrollment for the federal and state health care exchanges (“Exchanges”) created to comply with the Affordable Care Act (“ACA”) of 2010, commonly referred to as Obamacare. The creation of the state and federal exchanges was and is a massive undertaking, involving the “unprecedented task of linking databases maintained by insurance companies, [and] states and federal agencies, including the Internal Revenue Service.” (“Obamacare Web sites see much interest, some glitches”, The Washington Post, October 2, 2013).

As anyone who has been involved in large scale IT projects knows, these types of projects invariably encounter glitches before they work smoothly, and the health insurance Exchanges are no exception. Many users of these Web sites encountered error messages or experienced significant delays when they tried to access the Exchanges to research their health insurance options.

Federal and state health officials initially blamed the delays on higher-than expected site traffic, and pointed out that any new technology is going to have errors at first that need to be corrected. But the Exchanges have been up and running for over three weeks now and issues remain, particularly with the federal exchange HealthCare.gov. Some specialists have suggested that extensive changes are required before the site will operate properly and that the repairs could take months. (“Contractors See Weeks of Work on Health Site“, The New York Times, October 20, 2013) The problems have created mounting pressure on the current administration, including plans for a congressional hearing later this month and calls for senior administration officials to lose their jobs. (“HealthCare.gov launched despite warning signs”, The Washington Post, October 22, 2013).

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As the U.S. moves toward full implementation of the Federal Affordable Care Act (ACA, also known as Obamacare), employers are seeing new challenges and opportunities in the provision of health coverage and other benefits to their employees.
Some predict that ACA will lead to cheaper, better, universal health care. Others predict a calamity. But most agree that the law will drive significant change in the way health care is delivered, paid for and insured in this country. Employers are left wondering how to plan for and manage those changes while containing costs and meeting their employees’ expectations.
Human resource consultants and product vendors are responding by aggressively promoting their services as an answer to the complexity and administrative headaches created by the legislation.  Outsourcing benefits administration functions to these specialists is one approach. Another approach is to engage one of several service providers that have launched private health insurance exchanges in the two years since the ACA legislation passed.
These exchanges promise to address two critical challenges facing employers -1) ensuring compliance with the ACA’s complex rules, in addition to any applicable state and local laws, and 2) securing appropriate coverage benefits for employees at an affordable cost.

What Are the New Private Health Exchange Options?
Individuals and small businesses may use public, government-run exchanges like Covered California to compare and purchase insurance plans.
Larger employers can continue to arrange their own health care programs. As an alternative, some will direct their employees to the public exchanges if the exchanges deliver better pricing, better service and greater options for their employees.  Sixteen states and the federal government will have such exchanges operating come January 2014. This constitutes a threat to existing payors, who may see their business migrating to commoditized public exchanges. Private exchanges recently launched by health insurers, brokers, and human resources and administration consultancies, including major players like Aon Hewitt, Mercer, and Towers Watson, offer individuals and businesses an alternative to the government-run exchanges and traditional payor health care plans. At a minimum, these exchanges generally offer:

· An online self-service portal for covered individuals

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Database marketing outsourcing is a strategic transaction for retailers. This type of outsourcing can facilitate the integration of diverse marketing channels (e.g., web, social media, catalog and in-store sales) and enable more targeted and effective marketing to consumers.

Database marketing encompasses a potentially broad array of services, including:

• Implementation and hosting of a CRM database marketing solution;