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The Affordable Care Act of 2010 mandated the creation of health care exchanges (“Exchanges”) which will enable individuals to shop on-line for health insurance beginning October 1, 2013. Creating and configuring the software, databases and interfaces that comprise the technology platforms for these Exchanges has created huge challenges for the fifteen States and the District of Columbia that have decided to build their own Exchange rather than rely on the Exchange being developed by the federal government, as well as for the health insurance companies planning to market and sell their insurance through these consumer portals.

The Exchange mandate has generated a massive amount of IT work and required more technological change than possibly any other federal law to date. To provide an idea of the complexity of building these platforms:

  • Software must be developed that permits multiple health insurers to offer multiple insurance products through a single government-run portal with a common look and feel.
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When in the course of commercial events, it becomes necessary for one client to dissolve the operational bonds that have connected it with its supplier, and to assume a new service delivery model . . .

As the outsourcing industry has matured, we have seen a greater incidence of clients looking to dissolve their outsourcing relationships. For some, this is the natural end of the relationship, for some, there is a change in strategy, and increasingly for some, there is dissatisfaction with the service being provided. Against this backdrop, we present four tips for a peaceful move to independence.

I. Read Your Agreement

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Deploying a software package across the company (or most of the company) is becoming a reality for most companies. Standard processes and systems drive cost, quality and performance improvements. Unlimited deployment rights may also reduce transaction costs and project completion timeframes. The right enterprise and unlimited license agreement can make all the sense in the world.

In the first installment of this blog, we set up a scenario where you are a CIO faced with a decision on whether or not to enter into an “enterprise” or an “unlimited” license arrangement with a major software publisher. In discussing the first of our four questions (“What does “enterprise” or “unlimited” really mean?”), we explained that there are many potentially perilous pitfalls in these license arrangements, and conveyed how you might to look to avoid or mitigate them.

Again working from our four-question framework, let’s now focus on the second question: “Do we really want to be doing business with this publisher?”

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The rise of cloud computing services and the privacy/security issues involved have been much discussed (see, for example, our prior blog posts here). But when customers procure cloud-based services, a critical “behind the scenes” issue is often overlooked: is the cloud provider itself relying on third party subcontractors to perform critical functions? When these subcontractors are added to the mix, things become a bit more complicated.

Cloud computing offers a wide variety of services:

  • IaaS: infrastructure as a service to replace a customer’s data center or testing environment;
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Although reconciliation of the key terms has been a best practice for over-the-counter derivative trades for some time (particularly with collateralised trades), the scale of the reconciliation exercise imposed by forthcoming regulations in the EU and U.S. has caused many market participants to undertake a fundamental review of the systems and processes in place. For many, compliance can only be achieved by utilising a third party for provision of an appropriate technology platform or an end-to-end service. With imminent compliance deadlines and the late development of the requirements themselves, functionality has understandably been the focus of any sourcing process. However, from a supply chain and outsourcing perspective, a key challenge remains the manner in which the financial services-specific regulations are applied to this type of third-party arrangement.

The New Legislation

With the 1 July deadline for compliance with CFTC Rule 23.502 looming and the equivalent EU legislation (in the form of the Commission Delegated Regulation (EU) No. 149/2013) due to come into force on 15 September, OTC market participants are bracing themselves for major changes to the way they perform portfolio reconciliation in relation to non-cleared trades. In fact, it is looking increasingly likely that the deadline will have to be extended by around three months, to allow further time for compliance by the affected institutions.

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As noted in our previous blog postings on the subject (Applications Outsourcing Pricing – Part 1 and Applications Outsourcing Pricing – Part 2), the most prevalent model for pricing applications outsourcing services involves the following components:

  1. a fixed monthly charge for applications maintenance and support;
  2. a fixed monthly charge for a baseline number of application enhancements hours (typically included as part of the fixed fee for applications support) with authorized incremental hours charged on a time and materials basis; and
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You’re a CIO and a major software publisher proposes an “enterprise” or an “unlimited” license arrangement. Having made its way up the chain to your desk, you are told the deal looks promising. There can be pitfalls in any software deal. In “enterprise” or “unlimited” license arrangements the pitfalls can be devastating.

Asking yourself (and your staff) four basic questions may help you ferret out the risks and reduce your exposure to many of the big problems.

This is the first of four installments identifying and explaining each of these four questions. The first question is:

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“The details are not the details. They make the design.” – Charles Eames

Indiana vs. IBM

In 2006 Indiana awarded IBM a contract for more than $1 billion to modernize Indiana’s welfare case management system and manage and process the State of Indiana’s applications for food stamps, Medicaid and other welfare benefits for its residents. The program sought to increase efficiency and reduce fraud by moving to an automated case management process. After only 19 months into the relationship, while still in the transition period, it became clear to Indiana that the relationship was not going as planned. The expected levels of automation were not being realized. Instead, the program reverted back to a caseworker process, and performance was consistently slower than agreed to levels.

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In Part 3 of “It’s 2013. Do You Know Where Your BYOD Policies Are?” we will address developing BYOD trends and best practices. Please check out Part 1 and 2 of this 3-part series addressing employee and employer concerns, respectively.

Recent Findings: Widespread Adoption, Lagging Management

Recent studies show that security practices and corporate policies are struggling to keep pace with the popularity of BYOD. As mentioned in Part 1, a recent Cisco study found that 90% of full-time American workers use their personal smartphones for work purposes. Surprisingly, widespread adoption is reported in industries handling highly sensitive and regulated data: banking at 83.3%, and healthcare at 88.6%.

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Steve Farmer recently published an article in World Data Protection Report titled “Personal Data Transfers from the European Economic Area: Time to Consider Binding Corporate Rules 2.0.”

What exactly is the ‘”best” solution for an international business needing to handle and transfer personal data across borders?

This has become an increasingly important and common question as business becomes more global and companies grow, reorganise or merge.

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