Site management company moves its UK-based IT infrastructure into a dedicated cloud environment, dropping incumbent IT services provider CSC.

The UK division of Danish facilities management giant ISS has signed a five-year IT infrastructureoutsourcing contract with Atos. The deal will see ISS move its UK-based IT infrastructure onto Atos’ Sphere cloud platform. This means it will be hosted in Atos’ data centres and charged for on a “pay for use” basis.

All of ISS’s infrastructure and applications (excluding email, which is based on Microsoft’s cloud-based service) will be hosted on dedicated servers, with shared network, storage and backup systems, an Atos spokesperson told Information Age. ISS will also use Atos’ managed desktop service, Adaptive Workplace.

Atos is displacing IT services provider CSC, with whom ISS signed a global IT outsourcing deal in 2003.

Tesco has signed an eight-year software licensing and services deal with Microsoft aimed at helping improve the retail giant’s global productivity and international growth. As part of the agreement, Microsoft will provide the latest versions of its products and services to Tesco’s head offices, stores, distribution and datacentres, including Windows, Office, SharePoint, Exchange, Lync, System Center, BizTalk and SQLServer. The deal also includes consultancy services under Microsoft’s Enterprise Strategy programme.

Tesco plans to create a new global collaboration platform by deploying SharePoint, Exchange and Lync as part of its strategy to grow internationally, expanding its retail services, including banking, online and mobile. “Putting innovative technology in the hands of its customers, staff and suppliers will allow Tesco to get closer to its goals of multi-channel retailing and meeting people’s needs as they change,” said Tesco in a statement. Bill Gonzalez, general manager for worldwide distribution and services sector at Microsoft, said the agreement will change the way Tesco connects internally and with its customers.

But is it a good idea to sign such a long term agreement for desk-based versions of software in the light of the developing Cloud market, which includes Microsoft’s own Office 365 Cloud offering?

Spend, spend, spend. At least that’s what Gartner thinks.

Worldwide IT spend is poised to grow 7.1% in 2011, reaching $3.67trn (£2.29trn), according to Gartner’s quarterly outlook. This is an upward revision of the 5.6% growth projected by the analyst firm in the first quarter of this year.

Spending on public cloud services is set to grow nearly four times faster than overall IT spend in the next five years. Gartner predicts an annual growth rate of nearly 20% for public cloud services, increasing from $70bn in 2010 to $180bn in 2015. However, the 2010 figure represents only some 2% of total IT spend, rising to just 4% by 2015.

The computing and hardware sector is set for the strongest growth, with spending forecast to increase by 11.7%, reaching $268bn in 2011. Enterprise software will be the next largest area of growth, forecast to rise 9.5% to $268bn, while IT services will comprise the largest area of IT spending at $846bn, a 6.6% increase from 2010.

Software-as-a-service (SaaS) sales are expected to reach $12.1bn in 2011, an increase of 21% compared to $10bn in 2010, according to research firm, Gartner.

According to Gartner’s latest figures, SaaS will comprise almost a third (32%) of the total customer relationship management (CRM) software market in 2011, accounting for $3.8bn in 2011, an increase from $3.2bn in 2010.

“The market landscape for on-demand CRM continues to evolve and mature as the availability and use of SaaS solutions become more pervasive,” said Tom Eid, research vice-president at Gartner. “Initial concerns about security, response time and service availability have diminished for many organisations as SaaS business and computing models have matured and adoption has become more widespread,” Eid added.

Enterprise resource planning (ERP) SaaS sales are the lowest in the market, making up only 7% of the overall ERP market. Gartner predicts ERP SaaS sales to reach $1.7bn by the end of 2011.

Gartner expects the SaaS market to grow to reach $21.3bn by 2015 with 90% of sales being regarded as cloud services.

Since the release of Microsoft’s Office 365 cloud-based service, the pros and cons of how it stacks up against its competitors in terms of cost and usability have been hotly debated, but it is Office 365′s security credentials that really sets it apart, according to the company’s Trustworthy Computing Group.

Microsoft, the group says, is the only cloud services provider that addresses security at every level in the stack, starting with the underlying infrastructure, which is certified as complying with the ISO 27001 information security management standard.

Certainly something to consider when comparing Microsoft Office 365 to its rivals.

Salesforce.com has long been a pioneer of the Software as a Service (SaaS) industry. And as many of the larger software vendors have now started getting on the SaaS bandwagon, they have found that SaaS is not as easy to deliver as they expected. SAP has struggled and in 2010 only 100 users wereusing their SaaS offering. UK accounting software provider Sage scrapped its first attempt at SaaS owing to security flaws. Other vendors have decided to follow a different route following the old mantra ‘if you can’t beat them join them’. In 2007 Salesforce.com launched Force.com, a platform as a service (PaaS) offering that allows third parties to build their own applications on top of the salesforce.com core. This gave a way for independant software vendors a way to ‘go SaaS’ without having to build or host the platform themselves.

One of the first companies to do this was CODA, a UK based accounting software provider that has since been acquired by the Ducth software company Unit4. Since then many more have followed the path to PaaS as a low cost way to deliver SaaS. According to Forrester there may be as many as 25,000 organisations currently using Force.com to build their applications.

So you can’t ignore the Cloud and SaaS and you should include it in your technology roadmaps. Top tip: don’t sign long term traditional licensing deals with any software supplier as their current pricing model will be replaced with something better within the next few years.

Oracle is offering heavy discounts on the software and hardware for its Exadata database platform in a bid to drive sales. In the past few months, Oracle has offered discounts of up to 70 percent and 30 percent on its Exadata software and hardware respectively.

We believe that the discounts offered by the company were due to the fact that it wanted to drive sales before the fiscal quarter ended on May 31. One source told us that the discount offered by Oracle is based on the list price of the software license deal. For example, for a software license deal worth £250,000, the company offered a discount of 45 percent to 50 percent.

While the discounts and Oracle’s pricing plans for Sun servers and its own database software can be negotiated to a reasonable level for large organisations, many mid-sized and small companies that rely on Oracle’s database services are planning to move to Microsoft SQL due to the large maintenance and support fees being charged by Oracle.

Sometimes negotiators fall into traps and leave resources on the table because they can’t see that silver lining. Some common pitfalls are:

Poor planning
Successful negotiators make detailed plans. They know their priorities —  and alternatives, should they fail to reach an agreement. You must know your bottom line, your walkaway point. In addition, you need to understand time constraints and know whether this is the only time you will see your opponents in negotiation. After preparing your own agenda, outline the same for your opponents: What are their preferences, alternatives, and bottom line? Once at the bargaining table, test your hypotheses to determine what the opposition’s priorities really are. Prepare a written goal and analysis sheet for yourself.

Failing to pay attention to your opponent
Negotiators need to analyze the biases their opponents bring to the table.  One way to get inside your opponent’s head and influence his attitude is to shape the issues for him, a technique called “framing.” If you get your opponent to accept your view of the situation, then you can influence the amount of risk he is willing to take.

Caving in too quickly
Accepting a well-priced deal too quickly can cause anger on the other side, too. If you list a used car for £5,000, you might really be thinking of accepting £4,500. But when your first buyer has it checked by a mechanic and then immediately writes you a check for £5,000 without trying to bargain, how do you feel? Disappointed. You’ll think you sold it for too little. The lesson is: No matter what the price, even if it’s fair, always offer less — if only to make your opponent feel good about the deal. You may come up to full price in the end, but at least your opponent will feel as if he made you work for it.

Don’t Gloat
Finally, when you’ve cut a sweet deal, never do the dance of joy in public by turning to your opponents and telling them you would have done it for less. Gloating will only drive your opponent to extract the difference from you sometime in the future. Today, flagging corporate allegiances and rampant job hopping make it essential to keep on professional terms with your negotiating opponents. You may find yourself on the same side of the bargaining table one day.

Change of control – Beyond escrowing source code, you could try wording the deal so that you get license, maintenance and implementation fees returned if the vendor or product is sold off during the first year. Why? Because few products remain unchanged after another company acquires them. Material change should include asset sales, acquisition, divestiture, loss of founder and insolvency.

Entitlement – Software vendors often use the accumulated maintenance fees you’ve paid over the years to develop a new-but-similar product line, and then ask you to pay a new licensing fee to get full access to the new product. Don’t wait until this new product is released; instead, incorporate greater self-protection into the original contract just in case.

Sunsetting policy – Consider writing into your contract the minimum advance warning you would need if the vendor decided to retire the product you’re licensing. How much you’ll need depends on whether your organization typically runs the most current revision level or an older version. It’s advisable to become as current as your budget and timeline will allow.

Enterprise pricing – All bets are off when it comes to user counts and hardware infrastructure over the next few years. Ensure that your license doesn’t tie you to a disadvantageous cost structure or pricing model that becomes obsolete when you adopt cloud computing, for instance.

Maintenance fees – Vendors typically link maintenance fees to a fixed percentage of the “then current list price of the software.” And since some vendors increase their list prices faster than the cost of living and/or faster than your business will grow, consider tying maintenance fees to the Consumer Price Index, for instance, instead of the software’s list price.

Shared back-office services are being established across the public sector by pioneering organisations as well as service providers, but for public sector bodies yet to make the move there will be difficult decisions and compromises to make.

Ovum predicts 50% of European public sector bodies will use shared services in two years, but says: “Despite the benefits offered by pooling resources or taking them out of house, the option of sharing resources – such as receiving back-office functions from another agency – or outsourcing entire functions to a third party, hasn’t gained significant momentum outside Europe.”

Half of European public sector CIOs surveyed by Ovum said the biggest barrier to adopting shared services is concern that it will not save enough money to make it worthwhile. Can this really be true? Or are some CIOs simply protecting their own jobs behind a smoke screen of cost fudging?

Shared services are seen as key to the government’s drive to cut its spending. IT service providers are creating shared service centres targeted at different industry sectors with UK public sector organisations, such as police authorities, local government and NHS trusts already tapping into them.

Shared services in the public sector are already in use. NHS Shared Business Service is a joint venture between the Department of Health and IT services firm Steria, which began in 2005. It uses an Oracle platform and a single set of processes to run the back offices of NHS trusts. The theory is that the money saved can be invested in front-line services with more doctors and fewer back-office staff.

Another example of the shared-service model is the internal shared service. Nottinghamshire County Council’s recent deal with Logica, to create internal shared services. The council is spending £7.4m over five years on an internal shared service to cut costs by £47m in ten years. The authority’s different departments will be able to share HR, payroll, finance and procurement using services from Logica. SAP ERP software underpins the service.

Public sector organisations are at least considering using shared services. Many have already made the journey or already have plans in place. The pioneers who got into joint ventures with suppliers or become their first customers are now benefiting from lower costs.

But for public sector CIOs moving in the second wave, there are fears of having to make large job cuts and also of losing control of operations.

Perhaps there should be some independent body to ensure CIOs do what’s right and not what’s right for themselves!