The Bloor Perspective: Tech robberies, outsourcing and Accenture slaps Andersens

In their latest package of analysis, the Bloor team considers who suffers most at the hands of tech thieves, costs of outsourcing and the most famous divorcees in professional services...

Crimes against business are costing the UK economy as much as £18.8bn per year, according to the country's Chamber of Commerce. It seems they are rife across the land and if last week's break-in at Newcastle University is anything to go by - when chips were stolen from a mainframe - computers are making their way to the top of the burglars' lists. Last year 58 per cent of companies in the UK reported they had been victims of crime over the 2001 period. And it would appear that the bigger you are, the more likely you are to fall victim. Only 26 per cent of the self-employed were victims of crime while 85 per cent of companies with more than 250 employees had experienced of a crime committed against them. Similarly, with companies that are relatively young, 66 per cent of businesses more than 10 years old fell victim to crime compared with 47 per cent for companies less than ten years old. Four per cent of companies had experienced in excess of 50 crimes being committed against them. The most common crimes are vandalism and burglary, cited by 27 per cent of the study group respondents and this is where the big losses are typically incurred. Three per cent of respondents said they had lost in excess of £100,000 to these sorts of crimes. Twenty-five per cent said they lost between £1,000 and £9,999. This may not sound so bad if you have a secure insurance policy and well backed up information, but it's not just loss of computers or office equipment that causes the problems - disruption is a big consequence of crime. Thirty per cent of UK businesses said they had suffered a loss of trading as a result of crime and remember, it's not just external threats that need to be considered - 13 per cent of businesses reported it was an employee who committed the offence. There are plenty of things to do to protect equipment. Having it marked with company details, regularly backed up and password protected are all useful safeguards, but according to the Chamber of Commerce, the most useful anti-crime device is the surveillance camera, cited by 83 per cent as being highly effective. Outsourcing can raise costs by 25 per cent Outsourcing must be one of the most emotional issues in IT and it's not surprising. Many people's first exposure to the word outsourcing is in the same sentence as cost cutting, restructuring, reorganisation and redundancy - not a good impression! Of course, outsourcing vendors say it offers the customer cost management, service improvement, access to additional skills and the opportunity to focus on core business areas. So does it deliver its promises? Last year was a boom year for outsourcing and a few big deals already hit the headlines in 2002. EDS signed a $250m 10-year deal with Malaysia's Bumiputra-Commerce Bank - the largest ever outsourcing deal in Malaysia and EDS's largest in Asia. So far it looks like business as usual, but research last year shows in some circumstances IT services can cost as much as 25 per cent more when outsourced. The survey was carried out by SOCITM, a professional association for ICT Managers working for and around the public sector. The research also revealed that just spending more money on ICT does not especially improve user satisfaction, but that the political environment does have an influence. It's very difficult to get an unbiased answer on whether outsourcing delivers - opinion is so polarised. If it's as bad as some people will have us believe then why do we continue to do it at all? Anything that doesn't work soon falls into disuse and yet outsourcing is growing at its fastest ever rate. Is it really that bad? Of course, there are horror stories and it's only human nature to dwell on the negative rather than the positive. Every contract should be taken on a case-by-case instance and anyone considering outsourcing should not be scared off but should be aware of the potential pitfalls as well as the benefits. Meanwhile, there is no doubt that companies will continue to look at ways to manage the bottom line and outsourcing is still one of the primary mechanisms for doing this. Accenture 1 Andersens 0 The split of the accountancy group Arthur Andersen and the management consultants Andersen Consulting - now known as Accenture - was even messier than most Hollywood divorces. The accountants demanded a settlement of £14.5bn but a court eventually ruled in favour of the management consultants, stating Accenture was entitled to autonomy. Accenture - the world's largest consultancy - floated last year raising a massive £1bn, an impressive amount given the depressed market, for just over 10 per cent of its stock. The flotation left most of the firm's 2,500 partners paper millionaires - but this wasn't the usual windfall, as they had to take a 50 per cent pay cut to take part and are locked in for a number of years. The flotation shares increased by nearly 100 per cent - again quite an achievement in a slowing economy. Accenture's recent set of results has met analyst expectations and while things are slowing down in the consultancy market, Accenture - like many global services organisations - is profiting from the boom in the outsourcing. The company is keen to point out these results have been achieved in a period of economic uncertainty following on from 11 September and are now confident it will meet analyst predictions for the rest of the year. There has been a strong performance in Europe, with revenue increasing by 26 per cent. So, as Accenture continues to rise from the ashes, the question is what of Arthur Andersens? Well, the accountants have been in the news recently for a completely different set of reasons. The collapse of energy trading giant Enron has been well publicised and unfortunately it was Andersens - the auditors - who failed to spot sharp practice and financial irregularities. As if to make matters worse, the company has now admitted it destroyed documents associated to the account leaving the trail cold for investigators. Just like a divorce, there is always a winner and sometimes it's not always who you think it's going to be! Bloor Research is a leading independent analyst organisation in Europe. You can find out more at www.bloor-research.com or by emailing mail@bloor-research.com .