Andy Green

Nancy McKinstry
CEO

Logica Plc

Andy Green holds a degree in Chemical Engineering from Leeds University. He was appointed Chief Executive Officer and a member of the Board in 2008. He is also a member of the Executive Committee and the Nominations Committee.

He chairs the IT & Telecoms board of e-skills UK (the Sector Skills Council for Business and Information Technology) and is the overall Chair of e-skills UK; he is on the CBI board, a member of the CBI President's Committee and a Companion of the Chartered Management Institute. He is a Non-Executive Director of ARM Holdings. Prior to joining Logica, Andy was a Board member at BT plc and CEO of Group Strategy and Operations. He began his career with Shell and subsequently joined Deloitte Haskins & Sells.

 

Quotes

Nancy McKinstry

Andy Green

CEO, Logica Plc

Most clients are talking about reductions in spend. I think they will eventually move to do more outsourcing, which will be good, but that will take some time as they think through the consequences. What’s clear, though, is they can’t stop spending on technology because the way the world is changing.

Nancy McKinstry

Andy Green

CEO, Logica Plc

I’m assuming we are facing a recession and we have restructured our cost base to be ready for that and to manage that well. We are changing our propositions to make sure they’re the things that people can get most value from in difficult circumstances.

Nancy McKinstry

Andy Green

CEO, Logica Plc

The biggest concern I have is that there’s still instability in the financial sector, and that we could get a bigger shock than just a recession.

Nancy McKinstry

Andy Green

CEO, Logica Plc

How do you contingency plan for some form of break up in the Euro, for example? A lot of people are thinking about that but it doesn’t get you very far: it’s not very easy to manage for these catastrophes in advance.

Nancy McKinstry

Andy Green

CEO, Logica Plc

We have a very substantial graduate intake, probably the biggest graduate intake we’ve ever had. But that puts pressures, then, on our resource management in terms of people whose skills have become less relevant in today’s climate and with the changes that are going on in technology.

Nancy McKinstry

Andy Green

CEO, Logica Plc

The most important things we need always are the skills, the right skill sets technically but also increasingly the right business skill sets and sector and geographic understanding of the environment in which our clients operate.

Nancy McKinstry

Andy Green

CEO, Logica Plc

We’re consistently, I think, really focused on two risks – the management of our contract risk in an increasingly unstable world and one where clients need to change a lot: how do we come up with new ways of managing that risk so that we can make money and our clients can be successful? The second one is around IT security and the stability of that.

Nancy McKinstry

Andy Green

CEO, Logica Plc

We have most of our innovation capability in our offshore centres in India. Our chief of Global Innovation Direction lives in Bangalore and we’ve chosen to use India as a key source for innovation.

Nancy McKinstry

Andy Green

CEO, Logica Plc

We’ve seen this swing towards bringing in more young people and training them, a higher graduate intake, which I guess when I first joined four years ago was not what I was expecting. I thought we were on the verge of not being able to find work for young, onshore people but I think the change in technology towards mobile technologies and other web-based technologies has changed our mind on that; we are now recruiting quite a lot of young people everywhere across our operations.

Nancy McKinstry

Andy Green

CEO, Logica Plc

We’ve definitely grown less fast than we would have liked to in some places, particularly in some of these new skill areas – business intelligence or future IT skills – because we haven’t been able to recruit and attract and train enough people fast enough.

Nancy McKinstry

Andy Green

CEO, Logica Plc

It’s about whether we can find the people, which is to do with the educational system, but it’s also about whether our long term thinking and medium term thinking about resource planning is sophisticated enough to ensure we move fast enough or in a timely way.

 

Read interview transcript

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What is your forecast for the global economy? How confident of growth are you in this current environment and why?

I think we’re probably in for quite a difficult 18 months because we’re mainly focused on the Eurozone and growth will be quite difficult for us. The technology trends still suggest that the growth should be there in most economic conditions, but the level of uncertainty that clients are seeing means that they are just holding back and thinking carefully about the world because they are just very unsure right now.

Has this had an impact on spend in the industry?

Yes. I would guess that at this stage most clients are talking about reductions in spend. I think they will eventually move to do more outsourcing, which will be good, but that will take some time as they think through the consequences. What’s clear, though, is they can’t stop spending on technology because the way the world is changing means that technology will still grow over time. But I think we see quite an uncertain period ahead in Europe.

What is the one risk to growth you are most concerned about? Is it the financial crisis perhaps?

Well, it certainly is my biggest concern. I’m assuming we are facing a recession and we have restructured our cost base to be ready for that and to manage that well. We are changing our propositions to make sure they’re the things that people can get most value from in difficult circumstances. Alongside that, I think the biggest concern I have is that there’s still instability in the financial sector, and that we could get a bigger shock than just a recession.

Are you preparing for it by flexing your value proposition?

We’re trying to do all those things but how do you contingency plan for some form of break up in the Euro, for example?  A lot of people are thinking about that but it doesn’t get you very far: it’s not very easy to manage for these catastrophes in advance.

There are small things you can do but obviously the main impact is on the global economy, the local economies and therefore on client demand, and there’s a limit to what one can do to get ready for any of the more extreme scenarios, I think.

What other threats to you see to growth i.e. new market entrants, availability of key skills or the ability or not to finance growth?

We operate in a highly competitive market, with globalising competitors and shifting technological dynamics in our own industry, such as new types of service delivered over the internet rather than on premises.  Keeping up with the skills that are needed and keeping our people’s skills up to date with what is needed in advance of our clients’ immediate requirements is one of the biggest challenges we face.

The result of that skilling and re-skilling is that we have a very substantial graduate intake, probably the biggest graduate intake we’ve ever had. But that puts pressures, then, on our resource management in terms of people whose skills have become less relevant in today’s climate and with the changes that are going on in technology.

How are you addressing this sort of change of skills requirement? Are you training people, are you getting more involved in working with educational organisations?

Yes we work with industry bodies around these sorts of issues as much as we can, and here we work with e-skills UK. We’re looking at everything from modern apprentices upwards. We also have close links with universities on particular courses, and approaches with governments on things like cyber security training and skill sets. Those are national issues for many governments, so we have a wide variety of partnerships in that field.

How do you view the issue of cyber security?

Oh that is a great opportunity, but, of course, also a great threat. It’s another one of those threats to the global economy that we don’t talk about. These points of instability are always a concern, because we depend upon people’s confidence in cyber, and if that confidence wavers, then it will again damage some parts of the economy that are developing particularly well, such as online commerce. So it’s obviously subject to a continual and important set of discussions and debates between companies and clients and also between clients and governments.
 

Are you engaged in dialogue with governments on these sorts of issues?

Yes, we are one of the key partners in this area for a number of European governments so we obviously work very closely with them on the right approaches to support them in firstly securing critical national infrastructure, but then also in advising the wider economic fabric in a given nation about how to defend itself against an increasingly difficult threat.

So this is an interesting case of effective collaboration between government and the private sector.

I think it’s a very important one and I think in one or two countries it has gone extremely well, including the UK actually.

To what extent has your strategy changed over the past year i.e. increasing your geographical footprint or change in business model?

I think it is still more of the same. Obviously the sort of glimmering trends we see are: should we develop ourselves more in South America or North Africa? That is something where we have taken option decisions rather than big strategic changes. The other key thing, I suppose, is we are beginning develop new business models around the ‘cloud’. So the deployment of business process services where we create platforms which many industry players use and collaborate on, because they are happy to do so, such HRBPO platforms or platforms for the fuel cards that truckers use around Europe, or smart metering platforms which can be used by many utilities, all of these things are beginning to make a difference.

I wouldn’t call them radical strategy changes, though. Our underlying strategy is pretty much where it has been for the last couple of years because it’s a client focused strategy; we basically drive our changes based on what’s happening to our clients.

What would you say are the most important strategic and operational advantages you need in implementing your current strategy or driving those changes that you are starting to contemplate?

The most important things we need always are the skills, the right skill sets technically but also increasingly the right business skill sets and sector and geographic understanding of the environment in which our clients operate. They are all people skills, effectively.

Our interim findings are showing the importance of taking a local approach to one’s growth strategy. Is that something that resonates with you?

We are so European we don’t believe in Europe, if you know what I mean, because there are so many differences, real differences in the way that clients operate, even across a small region like Europe. We are fundamentally believers in that and, as we develop in all of our countries around the world, we have a strong belief in starting with local management, local leadership as the key way forward.

And you alluded earlier to South America and Africa as growth markets. Where are you with regards to that do you anticipate any difficulties?

At the moment we’ve made small acquisitions and we’ve developed some teams locally to drive our business forward, but it remains small for us. We are highly focused on our European heritage but we are beginning to make some of those steps.

How important would you say relationship building and partnerships are to success in this market? We’ve seen a trend towards companies making more joint ventures than alliances. Is this something that resonates with you?

Not particularly. It’s an area where we are relatively uncomfortable to be working in joint ventures and partnerships. We much prefer to work, if we can, in an environment where we partner with other people in a commercial sense, rather than in a sense of actually having a JV.

And the reason for that, in your experience?

It’s really difficult in a people business to seamlessly move people around the world, and do the other things necessary to build a global delivery model. With a local joint venture, you need to use other parts of your organisation to support that. It gets very complicated and clients generally want to know who to hold responsible for the work.

Would you say that your approach to risk has changed or is changing in the current environment or in the context of your strategy or change to your business model? How does the board engage with that?

We’re consistently, I think, really focused on two risks – the management of our contract risk in an increasingly unstable world and one where clients need to change a lot: how do we come up with new ways of managing that risk so that we can make money and our clients can be successful? And then the second one is around IT security, which we've touched on already, and the stability of that. I think we feel a little less exposed on pandemic risk and those sorts of things. We’ve done all the work and some of the threats seem to have reduced, but there are obviously a significant number of risks and certainly it’s a board issue. It’s a significant governance issue and it’s a significant client issue, so as we take on and manage parts of our clients’ operations, we also become part of their risk register and the management of their risk operation.

How is your approach to innovation changing?

I think the immediate thing for us is collaborative innovation. We’ve done some work on this. An example might be, we’ve done a big trial with a mobile company and an insurance company on pay as you go insurance in India, where a year’s insurance is a very large item for a family; so can you buy it by the 100 kilometres or 1000 kilometres using mobile technology? The understanding we have of the  car electronics to produce a secure solution enables that to happen. Similarly, we have worked on emissions monitoring approaches, which enable a fleet owner to develop good driving standards in their team and bring down the cost of fuel using real time monitoring systems. These are examples where we have been able to demonstrate, how through working with other players – the car industry or the mobile industry and the insurance industry – you can come up with innovative ideas. I think most of our thinking is around that cross-sector fertilisation approach and we create some innovation in that way.

So to what extent do you see this innovation being exported across economies?

The emission monitoring system, for example, was put together originally with the oil companies, thinking about variable fuel prices in various terms; we finally sold the first full solution of that in Portugal. So we see examples of that all the time – it’s a natural consequence.

And for you specifically?

Well, we centre our innovation capability in our offshore centres in India. Our chief of Global Innovation Direction lives in Bangalore and we’ve chosen to use India as a key source for innovation.

In what way has talent become a more strategic issue, if at all?

Well, talent strategies are both offensively and defensively important. I’ve just had to announce a restructuring plan across Europe for skills that have been built up in the business that we now can’t use. That was a very expensive thing to do. Talent management in terms of total talent and resourcing is at the centre of any successful strategy in our industry. We’ve seen this swing towards bringing in more young people and training them, a higher graduate intake, which I guess when I first joined four years ago was not what I was expecting. I thought we were on the verge of not being able to find work for young, onshore people but I think the change in technology towards mobile technologies and other web-based technologies has changed our mind on that; we are now recruiting quite a lot of young people everywhere across our operations. I think the other big talent issue that remains is how you create loyalty amongst your people in an environment where many young people, in our industry in particular, don’t see a long-term career with a company as a priority.

And how are you addressing that?

We’re doing all sorts of different things, but in the end it effectively becomes about trying to get them to help us to address it through engaging them in a view of the company and in getting them to help us create the type of company they want to work in.

So you do spend quite a bit of time trying to understand what drives that sort of talent layer?

Engaging the younger age group – getting that right – is quite a significant issue to us.

So what other vital skills do you need for your strategy?

Alongside those technical skills, we have got business understanding skills, mainly around sector understanding, and top level sales skills, such as highly developed account managers and directors. Those would be our key areas.

And are you moving people around to fill some of the skill gaps?

Oh, we do move people around, in modest numbers. We’re not as developed in that as some of the big oil companies, for example, but we do that.

And do you think that would be desirable?

Yes, it’s a very good thing to do. Economically, if you’re charging those people out to the client, it can get quite difficult, and you still have very significant language issues in Europe, where we operate. Many clients do not operate on a day-to-day basis in English and it can be quite tricky to take a southern French executive and send them into Sweden.

Would you say you’ve had to reconsider some of your strategic objectives or clients because you could not find the right talent, in the right place at the right time?

We’ve definitely grown less fast than we would have liked to in some places, particularly in some of these new skill areas – business intelligence or future IT skills – because we haven’t been able to recruit and attract and train enough people fast enough.

Do you have a sense of the opportunity cost?

It would be tens of millions of pounds for us, for sure. We would know that we have not done business in frequent situations right across the world because we haven’t had the right talent to do it. It’s a very direct measure for us, of course, because we are basically a people business.
Our revenues are higher the more people we have on the job, as long as they’re the relevant people, otherwise they sit around and cost you a lot. So it’s a really significant issue for us, and a pressing day-to-day issue, in terms of the way we think about it. It would definitely cost us tens of millions every year in terms of business which we could have won but didn’t.

Have the demands on your professional time changed?

Well, I still feel that face-to-face time with clients and people is crucial. I try to emphasise that. You also go through phases where it’s most important to spend time with investors, so there are continual developments on time. I always think it’s best to allow time to deal with the issue of the moment, so about two thirds of my time is sort of planned and a third of it is spent dealing with the issue of the moment which can, at different times, involve clients or people or investors.