So it's Lord Digby now! Sir Digby Jones gets a seat in the Lords (and will take the Labour whip) as a Trade Minister in Gordon Brown's new administration. He will have particular responsibility for promoting UK exports in an ambassadorial role which should be well suited to Digby's obvious talents.
Digby has some good strong links with our sector and I've met him several times. The encounters are always a joy. Love him or loathe him, you cannot ignore Digby!
Also noted that Stephen Timms has lost his Cabinet post - replaced by Andy Burnham as Chief Secretary to the Treasury. Described as "lacklustre" by the Independent today, Stephen was notably an Ovum analyst and shareholder some years back.

Capgemini shares rose 3.7% on rumour that Indian S/ITS player Infosys would make a bid. Capgemini has had a pretty good run of late with its share price up around 50% in the last year and c15% in 2007 so far. It has a current market cap of Euro7.9billion.
Capgemini has been building its presence in India organically at a fast rate. But this was greatly accelerated with the purchase of Kanbay for $1.25 in Oct 06. They added Indigo - the captive BPO arm of Unilever India - recently. By inorganic and organic growth, Capgemini expects to have over 23,000 employees in India by 2010.
Of course, both Capgemini and Infosys dismissed the rumours as "speculation".
Specuation that the Indian players would "Buy Big" in Europe (even the US) havs been rife for years. The Indian players have much higher relative valuations than their US or European peers and are therefore seen as having the resources to pull off some impressive M&A. But so far they have only undertaken small, focussed, IPR-led acquisitions in Europe.
Infosys is far more profitable and has a much higher ROCE than Capgemini. For that reason, investors would probably flee Infosys in droves if they actually consummated such a deal. That's why the unanimous view of the analysts I trust out there say "Never, never, never".
The Indian players seem to be having little trouble in gaining market share by impressive organic growth in Europe. Why put all of that at risk by a mega acquisition of a low margin business?
Regardless, with TCS very likely to enter the Top Ten player lists soon, the S/ITS landscape in Europe is changing beyond recognisition anyway.

Very interesting article on the excellent MarketClusters today about the competition between FaceBook and LinkedIn. As a user of both, I can see great advantages of "linking" the two. I'm afraid that if pressed, FaceBook would win. Can't see my daughters on LinkedIn. Whereas most of my business friends seem to be on FaceBook as well as LinkedIn.

LinkedIn follows Facebook's example

[MarketClusters - 24 Jun 2007 09:38 BST]
LinkedIn is opening up its platform to third party developers within the next nine months, following the example of social network Facebook, which recently claimed it attracted 40,000 developers in the first month since it opened up its platform. According to Dan Farber of ZDNet, LinkedIn CEO says LinkedIn would deliver APIs for developers: "Ostensibly to make it more of a platform like Facebook, and create a way for users who spend more time socially in Facebook to get LinkedIn notifications."
The move comes as Facebook, which claims more than 26m users globally, is seen as an increasing threat to more specialised social networks, such as the more business-focused LinkedIn, which has about 11m users. While some argue that specialised social networks will ultimately be more successful than general ones, Facebook allows users to decide how much of their profile is available to others depending on their relationship with them, for instance whether they are business contacts, close friends, or family. Extending this further, by allowing users to create different profiles altogether based on relationship type, would further put pressure on niche networks. Reid Hoffman, founder and chairman of California-based LinkedIn, and Silicon Valley angel Peter Thiel, both back LinkedIn as well as Facebook.

Well, it seems every post starts with an "i" this week.

Today Ashley Highfield, Director of New Media at BBC, has announced that iPlayer will launch in July. Basically 400 hours of the BBC's output (TV and radio) will be available for 30 days. Initially you will have to download the programme first before you view it. Later on you will be able to stream on-demand. The BBC is worried that if everyone does that to begin with most ISPs would not be able to cope. Certainly know mine - Tiscali - wouldn't. I have problems enough doing anything between 6.00pm and 12.00 due to contention.
iPlayer will work on a number of platforms - like Youtube and Facebook. First roll out is for PCs, then cable, then Mac and Vista.

But it looks as if Holway's Video Martini Moment is still some way off. Highfield said putting iPlayer on mobile devices was "currently a nightmare" because of multiple standards.

As I reported before, Ashley Highfield is one of our speakers at the Prince's Trust Summer Reception at Barclays on Monday evening July 2nd. I've called it "Video kills the TV Stars?" and it should be a really great evening. Still some tickets left if you email Elizabeth.Royds@princes-trust.org.uk or Click here to book

A few minutes ago, on the BBC Radio 4 Today programme, it was reported that David Burrows MP was to ask Tony Blair the first question in Blair's last PMQs in the Commons today. He had asked people to post suggestions for that question on his Facebook site. (The most popular to date was "Is the possibility of you taking up playing the guitar professionally in your retirement just an Ugly Rumour?")

The fact that an MP is on Facebook was accepted without comment.

I have a Facebook entry (please "Be my friend") Of course, I only joined for professional research reasons! Then I found out that, contrary to perceived opinion, Facebook is not just for 18-22 year old college students (although there are rather a lot of them!). I found that a huge number of my business friends were also there. Some, by the way, posting hour-by-hour updates on their business appointments. Very revealing!

The Social Networking phenomenon is quite amazing. Myspace and Bebo are the leaders right now in the UK with c33% market share each in May 2007 (Source - Hitwise) Myspace has grown two and half times since Apr 06 and Bebo is up 3-times. But the one to watch is Facebook coming in at Number 3 with a 13% market share. But Facebook traffic is up 20-times on the year and 9-times since Sept 06. Amazing!

Hitwise has just published an excellent (and free..) report on Social Networking. I commend you read it.

Some facts for you:

• Social networking now accounts for 4% of all UK internet visits - up 79% in one year
• Comsumers spend more time on socal networking sites than any others. An average of 25 minutes..
• Retailers are finding that upstream visits from social networking sites are soaring. For example, HMV.co.uk received 55% more upstream visits from Myspace than from Yahoo. Topshop more than twice - making Myspace the #2 referring site (after Google)

Although social networking is perceived as a young people's activity, all my experience indicates that its taken hold of us "older folk" too. I have long believed (see 26th May 07 in Archives or Click here) that "Silver Surfers" do, and will continue to, make up a significant percentage of internet users. And they are huge consumers (the link up between Saga and the AA yesterday illustrated that). Some may wish to belittle such sites as Facebook. But they are clearly having a major effect on how we interact both with our network of friends and with advertisers/retailers. That will have a detrimental effect on other sectors.

A good example of this is how email and other electronic means of communication means that the upcoming postal strike in the UK elicits a "Who cares?" response from most. Except, of course, for the 35% of the UK population who don't have internet access. Maybe, just maybe, they are the kind of consumers that advertisers don't care very much about... The same might well apply to membership of one or more social networking sites. Maybe, you will just not be able to exist socially or in business without being a member. A new definition of social exclusion?

And another of Holway's "Ignore this at your peril" warnings.

According to Nielsen BuzzMetrics, the launch of Apple's iPhone on 29th June is the most anticipated ever; with more media and blog posts than any other new product launch. Hitwise reports that searches for the term "iPhone" increased by 583% in the last four weeks making Apple's iPhone website the most visited site of all in the "Computers and Internet" category. One does get the feeling that the product has been hyped so much that the actual owner experience just must have some downside/disappointment.

One of the beneficiaries yesterday was Vodafone which is heavily tipped to get the iPhone carrier contract in Europe. AT&T have a 5-year exclusive deal in the US.

Credit Suisse said "The winner could sell more than 6m such devices over the next three years. Assuming half these are to new customers, this could add 8p to our valuation if Vodafone were to win" .

I have long expressed the view that the iPhone will alter for ever the relationship between the handset makers and the carriers. Ie that the handset will be far more important than the carrier; which in turn will become the same kind of commodity service as Broadband. We are not there yet. I want to buy an iPhone (or whatever handset I choose) for the market price and then shop around for the best/cheapest/fastest carrier. I really hope, in time, Apple will allow me to do just that rather than having an exclusive carrier.
Also, the main moans about the iPhone - price, memory size and speed of network (EDGE has been selected in the US rather than the faster 3G) - are all easily solved. Apple will bring out a range of iPhones in time - just like they did with the iPod.

Excellent article in the FT today Click here about the deficiencies of the Edge network to cope with the expectations of iPhone users. In my view, even 3G will not allow a decent web browsing or download experience. Only broadband, via WiFi or WiMax will provide that.

However, I'm very happy with the speed of the email service on my Blackberry. So if the iPhone combines voice, music, navigation, text, camera and mobile email...I'd be a happy bunny. I'll stick to downloading music at home (never believed in the mobile music download model, particularrly if it involves a subscription) and will just have to wait for faster web browsing to get the video service I'd like.

You cannot fail to have missed the furore surrounding the Private Equity sector right now. Indeed, having heard Jon Moulton (Alchemy) being quizzed by John Humphrey's on the Today programme on Saturday, I now see that he has been called before the Treasury Select Committee on 3rd July. I am sure he will put up his usual "robust" performance!

The problem with all this is that I fear that the initial reason why the current CGT regime was introduced will be forgotten and its benefits swept away in order to get a few highly paid PE people to pay a fair rate of tax.

On many occasions I have told of my campaign in the mid 1990s to get the crazy high rate of tax which was payable when entrepreneurs (like me..) sold their companies. I  initially sent my case to Kenneth Clarke - the then Tory Chancellor. In early 1997 I was surprised to get a call from Gordon Brown's office - when he was still "Shadow" Chancellor - wanting my input to the debate. As you know, in his first Budget Brown cut CGT on Business Assets to 20% and, in 1999, cut it still further to 10% after 2 years. It has benefited me and many others (including loads of staff in Ovum who  bought shares in the company they worked for). Whereas in the 1980s and 1990s went offshore to avoid this CGT, the UK is now one of the best places in the world to set up, grow and sell a business.

To me, applying this low 10% CGT rate to Carried Interest on PE deals seemed wrong. It is more like a Performance Bonus (which gets taxed as Income in all normal companies). The argument that partners invest "their own money" in these deals doesn't wash. The low rates were meant for "real" entrepreneurs who (like me!) mortgaged their homes and ran up huge credit card bills to finance their companies in the early days.

The place that really needs reform is the horrendously complex rules that apply to employee shares and options. That is a real disincentive right now.

Please don't throw "the babies" out with the dirty bath water!

The OECD issued a report on Friday showing that youth unemployment (that's those aged 15-24) rose from 10.9% to 13.9% between 2004 and 2006. Indeed unemployed males increased from 11.8% to 15.8%. This is nothing short of a national disgrace. Indeed the number of young people between the ages of 16-24 who are not in employment, education  or training of some sort, is now 1,288,745 - up over 10% since Labour came to power in 1997. This despite Labour spending £2b on the so called New Deal for Young People between 1997 and 2005.

As readers know I have a very personal interest in this via the Prince's Trust where, together with like minded people like James Bennett, John O'Connell, Steve Allen and others, we set up the Prince's Trust Technology Leadership Group http://www.princes-trust.org.uk/technology/ in 2002 to raise funds from the technology sector to help the Prince's Trust in this crucial area. In a variety of schemes - some which help young people to setup business, some schemes that help people at school or others to just help people to get their confidence back so they can get a life again. The Prince's Trust "mentoring" programme means that their success rates are very high. Higher than the VCs and Banks and certainly a lot more effective than any current Government scheme. On top of that 89p in every £ raised actually goes where it is intended - one of the highest % in the charity world.

Given this remarkable success, you would expect that the Govt would be supporting the Prince's Trust as "the way forward" to help tackle this problem. For many years there was a matching funding programme from the Govt. So that, say, the £50,000 raised from Holway's ICT Leaders Dinner was doubled up to £100,00 from HM Govt. A couple of years back Gordon Brown decided to halt this scheme. It was replaced by a load of regional schemes (all of which have to be applied for separately) which is much more inefficient. The Prince's Trust income has clearly suffered as a result. 

Anyway, one way you could help is to join the Prince's Trust Technology Leadership Group. 60 of the leading tech firms in the UK incl Capgemini, BT, Accenture and many others already are. Or you could come to our next event.

On 2nd July we are holding our Summer Reception on the 31st floor of Barclay's offices in Canary Wharf. I have called it Video kills the TV Stars? and we have Mike Lynch (CEO of Autonomy and its spin off; the video search company Blinkx) and Ashley Highfield who is the Director at the BBC responsible for New Media; in other words all their Web 2.0 activities.

Please come. Great evening. Great cause! 
More details and to book see http://www.princes-trust.org.uk/Main%20Site%20v2/supporters/whats%20in%20your%20region/tlg%20summer%20reception%202007.asp

Or email Elizabeth.Royds@princes-trust.org.uk 

I reproduce below the lead editorial in today's Business section of The Times.
It is well written, positive towards both Granger and the NPfIT (a rarity at this exulted level of the media) and also extremely interesting in the points it makes.
I commend you to read it.

The Times
June 23, 2007
The most important person in healthcare - the IT guy
James Harding, Business Editor
As the Chancellor moves into No 10 next week, the first and most enduring measure of his premiership will be the choice of people he makes to serve in the Gordon Brown government. Inevitably, attention will be paid to the politicians he puts into key jobs at the Treasury, the Foreign Office and at Home.
But if the new Prime Minister wants to show that he understands the real business of modern government, then he will pay personal attention to an all-too-easily forgotten but critical appointment: director of IT at the NHS.
Richard Granger announced this week his plans to stand down after five years in the job, leaving the £12.4 billion National Programme for IT project not even half-finished. He has been a controversial figure, infuriating many in the health service, who claim that the consultation process with the medical profession has been perfunctory, and enraging contractors, who have complained of his high-handed “my way or the highway” approach.
Mr Granger, no doubt, lacks a bedside manner, but he has been a crusader against the terrible loss of life that results from woefully inadequate systems in the NHS. He has, sought, at least, to ensure that contractors rather than taxpayers bear the risks, as well as the rewards, of the development of this project. And he has brought energy and urgency to what is arguably the most important government infrastructure project of the decade.
The Munich Economic Summit this week provided an extraordinary perspective on how an ageing population will transform the agenda of business and government, and nowhere more keenly than in healthcare.
A few key statistics to explain. Life expectancy for human beings everywhere has risen by 21 years from 46 to 67 between 1960 and 2005. (India’s life expectancy has gone up from 39 to 64 and China’s from 41 to 73.) The soaring number of old people has, of course, had a direct impact on healthcare: spending on health as a percentage of GDP rose from 7.7 per cent to 9 per cent in Europe between 1992 and 2003 and from 13 per cent to 15.2 per cent in America.
In Germany, there are now five times more people who work in the healthcare business than in the automotive industry, nine times more in Europe and nearly fifteen times more in the United States; and there is more innovation these days in healthcare than in IT, at least as measured by patent applications in 2005.
However, in the words of Klaus Kleinfeld, the outgoing chief executive of Siemens, the “bad news is that healthcare quality sucks”. In an address at the summit, he pointed out the extraordinary costs of inefficiencies in the industry: that there are 25,000 deaths a year in Germany because of medical treatment errors, that 50 per cent of X-rays are redundant and one in four consultations are done because the doctors are missing or have incomplete patient data.
There are complex problems underlying cost overruns, inefficient allocation of doctors and nurses as well as the unnecessary deaths in the NHS. But there are, at least, signs that improved management and systems can make a meaningful difference.
The Journal of Patient Safety, as cited by Mr Kleinfeld, identified in 2005 how the introduction of integrated processes and state-of-the-art imaging improved outcomes at hospitals conducting cardiac bypass surgery. On average, patients stay nine days in hospital when they undergo such a procedure. At the Heart Centre of Indiana and the Nebraska Heart Hospital, where they introduced new systems, the patient stay average was brought down to 6.4 days and 4.8 days respectively.
And the level of patient dissatisfation, 2 per cent and 6 per cent respectively, was also well below the national average of 20 per cent.
The point is that Mr Granger’s successor, who will be appointed by the Department of Health, has the potential to have as great, if not a greater, impact on lives than anyone else that Mr Brown will appoint to his government.
If the new prime minister is committed to improving services, he needs to start with systems. As any executive in a customer-facing business will tell you, it is all very well to have grand plans, but they just won’t happen without the IT guy.

My posting on 16th June (below) on Microgen and Trace seems to have caused some controversy. 

If my comments were construed as giving support to the MBO team - that was NOT my intention. The thrust of my argument (with which I know some disagree!) is that shareholder value cannot come from acquisition and the resultant cost cutting ALONE. Shareholders will reward companies that show organic growth because it is likely to be more sustainable than profits growth which mainly or solely comes from cost engineering. Personally I have always supported the 'blended' organic/inorganic approach and would cite Sage, Capita and Axon as some of the best examples of the genre. Ie strong organic model with strategic M&A to get them into new geographies, technologies or allied markets. But never venturing too far from their "core".

Turning to Trace, I too can find things to criticise. Indeed, I seem to have criticised Trace's performance continually for more years than I care to remember! I select this quote from the 1998 Holway Report "Trace Computers has hardly been our favourite company. Always confident of the future, always swinging from revival to slump to recovery". I could have used the same statement in every year since. So what's the point in inventing a new one..

It's amazing to report that Trace had lower revenues in its last financial year than it had in 1991! Prior to the current bid activity it had a lower share price than it did in its IPO at 125p in 1989! Trace was one of those almost unique companies whose share price fell by a third in the year to Apr 2000 - when just being involved in anything to do with IT guaranteed massive share price rises.

Many of you will know my abhorrence of the practice of capitalising software development - although this argument has become somewhat tougher with the advent of IFRS. Trace now has £2.5m of capitalised software development on its Balance Sheet (at Nov 06) In that six month period they made operating profits of £444K. But they also capitalised a further £385K of software (£285K nett of £100K amortisation). In other words profits would have looked somewhat meagre without this!

On the other hand Trace recorded a 9.5% increase on revenues from continuing operations. All of this seems to be organic. In today's market, that's not bad at all. But, I remind you that Trace has been here many times before..."Always confident of the future, always swinging from revival to slump to recovery"

What will happen now in the Microgen-Trace tussle? 

Will the Tulip MBO team increase their bid? If so they would have to raise it to 200p for Katie Pott's irrevocables to fall away. Would Microgen then be prepared to top that? At least if they then "No bid" they would be sitting on a sizable gain on the c26% of Trace shares they have already secured.

On the other hand, Tulip have also secured a significant % of irrevocables of their own which include a standstill arrangement prohibiting these shareholders from selling their shares for a 12 month period regardless of a higher external offer.. Does Microgen really want to be the majority shareholder in another small quoted company for a significant period? How messy is that going to be?

Anyway, some people are very happy. I had an email from a Trace shareholder, unconnected with both Microgen and Tulip, who thought the whole bidding war was great and hoped it would go on! 

Now what would be even better would be someone taking similar bid interest in Microgen.

Just received the following input on the BPO debate, from Samad Masood - who is in charge of Outsourcing@Ovum. Samad writes:

I've read John's reply on Hotviews - he is pretty spot on. I'd agree that BPO isn't necessary to win IT contracts, but I would also say that BPO is necessary for large IT services firms to secure long-term strategic partnerships with clients and therefore sustain long-term growth and profitability. All IT services are becoming more business oriented and owning the business process will, in the long-term, mean that you decide on the IT underlying it. Sure, its not the case now, but things are likely to end up that way. Or at least that is the threat/fear amongst IT services vendors. So ultimately, BPO services can be justified as a necessary interest for IT services players.

Ovum's "BPO - IT Services Vendor Strategies" report has just been published. You can get more details at www.ovum.com 

Many people have emailed me tell me to pull my finger out and get a better Blog. I could have done that the complicated way. But, given that Google seems to be taking over the world anyway, I decided to experiment with their BLOGGER service.
I've put the last few posts up. I'll do the Archive when I have the time. Amazingly it look about 30 minutes to setup the whole thing. I really found it amazingly simple!
Anyway., please take a look and give me your comments. Indeed you will be able to post your comments directly on the blog. Scary!
http://hotviews.blogspot.com/

Thanks for the many responses to my query below about the first use of the term BPO. The current 'earliest' quote is from an IDC report published on 23rd Nov 1993. You can read it here http://findarticles.com/p/articles/mi_m3311/is_n1-2_v29/ai_14904765
"Business process outsourcing is a growth segment with no discernible limitation" it states!

Frank Jones, who headed outsourcing at Sema in the 1990s, wrote to say that he believed that Sema's "BPO" deal with the DWP (then DSS) signed in 1995/96 was, at £450m, the biggest at the time. However, he also made the point that they called outsourcing "FM" until well into the 1990s.

One of my favourite TV programmes right now is Balderdash and Piffle where the "engaging" Victoria Coren tries to track down the first known documented use of words and terms. Last week it was "dogging" and "pole-dancing" ...

I was today preparing for a brief pre-dinner talk I am giving on Thursday on BPO. It set me thinking - then researching - the origins of the term.

When I looked at the Oxford English Dictionary entry for "outsourcing" it had first been used in the context of the automotive industry in Businessweek in 1981. But the first known use of it in a computer outsourcing context was in the Independent on 2nd March 1992. 

Surely that was wrong? Could I be heading for an entry of my own in the OED by proving that I used it at an earlier date?

But a search through my own writings (Yep, I have kept everything I have ever written since 1985) shows that I too first used the term in late 1992. I had referred to outsourcing as "Facilities Management" up until then.

By the way, the first FM deal ever recorded was EDS and Frito Lay in Feb 1963. In the UK I was actually involved at Hoskyns when they signed the first UK FM deal with Willis Faber and Dumar in 1969.

The first use of the term Business Process Outsourcing is even more elusive. I don't think too many people would really argue with Capita's claim to have "kicked off the provision of long-term contracted services" in the mid 1980s. But they certainly didn't use the term BPO then. Indeed they described their activities as "Business Support Services" until well into the early 1990s. The first BPO-type contract in the private sector seems to have been Accenture (known then as Arthur Andersen) and their F&A deal with BP in 1991. But again, it was not called BPO at the time.

The first known use of the term BPO in a "Holway" document was in 1998. The SYSTEMHOUSE report starts with the words "You can decide to play in it. You can decide to ally with someone who's playing in it. you may even decide not to play at all. what you can't afford to do is stick your head in the sand and ignore BPO, particularly if you are in the IT outsourcing business in any shape of form".

I think I could even raise eyebrows if I made that statement to some stick-in-the-mud companies today. But getting on for ten years ago that was a "Wow!" type of claim. BPO revenues in 1997 were around £500m and Capita (the market leader by a country mile then ...and now) had revenues of £173m. Today Capita has revenues ten times higher at £1.73b and the UK BPO market is worth in excess of £5b. If you did indeed ignore BPO then, you paid a heavy price. If you ignore it now...then maybe you just will not survive. Nelson Hall reported that in 2006 47% of all Outsourcing contracts awarded were BPO contracts. If you don't have a BPO offering (either directly or via a partner) you are at a serious disadvantage in the ability to win any type of IT outsourcing contract.

Now, i will admit that some of the forecasts for BPO growth have not been met. I have a chart predicting 30% pa growth between 2000-2010. That has not occurred. Indeed in 2005 BPO growth was <10% for the first time ever. However, I reckon that the UK BPO market will be worth around £20b (in today's money) in 20 years time (2026). It will grow at 2-3 times GDP whereas the rest of the UK S/ITS market will struggle to record any real growth at all. 

Anyway, the point of writing the piece was not to give you yet another article along the lines "Ignore BPO at your peril". I've written too many of those in the last ten years.

The purpose was to determine if anyone had any evidence of the earliest use of the term BPO. It must have been used before 1998 but I would be surprised (and so would the OED!) if you found a reference before 1992.

Please send to rholway@holway.com 

Very late on Friday, I received an email from Richard Granger - CEO of Connecting for Health (NPfIT) telling me that the papers this weekend would be full of stories about his 'departure'. In fact, Richard will stay on until the end of the year and says he intends to work "primarily in the private sector" in 2008.

I first met Granger soon after he took on the appointment in 2002. Some might find it strange, but I got on very well with Granger right from the start. We had dinner at least every six months when we had the kind of "robust" conversations that many will know I like so much! The NHS project was the biggest IT project around and the bidding process was "life changing" for many of the companies involved - not just the biggies but also the many hundreds of smaller suppliers/subcontractors. It was crucial that Ovum ("my" company at the time) should understand it and report on it with authority. Not only did we succeed in that - indeed one of my brightest analysts, Tola Sargeant, became perhaps the UK's leading authority on the project - but we were also asked by NPfIT to help them with an ongoing project to monitor suppliers.

I've been around in IT for over 40 years and have witnessed many Public Sector IT projects. Granger was like a breathe of fresh air. For too long suppliers were able to get away with murder on public sector projects. Indeed, suppliers reckoned that the initial quote was unimportant (other than to secure the contract). The most important thing was the money you earned as a captive supplier from all those inevitable changes. Indeed, even if you made a mess of the contract, the Govt would have no choice but to pay you even more to go fix your own mess. On top of that, we all know that, for decades, every Govt office, let alone, each Department, was dealt with separately by suppliers. Whereas the private sector would negotiate company-wide licensing and discount deals, the Govt was a license to print money.

Granger decided to put a stop to these practices. By ensuring that there were always at least one other alternate supplier for each function/area (which gave rise to the famous "husky" story) he ensured that no one company - however big - could ever blackmail him. Perhaps the most famous of these encounters was with Accenture. Granger stuck to his principles (and the contract terms) which caused Accenture to issue a warning which knocked $1b from its stock market valuation. They eventually withdrew from the project.

There are many in the industry - indeed I have just had a journalist ask me this very question - who thought that the contract terms were too tough. But we are not talking 'small' companies here. We are talking the biggest and most experienced IT services companies in the world. They all had the opportunity to "no bid" or withdraw if they thought that the terms were unacceptable. Some - most notably IBM - did just that. I refuse to defend these giants of our industry against Granger trying to get the best deal for us, the tax payers.

But Granger made many mistakes too. Not engaging the users from Step One was a BIG mistake. Not recognizing the importance of incumbent suppliers, like EMIS, was a BIG mistake. Letting politicians dictate the features (like offering choice) and timescale was perhaps understandable but led to many of the current problems.

Perhaps my biggest issue with Granger was his relationships with the media - Tony Collins from Computer Weekly in particular. Granger really let Collins get to him. I remember when Collins had it in for EDS in the late 1990s my advice to Bill Thomas at the time was  "know thy enemy". Indeed take him out to lunch and get to know him as a person. Actually Collins is good guy! The advice worked well for EDS. But Granger - quite possibly because of the NHS Press Office - was unable or unwilling to do that. If you Google "Tony Collins NHS IT" you get 235,000 responses. It is very difficult to find any comment which supports Granger and what he was trying to do. I got so irked by this one-sided reporting that, last year, I wrote a paper highlighting some of the things that I thought Granger had got right. (see Click here) Computer Weekly surprisingly asked to publish this which, of course, I agreed to. However, when it appeared, Collins had written a one page article to balance and rebut my views!

So now the view of everybody seems to be that the NHS IT project is another public sector IT "disaster". Indeed, at many a dinner party my friends - who have nothing to do with IT - are all of that view. When I point out that the digital X-Ray system is part of this project, they are surprised. When I tell them of the need to put in a unified email system throughout the NHS, they are equally surprised that this didn't already exist. When I ask them if they would like their medical records to be immediately available if they needed to visit an A&E in Manchester as a result of a car accident - they usually think that is a good idea too.

My own view is that in, say, five years time we will all take the NPfIT features for granted. It will be a bit like expecting your passport to be returned in 48 hours, being able to file your tax return on line or look at your neighbour's Planning Application on the internet. Couldn't we always do that? Perhaps, like Wembley Stadium (or indeed every large infrastructure project known to man) it might have been longer and have been more expensive to build than originally estimated. But that will be soon forgotten.

What I hope will NOT be forgotten is the major contribution that Granger made to this project. His undoubted hard work and dedication. His desire to secure the best deal for the Govt and get the job done. Personally he has paid a very high price. Being publicly described as "deeply corrosive" is not good on the CV.

Since his departure was announced, I have had several emails from CEOs of NPfIT suppliers. They all say that Granger should be proud of his achievements. He should and so should we all.

I note in my absence (I've been off visiting my 2 year old Grandson in Oz) that Microgen (where I was an NED up until Oct 2006) is back to its old tricks. Having seen an MBO team (codenamed Tulip) top its May 25th offer of 155p by offering just a 1p more on 13th June, on 15th June Microgen increased its own offer to 180p; valuing Trace at £25.6m. Microgen has already bought 25.83% of Trace stock and has an irrevocable from Katie Pott's Herald Investment Management for a further 7.9%.

The MBO team do not seem close to giving up ...yet. They issued a statement late Friday saying that, contrary to the earlier Microgen statement,  they have no intention of lapsing or withdrawing their offer and intended to put it to shareholders.

Clearly, if Microgen does win Trace, the MBO team is likely to depart. We do not know how deep their support is with the remaining Trace employees - we would suspect it was quite strong. 

What Microgen needs is organic growth. An acquisition-only strategy has never worked for any IT company (certainly it hasn't worked for Microgen or its long suffering shareholders) and, in my view, it never will work. I am sure that Microgen can reduce Trace costs and show short term profit improvement as a result. But that will not be enough. Indeed shareholders will continue to punish Microgen even if it improves profits (and even earnings) but fails to show organic revenue growth. I would suspect it will find such organic growth even more difficult if it takes over a seriously depleted and demoralised Trace workforce.

The FTSE100 (and NASDAQ) just keep going higher and higher. By contrast S/ITS stocks in the UK were flat in May. It was a very different picture for the Telcos. Vodafone's "resurgence" helped the FTSE Telcom index to double digit gains in May