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Friday 14 June 2024

*UKHotViewsExtra* Capita’s big new plan

CapitaYesterday afternoon’s Capital Markets Day presentation was the first opportunity for new Capita CEO Adolfo Hernandez to outline to the 'City' how he plans to fix profitability and get the Group expanding in the all right areas. Hernandez has been on board for less six months but has put together a decent assessment of where the problems lie, a coherent approach to focusing the business on core and growing activities, and a credible commitment to drive the technology enablement of Capita’s service delivery. Questions remain – this is yet another multiyear transformation programme – will the Capita staff team suffer from transformation fatigue? Funding the technology enablement and standardisation of Capita’s services could swallow big bucks. Hernandez is proposing to fund this all through £50m freed up through cost savings and efficiencies – is this enough to really shift the dial?

The theme for the event was a Better Capita – “Better Efficiencies, Better Technology, Better Delivery, Better Company” with Hernandez proposing to assign Capita’s services into three main ‘buckets’ – ‘Star Positions, Transformation Potential and Manage for Value’.

The ‘Star positions’ include services such as training modernisation, low emissions zone delivery, and pensions admin, with a view to developing standardised and repeatable propositions that can drive growth and be actively taken to market. Those areas deemed as having ‘Transformation Potential’ are core offerings that currently have a higher cost to service and where efficiencies would benefit from more technology, offshoring, partnering and/or automation. This includes the contact centre businesses, back-office delivery, Revs & Bens and Risk Assessment. Finally, a third bucket includes businesses that are to be ‘Managed for Value” – read divested, run off or radically transformed. This includes the IT networking business, IT managed Services, closed book L&P and standalone software. However, outgoing CFO Tim Weller made keen to make the point that this should not be seen as a “Portfolio Division Mark 2”.

Hernandez brings to Capita a long tech background (most recently AWS) and is rightly placing his faith in leveraging the big tech platforms to digitise service delivery and drive efficiency and effectiveness gains. Specifically, looking to partnerships with Microsoft, AWS, Salesforce and ServiceNow, as well as the potential of GenAI to transform. By way of example, Capita’s contact centre business is currently barely profitable, and lags the competition on margin. The business has partnered with AWS on CapitaContact using the cloud provider’s Amazon Connect cloud ‘contact centre in a box’ solution to pursue “higher-margin repeatable deals with improved cost predictability”. This coupled with much greater off/near shoring could make a big difference.

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Posted by: Marc Hardwick at 09:12

Tags: bps   transformation  

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