Using technology to transform the QSR experience May 2018 • EUROPE EDITION
NATIONAL EXPRESS
Starbucks Sourcing success
TRANSPORTING BUSINESS INTO THE FUTURE
ACCENTURE
CHANGING THE FACE OF PROCUREMENT Kai Nowosel discusses the next move in our exclusive video
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10 Tallest
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THE CHIEF PROCUREMENT Officer role at Accenture is a big job – but Kai Nowosel, interviewed for our cover feature for this month, has some big ambitions.
“I want to break the mould of traditional procurement,” he told Business Chief in Frankfurt. “Where I want to really take procurement at Accenture is very clear. I want to take it into a full business enablement function.” Speaking to Andrew Woods, Nowosel talks about a future where man and machine work in harmony and discusses the recent launch of Procurement Plus, the firm’s new offering. The feature also includes some exclusive video from Accenture’s German base. Elsewhere in our May magazine, Rob Muir, the new Chief Digital Offer at National Express Group, opens up about his plans for technology
innovation at the public transport giant, while this month’s City Focus narrows in on Barcelona’s standing as Spain industrial centre. Our Top 10 this time around identifies the ten tallest commercial buildings on the continent, while we offer further insight into the hot topics of technology, people management and sustainability. Finally, our exclusive digital reports boast interviews with, on top of Accenture, Keppel Data Centres, Laureate International Universities, Marriott International, McDonald’s, Odense Letbane, Starbucks, Turkcell, Virgin Money and Yandex – all involving in-depth discussions with top executives and industry experts. We hope you enjoy this latest issue and, if you have any feedback, you can find us across social media: @Business_Chief
http://europe.businesschief.com www.bizclikmedia.com
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ACCENTURE’S KAI NOWOSEL ON THE CHANGING FACE OF PROCUREMENT TECHNOLOGY
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WIDER ELECTRIC VEHICLE ADOPTION REQUIRES GLOBAL ENERGY SOLUTIONS
L E A D E R S H I P & S T R AT E G Y
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TRANSPORTING BUSINESS INTO THE FUTURE – NATIONAL EXPRESS HIRES A NEW CDO PEOPLE
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IS THE US SKILLS SHORTAGE PART OF A GLOBAL EPIDEMIC?
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STAY TRUE TO WHAT YOU ARE WHY BUSINESSES MUST BE CAREFUL NOT TO DILUTE THEIR BRAND
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CITY FOCUS
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BARCELONA
TOP 10 TALLEST COMMERCIAL BUILDINGS IN EUROPE
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C O M PA N Y PROFILES
100 Keppel Data CONSTRUCTION
Laureate International Universities SUPPLY CHAIN
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Marriott International
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McDonald’s
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208 Turkcell
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Odense Letbane CONSTRUCTION
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224 Virgin Money TECHNOLOGY
Starbucks
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POWERING DATA-DRIVEN DIGITAL TRANSFORMATION IN MANUFACTURING Hewlett Packard Enterprise’s (HPE) Hybrid IT technology is enabling original equipment manufacturers (OEMs) such as GE Digital enter a world powered by Internet of Things (IoT) connectivity and data analytics – where nothing ever breaks. These benefits are being passed on to customers, allowing them to adopt new business models, streamline operational processes and create more innovative products and services. Hewlett Packard Enterprise’s (HPE) Hybrid IT technology is enabling original equipment manufacturers (OEMs) such as GE Digital enter a world powered by Internet of Things (IoT) connectivity and data analytics – where nothing ever breaks. These benefits are being passed on to customers, allowing them to adopt new business models, streamline operational processes and create more innovative products and services.
CHALLENGE For OEMs, the current idea economy is all about turning ideas into value faster than the competition. With the vast amounts of data gathered from a growing number of IoT endpoints, manufacturers can drive operational efficiencies, deliver better user experiences, and develop new capabilities. However, while leveraging technology to improve performance is critical to remaining successful, it’s not as easy as it sounds. This is due to a variety of factors, including: • Bespoke systems: Many existing industrial systems are purpose-built, with distinct protocols and limited capabilities. However, right now, what companies need are cross-platform visibility and insights. • Implementation difficulties: The lack of mature skills and resources for IoT implementation means that the integration of information technology (IT) and operational technology (OT) has become essential in driving productivity and business results. • Alignment between IT and operations: The financial risk and uncertainty resulting from IoT adoption has driven companies to use a mix of SaaS, Hybrid and Cloud-first strategies, which must now be connected to each other.
SOLUTION To combat these challenges, HPE OEM has built hybrid IT solutions that include pioneering edge computing and analytic data techniques, to help manufacturers turn vast quantities data into real-time, actionable insights. These solutions have been designed to adapt to a variety of business challenges. For example, GE Digital harnessed them to create Predix – the operating system for the Industrial Internet – to drive its own business transformation, as well as that of other manufacturers. As the world’s first and only industrial cloud platform, GE Predix is turning data into actionable insights from the edge to the cloud, and employing the latest innovations to optimize assets and operations – all supported by a robust ecosystem that accelerates app development. With the HPE-powered Predix, manufacturers can leverage big data and analytics in conjunction with industrial expertise to achieve real gains in productivity,
BENEFITS The partnership between HPE OEM and GE Digital is helping national electric utility company Saudi Electricity achieve an ambitious modernization of Saudi Arabia’s electricity infrastructure. Working with the HPE OEM and GE Digital Alliance, Saudi Electricity implemented an industry-leading Industrial IoT platform that supports machine learning and predictive maintenance technologies. This allows them to improve the company’s quality of service while minimizing energy costs. By 2020, Saudi Electricity expects to this continuing partnership to yield a $19B reduction in operational and capital costs, 3x increase in power generation capacity and improved reliability, and 100% control of critical electrical assets. Ultimately, companies seeking to thrive in the idea economy must implement data-driven digital transformation Ul practices. By identifying problems before they occur, manufacturers will derive improved quality, reduced production time and machine downtime, and lower production costs – and then pass these benefits on to the customer. The collaboration between HPE OEM and GE Digital is a powerful example of how hybrid IT platforms are giving manufacturers real-time visibility across heterogeneous systems, putting them in a safe and secure environment that enables decisions to be made quickly, accurately, and intelligently.
ACCENTURE
HOW ACCENTURE IS CHANGING THE FACE OF PROCUREMENT
Kai Nowosel, Accenture’s Chief Procurement Officer, on his approach to an everevolving and increasingly vital business function Written by ANDREW WOODS Produced by RICHARD DURRANT
ACCENTURE
“ THE DEFINITION OF PROCUREMENT IS NOT ‘AM I A BETTER NEGOTIATOR?’ IT IS MORE, ‘AM I THE BETTER ECOSYSTEM MANAGER?’” — K ai Nowosel, Chief Procurement Officer, Accenture
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AI NOWOSEL, A HIGHLY experienced procurement professional – formerly of Sanofi and Deutsche Bank – is currently the Chief Procurement Officer (CPO) of global professional services giant Accenture, and he has a burning ambition. “I want to break the mould of traditional procurement,” he says. We caught up with Nowosel at Accenture’s 12
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Kronberg office, roughly a 20-minute cab ride from Frankfurt, where he sets out a detailed vision for the very future of procurement. His ambition is to see it transformed from a traditional back office function into an area much more closely aligned with the top line. “Where I want to really take the procurement function at Accenture
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Click to watch our talk with Kai Nowosel, Accenture’s Chief Procurement Officer, on his approach to an ever-evolving and increasingly vital business function.
is very clear. I want to transform it into a full business enablement function,” he says, easing back into his seat. “But to do that, I need to understand what’s out there. What is on their (the businesses’) mind every day and how can I support them to become more competitive? “We have heard a lot, and have read a lot, about business partnering,” he
says, ‘but for me, it’s really not a single point of content or contact. It’s a single knowledge pool of understanding. It’s about translating procurement and supply market opportunities in order to correlate them into business. That is business partnering, for me. So, it’s not like I am a caretaker. No. I want to sit at the table and have creative input on the commercial side of supporting europe.businesschief.com
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The Intelligent Edge for Strategic Procurement: Third Party Risk Management By Lee Kirschbaum Senior Vice President Product, Marketing, and Alliances, Opus
A simple definition of the word “procure” is “to obtain by particular care or effort.” Ask any strategic procurement leader, and he or she is likely to agree: particular care or effort is exactly what it takes to manage suppliers in today’s challenging financial and regulatory climate. Business is increasingly interconnected, with unprecedented levels of global trade and capital flows. The potential for corruption and data breaches escalates daily. Regulations like the General Data Protection Regulation (GDPR) demand compliance, and financial viability is an ongoing concern. And there’s the constant need to reduce risk and maximize value across suppliers. Underlying all these challenges is the intense reliance on third parties, such as traditional suppliers, vendors and contract manufacturers, agents, brokers, distributors, resellers, franchisees, affiliates and more. Far beyond the remit of traditional procurement, companies today depend on hundreds, often thousands, of third parties to complete core business functions, delivering 60% or more of a typical company’s revenue. Third parties are a major engine of growth, yet also pose major risks: • 56% of businesses experienced a third-party data breach in 2017 • 60%+ of all data breaches are third-party related • 75% of all anti-corruption enforcement actions are due to third parties To drive value and performance while optimizing costs, strategic procurement professionals must not just manage spend and onboard third parties, but also have a plan to address these risks — from bribery and corruption to performance to information security to financial health to reputational risk and beyond — across all their third parties. It’s a tall order, yet ultimately a company — and by extension procurement — is responsible for the actions of its third parties. That’s why forward-looking strategic procurement teams are taking their supplier and third-party risk management seriously. Through systems and processes to actively monitor third parties, strategic procurement can lower costs, drive value and improve overall performance.
Third Party Management: A Risk-Based Approach Third party risk management helps answer a few seemingly simple yet critical questions: who am I doing business with, what risks do they pose and how do I successfully manage those risks?
It’s the process by which organizations select, onboard and monitor their external relationships with third parties for risk. New risks emerge regularly, so it’s also important that businesses and procurement teams keep a constant eye on their third parties. Companies and procurement teams without a program in place for monitoring third parties for risk expose their organizations to significant regulatory, financial and reputational repercussions. They’re also at a significant disadvantage when it comes to growth opportunities. Effective third-party risk management programs establish a comprehensive view of all third parties and manage each based on risk levels. This includes maintaining an inventory of all third parties and keeping track of documentation, such as contractual agreements, workflows, risk audits and assessments. The goal is to identify potential threats before they occur. Start by determining the most pressing sources of risk and then direct the bulk of your effort toward mitigating those risks, beginning with these fundamental questions: • Who are your third parties? • What services do they provide? • Which introduce the most risk and are most important, what are their specific risks, and how can any risks be mitigated? Once you have identified your company’s risks, another risk management best practice is to develop an up-to date, realtime inventory of all your company’s third parties. The inventory details the nature of each relationship and its risks, such as third parties with access to sensitive information who are sharing your data with their own contractors. The inventory must also be monitored — risk isn’t static, and neither are your relationships. Identifying all relationships across your organization, gathering necessary information on each and effectively assessing their risks can be extremely time-consuming and complicated if done manually. An automated technologybased approach, such as that provided by Opus, allows your business to free up its resources so that you can focus on what you do best. Nothing worth doing in life comes without risk. It’s how you manage your risks that can make or break your business. By making third-party risk a business priority, strategic procurement teams can drive value from third parties, reduce risk and safely guide their organizations into new areas.
Case Study: Intelligent Third Party Management in Action at Accenture Operations As a case in point, the gold standard in strategic procurement, Accenture, turned to Opus for support managing third party risk. Accenture Operations — a business function of the leading global professional services company serving clients in more than 120 countries — is reinventing business operations through industrialized business process expertise, technology, applied intelligence and data. Procurement is one of the Business Processing Services (BPS) offered by Accenture Operations, reinventing procurement from source-tosettle — embedding robotics process automation, market intelligence and analytics, and exceptional business process expertise into the process and augmenting existing resources, so Accenture and its clients can move first in the market and accelerate results. The Procurement BPS team helps operationalize supplier management functions to facilitate continuous improvement, drive compliance and mitigate risk. The BPS team manages more than $168 billion in spend, 23,400+ projects and 87,300 contracts per annum across 380+ Procurement BPS clients and Accenture. Because of this, Accenture works with literally thousands of suppliers and third parties, and needed a robust, automated, reliable technology solution to help identify, assess, manage and monitor third party risk. As a result, Accenture is partnering with Opus, leveraging their award-winning third-party management SaaS platform, Hiperos 3PM, to support their Procurement BPS services. Accenture selected this solution for its: • Comprehensive functionality • Offering maturity • Financial services and industry expertise • Ease of client and technology integration Most important was Opus’s ability to create turnkey functionality called accelerators — such as a banking, GDPR or ABAC (anti-bribery / anticorruption) accelerator. The key to strategic procurement is efficiency. By offering templates and models that could be reproduced quickly, Hiperos promised quick time to value. Today, Accenture is actively managing its third parties and recently added functionality to bolster third-party compliance with the General Data Protection Regulation (GDPR), going into effect in May 2018. As the organization helps its clients prepare reinvent business processes with “intelligent operations” that harness talent, data, and intelligence to deliver the right information where and when it’s needed, it also can rest assured it’s covered one of its most significant risk factors — and opportunities — third parties. Now that’s, well, intelligent.
Put the strategic in strategic procurement. Free your business from third party risk. Global business today depends on third parties, from suppliers to contractors to vendors and more. As reliance on third parties increases, so do the risks — from data breaches, corruption, compliance and financial health and more. But so do the opportunities. Free your business to manage the risks and realize the opportunities. Learn more at opus.com/procure Free Your Business®
ACCENTURE
“ … WE SHOULD NEVER FORGET ABOUT THE RELATIONSHIP COMPONENT, AND THE HUMAN COMPONENT” — K ai Nowosel, Chief Procurement Officer, Accenture
the business. That’s one vision. “The second vision is linked to the moment you’re sitting with the business and identifying new opportunities and optimising current initiatives and delivery,” he explains. “But to do that, you also need to understand what is currently delivered. So, you need to get much closer to the business. At Accenture, we call it ‘rotating to the New’. If you want to be more agile, you
need to be faster. You need to be smarter in anticipating things, because just running a process faster doesn’t make you better. To anticipate what’s happening, and to already include that into your process, makes it much easier to work with a procurement function – you already have a solution before the concrete demand really happens. So, I want to drive my function into something of understanding and
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prediction rather than reaction.” The third vision in Nowosel’s procurement manifesto lies in the collation and utilisation of big data. “And that is where I need technology and digital. I need the co-worker. I need the data, and I need, last but not least, access to the right content at the right point. That is probably one of the biggest things. Today a lot of effort is spent creating static content, and that is
where I want to move away and say: ‘Our differentiator is not creating that content. Our differentiator is giving access to the right content.’ So, you need to understand the business to have the right access to the right content and, you need to have the right data understanding to really correlate and identify the right content by basically enabling it with the right rules, and with the right channels.” europe.businesschief.com
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ADDING VALUE OF DIVERSITY & INCLUSION IN SUPPLY CHAINS
For over 10 years, we have been dedicated to the mission of improving diversity in entrepreneurship and driving inclusive procurement. We believe that supplier diversity is an economic and moral imperative. Innovation comes from a diversity of perspectives, so when we limit who can contribute, we in turn limit what problems we can solve. Join our global network of diverse entrepreneurs, supply chain leaders, thinkers and doers and realise the power of differences. Look out for more as we expand into Europe with Germany as first stop in 2018!
TRANSFORMING SUPPLY CHAINS THROUGH INNOVATION & INCLUSION We prefer “variety” in our pastimes, “biodiversity” in our ecosystems and “diversified” holdings in our portfolios, yet we unconsciously resist diversity in our social and professional communities. This has become a liability in today’s marketplace, costing companies talent, growth & innovative solutions. From your workforce to supply chains; diversity & inclusion of people and ideas are critical drivers for further growth in your organisation. We must move past the tick box exercise, truly embrace diversity, and commit to applying it. Looking out at the business landscape today, it’s clear that diversity is increasingly being valued in its true sense by companies that thrive to improve productivity and profits — and outperform the competition.
WHY YOUR SUPPLY CHAIN IS RIPE FOR DISRUPTION? As we embrace the new digital world that is driven by technological advancement, innovation takes centre stage in every corporate strategy. There is strong evidence that innovation mostly comes from small businesses and individuals, which makes diversity a critical factor to bring new solutions, breakthrough technology and disruptive businesses to market. Diversity within supply chains can not only bring new ideas and solutions to your organisation, but it also brings competitiveness, and boosts market growth. Beyond these commercial benefits, there is the BIG social value supplier diversity brings -
reducing socio-economic inequality and creating stronger, more stable communities. With many global business leaders finally waking up to the positive impact it brings, businesses that understand how to use this to their advantage will stand to gain a competitive advantage and genuinely make positive contribution to a more fairer society. At MSDUK we are delighted to be working closely with Accenture - and especially delighted that we share similar core values. Together our mission is to rewrite the book on inclusive procurement and encourage diversity as a catalyst for innovation and growth. In partnership with Accenture, we are launching the Innovation Hub – a launchpad for ethnic minority businesses that have an innovative idea, solution or product to bring to the market. And through our extended ecosystem of the Knowledge Hub and Growth Hub, we offer an integrated programme of activities, processes and networks to bring those ideas to life and help these businesses scale-up and access global markets. We all have an opportunity right now to embrace diversity as a competitive advantage, examine our own unconscious biases and proactively look for ways to bring different voices to our team and into our decisions. Let your supply chain be the gateway to innovation, embrace diversity and inclusion to unlock hidden potential and give opportunities to the business leaders of tomorrow that represent modern Britain as it is today; multicultural & diverse!
TO FIND OUT MORE, VISIT US AT WWW.MSDUK.ORG.UK OR EMAIL DIVERSITY@MSDUK.ORG.UK VISIT WWW.GSDA.GLOBAL TO LEARN MORE ABOUT OUR GLOBAL NETWORK
INNOVATION | KNOWLEDGE | PROCUREMENT | BENCHMARKING
ACCENTURE
MAN AND MACHINE Nowosel can see a day when man and machine will work as one. “We need to rethink the way we use systems,” he says. “It’s not just the user interface. The intelligence in the system needs to recognise me. It needs to say: ‘Hey, I know you have already purchased something. I know you’re sitting in this type of business. I guess you’re currently looking for these types of buys. This is what’s relevant for you to be
successful.’ So, it’s less anticipating the right product and much more anticipating the right demand by understanding the business. And that is a very different user interface than just making it a little bit more web-based and smartphone enabled. And for me that is one of the biggest things I would really like to break and move away from. I want to take a very traditional process flow and transform it into something that is an
Click to watch Kai Nowosel talk about his approach to work with partners and business enablement within Accenture including their use of new technologies.
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intelligent portal solution that really guides people to the right channels, seamlessly and intelligently.” Does Nowosel ever envisage a time in the future where we could have an AI CPO? “When I worked in consulting, I wrote a point of view on the ‘organisation of one’. And yes, it was a provocation, and I don’t think it will ever happen, because in every business you run, whether it’s procurement, whether it’s marketing, whether it’s
sales, whether it’s R&D, we should never forget about the relationship component, and the human component. But will the role, or will the processes that we are currently performing, shift? For sure, they will. Can an artificial intelligence machine negotiate as good as a human being? I’m 100% convinced they can. We’re seeing it already in the stock markets where we already have machines to machines. So why shouldn’t it happen in a quite common negotiation? But that’s why I’m saying that procurement is moving to something else. The definition of procurement is not ‘am I a better negotiator?’ It is more, ‘am I the better ecosystem manager?’ Or, ‘am I the better window to innovation?’.” It is possibly easy to theorise regarding future systems and processes, but is Nowosel currently putting these words into practice as CPO at Accenture? “Absolutely. That’s where our big partnerships sit, and where our benefit – where my benefit – is. I am sitting in a company that basically invents digital solutions for implementation. I have access to all that.” Accenture has just released a new europe.businesschief.com
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DOING BUSINESS WITH WOMEN IS GOOD BUSINESS
We believe diversity promotes innovation, opens doors, and creates partnerships that fuel the economy. We believe a diverse and inclusive corporate culture integrates women at all levels of the organization, from the C-suite to the warehouse floor. That’s why we are dedicated to fostering diversity in the world of commerce by identifying, certifying, and facilitating the development of women-owned businesses.
The Women’s Business Enterprise National Council (WBENC) is a U.S.-based non-profit organization focused on women’s business development and sustainable economic growth. We are the largest certifier of women-owned businesses and a leading advocate for women-owned businesses in corporate and government supply chains. Our Corporate and Government Members with best-in-class diversity and inclusion programs recognize that partnering with womenowned businesses is not just about equality and fairness – it’s about making better business decisions.
C
O
CERTIFICATION WBENC Certification validates that a business is headquartered in the U.S. and at least 51 percent owned, controlled, operated and managed by a woman or women. Our world-class certification standard is accepted by more than 1,000 corporations representing the world’s most prestigious brands, in addition to many states, cities, and government entities.
OPPORTUNITIES We provide education, programming, events, and networking opportunities for women-owned businesses, diversity and inclusion experts, government and corporate procurement professionals, and other industry and thought leaders. From our signature events to executive education programs, we are dedicated to connecting women-owned businesses and our Corporate and Government Members in meaningful ways, as well as providing the programs and resources that enhance business development and growth.
JOIN FORCES. SUCCEED TOGETHER. Learn more at www.wbenc.org
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E
RESOURCES To address the challenges many small businesses face in building and growing a business, we provide support and resources through the full life cycle of entrepreneurship. Our goal is to ensure women business owners have access to the education, support, and tools they need to grow and succeed.
ENGAGEMENT Our theme is Join Forces. Succeed Together. because we know that success is only possible when we partner with our constituents toward a set of common goals. We foster healthy engagement through advisory councils, ambassador programs, and a robust recognition and awards program, including our annual America’s Top Corporations for Women’s Business Enterprises award.
WBENC Board Chair Theresa Harrison and WBENC President and CEO Pamela Prince-Eason present Kai Nowosel of Accenture with the 2017 America’s Top Corporations for Women’s Business Enterprises award.
The Women’s Business Enterprise National Council is proud to partner with leading corporations like Accenture to help break the mold of procurement by recognizing and promoting best-in-class diversity and inclusion practices. Because we know supplier diversity is about more than corporate responsibility — it’s a propelling economic force.
Supplier diversity is
Learn more about WBENC and how we partner with the world’s leading corporations at www.wbenc.org
a propelling economic force.
PROUD BUSINESS PARTNER OF ACCENTURE
ACCENTURE
procurement offering which Nowosel is visibly excited about as a practicing Chief Procurement Officer. “Because this is more than source to pay – which is not all that sexy. We call it Procurement Plus. Procurement Plus gives you a little bit of an indication that our procurement function has a vision that goes beyond a traditional procurement function, that also gives you an understanding about the size of the organisation.” So, what exactly is in the ‘plus’?’ “From a Procurement perspective, I run all venture and acquisitions on a due diligence side and on the commercial synergy side. So, that in itself is already a big team. In the past three years Accenture has completed roughly 70 acquisitions, that is a lot of work to integrate and to bring it into the right process and supplier panel. And we are buying more and more diverse portfolios. So, in the past we bought a lot of IT and now that we own a lot of agencies, we even budget for things like hair, makeup and other logistics for photoshoots and so on – it’s getting quite diverse. So, V&A to M&A is one. I also run all accounts payable, so I really have a P2P responsibility in that logic. 24
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“I also run something which is extremely close to the heart of where I see Accenture and the function going, and that is Supplier Inclusion and Sustainability,” continues Nowosel. “So, I run all our corporate social responsibility agendas that are attached to our supply chain. I also run the contractor business – one of the biggest categories I oversee. I basically do all the contractor onboard identification, onboarding, background checking
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MANAGING RISK
442,000
Number of Accenture employees globally
1989
Year founded
$34.85bn Revenue
and qualifications – that is something that you typically would not see in a procurement function, but that you could potentially see in an MSP (managed service provider) setup. It’s so close to our core business and is essentially the revenue driver. As a result, my team is larger than the traditional benchmark If you think about what is known as traditional procurement, it’s probably around double the size of a traditional benchmark.”
Nowosel is also keen to pinpoint the safety features of Accenture’s offerings. “It is extremely relevant that all the partners we are working with are following a very rigid process, a very clear playbook on how we assess and handle risk and controls,” he says. “Not only on our side, but with all the parties we are working with. Some of the players are much smaller, and therefore, we had to enhance the risk framework to something that is not just for the ‘big is beautiful,’ but also for the smaller, dynamic startups that probably have a completely different mindset. With regards to the size of the organisation that I’m running, I’m operating in 69 countries, so I can really claim it’s a global function. It’s definitely a global governance model I’m running.” Obviously, the role of the CPO has changed a lot over the years and the issues CPOs are presenting to Nowosel have also shifted. “I would say it’s not just them coming to me, it’s me, coming to them, with all the issues. I think the role of procurement has evolved big time. If you go back a little bit in CPO history, what have we always focused europe.businesschief.com
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“ THE ISSUE NOW IS HOW DO YOU FIND THE RIGHT PARTNERS IN THE ECOSYSTEM? HOW DO YOU MITIGATE THE RISK? HOW DO YOU PROTECT THE BRAND? HOW DO YOU GET COMPETITIVE?” — Kai Nowosel, Chief Procurement Officer, Accenture
on is how will we put enough control, compliance and negotiation power into the process? And I don’t think that is what the issue is anymore. The issue now is how do you find the right partners in the ecosystem? How do you mitigate the risk? How do you protect the brand? How do you get competitive? And getting competitive is more than having a great negotiated price. It is having the right solution for your customers at the right point. So, I see procurement moving very strongly
away from a control and compliance and into a business function. “One of the biggest discussion points I have with myself, but also with my peers in the market, is: What is our value proposition going forward? What is our reason of existence going forward? And how do we measure our impact?” “I talk a lot to my peers. ‘What’s your experience with this supplier? How do you approach this type of category?’ I don’t find that too exciting. I find it much sexier to think about how we combine europe.businesschief.com
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ACCENTURE
“ I SOMETIMES SAY THAT PROCUREMENT IS THE TINDER OF INNOVATION… BECAUSE IT MAKES PROCUREMENT SEXY AND I WANT TO GET INTO THAT MODEL OF BEING SEXY INSTEAD OF BEING A BACKOFFICE FUNCTION” — Kai Nowosel, Chief Procurement Officer, Accenture
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categories – how do I manage an ecosystem? How do I manage to come to a solution? I sometimes say that procurement is the tinder of innovation. I like the word ‘tinder’ because it makes procurement sexy and I want to get into that model of being sexy instead of being a back-office function. I want to have an impact, and that’s probably what I talk most to my peers about. How do we really see our repositioning?”
europe.businesschief.com
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L E A D E R S H I P & S T R AT E G Y
Transporting business into the future – National Express hires a new CDO THE INTERNATIONAL TRANSPORT FIRM HAS CREATED A NEW MANAGEMENT ROLE AS IT GETS SERIOUS ABOUT DIGITAL INNOVATION. BUSINESS CHIEF CAUGHT UP WITH ROB MUIR TO FIND OUT WHAT LIES AHEAD Written by SAM JE R MY
L E A D E R S H I P & S T R AT E G Y
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UBLIC TR ANSPORTATION CONGLOME R ATE, National Express, which has services in eight countries, recently appointed its first ever Chief Digital Officer. Rob Muir, a former Senior Director at global digital agency McCann, has been chosen to spearhead its digital operations and oversee related strategy going forward. The intention is to identify and select appropriate technological opportunities to pursue with the aim of best positioning National Express in a crowded sector. It is not a straightforward task, but the new-look digital team is enthusiastically rising to the challenge. “First and foremost, I’ve known National Express for quite some time,” Muir says. “I’ve always respected the company as a leader in its sector. For three years National Express was a client of mine when I worked at McCann, and that gave me real hands-on experience from a client perspective. Throughout the process I was really impressed by the calibre of the people here and so the opportunity to join the business was one I grasped with both hands.” 34
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IDENTIFYING OPPORTUNITIES There are numerous measurements that will need to be met before Muir and his team implement any kind of new technology, but primarily the innovation needs to drive at least one of four main areas. “Principally, there is an awful lot that is happening within the technology and travel sector,” says Muir. “The biggest challenge I see is identifying what is useful tech for the business rather than tech for its own sake.
“ As more customers interact with us through digital channels, we continue to demonstrate back to them that we are responsible in the use of their data” — Rob Muir, CDO, National Express
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L E A D E R S H I P & S T R AT E G Y “Tech that we can bring into the business will very much fit the vision, which is something that’s going to make transport more accessible, more efficient, more affordable and safer; safety is of course at the core of what we do. In everything we do, we want to ensure we keep that safety agenda extremely high. I would say the main challenge is around identifying what is useful tech rather than jumping on every
“ The biggest challenge I see is identifying what is useful tech for the business rather than tech for its own sake” — Rob Muir, CDO, National Express
technology bandwagon that rolls past.” The business has already been investing in technology prior to the creation of the CDO role. Lytx DriveCam is now fully implemented in the organisation’s UK bus and coach operations and North America transit, delivering a reduction in the number of collisions and associated costs. New mobile websites and ticketing apps have helped 36
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to increase sales in the Spanish arm of the business, ALSA, by 10%, and the launch of contactless pay across the UK business has proved popular in offering greater convenience to customers. Muir adds: “There is already plenty of digital activity going on within National Express. We’re identifying where the short-term digital opportunities lie for us looking forward. Then, medium and
embrace rapid prototyping and allow us to bring ideas quickly to market. That said, it comes back to having the processes in place to identify useful tech first. By useful we mean fulfilling criteria in one of the four areas of accessibility, efficiency, affordability and safety.” Muir adds that his appointment as CDO is “testament to how much National Express is focussed on the digital future”.
UTILISATION OF DATA
Click to learn about VUER – the onboard Wi-Fi and entertainment service from National Express
long-term, it changes to what strategic processes we can put it place as a business to make sure we continue to be at the forefront of tech innovation for our sector. “We need to continue to lead, whether that be on data or innovation strategy and we have to make sure processes are in place to consistently deliver strong, fit for purpose, innovative ideas that
In light of recent customer data breaches at tech firms making global news, National Express recognises it is a huge responsibility when a customer hands over their data. It has a rigorous system in place to ensure it is using data properly and responsibly, as well as complying with GDPR regulations. Muir said: “We are transparent with our customers and how we use that data. As more customers interact with us through digital channels, we continue to demonstrate back to them that we are responsible in the use of their data – it is core to what we do. “The social media channels that customers use are continually changing and developing so we are always looking 37
L E A D E R S H I P & S T R AT E G Y
“ Successful digital innovation doesn’t come from just one single investment or initiative; it comes from a continual, sustained and dedicated application to improving what we do for our customers” — Rob Muir, CDO, National Express
at that space, both from a customer service and satisfaction point of view and also from a marketing point of view as to how we can best make our services available to customers.”
FUTURE AMBITIONS Digital innovation can be truly beneficial, not just for the customer but also for a firm’s own staff. This is why National 38
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Express is looking internally as well as externally in the way it innovates as a business. Digital scorecards are used as a yardstick that allows the management of the business to see how the overall group is evolving digitally. Muir explains: “Successful digital innovation doesn’t come from just one single investment or initiative; it comes from a continual, sustained
and dedicated application to improving what we do for our customers, what we do for our safety, continuously going back through that loop and asking ourselves the pertinent questions. It is a concerted push rather than a granular approach. “By looking at the opportunities as a whole, where are they, what can we do better, and what new tech is out
there that’s going to be useful to us as a business, we can then judge which ones are going to make us more accessible or efficient, going to make travel more affordable or is going to drive the safety element forward. Therefore, it is an iterative process that we go through and what a digital scorecard does is keeps those four important areas at the top of the agenda” Looking at how customers are interacting using particular social media channels and analysing what developments National Express needs to bring through are activities that make up the bulk of what a digital scorecard does – essentially a way to summarise current market position to management. Muir and his team will be reviewing and measuring multiple components on a monthly basis to ensure National Express stays ahead of the industry curve. Muir concludes: “So far, my time at National Express has been everything I had hoped for upon joining the business and I look forward to the challenges that lie ahead as part of an intelligent enthusiastic team. I’m confident we’ll continue to make waves across the board.” 39
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Wider electric vehicle adoption requires global energy solutions WITH COUNTRIES THE WORLD OVER INCREASINGLY TURNING TO ELECTRIC VEHICLES, TAAVI MADIBERK, CEO AND CO-FOUNDER OF SKELETON TECHNOLOGIES, INVESTIGATES HOW WE CAN ENSURE THIS ADOPTION IS SUSTAINABLE Written by TAAVI MADIBERK
TECHNOLOGY
T
HE AUTOMOTIVE SECTOR is evolving at an unprecedented rate. According to the International Energy Agency (IEA), an estimated 50mn electric vehicles will be in operation by 2025, and 300mn by 2040. With BMW, Volvo, and Jaguar Land Rover promising electrified versions of their current models, most of the major car manufacturers have now announced significant investment, re-affirming this shift. Furthermore, with Dyson announcing that it is starting to manufacture electric cars and the European Commission forming a consortium that will drive the development of battery technology, there is no doubt that we are moving towards a world with electric vehicles at its centre. While we are certainly on the road to wider adoption, there is still one main drawback that could thwart public interest: charging infrastructure. Fundamentally, in order to support the innovation and commercialisation of electric
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vehicles, the right energy technology and infrastructure must be in place. This is critical to ensure the experience matches the hype.
THE RISE OF THE ELECTRIC HYPE Fuelled by the rise in air pollution and political momentum to reduce global warming, electric vehicles have grown in popularity and the technology has improved at a record pace to become a benchmark for innovation in the automotive sector. Competition in the marketplace is also increasing. From the first Prius hybrid model launched by Toyota in 1997, to the more recent full electric
‘THE CASE FOR MORE ENERGY EFFICIENT VEHICLES IS GAINING MOMENTUM’
The Range Rover Sport plug-in hybrid electric SUV signals an electified future
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TECHNOLOGY vehicle launches of the Tesla Model S, BMW i3 and Nissan Leaf, car manufacturers are investing in hybrid and electric vehicles and demand from consumers is gradually growing. Couple this with increasing environmental and sustainability regulations and the case for more energy efficient vehicles is gaining momentum. The adoption of this technology, however, is hampered by a need to optimise infrastructure to ensure it can support the surge in charging capabilities. Crucially, if the infrastructure cannot cope with peak power points, the adoption of electrical vehicles will reach a standstill.
GLOBAL ADOPTION REQUIRES A UNIVERSAL SOLUTION We already see Britain, France, Norway and China committing to ban diesel and petrol cars in favour of cleaner vehicles. This shift was most recently followed by one of the leaders in the automotive industry: Germany. At this point, it is becoming critical to adopt technology that allows us to smooth over the energy consumption needs that advanced countries are yet to experience. We need to take 46
May 2018
Click to watch Skeleton Technologies – Global Tech Leader in Ultracapacitor Energy Storage
‘IF THE INFRASTRUCTURE CANNOT COPE WITH PEAK POWER POINTS, THE ADOPTION OF ELECTRICAL VEHICLES WILL REACH A STANDSTILL’
a holistic view to managing energy provision, as we will not be able to rely on drivers of electric vehicles to scatter the time when they charge their vehicles to reduce peak demand. With implementation commitment growing at a rapid pace, there is a pressing need for collaboration that will support solutions for energy technology challenges globally. This can only be done if governments, industry bodies and innovators join forces to support energy storage technologies that complement future developments in the sector. There is a need for a serious discussion on how to implement a stable grid that will be capable of withstanding the increased energy consumption inevitable with electric vehicles. Critical to this will be coping with especially high demand peaks and proving that the grid has the resilience needed for electric vehicles to become a success.
REVOLUTIONISING THE SECTOR It is possible to manage the growing demands on our energy infrastructure and ensure that there is a stable and reliable energy support that will drive the growth of electric vehicles, but 47
TECHNOLOGY it requires a fresh look at our energy storage mix. By investing in energy storage technologies that complement battery power, such as ultracapacitor technology, we can manage peak power needs. Ultracapacitors are one of the lowest cost solutions to helping with grid stability, and can play an integral role in supporting the national grid and managing power demands. Wide-scale electric vehicle charging creates serious issues with demand management, which can potentially cause power blackouts. These blackouts are caused mostly by short
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demand peaks, which usually last under a minute. This is precisely where ultracapacitors excel. As part of the grid solution, ultracapacitors can provide a means to ensure there are no blackouts during sudden changes in demand. On board vehicles, the technology should be evaluated and used in tandem with lithium-ion batteries in order to downsize the pack and increase the battery lifetime. By introducing capacitive technology to the power unit, it is possible to reach longer lifetimes and support the peak power needs of electric vehicles. However,
in order to do so, we must secure a reliable infrastructure to support this trend going forward. By prioritising investment in infrastructure and encouraging discussion and collaboration between governments, car manufacturers and technology companies, we will be able to create an environment where infrastructure, technology and the consumer act as one. Only then will be able to embrace electric vehicle revolution globally and support a future that is dominated by electrification.
‘WE NEED TO TAKE A HOLISTIC VIEW TO MANAGING ENERGY PROVISION’
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IS THE US SKILLS SHORTAGE PART OF A GLOBAL EPIDEMIC?
Jack Coker, Principal, Ducatus Partners, discusses how America can make its infrastructure “great again” as Business Chief finds out whether the current skills gap is a global phenomenon Written by JACK COKER Edited by OLIVIA MINNOCK
PEOPLE
“ Although it will take several generations to rebuild the infrastructure workforce to full capacity, companies can kickstart the process” – Jack Coker, Principal Consultant, Ducatus Partners
THE PEOPLE PROBLEM Modern infrastructure in the US was born from President Franklin D Roosevelt’s New Deal for the American people. Between 1935 and 1943, the Works Progress Administration (WPA) built over 500,000 miles of rural roads, 100,000 bridges and 1000 airfields. The WPA built sewers, tunnels and power lines. Hospitals, schools and fire stations sprang up across the nation. 54
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However, in recent years this spirit of investment has waned. In every report card since 1998, the American Society of Civil Engineers has awarded a ‘D’ to America’s infrastructure, reflecting chronic underinvestment in the sector. The society also estimates that, unaddressed, this could damage the economy to the tune of almost $4trn lost in GDP by 2025, slashing the disposable income of each household
across the United States by $3,400 each year. Fortunately, change is in the air and major infrastructure investment is back on the political agenda. The problem? There are not enough skilled people to meet demand. Whilst the WPA was created in part to soak up excess labour in the workforce, modern programs are hampered by the lack of it. All over the world, the skillsets required
in the labour market are having to adapt to technology transformation. As the US struggles to keep up with this demand, developments are more positive around the world with governments and educational organisations focussing on better preparing the workforce. Across the Middle East, Europe, Asia Pacific and parts of the Americas, employers are beginning to find it easier to find the right talent, but additionally it has been shown that particularly in Europe, contract, freelance and temporary work are all on the rise. This could point to a workforce adapting to fit their existing skillsets around changing demand. Globally, economic migration is on the up, with migrant workers increasingly of a more educated caliber. While migration can help to plug skills gaps across the world, as there is a bigger pool of talent to choose from for a country’s particularly profitable industries, in many cases restrictions on migration are set to increase, particularly in the UK and US. In addition, wage growth across the EME market has been slow and as such it can be easier to hire new employees than in other regions, like Asia and the US. 55
PEOPLE
“ There are essential A VICIOUS CYCLE individuals who Coming back to the US, underinmake the difference vestment in infrastructure has been a topic of discussion for decades. between on-time, However, the paucity of large on-budget projects infrastructure projects has led civil engineers and specialist managers and multimillionto depart from the industry. This is dollar overruns; and compounded by fewer people seeking a career in the space, and fewer students there aren’t enough enrolling in courses. A vicious cycle. of them” Several states have recognised the need for infrastructure investments. – Jack Coker, Principal Consultant, For example, Connecticut and Ducatus Partners Washington are in the early stages of multi-year transportation improvement overruns; and there aren’t enough initiatives. What’s more, some states of them. have resorted to raising extra funds A number of issues stem from the to try and deal with the situation, workforce shortage. Lack of including raising gas taxes, a key experienced workers means companies source of funding for road construction. must relocate employees across the In California, 20 of the state’s 58 country on a project-by-project basis. counties already have transportation Relocation can be expensive, especially sales taxes in place which has led to in states like California. an exponential increase in infrastructure Another issue is that human resource projects. Unfortunately, even as the and leadership teams focus almost money is starting to flow, the workforce exclusively on project start-up to the has atrophied. In short, there are detriment of ongoing roles throughout essential individuals who make the the project lifecycle, resulting in difference between on-time, on-budget a backlog of hires which has a direct projects and multimillion-dollar 56
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impact on the bottom line. Project and construction managers with five to 15 years of experience are in particular demand, and positions can remain open for months at a time; especially in the aviation, rail, transit and water sectors. This stretches workloads which in turn increases staff attrition. Another vicious cycle, further compounding the talent crisis. This is a particular problem for US infrastructure, but that’s not to say that other regions aren’t struggling to find staff with the specific skills needed as their economies shift and change.
TAKING ACTION Running into this problem with varying degrees, countries are taking different steps to upgrade the skillsets of their workforce in line with new requirements – but exactly where this responsibility lies is a contentious issue. Udemy recently commissioned a ‘skills gap’ report pertaining to the global work environment. This showed that the majority of workers around the world agree there is a growing skills gap, but largely feel “optimistic about their own skills and the competitiveness of their respective countries”. 57
PEOPLE On a worldwide scale, Udemy CEO Kevin Johnson stated: “the nature of jobs is quickly changing with automation, globalisation, government policies and other factors, making it impossible for anyone to predict which skills a job will require in the future. This only serves to widen the perceived skills gap.” In the US, 79% of full-time employees according to Udemy believe there is a skills shortage and 35% “feel personally affected by it”, but 80% of these believe that workforce reskilling will be successful. In terms of reskilling efforts, 41% think the government, through tax benefits or otherwise, should contribute. Udemy’s report analysed five global markets and found that in France, staff largely don’t feel the need to upskill, with 75% stating that they were confident with their current skill set – however in Brazil, 98% of those surveyed acknowledged the existence of a skills gap in their country. In terms of responsibility, 50% of Mexicans felt that it was up to the individual to upskill, with 17% placing responsibility on the government and 13% on employers. It was also found that some people have taken on a second 58
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job in order to utilise their skills in a more appropriate way, with 39% of Americans describing themselves as having a “side hustle” in comparison with just 18% in both Spain and Germany. In the US, there are doubtless deepseated issues that will not be solved overnight. However, with mega-projects in construction and infrastructure in the offing such as those tied to the 2028 Olympics, California’s high-speed rail and LAX’s $5mn upgrade program, there is no time to wait. With that in mind, the question is: how can companies
“ Human resource and leadership teams focus almost exclusively on project start-up to the detriment of ongoing roles throughout the project lifecycle, resulting in a backlog of hires which has a direct impact on the bottom line” – Jack Coker, Principal Consultant, Ducatus Partners
best manage and mitigate workforce issues to ensure projects are on schedule and on budget?
PROACTIVE TALENT MAPPING AND EDUCATION By partnering with a specialist executive search provider, companies can build a map of where talent is and where it needs to be. Talent mapping is about proactively building a virtual ‘bench’ of talent, anticipating need, and successfully mitigating unnecessary cost. Mapping allows companies to
proactively engage candidates which significantly reduces time to hire. Upon the award of a large infrastructure project, a high-potential candidate pool is identified, engaged, and ready to be mobilised. In locations that are difficult to recruit to, either due to high costs or low desirability, talent mapping is especially useful. Although it will take several generations to rebuild the infrastructure workforce to full capacity, companies can kickstart the process. By working in partnership with colleges, companies can start to mould the next generation by putting the right skills in place, imparting knowledge, and developing talent pipelines through internships. When the time comes for graduates to seek full-time positions, companies may benefit from having built respect and loyalty with interns. According to World Atlas, one of the countries suffering an even greater skill shortage than the US – indeed the ‘worst’ in the world – is Japan, and education is a leading cause. “Japanese companies are faced with potential employees lacking knowledge of the global markets,” the report argues, putting this down 59
PEOPLE to a “rigid” educational system which does not equip Japanese students for the modern world. In China, as it strives to overtake the US as an AI superpower, finding the correctly skilled individuals is paramount and has become a common issue for companies according to the Global Skills Index. Therefore, issues in transforming the economy aren’t
isolated to the US alone, but in China they are increasingly in the form of new technology skills and the ability to manage a tech-based enterprise, which often has to come from employees educated in the US or Europe. High costs of hiring mid-to-high management have resulted in MNCs being reluctant to set up core research centres in China, according to China Daily, which adds
“ In locations that are difficult to recruit to, either due to high costs or low desirability, talent mapping is especially useful” – Jack Coker, Principal Consultant, Ducatus Partners
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that China is making more efforts to work with universities, “especially top engineering institutions”. It is widely agreed in China that the likes of AI and Big Data should be exploited, but employers are now forced to look at the skills and talent pool on a global scale. The government has launched guidelines on focussing talent development in manufacturing, including integrating industry and education, promoting key adaptable abilities and qualities, and “establishing a high-level management skills pool”. While China leans more toward a planned economy than most, government involvement may be a direction for other economies to consider when dealing with the global skills gap. Although young talent is slowly entering the industry in the US, experienced talent is quickly flowing out. Senior talent is retiring and leaving an institutional knowledge gap. Companies have a responsibility to eliminate this from happening. Developing concrete succession plans to transfer knowledge and skills to the next generation minimises the risks to the retirement process. This applies across the organisation, from the
Jack Coker is a principal consultant at Ducatus Partners, an executive search and leadership consultancy focused in the global energy, infrastructure and process industries. He has significant search experience in both Europe and the Americas, serving a broad range of clients spanning architecture, engineering and construction across the energy, power and civil infrastructure sectors. Jack holds a Master of Science degree in Environmental and Earth Resources Management from Kingston University, London and a Bachelor’s degree, with honours, in Geography from the University of Portsmouth.
C-Suite, project leadership to the experienced niche engineers. Will the rediscovered appetite for infrastructure investment be enough for the US? Or is it a case of a day late and a dollar short? Only time will tell, but companies the world over can be sure of one thing: smart workforce planning and talent management is essential to successful project delivery. 61
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S U S TA I N A B I L I T Y
Stay true to what you are Marketing expert Allen Adamson tells us why businesses must be careful not to dilute their brand when introducing new products Written by STUART HODGE
S U S TA I N A B I L I T Y
W
E LIVE IN a changing marketplace. Although all of the traditional staples of customer service are still welcome, they are becoming less important to a new generation that had grown up with the ubiquity of online shopping platforms and a plethora of choices like never before. More and more highstreet retailers are suffering at the hands of the growth of at-home pointand-click shopping, and it seems that the power of a strong brand identity is greater than ever before. With this in mind, Business Chief spoke to branding expert Allen Adamson, author of various books esteemed at universities globally on the topic, including his latest title ‘Shift Ahead: The Best Companies Stay Relevant in a Fast Changing World’. He spoke to us about how the power of brands is changing in the modern world, and the challenges of diversifying in a changing landscape. “In my world a brand is what your story is,” he says. “One of the challenges that many marketers face is ‘what is their story? What do they stand for?’ Once you figure out your story, your 66
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brand, what has become increasingly difficult is ‘how do you get that story out there?’ Like many things, a theory in marketing and branding is pretty easy, but execution is really hard. What I mean by that is people only recommend extraordinarily good things or talk about extraordinarily bad things. They don’t recommend or talk about things that are just ‘okay’.” Consumer habits are no doubt changing too. In fact, a recent study by EFG Companies looking at digital
“ People only recommend extraordinarily good things or talk about extraordinarily bad things. They don’t recommend or talk about things that are just ‘okay’” – Allen Adamson, Co-Founder at Metaforce
purchasing in the car market revealed that half of customers will now check reviews online before even contacting a dealership. Not just that, but the study would also indicate that we are becoming more picky and impatient: 43% of the pool of almost 1,500 respondents said that they were more likely to visit a dealership if it had plenty of information on its website, and 83% expected a response from the dealership within 24 hours of sending an online vehicle inquiry, with 16% 67
S U S TA I N A B I L I T Y
“ If you don’t look good, most consumers are not going to read the product specs to find out what’s inside” – Allen Adamson, Co-Founder at Metaforce
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wanting information immediately or within the hour. However, the nature of the response people are expecting has changed, with only 9% wanting a phone call from the dealership after they’ve submitted an online request. Not just that, but Adamson believes the way we are interpreting the world around us now is changing the way that consumers are recommending products. He says it’s now more often about how they appear visually than whether they’ve been recommended by one person to another. “Younger consumers are spending more and more of their time sharing stories, sharing ideas, sharing pictures,” says Adamson, who is also the founder of marketing and branding consultancy Metaforce. “With that in mind, I think ‘word of eye’ is becoming more important than word of mouth. I think the quality or the visual appeal of things is growing in importance because people are visual to begin with, and now that they can share pictures as fast as they can share words and ideas, you have to look good no matter what you’re doing. 69
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“A couple of years ago I went to the Consumer Electronics Shows in Vegas and no matter which manufacturer I looked at, from 20 companies from China and from India that I’ve never heard of to Apple, Sony and Samsung, everyone’s products looked spectacular. All of a sudden, even the cheapest products looked incredibly stylish. Now, if you don’t look good, most consumers are not going to read the product specs to find out what’s inside. They’ll make a snap decision and if you don’t look good, you can’t fix it.” Another trap that manufacturers have to avoid falling into is having too myopic a viewpoint. If you are Coca-Cola, don’t just look at Pepsi as your major competitor or you could fall off the pace. With so much choice out there now, every soft drink manufacturer is a competitor. Blackberry is a prime example of a company which has suffered from being too tunnel-visioned in its approach. The Canadian smartphone provider did help to drive the boom in smartphone pervasion, but staunchly believed that consumers would never 70
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“ You have to make sure that whatever product you go into, the benefit of your brand is still delivered” – A llen Adamson, Co-Founder at Metaforce
move away from using a keyboard. The entire management team was convinced that the iPhone and touchscreens were a toy that kids would be playing with, but that any serious person typing out messages for business would never give up their keyboard. This undiversified view was why Apple and other competitors were able to steal a march and ratchet up their market share.
It’s a danger for every company, but do these changes in consumer behaviour and the requirement for increased brand awareness mean it’s now harder to diversify your line of products within an overarching brand identity? Adamson doesn’t believe so, but he does feel companies need to be a little cleverer about how they do it, ensuring that the integrity of what their company
stands for is not compromised. “You have to make sure that whatever product you go into, the benefit of your brand is still delivered in that new category or that new segment and it reinforces what the core idea is,” he asserts. “I think BMW has been pretty successful switching from sports sedans to SUVs. Yes, their SUVs perform differently than their other models but when they talk about why their SUV is better than other SUVs, it’s still tied to that core idea of ‘the ultimate driving machine’. If you’re in an SUV, ‘the ultimate driving machine’ lets you go through a riverbed and up an incline without tipping the car over, and through mud and muck. If you’re driving a sports sedan, that means you can go around the corner on the highway at 60mph and not feel that you’re going 60mph around the corner. They have a clear definition of what BMW-ness is. “Now they’re experimenting with electric cars, the definition of what ultimate driving means has some latitude but no matter what it is, the worst thing you can do to a brand is to line-extend it or diversify into 71
S U S TA I N A B I L I T Y a product that’s unsuccessful and is rejected by the market. Because not only will you miss the opportunity to sell SUVs if you’re BMW, but you’ll do more damage to your core product line.” An example of a company losing vision of what made its brand truly special, as Adamson illustrates in his latest work, is Sony. “Sony used to stand for magical things when they first were around,” he says. “Their television sets, their screens had matchably better colour than anyone
else’s. When you put on their Walkman 20 years ago, the sound was phenomenal. Then they started to stick the Sony name on products that didn’t give you goosebumps like clock radios, shower radios… not quite toasters, but they put their name on everything and all of a sudden on phones that were not that good. “I think the key part of success today is being able to deliver your brand benefit in whatever form your customer wants it. The trick is not to go so far
“ If you can’t deliver a great experience at these new diversification points then you’re basically diluting your brand, you’re stretching it too thin” – Allen Adamson, Co-Founder at Metaforce
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where you’re just extending and, like the Sony story, you have nothing special. When we look at brand extension we look at both fits. Yes, the Sony brand can fit in shower radios but does this have any leverage? “If you can’t deliver a great experience at these new diversification points then you’re basically diluting your brand, you’re stretching it too thin. You are looking at short-term sales versus longterm success. More and more brands have stretched so far that they don’t
stand for anything because they become diluted. Famous theory is ‘the stronger the focus, the stronger the brand’. If a brand stands for everything and is in every category it’s going to lose its success. “All of sudden people looked at Sony and said ‘oh, it’s not that special. Their phones aren’t that good. The shower radio is not that great’. They lost their sizzle because they diversified well beyond their ability to deliver a core Sony experience.”
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BUSINESS CHIEF TAKES A LOOK AT WHAT THE CAPITAL OF CATALONIA HAS TO OFFER FOR BUSINESS Written by SHANNON LEWIS
ELONA 77
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‘DUE TO ITS COASTAL LOCATION AND PROXIMITY TO FRANCE, BARCELONA HAS BEEN A PIVOTAL SHIPPING CENTRE FOR HUNDREDS OF YEARS’
FACTS AND FIGURES Located on the coast of the Mediterranean, Barcelona is the capital of Catalonia and the second largest city in Spain after Madrid. According to the official website of the Barcelona Metropolitan Area (BMA), the metropolitan area of Barcelona is the economic core of the Catalonia region, accounting for over 50% of Catalonia’s GDP and workforce. With a population of 3.24mn in the metropolitan area and a population distribution of 58% Catalonian, 22% from other areas in Spain, and 19.2% foreign, Barcelona accounts for 10% of Spain’s total GDP, according to the BMA website. According to Barcelona.com, 78
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it is also the second most densely populated region in Spain, with 196 people per sq km. The city has enjoyed relative stability with regards to population over the past decade, accounting for 1.6mn inhabitants since the 1990s, housing 1.6mn people at the start of 2015, according to La Vanguardia. The population is varied, with 170
different nationalities living together, and includes 23,000 people over the age of 90 and 702 people over the age of 100, according to La Vanguardia. While the unemployment rate increased to 16.55% in the final three months of 2017, according to Trading Economics, Barcelona has been keeping its head above the water. In
2017, the University of Barcelona was ranked first for graduate employability among the public universities of Spain, according to the university’s website. The University of Barcelona is also competitive on an international level, ranked in the 61-70 range, standing out in university-company collaboration and overall graduate employability. 79
CITY FOCUS
SPAIN’S INDUSTRIAL HUB Barcelona is a hub for tourism. According to CNN, it pulled in approximately 36% of all foreign investment in Spain in 2015, and surveys have found it to be the fifth most attractive European city to international investors. 8mn tourists stay at least one night in Barcelona, and according to Euromoniter it is the most popular cruise port in Europe. Other sectors in which Barcelona does well are transport, industry and manufacturing, information and communication technology, media, biotechnology, energy, design, research, agrifood, logistics, and medicine. It has also made large strides in the environmental sector, which, according to Meet Barcelona, provides employment for 42,500 people in the city. Due to its coastal location and proximity to France, Barcelona has been a pivotal shipping centre for hundreds of years, providing a middleman between Europe and the Americas and North Africa. According to CNN, 2016 saw shipping reach
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‘ THE UNIVERSITY OF BARCELONA IS COMPETITIVE ON AN INTERNATIONAL LEVEL, RANKED IN THE 61-70 RANGE, STANDING OUT IN UNIVERSITY-COMPANY COLLABORATION AND OVERALL GRADUATE EMPLOYABILITY’
a record high with regards to cargo volume, passengers, and vessels; in the same year, Barcelona’s airport was named by the Airports Council International as Europe’s seventh busiest airport. Moreover, Barcelona provides a centre for industry and manufacturing. Approximately a third of all Spanish exporters have headquarters based in Barcelona, while approximately a third of all foreign companies operating in Spain base themselves in the city. Information and communications technology is another leading sector in Barcelona, accounting for over 7% of the city’s economy, according to Meet Barcelona, which matches CNN’s figure for the amount that hotels and catering bring in. Not only does Barcelona host the yearly Mobile World Congress, but it is home to particle accelerator facility ALBA synchrotron and the Barcelona Supercomputing Centre. King, owned by Activision Blizzard and the developer of the widely-popular game Candy Crush, opened large offices in the city in 2012.
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BIG BUSINESS IN BARCELONA
BARCELONA IS HOME TO SEVERAL INDUSTRIES THAT RANK ON AN INTERNATIONAL SCALE, MAKING FORBES’ GLOBAL 2000 LIST.
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FCC | www.fcc.es/en/home FCC, 1,223 on Forbes’ list, operates under the sectors of infrastructure, water and environment. In the environmental sector, the company undertakes street cleaning, park and garden maintenance, and treating industrial and domestic residue. In water, it operates under the brand name Aqualia, working on large infrastructures, as well as in homes and businesses. For infrastructure, it operates as FCC Construcción, designing, developing and maintaining infrastructure on a global level, and Cementos Portland Valderrivas, leading in Spain’s cement production. According to Forbes, it makes $14.7bn in sales, has $25.1bn in assets, and has a market value of $1.3bn. Established over 115 years ago, employing over 57,000 people, and operating in over 40 countries, FCC makes a name for itself in both national and international economies.
FENOSA | www.gasnaturalfenosa.com The highest-ranked Barcelona-based company on Forbes’ Global 2000 is gas and electricity company Fenosa, standing in 239th place. It makes $32.9bn in sales, has $60.4bn in assets, and has a market value of $20.4bn. Operating in over 30 countries for almost 22mn customers, it earns its place as a multinational corporation.
ABERTIS | www.abertis.com In 628th place on Forbes’ Global 2000 is Abertis, a road construction company. It reportedly makes $5.2bn in sales, has $37.2bn in profits, and has a market value of $14.3bn. It is an international leader in road construction, with over 8,600km under its belt in 15 countries across Europe, Asia and America. Over 70% of its earnings come from outside Spain, primarily from France, Brazil and Chile.
8mn tourists stay at least one night in Barcelona 42,500 people are employed in the environmental sector Barcelona accounts for 10% of Spain’s GDP
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CITY FOCUS BARCELONA: A SMART CITY Recently, Barcelona has been making a name for itself as a smart city. The British Standards Institute defines the smart city as “the effective integration of physical, digital, and human systems in the built environment to deliver a sustainable, prosperous and inclusive future for its citizens”. A report released by Philips Lighting and SmartCitiesWorld ranked several cities by how well they adopt the “smart city” mindset. Singapore came first, followed by London. Barcelona placed third, its ranking a result of its integration of the IoT in a network of devices across the city connected via the internet, which has provided 47,000 jobs for Barcelona, according to Energy Digital. Cisco decided to base its Internet of Everything innovation centre in Barcelona. Some of the citywide implementations include 500km of optic fibre, free wi-fi via street lighting, and sensors designed to monitor air quality, parking spaces, water usage in city parks, and rubbish bins. The sensors in the city parks increased water conservation by 25%, saving approximately $5.55mn, according to Data Smart. Barcelona has been the one of the venues for the Smart City World Congress, which sees over 17,000 professionals, 600 exhibitors, representatives from over 650 cities, and 400 experts. It was the event’s success in Barcelona that spread it across the world, now with venues on four continents.
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‘CISCO DECIDED TO BASE ITS INTERNET OF EVERYTHING INNOVATION CENTRE IN BARCELONA. SOME OF THE CITYWIDE IMPLEMENTATIONS INCLUDE 500KM OF OPTIC FIBRE, FREE WIFI VIA STREET LIGHTING, AND SENSORS DESIGNED TO MONITOR AIR QUALITY’
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‘IoT net blockch that on configu creden perform actions
Could Blockchain Transform Manufacturing? How will blockchain impact the manufacturing sector? Kate O’Flaherty compares the reality with the hype. It is the distributed ledger system that enables cryptocurrencies, but blockchain technology offers new use cases across multiple vertical industries. Within the Internet of Things (IoT), blockchain’s applications go beyond security and authentication to asset tracking and the exchange of smart contracts, which give devices a way of handshaking and exchanging information according to mutually agreed rules. Indeed, the claimed potential of the technology to boost efficiency in supply chains, for example, has resulted in a number of projects and pilot programmes that focus on the IoT. The Trusted IoT Alliance – a consortium of companies that includes Bosch, Cisco, Gemalto, and Skuchain – was formed in September 2017 to focus on how blockchain and the IoT can intersect for business advantage. Recentl AI and blockchain technologies Recently, have been combined by Fetch.AI to create autonomous ledgers that can act as smart agents on behalf of a person, organisation, or technology. iom-uk.internetofbusiness.com
Yet more than most new technologies, blockchain is surrounded by hype on the one hand and criticism on the other. For every claim that blockchain forms the basis of a new data commons, there is another saying that it is slow and inappropriate for 90 percent of the tasks that it is being proposed fo And for every claim that it forms a new, for. more secure bedrock for tracking goods and services, there are voices suggesting that it is a flawed technology. Is the hype real? Innovative ventures certainly abound – using blockchain to track and authenticate contracts, for example, and both physical and digital assets – while even some blockchain experts express reservations about the technology and suggest that it urgently needs to evolve. So, taking all of this into account, what will the real impacts be on the manufacturing sector? The There are multiple uses for blockchain in manufacturing. According to Shaan Mulchandani, global security strategy and blockchain leader at Aricent, blockchain-based processes and smart contracts can facilitate automated security and compliance checks as part of the p manufacturing/building process.
tworks can leverage hain solutions to ensure nly devices with valid urations – or trusted ntials – are accepted and m a limited set of s.’
He says: “IoT networks can leverage blockchain solutions to ensure that only devices with valid configurations – or trusted credentials – are accepted and perform a limited set of actions.” In the future, futu manufacturing will increasingly see the IoT and blockchain intersect, powering robots that are able to teach themselves, says Van Ostaeyen. He cites the example of Sewbot, a robot that makes clothes without human intervention, which could take advantage of blockchain in the futu to become fully integrated into the future supply chain.
In addition, Van Ostaeyen claims that manufacturing will “become 100 percent transparent through blockchain”. In the future, he predicts: “There will be no tampering, and no fakes or counterfeit goods.” Th claim seems unlikely. However, it is clear That that manufacturing is itself slowly transforming from a slow, monolithic process into a smarter, more automated, more localised one, in which smaller facilities that cater to local needs replace offshore outsourcing, which is based on the lowest labour cost. Read full article.
Radisson Park Inn London, UK 5-6 June 2018 Taking place in London from 5-6 June; the Internet of Manufacturing UK conference and expo is your opportunity to network with and learn from those driving IoT adoption for Manufacturers as well as your peers already benefiting from this innovation.
The summit will examine in detail how Manufacturers can enhance their IoT strategy focusing on ROI, blockchain, additive manufacturing, connectivity, AI/analytics and security. All attendees will leave with tailored roadmaps to the adoption of these next generation technologies to reduce costs, imp improve efficiency and increase ROI.
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TALLEST COMMER CIAL BUILDINGS IN 10
TOP
EUROPE
Business Chief takes a look at the tallest commercial buildings Europe has to offer Written by SHAUN BOWIE
T O P 10
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Metropol Istanbul 920 ft
www.metropolistanbul.com
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Naberezhnaya Tower C 881 ft
wiki/Naberezhnaya_Tower Located in Moscow, Naberezhnaya Tower C is part of a larger complex with consists of three individual office buildings linked together by a shared basement, which has over 2.7mn sq ft of lettable office and retail space. Tower C is the tallest of the three at 881 ft and also the newest with construction finishing in 2007, at which point it was the tallest building in Europe until 2009. It has 61 levels above the ground and five below linking it to the larger complex, as well as 28 separate elevators. 90
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Metropol Istanbul is the largest private sector project in the city’s international finance centre, located in the district of AtaĹ&#x;ehir on the Anatolian side of Istanbul. It boasts a 920 ft tall tower with a 400m catwalk, luxury shopping facilities, a 16-room theatre, educational institutions and a recreational area. The building was designed by British architecture firm RMJM and is part of a larger development comprising of two additional towers: an office block and a residential development.
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CoC: Moscow Tower 990 ft
www.themoscowcity.com/en
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Moscow Tower is part of the City of Capitals (CoC) development which consists of this “supertall skyscraper” as well as the smaller 65-storey St. Petersburg Tower. When it was first constructed it spent two years as the tallest building in Europe before being overtaken by The Shard in 2012. The two towers symbolise St Petersburg and Moscow, two of the most important cities throughout the country’s history. The Moscow Tower contains shops, a fitness centre and conference halls as well as numerous restaurants.
Skyland Istanbul 1 & 2 932 ft
www.skylandistanbul.com/En Skyland Istanbul 1 and Skyland Istanbul 2 are the joint tallest building in Istanbul and 932 ft. The project had a budget of $700mn and was designed by Peter Vaughan of the architecture firm Broadway Malyan with construction beginning in 2012. The 65-storey mixed-use towers contain 830 flats, over 500 office spaces, and a five-star hotel with a 550-seat conference hall and 300 rooms. 91
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05
The Shard 1,017 ft
www.the-shard.com
06
Eurasia 1,014 ft
wiki/Eurasia_(building) The only steel tower in Moscow, the Eurasia tower is 1,014 ft tall and boasts a garage with 1,000 car parking spaces. Designed by the New York based architecture firm Swanke Hayden Connel (which also designed Trump Tower, NY) the complex is owned by Russia’s VTB Bank. Spread over the 67 storeys are office spaces, apartments, restaurants and entertainment facilities. The building also includes a scenic elevator on the outside of the building, allowing visitors to enjoy panoramic views of the entire city. 94
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Situated above London Bridge station in central London, The Shard was completed in 2012. At the time it was the tallest building in Europe, overtaking the CoC: Moscow. The tower is 95% owned by the sovereign state of Qatar and was designed by Italian architect Renzo Piano. The Shard boasts a 26-floor office complex which is occupied by 32 different companies across 10 business sectors. It also has three restaurants, a five-star hotel, 10 residential apartments and the highest viewing gallery in the UK with views over the entire city of London.
‘The Shard boasts three restaurants, a five-star hotel, ten residential apartments and the highest viewing gallery in the UK’
03
OKO South Tower 1,162 ft
www.som.com/projects/oko_tower
‘ In 2009, Mercury City Tower overtook The Shard to become the tallest building in Europe’
04
Mercury City Tower 1,112 ft
Designed by US-based architect firm Skidmore, Owings & Merrill, the complex that contains OKO South Tower consists of a seven-storey transparent base structure from which rise an 85-storey skyscraper and a 49storey office block. The development contains luxury apartments, large office spaces, a four-star hotel, extensive parking and urban green space. The largest conference hall in Moscow is also found here and hosts fashion shows, car presentations and large business meetings.
www.mercury-city.com/en Construction started on the Mercury City Tower in 2009 in the Moscow International Business Centre. Renowned for its golden glass facade construction on the tower began in 2009 and finished in 2013, costing $1bn. Mercury City Tower is a multipurpose skyscraper with a mix of accommodation, shops and office space and has five underground levels. When construction finished it overtook The Shard to become the tallest building in Europe. 95
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Federation Tower: East Tower 1,227 ft
www.skyscrapercenter.com/building/federation-towers Construction began in Moscow on the Federation Tower complex in 2005 but the Great Recession in 2008 caused all building work to halt until August 2011. The complex itself was complete in August 2011 with the East Tower, or Vostok to many Russians, being finally finished in December 2017 with a height of 1,227 ft and 97 storeys. Vostok boasts a number of large premium office spaces, a five-star hotel, restaurants, retails shops, a hotel ballroom, a conference and events centre and a public viewing platform. The East Tower also has the highest digital clock in the world.
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01
Lakhta Tower 1,516 ft
www.lakhta.center/en
The Lakhta Tower in St Petersburg is the tallest building in Europe at 1,516 ft and serves as an educational and scientific complex as well sports and recreation facilities and an outdoor amphitheatre. The project was put on hold in 2010 due to the historical significance of the construction site and objections from UNESCO, and at the start of 2011 it was relocated to the Lakhta area 9.9km away. The box-shaped foundation of the tower also gained a Guinness World Record for the largest continuous concrete pour of concrete at 19,624 cubic meters over 49 hours.
‘ The box-shaped foundation of the Lakhta tower gained a Guinness World Record for the largest continuous concrete pour of concrete’
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KEPPEL DATA CENTRES ARRIVES IN THE GERMAN MARKET 100
Written by Dale Benton Produced by Lewis Vaughan
FOLLOWING THE ACQUISITION OF A DATA CENTRE IN FRANKFURT, KEPPEL DATA CENTRES IS LOOKING TO DISRUPT THE GERMAN DATA CENTRE INDUSTRY
T
raditionally across the global colo-data centre industry, power generation, location and cooling systems have dominated the conversation as to what can make a data centre partner of choice. But over the last few years, that conversation has started to change. No longer is it enough that a company can provide unrivalled cooling efficiency, greater capacity than any other and it’s even arguable that being strategically placed may not be enough to separate one company from another in competitive markets. For Jens Peter Mueller, Country Head / General Manager for Germany at Keppel Data Centres Holding, the key is in the additional value that a provider can deliver. “Companies won’t buy from you just because you have all of the traditional qualities; cooling, power, space, security, fire suppression,” he says. “Don’t get me wrong, all those traditional qualities are still key, but as a provider you need to offer additional value on top of those commodity issues.” Keppel Data Centres is the manager and operator
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The vision is to be the number one partner of choice for enterprise customers from certain, security- and proximity demanding verticals” Jens Peter Mueller Country GM
Jens Peter Mueller, Country GM
of premier data centres across AsiaPacific and Europe. Mueller, having worked with Deutsche Telekom, was brought into Keppel DC to oversee the company’s expansion into the German market, which was solidified by the acquisition of its first data centre in Frankfurt Kalbach earlier last year, Keppel DC Frankfurt 1 (KDC FRA 1). Mueller believes that where Keppel
DC is different from other data centre providers in Germany is in its approach to grow fast; the company acquires existing data centre sites rather than opting to build from scratch or take over competitors. “That is something different because if you own the sites, that’s not the end of the story because you need to have much more than just
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K E P P E L D ATA C E N T R E S
Keppel Data Centres’ Datahall, Germany
the site,” says Mueller. “You need to have a brand, a service portfolio, you need market access and you need to have an organisation.” Getting to that point in Germany is part of the journey for Mueller. Keppel DC has an existing strong presence across the APAC region and its presence, particularly in Singapore (a data centre hub), provides the company with an ever-growing list of international customers. As the company seeks to firmly establish its European footprint, Mueller understands the core
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challenge in this different market. The European data centre market is densely populated with some of the biggest players in the industry, many of which have been active on the continent for the last decades and, in order for Keppel DC to catch up, it requires a certain economy of scale, proven “IP-Gravity” and the ability to create an eco-system within your customer base. “The vision is to be the number one partner of choice for enterprise customers from certain, securityand proximity demanding verticals,”
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Keppel Data Centres, Germany.
says Mueller. “But we are aware that in order to catch up and overtake the ‘big names’ of the market, we must bring our organisation up to that level and then we look to do something new, something disruptive like offering fully transparent TCO to that customer group upfront.” Growing with customers will prove key. As Keppel seeks out to acquire new data centre sites, it will look to establish a varied portfolio of large scale customers that it can host, while also targeting the enterprise market. This is where Keppel will
establish a state of the art service and connectivity portfolio, as Mueller is not the first to admit that a data centre is now much more of a marketplace. “Compare a data centre with an airport,” he says. “The going in and out of planes is just the basic functionality, but it’s all about the people. What do they need when they head to other countries? They need services and everything to make their journey pleasant and successful. That’s what Keppel DC brings to the table with its portfolio spanning Europe and Asia Pacific.”
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K E P P E L D ATA C E N T R E S
GROSS CAPACITY
40 MW 106
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WHITE SPACE
10,000 SQM
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LEADERS IN ELECTRICAL ENGINEERING STS Group provide electrical engineering, instrumentation, design and commissioning services across Ireland, the UK, Europe and the Middle East.
stsgroup.eu +353 51 508009 info@stsgroup.eu
STS is a full-service provider to world renowned brand names in the pharmaceutical, data centre, healthcare, utility, renewable energy and other industry sectors
IRELAND | EUROPE | SCANDANAVIA | THE MIDDLE EAST
CONSTRUCTION
Compare a data centre with an airport. The going in and out of planes is just the basic functionality, but it’s all about the people. What do they need when they head to other countries? That’s what Keppel DC brings to the table with its portfolio spanning Europe and Asia Pacific” Jens Peter Mueller Country GM
Like all airports, a data centre can only be as good as its connectivity options and in Frankfurt, KDC FRA 1 is connected to DE-CIX – the largest internet exchange in the world. As a DE-CIX enabled site, Keppel can now play in the “major league” of Colo-Datacenters in Frankfurt. “Having the biggest Internet Exchange Point (IXP) on our site not only allows us to connect our customers to hundreds of carriers all over the world plus to all relevant cloud platforms in the market. It also enables us to attract cloud-ready customers with a hybrid IT-architecture to our sites,” says Mueller. “And being a part of the largest exchange in the world, it’s like sitting on a big switch where a customer can connect to just one port, and on the other side of that switch are all the peering partners and cloud-platforms of his choice, readily connected and available to exchange traffic. This option is accompanied by Keppel DC´s unique business model of not charging the customers for cross-connects on a monthly basis” Keppel’s German expansion is of course a journey and Mueller readily admits that the customer base is still growing, but what does prove key is the company’s access to the APAC regions, specifically Singapore. With a footprint across five countries in Europe and many places in the APAC Region, Mueller believes that customers will be attracted to Keppel DC as the organisation can be a gateway to Asia for
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Keppel Data Centres utilises one of the most efficient cooling systems in the industry europe.businesschief.com
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K E P P E L D ATA C E N T R E S
their own expansions into that growing market. “We can be in the eyes of customers a very valuable partner because we have all the businessconnections across the APAC regions,” he says. “It goes back to our idea of growing with the customer. We can really take their business to places like Singapore, Malaysia, Australia and Hong Kong and connect them to our expansive customer base.” As a data centre provider, Keppel will be nothing without its customers and as it continues to grow and expand its customer portfolio, it can do so with the support and collaboration of its existing vendor base. In acquiring an existing 40MW/10.000 sqm data centre site from a financial institution in Frankfurt, Keppel took it upon itself to turn the site from a single tenant data centre into a multiple tenant site. This, Mueller describes, is like looking at the difference between a house for a family and a hotel. “You don’t have to have everything in your private household that you would need for a hotel,” he says, “and it’s the same when taking over a data centre that has already been built according to other plans. “Besides from having a strong foundation in the existing setup and a clear plan how to adopt to enterprise needs it is important to have other partners that are familiar with the rules of the data centre business, that know what the challenge is and that can serve you on an international basis.” In this instance, partners that have proved instrumental on this German expansion have been
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Being a part of the largest exchange in the world, it’s like sitting on a big switch where a customer can connect to just one port, and on the other side of that switch are all the peering partners and cloudplatforms of his choice, readily connected and available to exchange traffic” Jens Peter Mueller Country GM
www.wisag.de
Sicherheit & Service
Facility Service
Sicher und verlässlich: Ideal support in all areas Unser Auftrag! Unsere Werte! Our broad range of services and wealth of real estate experience make your life easier – ensuring that all processes run smoothly. Your contact: André Manecke phone +49-69-505044-354 andre.manecke@wisag.de WISAG heißt Wertschätzung! WISAG heißt Einsatz! WISAG heißt bunt!
K E P P E L D ATA C E N T R E S
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Keppel Data Centres has invested heavily in its back-up power system to support its ability to provide an Uninterrupted service europe.businesschief.com
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STS-Tecom, CBRE and WISAG, all providers of professional and innovative data center services “Those companies go above and beyond what you ask for,” says Mueller. “They see issues that need to be resolved and work fast, effectively and collaboratively in order to provide a smart solution. “As we embark on this growth journey, having partners that can provide that level of innovation and collaboration will continue to prove instrumental.”
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At the time of writing, Keppel is very much at the start of this growth journey in Germany. Having finalised the acquisition of its Frankfurt data centre at the end of last year, and an official operational date earmarked for July 2018, what does the future hold for Keppel in Germany and beyond? Mueller feels that the current data centre market in TIER 1 cities across the world is dominated by the likes of Google and Facebook, responsible for close to 40% of market growth in 2017 alone. This, he believes,
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will change the customer demand across the data centre market. “We will see more and more businesses being hooked up to hyperscale platforms,” says Mueller. “This part of the market will grow further, mostly in built-tosuit environments - but there will always be an important customer base demanding an enterprise offering with proximity to the cloud. “So, you could argue that we may lose some customer groups being soaked up by hyperscalers,
but at the same time we will maintain customers that need to run mission critical services and they will always focus on top notch, highly secure and hyperconnected data centres, which is what we have in our portfolio. “Take all of that and throw in the fact that we can deliver a connected platform with those larger regions like Asia and Singapore, and we will become a key player for any business looking to expand their own reach,” concludes Mueller.
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N I M R O F S N N A E M TR E R U C E O C PR NHAN E O O J T T N E D U ST rm a n u t S erine Durrant h t a by C ichard n e t t i Wr by R d e c u Prod
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L A U R E AT E I N T E R N AT I O N A L U N I V E R S I T I E S
Francisco Zuriguel, VP Procurement, discusses his work to transform Laureate’s procurement operations to better serve its students
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ith a mission to make learning accessible to all, Laureate International Universities enables students to unlock their potential and further their careers. Spanning more than 20 countries, its multifaceted approach has been enhanced through its procurement transformation. Providing world-class sourcing, supplier, product and service capabilities, Laureate’s procurement team enforces the organisation’s global mission to promote accessibility and works to create further value as a strategic partner. “At Laureate, procurement is organised in two regions, the Americas and Europe, Middle East, Africa & Asia (EMEAA). I lead the strategic sourcing across EMEAA,
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guiding a team of high-performance professionals in each country who are responsible for supporting more than 60 institutions that are part of the Laureate network,” explains Francisco Zuriguel, VP Procurement. “I devise and enforce strategic sourcing plans to assure adherence to procurement policies, processes, ethics and supplier relationship management guidelines by all procurement staff. Additionally, I interact and build relationships with internal stakeholders, countries and regional C-suite professionals to understand the needs of the business.” Procurement transformation Throughout his tenure, Zuriguel
S U P P LY C H A I N
Dr. Nery Parada Bonilla
“I devise and enforce strategic sourcing plans to assure adherence to procurement policies, processes, ethics and supplier relationship management guidelines by all procurement staff� Francisco Zuriguel, VP Procurement
L A U R E AT E I N T E R N AT I O N A L U N I V E R S I T I E S
VIDEO: OneCampus by Lau
‘LAUREATE INTERNATIONAL UNIVERSITIES ENABLES
STUDENTS TO UNLOCK THEIR POTENTIAL AND
FURTHER
THEIR CAREERS’
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has continually sought to bring detailed visibility and essential processes to the table at Laureate. “The procurement division was completely decentralised, with a focus on tactical sourcing, with no standardised global processes, policies, or visibility into spending – that could result in inefficiencies or further opportunities for improved controls,” he says. Taking on the challenge with gusto, and with support from Chief Executive Officer Eilif Serck-Hanssen (who previously held the role of Chief Finance
S U P P LY C H A I N
“Apollon Fanzeres, our Chief Procurement Officer, has been instrumental in building and establishing the Laureate procurement team”
ureate
Francisco Zuriguel, VP Procurement.
Officer) and Apollon Fanzeres, Chief Procurement Officer, Zuriguel has created a world class regional procurement team to serve the needs of its students. “Apollon has been instrumental in building and establishing Laureate’s global procurement team. His leadership and guidance allowed us to successfully execute on the objectives identified within the procurement division. Without him nothing would have happened the way it finally occurred,” says Zuriguel. “He brought expertise in
both procurement and in global companies at the Senior Executive level, as well as an enormous influx of energy that influences everyone from the top, down.” Implementing an increasingly effective organisation structure as a result of the Excellence in Process (EiP) global initiative, the procurement division has developed into a Procurement Centre of Expertise (CoE), incorporating policies, processes and procedures to professionalise its functions. “Today, we operate on a
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geographical and category expertise basis. We have country procurement CoEs and global category leaders providing strategy, guidance and category expertise. Two Regional VicePresidents then look after the country Procurement CoEs, as well as build and maintain relationships with the business and C-level executives,” adds Zuriguel. “A series of shared service centres (SSCs) were also built to
‘ZURIGUEL HAS SOUGHT TO BRING DETAILED
VISIBILITY AND ESSENTIAL PROCESSES TO THE TABLE AT
LAUREATE’
ENVIRONMENTAL SERVICES
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RESOURCES & INDUSTRIAL
TRANSPORT INFRASTRUCTURE MAINTENACE
UTILITIES
Ferrovial Ser vices is a provider of end-to-end solutions for cities and infrastructure. It has a solid international p r e s e n c e in s t ab l e r e gi o n s an d wit h a w o r k f o r c e o f m o r e t h a n 6 9, 0 0 0 .
www.ferrovial.com
S U P P LY C H A I N
The Volunteer network in AIEP
oversee transactional operations and tactical purchasing, which enable the Procurement CoE to focus on strategic sourcing.” Team resilience A key focus within Laureate’s procurement operations has been the development of its procurement team. Adhering to a five-year roadmap, incorporating the implementation of business intelligence (BI) and e-sourcing tools, strategic sourcing initiatives, a savings methodology and much more, it is clear that the organisation continues to place procurement at the centre, in order to provide student-focused solutions.
“With the contribution of our country teams, global category directors and peers in the Americas, today we can better serve our students. It is a truly collaborative environment within the procurement organisation,” says Zuriguel. “I work closely with my colleague in the Americas, Jose Mello, where we are constantly sharing best practices and helping each other. He is an experienced and humble professional from which I continuously learn.” With up to 50 employees within the procurement organisation, Zuriguel has sought to eradicate
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“Laureate has embarked in a new programme called Positive Leadership, where we invest in training and energising our teams, while encouraging best practice and sharing throughout the organisation” Francisco Zuriguel, VP Procurement.
certain obstacles in order to allow for the development of key sourcing strategies. Professional development is also encouraged throughout a number of initiatives. “Laureate has embarked on a new programme called Positive Leadership, where we invest in training and energising our teams, while encouraging best practice sharing throughout the organisation. We provide face to face training, as well as online training, where employees can develop expertise in areas such as strategic planning, change management or leadership. We 126
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also facilitate certifications, if they are interested, like CPSM,” Zuriguel explains. “We also encourage mobility when possible and we always recognise success. It is important to acknowledge others, to make your team to feel recognised. It doesn’t have to be a monetary recognition, but many times a sincere thank you note is much more appreciated.” Supplier diversity Leveraging its supplier partners for quality, innovation, growth and total cost of ownership,
S U P P LY C H A I N
Laureate has unlocked increased quality and educational services across its entire portfolio. “Apollon decided that we had to have a motto in procurement, which is: ‘World Class, World Wide,’ and we won’t stop until we get there,” adds Zuriguel. “Consequently, our supplier base is quite diverse, where we have an interesting mix of global, regional and local vendors due to our many
Universidad Europea de Madrid
different geographies, as well as a strong base of local suppliers.” With a number of specific services in certain markets, working with local suppliers has supported Laureate’s mission to promote educational accessibility. Its B-Corp certification also cements its drive to work with local vendors. “We work on a global and regional basis with IT and
VIDEO: 2017 Here for Good Awards Winner - Faculty/Staff
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facilities management (FM) vendors, as well as for specific medical equipment. Other than this, we rely on local vendors,” reflects Zuriguel. “In FM and food services, Ferrovial has been crucial for our FM operations in Spain and Portugal as well as Sodexo that supports us in a number of geographies, working closely with Jose Verdejo, our Category Director for FM. Both companies have helped us to standardise processes. “GE is also working with us on a global lighting project to help us become more efficient in our energy usage, and to become more sustainable, something which is increasingly important for students,” he continues. “With regards to medical equipment or printing, Laerdal, Konica Minolta, 3B Scientific and Ricoh are all working closely with Andre Khoury, our Category Director for Administrative and
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Professional Services, as well as Telefonica, HP, or Optus on the IT side, who are working with Randy Estep our IT Category lead. “We also have good relationships with consultancy firms like KPMG, EY and Accenture that have been supporting us in different projects.” As the industry increasingly moves to put the student at the centre, Laureate will continue to enforce and drive highlevel education, but at the right cost for its students. “Nowadays, students have more information than before and want to have the control and flexibility to study at their own pace. They also want to participate more and be more involved in everything regarding their education and want to take advantage of new technologies as much as possible,” concludes Zuriguel. “Online and hybrid education will become more and more important in the upcoming years to cater to this growing market.”
‘WORKING WITH
LOCAL SUPPLIERS HAS SUPPORTED
LAUREATE’S MISSION TO PROMOTE
EDUCATIONAL ACCESSIBILITY’
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MARRIOTT INTERNATIONAL BRINGING AUTHENTICITY BACK TO THE F&B MARKET Written by LAURA MULLAN Produced by BROGAN BAGGOTT
Championing bespoke, authentic and locally-relevant restaurants and bars, Marriott International is leading the way in the food and beverage space
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THE BIG DOG MARRIOTT BERLIN
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hether you want to chow down on a spaghetti carbonara in Rome or sip a wheat beer in Belgium, today’s consumers are searching for a true taste of their locality. Embarking on a major overhaul of its restaurant and bar offerings, Marriott International is serving up an authentic slice of European cuisine and it seems that both hotels guests and locals alike are eating it up. At the age of 15, Gustaf Pilebjer worked as a kitchen porter and since then worked his way through every single position within the restaurant and bar Food & Drink. Most recently having spent the past decade as a consultant developing F&B concepts for the hotel industry and independent operators. PICTURES: LUTZ VORDERWĂœLBECKE
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BEAUTY AND THE BEEF “Nothing short of spectacular” H o n g K o n g Ta t l e r
R E S TA U R A N T C R E AT I O N S
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“Star studded”
T h e N e w Yo r k T i m e s
R E TA I L & F O O D S E R V I C E S C O N C E P T S w w w. r i c c a r d o g i r a u d i . c o m w w w. b e e f b a r. c o m
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In doing so, he has gained a wealth of experience and insight into the mechanics of a successful restaurant and bar operation and has risen up the ranks to become the Director of Food and Beverage, Europe, for the world’s largest hotel chain.
BESPOKE RESTAURANTS AND BARS Whilst Marriott may be better-known for its hotel offerings, Pilebjer says
that food and beverage sits front and centre in its strategic plan. “The hotel Industry as a whole has really awakened to the importance of the food and beverage market,” he says. “Food and beverage are at the heart of Marriott’s strategic thinking. It’s one of our key priorities to be able to stay relevant and lead the way in the restaurant and bar market.” With stringent competition and a global brand to uphold, creating a ground-breaking restaurant or
FISKE BAR
THE RITZ- CARLTON GENEVA
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bar concept is no easy feat. But Pilebjer believes Marriott has a meticulous plan for success. “I think our key differentiator is that we appreciate there is no cookie-cutter solution for food and beverage, particularly when we look at a continent like Europe where we’re looking to be present in over 30 countries and where every single outlet needs to be relevant to that space,” he says.
“If you try to use a uniform mould of what a restaurant or bar should look like you’re not going to create something that’s attractive to the local crowd,” he continues. “We don’t create food and beverage outlets solely for our hotel. We also position them so that they are relevant to the local market so that local guests will want to come to these outlets. “This is at the heart of the strategy: we want to be locally relevant and
FOOD & DRINK
we aim to attract 80% of the locals and 20% of the hotel guests. I think it’s very important that we open up the space for the local community to utilise it. We want to honour the local traditions, local cuisines, and the local concepts that are in that market. It’s about being mindful of what the local community desires.”
AN AUTHENTIC, CULTURALLY-RELEVANT EXPERIENCE
“
FOOD and
BEVERAGE
are at the heart of Marriott’s strategic thinking ” GUSTAF PILEBJER, Director of Food and Beverage, Europe
For Pilebjer, the importance of a locally relevant, authentic cuisine experience cannot be overstated and it is a trend which has swept right across the food and beverage landscape. The experience movement is certainly more prevalent than ever, with three in four millennial consumers saying that they would rather pay for an experience than a product, according to a study by Eventbrite. “Today there is a great amount of pride in what the local cuisine is,” notes Pilebjer. “Whether it’s in
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Budapest, whether it’s in Stuttgart, whether it’s in London or elsewhere, we’re seeing a trend whereby people want to taste the local cuisine. “It’s also about experience,” he adds. “Diners today are seeking out culinary experiences. When our travellers fly to Istanbul, they don’t want to sit down and have a slice of pizza. They want to have an authentic taste of where they are.
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“We know that the millennial generation is already now, the largest segment of the travel industry and that’s only going to be increasing in the coming years. This overarching food and beverage strategy which we have ensures that we are able to cater to this curious generation, to make sure that we not only stay relevant but that we also try and lead in this millennial space.”
FOOD & DRINK
THE PICKLED HEN MARRIOTT PARK LANE
REMARKABLE GROWTH Since its acquisition of Starwood Hotels and Resorts two years ago, Marriott International has gone from strength to strength. It’s an exciting time for the company – it has doubled in size and has expanded its restaurant and bar offering – and with a range of new builds and refurbishments underway, Pilebjer says it’s only
the beginning of things to come. “My team I have worked on over 100 different types of renovations, repositions, and new build F&B projects,” Pilebjer says. “Food and beverage is a very individual market, and it’s also always a little bit of a gamble, in terms of whether an outlet is going to be successful or not. Whether the local market will be susceptible to it or not is
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THE PERCEPTION BAR W LONDON
DINERS TODAY
“
are seeking out
CULINARY EXPERIENCES.
When our travellers f ly to Istanbul, they don’t want to sit down and have a slice of pizza. They want to have an authentic taste of where they are” GUSTAF PILEBJER, Director of Food and Beverage, Europe
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always a little bit of an unknown. “But the one thing you can control is the way that you go about researching, brainstorming, developing, designing, and deciding if this is something that is appropriate to the market and designing it accordingly.”
METICULOUS PLANNING AND RESEARCH Tapping into his experience as a restaurant and bar concept consultant, Pilebjer takes a collaborative approach when designing both brand and concept.
By working with a roster of some of the industry’s leading food and beverage consultants, interior designers, property owners, and more, Marriott International strives to create a bespoke restaurant and bar concept which adds something different to the current marketplace. Although such scrupulous research and planning may seem time-consuming, it’s a critical aspect of Marriott’s strategy. “I think that the one thing which I’m very, very passionate about, very strict about, is the fact that
MOKKI
THE RITZ- CARLTON ASTANA
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we go through the feasibility and the concept ideation phase before going into design,” says Pilebjer. “It can be a bit of a battle sometimes but it’s important to see the process through and stay consistent with the original concept which has undergone the sound process of market feasibility studies. If you get all these things right, then you can create a locally relevant and beautiful food and beverage outlet.” As high streets become saturated with food and beverage outlets, Marriott has ensured that it cuts through the noise with its unique attention to detail which puts the guests at the forefront of everything it does.
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MULTI-PURPOSE SPACES Whether guests are working over brunch or going to a romantic dinner in the evening, Marriott understands that different guests will use the space for different reasons. Therefore, Pilebjer and his team have worked diligently to ensure that Marriott’s offerings are multipurpose and transition throughout the day. This thought process impacts how the company designs its spaces and even the type of service that guests may need. “That’s the difference between accessible and non-accessible F&B outlets: it’s having that attention to the detail and following the right steps in
FOOD & DRINK
DEAK STREET KITCHEN
THE RITZ- CARLTON BUDAPEST
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order to be able to develop something that is compelling and authentic through the day,” Pilebjer notes. “It’s about ensuring that the space transitions throughout the day; that the music, the lights, and the service stay true to each time period,” he continues. “Depending on whether you’re having a coffee, sitting and working on a laptop by yourself for a couple of hours, or if you’re sitting down and having a dinner, there’s a different type of attentiveness that you want from your service staff to deliver also.”
INDUSTRY-LEADING SERVICE Casual, attentive and knowledgeable: this is how Pilebjer defines the service that Marriott International provides and it is this which has helped to differentiate the firm as a major player in the Food & Drink. With around 700 restaurants in
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its portfolio, Marriott International has become a platform for some of the industry’s leading talent and expertise. Explaining the appeal of Marriott, Pilebjer says: “On a more global and strategic level, we have worked to make Marriott attractive to the artisan – those people who care and dedicate their lives to a certain field, whether it’s being a bartender or a chef or even a front of house manager. We’re working very hard to identify this talent, showcase them and tell their story in that way. In Marriott’s hands, they are an employee for the future.” Standing as the largest hotel company in the world, Marriott International has gained a glowing reputation for its hospitality offerings and now, as it champions local, culturally-relevant cuisines and concepts, it seems its restaurant and bar offerings are gaining the spotlight also.
CAELUM BAR
FOOD & DRINK
ST REGIS ROME
BERNERS TAVERN
LONDON EDITION
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Using technology to transform the QSR experience Written by Dale Benton Produced by Andrew Lloyd
McDonald’s Sweden is overhauling its IT infrastructure, placing the restaurant experience at the project’s core
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he very nature of the multibillion-dollar global quick service restaurant (QSR) industry is changing, and technology is the driving force. For Anders Westling, IT Director and CIO of McDonald’s Sweden, over the course of the last 20 years through a number of digital, technology and management consultant focused roles, he has seen first-hand just how much the IT function has changed. “When I started, IT was seen as the responsibility of the tech guys who would deliver technology in bits and pieces,” he says. “If you wanted to deliver solutions within a company, you’d have to bring in many different vendors and you had to have in-house development in order to be able to deliver the requested services.” As IT has become more mature, with companies boasting much more mature IT infrastructure, the “bits and
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pieces” model of approaching IT and technology has begun to disappear. “More and more vendors have understood that IT can be delivered as a service, a one stop shop,” says Westling. “It becomes less of a technology conversation based on ‘what’ technology we need and centres much more around ‘how’ the business can be developed and how technology can support that.” Westling joined McDonald’s in 2015, having been headhunted based on his strong experience in the IT space. His task? To restructure what he described as a malfunctioning IT infrastructure. His first observation was to look at how McDonald’s IT function supported, or in this instance isolated itself, from the delivery of McDonald’s services to its customers. Westling notes that as an organisation, McDonald’s was “more or less automated”, with the
TECHNOLOGY
A self-ordering automated kiosk at McDonald's
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Global IT Strategic Partner
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MCDONALD’S IT infrastructure operating almost entirely separate to the business function. As technology advanced, and the perception as to what IT could do to support and enhance an organisation, this old model was hindering McDonald’s in Sweden. The challenge for Westling was to speak to more than 40 franchisees across Sweden to understand their pain points with IT and, more
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importantly, begin to understand how to implement solutions to fix them. “I also looked at the organisation and how we should reorganise ourselves to meet the businesses demands and to find the right resources to enable us to do so,” he says. “That became a case of looking at and understanding close to three years’ worth of resources inside a timeframe of around two months.
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TECHNOLOGY
McDonald’s has introduced automated kiosks at over 100 locations in Sweden
“We worked in a small team to pinpoint what was considered to be some of the worst areas, and overall I’d say this took about nine months in total before we began to see noticeable improvements in our delivery.” As we enter Q2 of 2018, three years into a seven-year transformational journey, Westling can already point to significant progress. Across more than 100 restaurants throughout Sweden, McDonald’s has
introduced a new production system (Made to order) that is powered through self-service order kiosks. Running alongside this, the company has also launched a mobile application in which customers can utilise promotions and will soon be able to order and pay before they arrive, and only recently it even introduced table service at a number of its franchisees. “Table service has been very much appreciated by our guests,”
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Westling says. “The new service will be rolled-out in a rapid pace in Sweden. McDonald’s Sweden will also launch home delivery. First in the Stockholm city area but other cities will follow soon.” These changes represent the notion that the technology conversation is much more focused on how you can develop your service delivery. “What has happened is that we are now more able to focus on new services and trying to establish a new restaurant experience for our customers,” says Westling. But Westling admits that this has been a process that has required patience, a direct result of that
malfunctioning infrastructure. Part of the challenge for Westling centred around McDonald’s working with a large number of IT vendors, and so he set out to streamline those vendors and work with what he describes as “critical partners”. “Our franchises are planning to be in business for the long run and so we need to have partners that possess the muscles and the strength to be right alongside us in both the good, and the more challenging times,” he says. “Our partners must understand our business and the challenges ahead, be involved in our planning, share industry and technology insights with us,” he continues.
“We worked in a small team to pinpoint what was considered to be some of the worst areas, and overall I’d say this took about nine months in total before we began to see noticeable improvements in our delivery” – Anders Westling, IT Director and CIO of McDonald’s Sweden 156
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“The relationships that we forge with these partners is crucial as we work together on a number of levels. We need to be able to place the implementation of technology and operations into their hands, while simultaneously being able to work on a practical level in order to develop a roadmap together.” Creating that roadmap has been a significant part of the journey to date, both internally across the franchises and of course with those critical partners. This roadmap would identify what activities and plans were in place for the future of McDonald’s and how Westling could incorporate IT services and technology into those plans. This, he feels, meant that the early stages of this transformation were dedicated to “getting the lights on”. “Those first six to nine months were centred around getting this journey up and running, putting the implementations in place,” he says. “We were having meetings with the franchises, explaining what we were doing and working internally on establishing IT services. There were many different areas that
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42% 42% OF DINERS WOULD USE SELF SERVICE ORDERING KIOSKS IF AVAILABLE we had to work on in order to improve the overall IT delivery.” As the company continues to develop, Westling admits that it’s an ever-evolving process. Towards the end of 2016 and throughout the second quarter of 2017, he admits that the organisation spent around 85% of its time “keeping the lights on”, with the remaining 15% spent on businesses development and implementing new initiatives. “At this moment in time, I’d say its now 65% on keeping the lights on,” says Westling. “But it is a continuous journey, and this will
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MCDONALD’S
only continue to change as we move into the future and continue to implement this IT infrastructure and new business capabilities.” “A significant expansion of the number of restaurants in the Nordic region is waiting - 100 new restaurants in the Nordic countries over the next five years and 200 in 10 years,” he adds. ”We serve 150 million guests a year and the vision is to reach 200 million a year in the Nordic region. This will require us to step up and deliver reliable restaurant operation and at the same time conduct
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many critical projects with a lot of digitalisation and technology involved.” With technology transformation it can be easy to forget the key driving forces behind such a significant journey. For some it could be keeping up with competitors, for others it could be identifying and enabling greater cost efficiencies. For McDonald’s, the driving force has and forever will be the guest. As technology continues to redefine the QSR industry, the guest has undoubtedly changed with it. In the digitally enabled
TECHNOLOGY
70% IN THE US MARKET, QSR’S ARE SEEING AS MUCH AS 70% OF THEIR OVERALL BUSINESS COMING VIA THE DRIVE THRU LANE world of today the guest expects a certain level of accessibility and efficiency through technology. To that end, Westling believes that the guest journey and experience is running alongside that of McDonald’s in parallel. “I think the guest journey and experience is changing all the time. I mean, we have a quite competitive market in Sweden with a number of existing fastfood brands and new players are entering the market with new and different technologies,” he says.
“The biggest competitors are the ones that have spent a lot of energy in developing the customer journey like we are at McDonald’s and in that regard, the restaurant experience is changing overall.” Westling stresses the importance of understanding that it’s not a case of trying to reinvent the restaurant experience, rather it is one that develops to suit the ever-changing demands of what a guest expects from the restaurant experience. “It’s not all technology, it’s also, at the end, how we run the restaurants,”
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he says. “We need to run great restaurants and the technology needs to support that. We can’t create a great restaurant, we’ve got to understand the importance of how we run the restaurant to establish the restaurant experience of the future.” But what comes first? Does McDonald’s listen to the guest and then implement? Or does McDonald’s define its own technology and restaurant experience and the guest follows suit? For Westling, he’s not too sure if it’s the “chicken or the egg”, admitting that there is a sense of collaboration as guests come from different restaurants in different countries and expect the same level of experience to be had in McDonald’s, regardless of where it is.
But he also stresses that the company approaches it from its own viewpoint and being a part of the larger McDonald’s corporation proves key. “We’re trying to understand our guests, but we are also learning from other markets and other countries,” says Westling. “We look at other markets to see how table service or self-service order kiosks work and how that can shape our own experience. “As a large company operating in a number of different countries around the world, it really helps us implement new services very rapidly. Sure, the customer experience may be different in Denmark, or Norway, but a kiosk is a kiosk. “It’s more about how technology can support the guest journey in order to
“It’s more about how you implement the guest journey into the technology in order to deliver a great customer experience. That’s what’s more important” – Anders Westling, IT Director and CIO of McDonald’s Sweden europe.businesschief.com
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deliver a great customer experience. That’s what’s more important.” It’s all well and good striving to deliver the best possible restaurant experience, with innovative technology supporting it, but this cannot be achieved without high quality staff that understand this changing landscape. McDonald’s spends a significant amount of time investing in training and educational programmes to better enable its staff to understand and be able to utilise the new technology. As Westling himself admits, working in restaurants now is so much more
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than simply “greeting the guests”. “It’s continuous work and we spend a lot of time on training,” he says. “We are working with and educating all levels of staff to increase the knowledge and understanding of technology. We’re working in many different areas to increase the knowledge and understanding of how the experience is changing.” Technology is a continuously evolving beast. The technology and the IT infrastructure that McDonald’s has already implemented today could be obsolete, or at the very least
TECHNOLOGY
Anders Westling IT Director and CIO
Anders Westling has many years of experience in senior positions in internationally operating Retail and FMCG organisations. Westling has also worked as a Management consultant for larger organisations to implement service management, deal with “emergency projects” and to carry out major organisational re-structuring, digital initiatives and change management.
lagging behind the market demand in as little as six or twelve months’ time. Westling points to the importance of having that roadmap and close collaboration with the restaurants, business functions as well as those critical partners as key to remaining ahead of the curve. With more opportunities to be more digitally enabled, Westling believes that the key thing to understand is to be exactly where the guests are and not to be where McDonald’s feels it ‘should’ be. “We have self-service order kiosks, we have mobile apps, we are now
implementing table service and home delivery,” he says. But Westling concedes that the most important component, is focusing on the guests restaurant experience and how technology can better enable that. “We need to improve and free up more time for our employees though digitalisation to allow them to spend more time with our guests,” he says. “I think that’s crucial and it helps us improve the way we listen to our guests. That will define our future and exactly how we continue to implement technology into our restaurant operations.”
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Delivering light rail in Denmark’s third TO OPEN IN 2020, THE largest city DUE LIGHT RAIL SYSTEM ODENSE Written by FRAN ROBERTS Produced by LEWIS VAUGHAN
LETBANE WILL REVOLUTIONISE TRAVEL IN THE CITY. MOGENS HAGELSKAER, CEO, EXPLAINS MORE
E
U R OPE HAS AN extensive number of tramway networks, although Melbourne in Australia boasts ownership of the world’s largest tram system. All the former communist countries of Central and Eastern Europe, excluding Lithuania, the Republic of Macedonia, Montenegro, Moldova and Slovenia, have extensive tram infrastructures. Many cities closed their tram programmes last century due to the rapid increase in traffic. However, in recent decades, tram networks in countries including the UK, Ireland, France, Germany, Spain and Portugal have grown considerably. Denmark is the latest country to re-embrace the tram – 45 years since the last tram ran in Copenhagen, a new tram system is being constructed in Odense, in addition to one in Aarhus. Following the Odense Letbane Construction Act in spring 2015, the construction company Odense Letbane P / S was established. It is 100% owned by Odense Municipality, but acts as an independent company. Perhaps most famous as the birthplace of the author Hans Christian 168
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A final layer of concrete being poured, before tarmac is added on Albani Bridge Andersen, Odense is hoping to become a global leader in sustainability. “It is a very green city and a very blue city as well,” acknowledges Mogens Hagelskær, CEO at Odense Letbane. “Of course, from an environmental point of view, we are obligated to look into how can we reduce the CO2 or emissions in any way. How can we re-use braking energy? How can we utilise solar cells on top of the roof of the control room centre?”
CONSTRUCTION
“ FROM OUR PERSPECTIVE, THE TRAMWAY IS THE MOST IMPORTANT PROJECT OF ALL OF THEM BECAUSE WE ARE COMBINING THE SINGLE STRATEGY TOWARDS A HIGHER SCALE AND WITH THE INFRASTRUCTURE” – Mogens Hagelskær, CEO
A DANISH CITY ON THE RISE The tram system is part of a wider regeneration scheme in Odense after the city was hit hard by the global financial crisis. “15 years ago, there were a lot of industrial areas in Odense but due to the financial crisis they were closed,” explains Hagelskær. “The former Mayor and CEO of the municipality, together with the city council, decided that instead of just slicing their way out of it by cost cutting,
they wanted to invest in the city.” The planned total investment in urban development from 2012 to 2022 is DKK 44bn (US$6.8bn). As a result of this, 38,000 new temporary jobs and 10,000 new permanent jobs will be created. US$6.8bn may be a small amount compared many other projects – London’s Crossrail project is scheduled to cost US$23bn – but in Danish terms, it is a considerable investment. “Odense is moving from a medium europe.businesschief.com
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sized city to a great city in Denmark,” Hagelskær notes. “It’s not only enough to have a city. You need culture, you need sports, you need good shopping and restaurants, you need education, you need transport. “All these things are handled in the one big overall strategy of getting to a greater city and they are all projects attacking the same three principals – that is attraction, growth and transformation of the city. Of course, from our perspective, the tramway is the most important project of all of them because we are combining the single strategy towards a higher scale and with the infrastructure.”
TRANSFORMING ODENSE The overall strategy of making Odense a great city is one that Odense Letbane is determined not to lose sight of. “The tramway scheme in Odense is being built in four legs. It is our vision of the tram that it is supporting the overall city vision. All in Odense need to be careful because it’s not the end goal to deliver a tramway. It is just a step to the end goal. The end goal is to make to transform of all of Odense,” observes Hagelskær.
Construction began on July 1st 2015 and then mayor, Anker Boye, cut the first section of tarmac To support the overall objective, Odense Letbane envisions that it will support development work in Odense generally and especially within 400m of each station. “We know that there will come a lot of investment, we see it already. We support new infrastructure and we are integrating and strengthening the public transportation infrastructure, both the existing railways and the highway,” states Hagelskær. From the public transportation point of view, Odense Letbane is also supporting and transforming the bus system.
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transport challenges in the coming years. On the outskirts of the city, a new university hospital and science campus are under construction, and the existing university is planning to double its capacity over the next couple of years. “By 2024, we can see that more than 60,000 people on a daily basis will travel in and out of that area. That is approximately the same as a medium sized city in Denmark that needs to go in and out of an area. We cannot do that with the existing infrastructure,” acknowledges Hagelskær. “Second of all, we have an ambition
in Denmark that it will only take one hour to come from Copenhagen to Odense and one hour from Odense to Aarhus, the second largest city in Denmark. If that is going to be realised then we will be looking at double the amount of people coming in and out of Odense station on a daily basis. That means that we will have a lot of congestion in that area.” Many solutions to these challenges were proposed but, in the end, the tramway is the one that Odense is going with. “The tramway will carry more than four buses and more than
“ WE HAVE AN AMBITION IN DENMARK THAT IT WILL ONLY TAKE ONE HOUR TO COME FROM COPENHAGEN TO ODENSE AND ONE HOUR FROM ODENSE TO AARHUS, THE SECOND LARGEST CITY IN DENMARK.” – Mogens Hagelskær, CEO
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200 cars worth of passengers each time that it enters the stations,” Hagelskær comments. “On top of that, of course, there are a lot of extra benefits and developments that come with urban development. But actually, the core objectives and the core business case are in the capacity of the tramway.”
LESSONS LEARNED In August 2012, the competition for the design and visualisation consultancy for the Odense tram system was won by a team consisting of Niras, PLH Architects, Atelier Villes & Paysages and MBD Design. In March 2015, Parsons Brinckerhoff won the contract for project management, and strategic and economic advice. COWI was selected as technical advisor. Following on from that, in June 2015, preparatory work began involving the city’s water and sewer pipes – work that will be hard to do once the rails are in place. “We are actually taking a risk out for the big contractors by doing all the utilities diversions. That is from lessons learned from programmes in the UK where they have tried to do it at the 174
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The utilities diversion has had a big impact and all along the tram line the utilities have been updated to modern standards, whilst the water supply and sewer system has also been upgraded to better accommodate heavy rainfall
“ WHEN YOU LOOK INTO HOW WE’RE GOING TO BUILD THE TRAMWAY, WE HAVE DIVIDED IT UP IN A VERY LOGICAL WAY” – Mogens Hagelskær, CEO same time and you are always surprised by what’s happening under the road,” notes Hagelskær. The tramway project has been split into four different construction phases. “When you look into how we’re going to build the tramway, we have divided it up in a very logical way,” Hagelskær observes. After the utilities are moved, the roads, bicycle lanes and pavements will be built. Then after that the tracks, the masts and the stations. Finally, the focus will be on greenery. “We’re
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planting one or two trees every time that we are removing one,” adds Hagelskær.
COMPETING ON EFFICIENCY In the beginning, Odense Letbane decided to tender out the project as DBOM – design, build, operate and maintain. However, it quickly became apparent that there would be a lack of competition, driving up prices, as few companies could deliver all that was required within the tender. It was then decided to split the civil works into
individual packages, as well as packages for the transport system and the rolling stock. The contract for rolling stock has been awarded to Stadler. “We now have divided the whole alignment in the civil works into seven smaller packages because we can see that in Denmark it was too large a scale of packages for one contractor, and we couldn’t attract international civil workers or construction companies to come and do that for us,” acknowledges Hagelskær. “To have the highest competition possible, we divided them into certain packages. We have done the detailed design so our contractors are competing on the efficiency that they will provide in the construction phase. Right now, we have tendered up five out of the seven packages and we will have received the last two packages before 1 March.”
NEW MONEY The first of 16 Variobahn trams is expected to be delivered by Stadler to Denmark in autumn 2019, while the whole fleet is scheduled to enter service by the end of 2020. Despite being almost three years away, the europe.businesschief.com
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Odense tram project is already attracting developers to the city. “We can see already that a lot of developers are attracted to Odense, even developers we haven’t seen in the city before,” Hagelskær comments. “There’s actually new money coming into the city here, and what we see from other projects is that a tramway is a generator for growth – there will be urban development. Not only the ones that we had planned for already, but also new ones that we wouldn’t have seen coming before. It means that the municipality must treat the tramway as strategic to their overall planning.” It is hoped that investment will flow into Odense with new businesses developing along the route of the tram. In 2010, a modern tram line opened in Bergen, Norway, and Odense Letbane uses this project as a point of comparison. “At this point of time in the project, there were approximately DKK 17bn [$2.6bn] invested near to the tramway tracks and that is similar to us here in Denmark. We have approximately DKK 15bn [$2.3bn] in investment within a 400m radius of the tramway right now,” remarks Hagelskær. “The challenges that we are facing is that an
“ THERE’S ACTUALLY NEW MONEY COMING INTO THE CITY HERE, AND WHAT WE SEE FROM OTHER PROJECTS IS THAT A TRAMWAY IS A GENERATOR FOR GROWTH, THERE WILL BE URBAN DEVELOPMENT” – Mogens Hagelskær, CEO urban tramway as we’re building in Odense, there are very few people in Denmark with experience of building a tram like that.”
GAINING COMPETENCE This lack of experience of building tramways in Denmark has certainly been a challenge for Odense, although neighbouring countries have been sources of inspiration. “Building a tramway in the city centre, that is something new in Denmark,” Hagelskær comments. “We haven’t seen that from past history, so the capacity of the competence is very high for us to gain. We do of course get a lot of inspiration from how they’ve europe.businesschief.com
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Committed to the best railway infrastructures COMSA’s 125-year history and its international presence vouch for its capacity to undertake all kind of projects in the infrastructure sector. Today it finds itself among the leading construction companies in Spain and it has a strong international presence in over 20 markets. The company has been involved in the development of all high-speed lines in Spain and in other countries like Australia, Italy or Taiwan. It also has a wide experience in the metro and tramway sector. In this last field, COMSA has carried-out the construction of the Line 1 of Bursa and Line 3 of Gaziantep, both in Turkey; Lines A, B, and C in Dublin (Ireland); the west Madrid light railway and the trams of Barcelona, Murcia and Malaga (Spain), as well as track upgrades in the cities of Porto (Portugal), Turin (Italy) and Adelaide and Melbourne (Australia).
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done it in the UK, France, and Germany.” In all Danish towns and cities, cycling is one of the most common means of transport. According to the country’s official website, it is estimated that there are more than four million bicycles in Denmark and more than 10,000km of designated cycle tracks and routes. As the tram system takes shape, care must be taken to manage the space available for traffic. “The pedestrians and bicycles are using the same space as we are building on, so there’s a lot of congestion. You see people are stopped in their cars but there’s a lot of things that you need to balance when you’re doing this. You need your alignment to work for your construction site, but you also need to take into the account that the city must function when you are doing the construction,” Hagelskær acknowledges.
COORDINATION AND COMMUNICATION There will be 26 stations on the line from Tarup in the north to Hjallese in the south. At 14.5km, the first phase of the tram system extends through much of Odense. As well as ensuring that the city can function during construction, Odense Letbane must also take into
It is estimated that there are more than four million bicycles in Denmark account other projects that are happening in the city. “We need to have a lot of mutual adjustment, coordination and communication together,” explains Hagelskær, referencing the aforementioned university and hospital projects. “The city needs to be facilitators to the common investment. That means that we are actually adjusting or balancing a lot of bottom lines in a project like this. That is not a simple job to organise.”
FOCUSED DISCUSSION The impact that the project has on the citizens of Odense is also an important europe.businesschief.com
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consideration for Odense Letbane, and is reflected in how the management team operates. “We are very focused on the fact we are dealing with other people’s money. It is public funded. We make an effort. When we do things, we don’t cut corners to make decisions. When we make a deal, it is a deal and we work through it. We are setting the direction as the management team and are clear in our communication to our employees,” Hagelskær comments. “From my point of view of what we have done here is we have focused on
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the organisation part. The leadership, clarity and principles. We are looking very much to cultivate a performance culture, and we are making huge efforts to not only promise a lot of things but also putting it into practice. From the organisational perspective and the focus, we have managed to have an independent board with only nonexecutives,” observes Hagelskær. “That means that they are here to support us. They are skilled in the various disciplines of maintenance, design, good governance, and
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stakeholder management in Odense.” The team built a mission control centre – known as On Track – to help the project stay exactly that. “I thought that we had a lot of management meetings, where we were discussing a lot of things but I thought we weren’t discussing the right topics. I wanted to cut all the filler out of the discussions and then know what is the most important thing to discuss together with my senior management team. It’s a very focused discussion surrounding, so that everyone can
contribute to the success that we are planning, and we will not talk about all the things that are running smoothly,” Hagelskær advises.
INFORMING THE NEIGHBOURHOODS At the heart of all of this is communication. “Communication is very important for me because, at the end of the day, this is Odense’s tramway. It’s not my tramway,” Hagelskær explains. “We will go out there, knock on people’s doors asking them if they feel that there’s any information that
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Mogens Hagelskær (left) discusses the project with a member of the public they want or need from us. If they are not informed they are very easily going to say no to the tramway, but if we have informed them and they say no, then we have a much easier discussion than if they are saying no on an uninformed basis.” From the beginning of the project, Odense Letbane has laid out a clear vision for the project, allowing effective communication to residents about the impact of the tramway, and thus maintaining support for it. “When we are nearing the construction phase, we will have information meetings in the
neighbourhoods. We have divided the tramway route defined areas, and then we will go out there, inform residents about what will happen, when it will happen, and how it will affect them on a daily basis,” Hagelskær advises. When Odense Letbane is undertaking the construction, its staff will also be there on bicycles and with an information wagon. “We will have a very close sense of if there’s going to be any rumours in the areas, so we actually can tackle that as well as giving them the information in the right place,” explains Hagelskær. Press, digital channels and social media are also utilised by Odense Letbane to keep residents informed about the project. “Neighbourhood communication is very important for us. To have that face-to-face communication along the route and using channels such as mobile exhibitions, guided walks along the route or through the outdoor campaign to decorate the europe.businesschief.com
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• Odense Letbane is the public company responsible for developing the first light rail line in Denmark’s third-largest city
• I n March 2015, Parsons Brinckerhoff won the contract for project management, and strategic and economic advice.
• Melbourne in Australia maintains the title of the world’s largest tram system
• In June 2015, preparatory work began involving the city’s water and sewer pipes
• 45 years since the last tram ran in Copenhagen, a new tram system is being constructed in Odense, in addition to one in Aarhus
• T he tramway project has been split into four different construction phases
• T he planned total investment in urban development from 2012 – 2022 is DKK 44bn (US$6.8bn). As a result of this, 38,000 new temporary jobs and 10,000 new permanent jobs will be created. • T he tramway will carry more than four buses and more than 200 cars worth of passengers each time that it enters the stations • In August 2012, the competition for the design and visualisation consultancy for the Odense Light Rail was won by a team consisting of Niras, PLH Architects, Atelier Villes & Paysages and MBD Design.
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• T he first of 16 Variobahn trams is expected to be delivered by Stadler to Denmark in autumn 2019, while the whole fleet is a to enter service by the end of 2020 • T here will be 26 stations on the line from Tarup in the north to Hjallese in the south. • At 14.5km, the first phase of the tram system extends through much of Odense
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An important part of Odense Letbane’s communications throughout 2017 was a mobile exhibition, parked around busy public spaces and where construction work was taking place
fence for the construction site,” reveals Hagelskær. We’re making a digital learning concept for the school children as well.”
SELLING THE PROJECT Communication and a coherent vision has played a key role in driving a performance culture at Odense Letbane, which in turn has helped to rally support for the project. “When I’m looking at performance culture, I’m looking knowing what to do when there are challenges so that you will steer out of the fence and not into the fence,” states Hagelskær. “How we dealt with it here in our organisation is that we
are very clear on the vision and we are very clear on the objective of the programme. That was what was certain when we were selling the project to the politicians or to the citizens. At that time, we were very good at defining the vision.” When the tram system arrives in 2020, Odense will no doubt wish to continue emulating Bergen, which has seen a steady increase in passenger numbers, numbers increasing by 2.3% on the previous quarter in Q3 2017, according to Statistics Norway.
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SOURCING THE RIGHT BLEND IN PROCUREMENT Written by James Henderson Produced by Richard Durrant
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THE WORK OF EELCO VAN DER ZANDE AND HIS EMEA SOURCING TEAM AT STARBUCKS IS REAPING REWARDS
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iven its obvious presence on the high streets of Europe, Middle East and Africa (EMEA), it is difficult to believe that the first Starbucks in the region opened just 20 years ago in London. The brand has exploded in popularity in the intermittent years, and there are now thousands of outlets across the territory. The scale of the Starbucks’ footprint brings inevitable challenges in terms of its supply chain, sourcing and procurement operations, especially when you consider the wide spread of its stores across the geography, and that around 85% its sites are not company-run, instead being run as a licensed operation. Up until three years ago, the sourcing and procurement approach of sourcing partners was to a certain extent fragmented, from time to time
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“I would say expanding our relationships with our key suppliers is very important, getting a better and better view on who are the right suppliers to work with and developing the supply model with them” EELCO VAN DER ZANDE Director Strategic Sourcing for EMEA, Starbucks leading to an inconsistent execution. Enter Eelco van der Zande, the company’s director of strategic sourcing for EMEA who today leads the team for direct and
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indirect spending for Starbucks EMEA, covering all COGS, operational and capital spend to support a business that generates over $1bn in revenue annually. The Dutch native came to Starbucks with logistics and sourcing experience in Europe and Asia and quickly recognised the challenge. “It was important that we brought together how all of our partners were sourcing; there was a lot of good work being done, but we felt that there was a lack of consistency and that perhaps the right tools were not being used consistently. The various partners were also reporting into a number of different managers so we perhaps were not maximising our output as a team,” comments Van der Zande from the company’s hub in Amsterdam. “We thought about how we could benefit from using standard systems and processes and really look to professionalise the sourcing function. A large part of that was to free up our senior people from admin as there was evidence that it was very time consuming for a lot of them. Another important piece of work was the
SOURCING SUCCESS A great deal of the success of the sourcing team is down to its talent and diversity, according to Van der Zande. “Having a lot of good people, good talents with the right mindset is absolutely critical. I believe the sourcing function really will change through the years from much more internally focused and looking at cost towards more of an ‘outside-in’ and relationship management focus. “I think with that it brings a different mindset, and also a different skillset that is required. It means having the right people that embrace change is just crucial to the success of sourcing teams. On top of that, in my view another enabler to team success is having real diversity in the team. I would describe diversity in different ways – it’s either about cultural backgrounds, but it’s also about gender, it’s about age, and I think by looking at the right balance in your team from a diversity perspective, you get better sourcing teams.” europe.businesschief.com
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“There is a lot of focus on creating endto-end visibility in our supply chain and that will allow us to better understand demand and supply patterns� EELCO VAN DER ZANDE, Director Strategic Sourcing for EMEA, Starbucks
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conversation with our cross-functional peers about how to create value in a defined way. So that was an open talk about costs, innovation, risk and quality, which – amongst other outcomes – led to us changing the team structure so that we are much more focused on licensees and franchises and how they are organised from a sourcing perspective.” This approach has fostered a closer working relationship with the company’s licensees as strategic partners, with very regular communication between licensee groups and Starbucks. “I would say the most important thing for our business to keep in mind is that although the licensees operate our brand, and they have the rights to operate our brand, we almost need to deserve the right to work with them in terms of investing in their business and spending their money. So, the acknowledgement that the licensee is actually the investor and the entrepreneur and it’s their money that we eventually are able to spend, that recognition is just super crucial
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Goglio North Europe offers solutions for packaging materials that must excel in run-ability on packaging lines and must be spot on with expectations on design. Of course needless to say that our offers must match clients expectations on shelf-life to have the final consumers enjoy a fresh coffee, even if it has been packed 6 months ago. Goglio offers total partnership on logistics and forecasting to have demands on-time and in-full. Fres-co System International offers solutions to pack coffee on an automatic packaging machine and maintain it in the best possible ways. We team-up with our clients to determine the best machine that can do their bags at the requested speed and corresponding with all quality aspects you can think of. Last but not least we gladly share our experiences using Industry 4.0 standards that measures variables in order to identify a potential problem before it really happens. www.goglio.it Provincialeweg 200, 506MG Zaandam, The Netherlands +31 (0)75-6518000 Arthur van Dijk | Sales Director Northern Europe +31 6 1508 1975 | Arthur.vandijk@goglio.it
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in my view,” says Van der Zande. “It’s a very close collaboration with our licensees that we require, and it’s exciting, because creating a ‘demand driven value chain’ gives a very entrepreneurial spirit to how we work.” Within the business itself, Van der Zande says that one of his main goals was to make sourcing be seen as a real value creator and ally. “It was important that with the programme of work that we were doing we were not considered the disruptor,” he comments. “We didn’t want to take exciting work away from people, rather
we became a sustainable supporter of driving business. That meant being clear to other departments that we are not cost-cutters or savings chasers, but rather a team to help improving margins and ensuring the top and bottom lines align. “And in our company, as we are so brand and product focused, by definition product related spend gets a lot of attention. So we worked hard to also focus on improvements in nonproduct spend categories, which I think was a really valuable thing to do.” The team has also been driven
Video: Starbucks Year of Good
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“At the moment we have about 9mn mobile paying customers, and in the US at the moment already one out of three customers are actually using mobile order and pay” EELCO VAN DER ZANDE, Director Strategic Sourcing for EMEA, Starbucks
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by a recognition of the importance of indirect spending. “There will always be more of focus on direct, but indirect can and does play absolutely a pivotal role. Take, for example, what marketing services can do to us or the wider benefits of procuring 100% green energy to drive our corporate sustainability agenda. These are really important things for us and it gives the opportunity to actually talk a little bit more to our consumers about what we buy and how we buy.�
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By Van der Zande’s own admission, Starbucks has perhaps been guilty of taking quite a conservative approach when it comes to technology adoption in the supply chain in past years. But, he says, its efforts have been accelerated in the last two years, as the company has embraced what technology can offer, to the extent that Starbucks considers digitisation
one of its three key pillars of growth. “It is and will be a major driver of our business,” Van der Zande says. “We expect and have already achieved a lot with what we call ‘Mobile order & Pay’, and its functionality. At the moment we have about 9mn mobile paying customers, and in the US at the moment already one out of three customers are actually using mobile
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order and pay. That’s quite impressive and our challenge now is to actually expand that platform globally. Each customer coming into Starbucks, whether it’s a company-owned store or a licenced store, should be able to order online, or through its mobile app. Through that platform we can actually engage much closer with the customer and actually further grow our business. Then, back to the adoption of technology in the supply chain:
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“There is still significant work to do on the supply chain and sourcing side, but we are making progress and digitisation is absolutely key to our supply chain strategy. In the two years since Starbucks brought in new, strong supply chain leaders in both global and regional teams, there has been a lot of focus on creating end-to-end visibility in our supply chain and that will allow us to better understand demand and supply
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patterns. We’re working on supply and demand maps, and by doing so that gives us a lot of information in order to further optimise supply chains, specifically our source to pay function.” Clearly, great strides have been made by Van der Zande and his sourcing team supporting Starbucks’ presence across Europe, Middle East and Africa; that 100% of its supplier base comes from ethical sources is something he is, rightly, very proud of. But there
is clearly still an ambition to iterate and continue to refine the function. “We certainly want to continue to grow with our licensees and strengthening our sourcing collaboration with them is something I am very passionate about investing in,” he says. “I would say expanding our relationships with our key suppliers is very important, getting a better and better view on who are the
right suppliers to work with and developing the supply model with them. By doing that I think we get to a better supplier development and recognition programme, which will set us up for further success and future growth: Our licensees, our suppliers and Starbucks.”
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A true root-and-branch procurement transformation
Written by LAURA MULLAN Produced by RICHARD DURRANT
WHILST OTHER TELECOM COMPANIES HAVE STRUGGLED, TURKCELL HAS BLAZED ITS OWN PATH IN THE SECTOR THANKS TO ITS AWARD-WINNING PROCUREMENT PRACTICES
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NTIL RECENTLY, PROCUREMENT was seen as a necessary, but rarely celebrated, aspect of daily business. But times have changed. Nowadays, procurement sits squarely at the heart of almost every five-year plan and business strategy in a way the sector could never have imagined. Embarking on an ambitious root210
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and-branch transformation of its procurement function, Turkcell has seen considerable success in recent years, reporting record revenues of $4.9bn in its last fiscal year. Ali Türk, the firm’s Executive Vice President of Supply Chain Management, says that by championing resourceful buying practices and close-knit supplier relationships, procurement is elevating the company to new heights. “If you want to stay strong and
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“IF YOU WANT TO STAY STRONG AND COMPETITIVE IN THE MARKET, YOU HAVE TO ESTABLISH A POWERFUL PROCUREMENT FUNCTION”
competitive in the market, you have to establish a powerful procurement function,” he explains. “While the role of procurement used to have a supportive and reactive function, it now has a strategic and central role in the organisation. “We have a responsibility to contribute to the company’s strong
– Ali Türk, Executive Vice President of Supply Chain Management
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“ CONSOLIDATING GROUP SPENDING AND BRINGING THE DIFFERENT PROCUREMENT UNITS UNDER ONE UMBRELLA WAS ONE OF THE TOUGHEST CHALLENGES WE FACED” – Ali Türk, Executive Vice President of Supply Chain Management
financial structure, leadership in corporate business, and superior customer experience.”
A DIGITAL OPERATOR Procurement isn’t the only thing that’s changing at Turkcell. A few years ago, the Turkish firm was better known for its mobile infrastructure, but today it has earned its stripes as a fully-fledged digital operator. Growing its value-added services – its digital communication platform ‘BiP’, music platform ‘fizy’, TV platform ‘TV+’, digital publishing platform
‘Dergilik’, search engine ‘Yaani’, cloud platform ‘lifebox’ as well as its legacy communication services – Türk says that the company no longer sees itself as a mobile operator, but as “the only digital operator in the world today.” “Turkcell has transformed its role from being an infrastructure focused service provider into an experience focused digital operator,” he adds. “Our digital services are giving us the opportunity to share every moment with our customers, 1,440 minutes in a day. It gives us a competitive edge over our rivals in the market right now. europe.businesschief.com
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“We closed our last fiscal year with a 23.4% increase in local currency revenues, thanks to our 4.5G investments and successful digitalisation model,” he adds. With a footprint across Turkey, Ukraine, Belarus, Northern Cyprus, Germany, Azerbaijan, Kazakhstan, and Moldova, Turkcell has evolved to become an international technologydriven and customer-centric company.
POWERFUL PROCUREMENT Procurement has played a pivotal role in this shift and, as a result, the chief of procurement has gained a welldeserved place at the company’s executive board level.
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In his role, Türk is responsible for the procurement of approximately $1.1bn in annual capital expenditure (2017). With 300 people in the supply chain management team, Türk says that procurement is contributing to the company’s finances and enhancing its sales activities. “Buying decisions have a direct effect on company’s’ earnings before interest, taxes, depreciation, and amortisation (EBITDA),” explains Türk. “This is one of the most important reasons why we are in close cooperation with our finance people. “It’s helping us streamline processes, better serve our internal customers’ needs and identify better sources of
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supply,” he continues. “In essence, supply chain management plays a critical role in reducing the bottom line spending and increasing the top line revenue growth.” The Chartered Institute of Procurement & Supply, better known as CIPS, represents one of the highest procurement standards in the world today. By overhauling its procurement function, Turkcell emerged as one of the first companies in the country to achieve this certification. Along this journey, Turkcell has seen an ‘external transformation’ whereby it has grown its relationships with its suppliers; an ‘in-company transformation’ which it changed how it
Investing in its people This procurement journey wouldn’t be possible without the talent and expertise of Turkcell’s employees. Therefore, the Turkish company has developed a unique Young Talent Program, Digital Masters Program and Marketing Masters Program to help nurture the company’s skills. “We have taken serious steps towards recruiting the best talent on the market, enhancing the capabilities and competencies of our employees,” says Türk. “Our people are one of the key drivers behind our groundbreaking results.”
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communicated with internal stakeholders and management; as well as a ‘structural transformation’ where its internal procurement function underwent organisational changes.
Ali Turk addresses a group of Turkcell’s leading vendors
EXTERNAL TRANSFORMATION Sustaining strong supplier relationships is a critical aspect of supply chain management and, when working with almost 1,800 suppliers, it’s something Turkcell doesn’t take lightly. As a result of a workshop with its top 20 strategic vendors, Turkcell has started to work towards increasing the transparency of its supply chain, using digital tools like online supplier portals and e-auctions. Vendors can apply for active tenders through Turkcell’s online supplier portal, with 95% of tenders being published publicly. Additionally, with 90% of Turkcell’s sourcing carried out through e-tendering, suppliers can also bid online through Turkcell’s e-auctions. “Online tendering tools are very efficient and transparent,” notes Türk, “so this means suppliers can no longer claim that they have the lowest offer or that their offers are not being assessed. 216
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“The procurement team has also benefited from our supplier’s positive change in perception, the reduction in negotiations, and the data we can collect from submitted offers,” he adds. “We are trying to stop evaluating our suppliers from a price-driven approach and trying to build long-term valueadding partnerships.” On top of this, the Turkish company has promoted an open-door policy with suppliers. This means that if a supplier
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wants to get in touch with Türk’s team they can have a face-to-face meeting in less than two weeks. “Although it can be tough and timeconsuming, these practices have increased the level of confidence our suppliers have in us and it has supported the transparency of the organisation,” he says.
IN-COMPANY TRANSFORMATION Yet, Turkcell has not only transformed
how it works with its suppliers – it also works more closely with internal stakeholders and management to reimagine its procurement function from the inside-out. With a seat at the top level of the organisation, the procurement team has weekly meetings with internal management every week, which has helped to increase its visibility. “With the new C-level presence, the power of distance between top management and the procurement team has vanished,” Türk bserves. “The new structure has increased the confidence of the procurement team and support from top management has helped to enhance the teams’ awareness and capabilities.” Cooperating closely with Turkcell’s finance division, procurement is also helping to manage the company’s strong financials by providing cash flow reports, opex optimisation programmes and capex per revenue analysis, for instance, to see visible financial results. Increasing the visibility of the procurement function, Turkcell has also formed a strategic buying committee which Türk says has been a roaring success. “The strategic buying committee europe.businesschief.com
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was also a great opportunity to impress top management and show how procurement can bring additional value to the business,” he notes.
STRUCTURAL TRANSFORMATION Perhaps one of the biggest transformations, however, is how Turkcell’s internal procurement function has evolved. With over 30 companies under the Turkcell umbrella, the digital operator consolidated its group spending into one centralised procurement team. “Consolidating group spending and bringing the different procurement units under one umbrella was one of the toughest challenges we faced,” notes Türk candidly. “However, the company has not only profited from the increased budget, our smaller group companies were also benefited by the unified processes and contracts which helped to deliver savings.” In the midst of Industry 4.0, digitisation has also had a ripple effect on the company’s procurement function. The Turkish-based company has created a digital cockpit which monitors the company’s supply chain management, sales, network operations, marketing and HR in real time. With the help of this digital cockpit, Turkcell has made dashboards which combine different reporting tools, on the same platform, using different data sources. By developing and customising its current infrastructure, this digital cockpit makes access to information possible in real time monitoring. On top of this, procurement has also developed a supplier integration project with one of its vendors for real-time order monitoring. “Today if your strategies, resource planning, and business 218
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BiP users are able to make voice and video calls as well as messaging services
models are not in line with digitisation, it is impossible to be successful,” Türk says. “Therefore, we have digitised our processes, services and more to make real monitoring possible throughout the organisation.” All of these initiatives and policies have accumulated to form an immense transformation, one which demonstrates the firm’s innovative thinking, strong business practices, and collaborative approach.
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a mammoth task but it hasn’t gone unnoticed by the international supply chain community, apparent as Turkcell scooped up accolades at both the Supply Chain Excellence Awards and the inaugural Procurecon Europe in association with CIPS SM Awards. Procurement is a discipline that is defined by the need to meet aggressive cost targets, and thanks to its awardwinning procurement strategies Turkcell is meeting this challenge head-on. Working with around 1,800 suppliers, the company deftly tackles supplier relationship management with its suppliers’ performance management tool and its supplier management system. These tools allow Turkcell to track its procurement processes from endto-end and also allow it to measure suppliers’ performances using key performance indicators. In turn, this is helping to promote supplierenabled innovation and cost-effective procurement. On top of this, the company also manages its strategic business partners using a Key Account Management (KAM) model. Using this model, the firm promotes a dedicated, standardized,
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•T urkcell reported an 23.4% increase in revenues to TL 17.6bn (c.$4.9bn) in its last fiscal year. •9 0% of Turkcell’s sourcing is done through e-tendering. •9 5% of Turkcell’s tenders are published publicly on its online supplier portal. •T here are 30 companies under the Turkcell umbrella.
disciplined and heightened focus that ensures tasks are fully completed to a high-standard in an efficient way. Türk also credits the firm’s innovative bundling negotiation technique for some of its success. “We have changed the rules of bundle negotiations and transformed it into a more planned, structured, systematic and collaborative structure,” he adds. Understanding the collaboration is key to success, Turkcell has also organised a Supplier Summit whereby the company can explain its strategies
and expectations, make new business connections, strengthen existing relationships, and discuss new market trends. In a similar vein, Turkcell’s procurement team is collaborating closely with its finance division. By working together, the pair approach the firm’s budget in a very disciplined manner, meeting challenging capex and revenue targets. With enviable financial health and some of the industry’s leading procurement practices, it seems Turkcell is set europe.businesschief.com
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to continue on its upward trajectory. But what are the next steps for the digital operator? As a Turkish company, one of the company’s main focuses is supporting local production and local firms that will contribute to the country. What’s more, the digital company has also revealed that it is participating in a joint venture to create the country’s first national car and it is also helping to develop smart cities using its 4.5G technology. Forecasting a surge in demand for data, Türk also says that the company will continue to tap into the growing demand for data, leveraging its search
engine ‘Yaani’ and developing new tier III data centres. “We expect that demand for data will keep rising as we see more and more 5G technologies,” he says. “Everybody needs to understand that a country which does not own its data is a country that is going to disappear in the future.” In order to keep Turkish data in Turkey, the company notably has several data centres in the country. “All of these data centers have been built to Tier III certification in order to provide security and management services for our customers at the highest international level,” Türk adds. Keen to show leadership in
“ WE ARE TRYING TO STOP EVALUATING OUR SUPPLIERS FROM A PRICE-DRIVEN APPROACH AND TRYING TO BUILD LONGTERM VALUE-ADDING PARTNERSHIPS” – Ali Türk, Executive Vice President of Supply Chain Management
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corporate business, Turkcell is also looking for new opportunities as a health technology provider. For example, the company has embarked on a series of city hospital projects in partnership with one of the main health investor companies in Turkey to help usher in a new era of digital hospitals. “We have digitised city hospitals from end to end by installing and managing the latest technological infrastructure and IT management systems,â€? TĂźrk explains. On top of this, the firm is also exploring opportunities as an educational technology provider.
All in all, it seems Turkcell has truly evolved from the company it was when it was first founded in 1994. It has undergone an extraordinary shift, putting procurement at the heart of its strategy. As such, whilst other telecom companies have struggled, Turkcell has blazed its own path in the sector.
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Developing digital tools
for the modern
banking age Written by Catherine Sturman Produced by Kiron Chavda
Investing in new digital tools has transformed Virgin Money’s service offering, putting the customer in control. Chief Information Officer, James McGlynn, tells its technology story
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igital disruption is impacting every business sector, not least of all financial services. Increasing customer expectation has seen the emergence of new technologies to meet the growing demand for greater control and flexibility in the way that people manage their finances. This shift has led financial institutions to transform traditional ways of working and invest in new solutions to remain competitive, deliver a frictionless customer experience, drive down costs and enable future business growth. “Customers expect to be able to manage their finances whenever and wherever is most suitable for them and technology is the key to
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meeting and exceeding their expectations,” explains Chief Information Officer of Virgin Money, James McGlynn. An electronic engineer by background, McGlynn witnessed how the 2008 financial crash led to the subsequent acquisition and merger of financial institutions and the emergence of ‘challenger banks’, creating a seismic shift in the financial market. This disruption has also been supported by the development of new digital tools designed to make banking increasingly seamless, with new services devised specifically around the customer experience. “You could argue that in a future Open Banking market, three things will become increasingly important for
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banks. Firstly, what your brand stands for and the customer experience that underpins it,” notes McGlynn. “Then how you gather and protect data. And finally, delivering customercentric propositions to make people’s lives better, financially or otherwise. The banks who find the optimal balance of these three elements will prosper in the long term.”
BIO
VIRGIN MONEY
Leading edge technology Innovation is key; however, the real differentiator is how innovative technology is operationalised and implemented in a stable, secure way to operate at scale. Many exciting betas or prototypes exist but to truly bed-in a stable tech environment, takes skill and time. “At Virgin Money our size and scale is a competitive advantage. We have operational maturity, whilst being relatively more agile than the larger incumbent. Our technology transformation plans are focused on exploiting this agility via the development of re-usable services and cloud technologies. Re-usable services allow us to break down
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James McGlynn
Chief Information Officer Trained as a Marine electrical and electronic engineer and spent the first five years working overseas on oil/gas exploration projects. Spent 15 years in manufacturing in production, change and IT roles, latterly heading the European Manufacturing Systems division for Motorola Semiconductors. Following that, five years as Managing Director of building technology companies from startup, including an executive role in a football club. Then joined HBOS/Lloyds Banking Group in various change and CIO roles for seven years, latterly as Group Change Director for Lloyds Banking Group. Joined Virgin Money in August 2013 as Change Director, then CIO in 2015.
Innovating to Stay Ahead
The future is exciting.
Ready?
“We support Virgin Money to innovate for customers, enable colleagues to be more productive and to make efficient use of technology... together.” Search Vodafone Business
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complex systems into components which we can use to create different products and services quickly. You build something once and then you reuse it multiple times,” says McGlynn. “This has given us a faster lead time to market and lowered operating costs. It also gives us an open, extensible model where we can bring in the benefits of open APIs and sharing services with our commercial partners to expand our customer propositions. “We are also focused on the journey to transform physical computer systems and assets into Glasgow Virgin Money Lounge
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Cloud services which enhances our capability to flex the scale in line with business growth while avoiding linear cost growth.”
Consumer confidence To respond to the changing needs of customers and colleagues, Virgin Money needed a secure and highly reliable data infrastructure capable of running applications and services that would improve the user experience. That’s why Virgin Money partnered with Vodafone. The telecoms giant worked closely with Virgin Money to first understand the company’s
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needs and growth strategy in order to deliver the right solutions. “Vodafone has a strong pedigree in the finance sector, and our best ever network provides a future proofed data infrastructure that can scale to meet Virgin Money’s needs,” explains Mick Wayman, Head of Major Business at Vodafone UK. “We spent lots of time understanding the Virgin Money business and aligning our capabilities to their needs. We also shared insights from our own experiences and our market knowledge to help Virgin Money in
their own decision making. “The full portfolio of services we offer allows Virgin Money to consolidate the number of strategic suppliers they engage with and builds a cohesive future technology roadmap. “Our fixed and
Customers expect to be able to manage their finances whenever and wherever is most suitable for them and technology is the key to meeting and exceeding their expectations – James McGlynn, Chief Information Officer, Virgin Money
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VIRGIN MONEY
Video: Investments in 3 minutes
Together we can create new opportunities and value. We call this Digital Co-creation.
Digital technology touches all of our lives. At Fujitsu, we bring together customers and partners from different industries and combine them with digital technology and expertise to create new value and opportunities. Find out what Digital Co-creation could mean for your business at www.fujitsu.com/digital-cocreation.
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mobile services are underpinning business critical change programmes across the UK. Vodafone teams have worked closely with their Virgin Money counterparts to make sure services are delivered ahead of schedule. When challenges were encountered by either side throughout the roll outs, we worked quickly and collaboratively to find solutions that would ensure business outcomes were not placed at risk.” By working with Vodafone to design a network solution that’s tailor-made for its needs, Virgin Money now has the secure, reliable data infrastructure it requires to provide customers with the best possible digital experience, both today and well into the future.
Changing attitudes The use of ‘big data’ analytics, open API’s and Cloud Services is set to grow across the financial sector. “The number of third party services that contribute to the end-to-end value chain between a bank and its customers can grow exponentially. This is a risk,
but successful businesses will be the ones who understand how to take advantage of this ‘ecosystem’ without losing the ownership of their customer,” adds McGlynn. Building mutually beneficial partnerships to create a resilient ecosystem has been essential for Virgin Money, and has furthered the business in standing apart from the competition. “Many businesses treat IT services as commodities, which can be consumed in-line with contracted service level agreements. We have a different take on that and believe that everyone who provides services to our customers with us and for us, needs to understand our principles, our values, and ultimately love our customers as much as we do,” adds McGlynn.
Strengthened Operational Performance In a world of fast-changing technology it is imperative for the business to work closely with partners that have the scale, innovation capability and commercial
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Future technologies are exciting differentiators but it’s still a matter of balance between rolling out an innovative technology solution while being able to operate that safely, reliably and at scale – James McGlynn, Chief Information Officer, Virgin Money
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Virgin Money Sheffield Lounge
strength to go the distance on the transformation journey. Partnering with Japanese tech giant Fujitsu, the company has brought a breadth of capabilities to the business. Most importantly, it has not only supported, but steered the development of its core banking platforms. McGlynn adds: “Fujitsu supplies the engine that drives our core banking services. The platform is reliable – quite simply, it is always on - and its performance is of the highest quality. Six Sigma performance measures are just expected when dealing with millions of customer transactions. “We have enjoyed a 30-year long relationship with Fujitsu, so we know that works but we have been impressed by the way that Fujitsu has embraced our EBO values and worked to further strengthen the partnership. Fujitsu treat us as a valued customer and work hard to understand what we are about, to build relationships and to bring us new ideas. “Fujitsu don’t rest on their laurels. They’re evolving their current service so that it can be more cloudbased and open. We put a lot of emphasis with them to make sure services are fast, secure and resilient. And that’s what they do, and they’re good at it. “Relationships, and a sharing of values runs deep between the two companies. Virgin Money and Fujitsu are working towards shared apprenticeship schemes that help school leavers enter the workplace,” he continues.
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“Fujitsu is using the Virgin Money Giving platform to support its in-house charitable work. And, in 2017, Fujitsu’s runners raised over £10,000 for the mental health charity, Heads Together, by running the Virgin Money London Marathon. A Fujitsu team will participate in the race again in 2018. “These add-ons may not look business critical, but they are really important to us. It’s what differentiates Fujitsu from other suppliers – the team gets what we are really all about.”
Advanced technological world Demand for staff to adopt a multiskilled approach within the CIO function has led the business to invest in its workforce and offer a number of graduate schemes for those currently in education. McGlynn notes: “We’re getting a different type of candidate who has a new perspective on
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technology which complements our existing teams perfectly. “To support our future plans we’ve got a very active STEM initiative with schools and colleges to get that groundswell of new talent and diversity into the technology market. “Future technologies are exciting differentiators but it’s still a matter of balance between rolling out an innovative technology solution while being able to operate that safely, reliably and at scale. Beyond that, the key is to not to forget the customer journey and experience. As such, the development of our technology strategy is about creating extensive end-to-end solutions, where we can continue to deliver the flexibility our consumers need. Making sure that we are business-led, safe and focused on what customers truly need, is the key,” concludes McGlynn.
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REDEFINING SUSTAINABILITY IN THE DATA CENTRE SECTOR Written by Laura Mullan Produced by Lewis Vaughan
At a time when sustainability is a key talking point in the data centre space, one of Europe’s largest internet companies is blowing the competition away with sustainable data centre operations
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rappling with some of the largest behemoths in the tech industry, in Russia, it’s Yandex which reigns supreme. Commanding 54% of the market in the region, Yandex owns Russia’s most popular search engine which also stands as the fourth most popular search engine globally – yet that’s not all it offers. Some 19mn people log into its online marketplace, Yandex.Market every month and its service, Yandex. Taxi accounts for 60% of Moscow’s taxi rides. On top of this, the Russian firm also offers products like translation services, map services, crowdsourcing tools and more. Right across its portfolio, Yandex strives to make everyday life simple, using data to empower its customers.
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Now the Russian web giant is, quite literally, giving power to citizens, with its state-of-the-art data colocation centre in Finland. Standing proudly in the southern province of Mäntsälä, Yandex’s data centre is a mammoth operation to behold, with five data halls at 500 sqm each.
A sustainable vision More impressive though, is the fact that this data centre is heating the local district’s water by reusing its waste energy. “As a dynamic technology company, we want to lead the way and bring new ideas and new innovations to the industry,” explains Ari Kurvi, the firm’s Data Centre Manager. “For us,
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it’s important to give back to the community and make full use of the excess energy we produce. “Half of the neighbouring urban city’s needs can be fulfilled by our excess heat which is environmentally very impressive, yet this isn’t just about sustainability as there’s also a very solid business case behind it,” he adds. “Therefore, I think it’s important to show the industry that this is doable and to encourage others to follow our lead.” Working alongside local Finnish energy company Nivos OY, the Russian web firm has developed a ground-breaking approach to heat production. The excess heat from Yandex’s data centre is collected and directed through the district heating network to Mäntsälä households. In doing so, the Finnish city has been able to reduce the price of heating and slash its emissions by 40%.
Energy efficiency realised The Mäntsälä data centre is built around an inherent need to drive efficiencies and its state-of-the-art district heating solution is a solid reflection of this ethos. “At the moment, our energy reuse factor is 0.31, which means that 31% of the energy what we take in can be recycled for further use,” notes Kurvi. “We are now embarking on the next phase of this energy reuse installation and through that, we hope to increase our energy reuse factor to
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The utilized waste heat does not burden nature nor wallet Households in Mäntsälä are heated by pictures, memories and data stored in Yandex datacenter. In data parlors 1000 stoves worth of heat is generated every second. Instead of wasting the heat it is collected by Yandex. Nivos, an innovative energy company located in Mäntsälä, recycles the heat into the district heating network in Mäntsälä. “We realized that we won’t get a data center locate to Mäntsälä unless we offer them an innovative and useful operating model. Therefore we studied how both parties could benefit from using the excess heat. When Yandex planned to invest in Finland we offered this type of business concept” Esa Muukka, CEO of Nivos talks about how co-operation started and continues. “And as you can see, the result is outstanding ecosystem between an energy company and a datacenter”
Local, emission-free and cheaper energy – everyone wins Nivos and Yandex were the first ones in the world to recycle waste heat from the data center
to the district heating network on this scale. Half of Nivos’ heating energy now comes from locally generated waste heat. Additionally, in 2017 CO2 emissions fell by 40 %. Because of this venture, Nivos has also been able to lower the district heating prices. “The waste heat is local, no emission, and cheaper than the natural gas from which the district heating was previously produced. When others are pushing for district heating prices, we will lower them: once the cooperation has started, prices have been lowered to customers twice.” Muukka tells. And of course for datacenters this means business. Nivos buys the excess heat on normal commercial terms. So the heat produced by the data center recovery decreases Yandex’s operation cost. “That kind of radical thinking requires a little positive madness,” laughs Yandex Data Center Manager Ari Kurvi. “Fortunately, plenty of courage is found on both sides. Nothing will ever change if you always go down the usual path.”
About Nivos Nivos is a trailblazer in the energy industry. Over the past few years, Nivos has developed an award-winning heat recovery system for a data centre, power grid automation and sensor technology, as well as distributed energy solutions, for example. Tel 019 68 991 | Customer service 019 689 955 Email service@nivos.fi Mäntsälä, Finland
www.nivos.fi/en/Yandex
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around 0.55 or 0.60, which means 60% of our energy will be reused.” Sustainability has become a huge talking point in the data centre landscape, as the facilities are leveraging increasingly more energy. In an alarming report by Climate Change News, the outlet suggested that the communications industry could consume one-fifth of global electricity by 2025. This is something which Yandex is taking seriously and it has many more sustainability initiatives under its sleeve.
exhaust area is,” says Kurvi. “This will also reduce the need for energy for fans on those days when it’s windy. “In a similar vein, the building was designed so that all its interior lights are LED lights, which keeps energy consumption low overall and this is one of the reasons we are best-in-class,” he adds. All of this has culminated to help Yandex achieve a power usage effectiveness (PUE) of 1.15 for the whole site including office buildings, one of the most efficient ratings in the sector.
Unique cooling design
An ideal location
The firm’s Finnish data centre not only boasts a trailblazing heating system, it also has been meticulously designed by engineering firm Royal Haskoning. With a distinguishing aeroplane wing shape, the Mäntsälä data centre has an efficient air-cooling system, which Kurvi says is integral to its energy-efficient standing. “By designing the building in the shape of an aeroplane wing and facing it towards the nominal wind direction, it creates a little bit of under pressure behind of the building where the
The Nordic data centre is just one of over 10 data centres that the Russian firm has across the globe and the choice of location
“This isn’t just about sustainability, there’s also a very solid business case behind it” – Ari Kurvi, Data Centre Manager
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Yandex operates ten data centres around the world
was by no means accidental. “There are many reasons why Yandex felt Finland was a good choice,” reflects Kurvi. “The power quality is very good, the cost of electricity is better than some other western countries, there’s a good availability of skilled labour, and the region’s strong fibre connectivity is also very important. “We use direct air-cooling in almost every data centre we have and, in this respect, the Finnish climate and clean air quality make this location
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optimal as there is cold, clean air available for cooling purposes. “As well as this, the local energy company was very willing to cooperate with us and build this ground-breaking new approach to heat production,” he adds. “In this region, they’ve already lowered the district heat price by 10% because they can reuse our excess heat. In this way, we have a very good citizenship approach. I think we are very well-known and well-accepted here because of this.”
Your business case today
translated in smart data centre space for tomorrow
Royal HaskoningDHV is an independent, international engineering and project management consultancy with 135 years of experience. Backed by the expertise and experience of 6,000 colleagues all over the world, our professionals combine ‘global expertise’ with ‘local knowledge’ to deliver a multidisciplinary range of consultancy services. By showing leadership and innovation in the design of data centres, we are creating solutions for a vital infrastructure in our modern live and empower a sustainable society now and into the future. For more information, please contact: Martien Arts, Director - Mission Critical Facilities T: +31 88 348 6550 M: +31 6 51846333 E: martien.arts@rhdhv.com www.royalhaskoningdhv.com/datacentres
Collaboration is King How a collaborative team approach helped DPR Construction deliver Yandex’s first data center build outside of Russia
Complex mission critical design and construction projects require cross-team collaboration. While there are performance metrics and benchmarks to help guide success, team dynamics can make or break a project. With a short timeframe for design, procurement and execution of its first data center outside of Russia, Yandex quickly realized traditional design and construction processes were not going to meet their needs. They also realized a traditional contractor would not fit the bill. Yandex enlisted DPR Construction, one of the top data center contractors in the U.S. over the past decade. DPR proposed an alternative plan that allowed for the design to be finalized during the preconstruction phase of work. The preconstruction effort took an innovative approach allowing the design to be completed without delaying the construction start. Preconstruction also fostered a collaborative effort between designers, Yandex and DPR, which maximized the design development. DPR implemented a 360° team approach, tying together the entire project team and eliminating silos. The collaborative team approach empowered and improved the speed of decision making by individuals and avoided the old “decision-by-committee” approach. When asked how to best manage and strengthen teams to ensure projects are set up for success, DPR’s Damian Farr outlined six crucial responsibilities for managing a project:
1 gigawatt and counting... Total data center power capacity put-in-place by DPR Construction around the globe to date.
Learn more about DPR’s experience and expertise at
www.DPR.com
1. D evelop a clear and common understanding of project values and goals. This is the foundation of a truly collaborative project — clearly defined project values and goals that are determined by all key stakeholders. 2. C learly communicate these values and goals to ALL participants. In addition to clearly communicating values with all participants, leaders must appropriately onboard any subcontractors or consultants, as well as continually reinforce the goals and values to the whole team through repetition and recognition. 3. C reate a functional physical and virtual space for co-location. To enhance performance, digital networks, collaboration systems and other elements must be established up front. 4. D efine the necessary project teams/select team members. Teams should be diverse, crossfunctional and have different viewpoints and perspectives. Not only does this diversity provide more information to inform the design, the tension between perspectives stimulates greater creativity. 5. P rovide training and mentoring for project teams. Training and mentoring should address three task performance issues: level and coordination of member effort; appropriateness of the task and performance strategies the team is using; and degree to which the team leverages all of its members’ knowledge and skills. 6. M onitor and adjust team dynamics as needed. The team’s strengths and weaknesses should be reviewed and addressed to minimize negative impacts.
ABOUT DPR CONSTRUCTION DPR Construction is a forward-thinking international general contractor specializing in technically complex and sustainable projects. Since 1990, DPR has grown with its customers supporting them internationally through offices in the U.S., Asia and the Netherlands.
DAMIAN FARR Europe Managing Director DPR Construction DamianF@europe.dpr.com +31 618 585 380 (NL) +44 7984 005 725 (UK)
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One of Yandex’s data centres
Operational excellence Like any data centre, operational excellence is at the heart of the Mäntsälä data centre and now, as the company’s data consumption and size swells, Kurvi says that there will undoubtedly be more data centres in the pipeline and, as the industry grows, he says tech companies have a civic responsibility to uphold the highest sustainability standards. “Yandex is growing fast and the demand for data centres is growing. I think we will expand the site or create a new one within the next two to three years or so,” notes Kurvi.
“On top of this, we’re also promoting operational excellence and maintaining the site so it stays in excellent shape. Of course, as any company, we are also reducing costs wherever we can electricity-wise by selling more waste energy and trying to be as energyefficient as we can,” he continues. “We are managing our own IT hardware design and combining that with energy-efficient ventilation and cooling to be the top-class data centre in the world – that’s where our concentration is at the moment.”
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Strong industry ties ‘No man is an island’, and the same can often be said about business. In the ever-evolving tech industry, new innovations are emerging every other day. Therefore, the right collaboration could set you miles ahead of a competitor and arguably no one understands this better than Yandex, “The business development unit in this municipality is one of the biggest reasons why Yandex decided to switch on its data centre in Mäntsälä,” says Kurvi. “They take care of our needs as well as our future plans and improvement plans.
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“One of our key partners has been MYK Oy, we’ve worked with them a lot to see how we can help the municipality grow, and bring new companies to the city, and in turn, we’re also enhancing our level of services. “Another key player is a company called Calefa Oy, who has delivered the heat reuse system for us,” he adds. “Together we have innovated and built the whole concept and they’ve also provided all the necessary equipment and heat pump solutions. They have been very open-minded and also have really helped us improve our sustainability.”
SERIOUS COMMITMENT IN PROJECTS AND SCHEDULES Telefuusio Ltd (part of Instalco concern) is a responsible-minded contractor specialized in telecommunications network (SCS) and audio-visual systems installation service (AV). We look after providing our customers with long-lasting telecommunications solutions. At the same, we take an active stand in regard to design errors, in case they occur during a project. Area of operation: We operate throughout and, if needed, outside Finland.
www.telefuusio.fi info@telefuusio.fi +358 45 133 0881
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100% uptime Although the firm is embarking on an ambitious sustainability drive, Yandex hasn’t forgotten the core objective of its data centre – to ensure that European projects by Yandex Data Factory, its machine learning and big data division, run consistently, without interruption. Today, ensuring the uptime of mission-critical operations is more important than ever with data centre downtime costing around $8,000 per minute, according to an in-depth study by the Emerson Network Power and the Ponemon Institute. Therefore, 100% uptime isn’t just a whim, it’s a necessity. “We have a lot of backup power generation onsite and have power reserves in case of emergencies,” Kurvi notes. “We also have an agreement with the Finnish national grid so they ensure the grid is stable. “It’s very important because we need to make sure we have 100% uptime for the company,” he adds. Since 1997, Yandex has delivered market-leading information services with over 53mn users logging into its services every month. The
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Russian web giant is presently one of Europe’s largest internet businesses and it expects sales growth to accelerate this year, forecasting that its consolidated revenue will be between 25-30% in 2018. With such imminent growth on the horizon, Kurvi is optimistic about the firm’s future, and the example it will continue to set in the data centre industry. “Where do I see Yandex in five years?” reflects Kurvi. “I hope that the Mäntsälä data centre will have doubled or tripled in size from what we are today. I would like to see us stand as one of the world’s most ecological and best-driven data centres from both a sustainability and operations perspective. I hope that our downtime will remain 0% and uptime 100%.” “Yandex is a very technical and competent company when it comes to designing and operating data centres. We are very innovative and we’re going in a direction where no one else has been. In that sense, we want to be known as a leading technology company and a leading data centre business.”
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“I would like to see us stand as one of the world’s most ecological and best-driven data centres” – Ari Kurvi, Data Centre Manager
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