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October 2017
HOSPITALITY PROCUREMENT
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DATABANK
SPACE INDUSTRY INVESTMENTS
FOREWORD HELLO AND WELCOME to the October edition of Business Review USA. This issue starts by looking at a new blueprint for digital transformation, a five-step plan presented in a new book by the Sentient Enterprise, part of Teradata. Answering our questions are Oliver Ratzesberger, EVP & Chief Product Officer, Teradata and Mohanbir Sawhney from the Kellogg School of Management at Northwestern University in Illinois. Next is a look into space and how more and more investment is being made into space-related projects. Daniel Domberger and Graham Carberry of investment firm Livingstone discuss the reasons behind this developing trend.
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Among our other excusive company insights is hospitality giant Marriott, whose Senior VP of Global Procurement StĂŠphane Masson reveals how the company has transformed its supply chain operations, not least through recruiting the right-minded people. Other supply chain focuses come from BDP International, Main Street Renewal and Knichel Logistics. The construction sector also comes under the spotlight in this edition, with two data centre focuses coming from Infomart and DataBank. Finally, be sure to read our top 10, which charts the 10 cities around the US that stand out for their commitment to social enterprise. Enjoy the read!
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CONTENTS
F E AT U R E S INSIGHT
08
TECHNOLOGY
TOP 10
22
30
Space industry investments,
Top 10 US cities for social enterprise
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CONTENTS
COMPAN Y PROFILES SUPPLY CHAIN 38 Marriott 64 BDP International 76 Main Street Renewal 90 Knichel Logistics 102 WERC
CONSTRUCTION 108 DataBank Ltd 132 City of Norman Water Treatment Plant Expansion Phase II 150 Infomart Data Centers
GIGABIT 162 Laureate Online Education
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BDP International
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Marriott
76
90
Main Street Renewal
Knichel Logistics
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102 WERC
DataBank Ltd
158 132
City of Norman Water Treatment Plant Expansion Phase II
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Infomart Data Centers
Laureate Online Education
THE SENTIENT ENTERPRISE
Inside a bold new framework for data-led business transformation W r i t t e n b y : R O M I LY B R O A D
The Sentient Enterprise, by Oliver Ratzesberger and Dr. Mohan Sawhney, aims to provide a map for navigating the treacherous waters of disruptive technology. It plots a journey to ‘a new model for analytic capability, maturity, and agility at scale’, with a promise to ‘change the way everyone in business makes decisions’…
IN AN INTERCONNECTED, datasoaked and increasingly disrupted business world, companies are rushing to embrace digitisation. They’re rushing, in part, because they no longer have much choice. The upstart challengers troubling their comfort zones began digital. Forged in data, they were born in a hurry. Disrupted enterprises are looking for answers. They’re pouring hundreds of millions a year into the deployment of data and analytics technologies. A recent TCS survey of companies across 13 global industries suggests the most progressive companies are spending $100mn or more annually on AI alone, and intend to ramp that spending by a further 30% by 2020. It is investment provoked by the burgeoning availability of data itself, surging at a speed only automation and advanced analytics can hope 10
October 2017
to handle; mere humans are no longer capable of processing what they’re seeing. So, capturing and fully exploiting insight from data erupting from all corners of company operations is now globally recognised as an existential necessity. But despite accelerating investment, companies that weren’t formed from data continue to struggle to live with it. Around two thirds of all enterprise-level software projects fail to deliver desired results, while - if one study is to be believed - up to 75% of executives think their projects are doomed to fail before they’ve even got started. One solution may have now arrived in the form of a new book from two storied luminaries of the digital industrial revolution. The Sentient Enterprise, by Oliver Ratzesberger and Dr. Mohan Sawhney, aims to
THE SENTIENT ENTERPRISE
“The tipping point is here, but the root of the problem is in scaling your decisionmaking capabilities to match the explosion of data and speed and volume of things to which you need to respond” – Dr. Mohan Sawhney, Kellogg School of Management
Oliver Ratzesberger EVP and Chief Product Officer at Teradata 12
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THE SENTIENT ENTERPRISE
provide a map for navigating these from trillions of website clicks and treacherous waters. It plots a journey hundreds of billions of transactions. to ‘a new model for analytic capability, Sawhney is the McCormick maturity, and agility at scale’, with a Foundation Chair of Technology, promise to ‘change the way everyone a professor of Marketing, and in business makes decisions’. Director of the Center for Research A bold claim, but it’s one the authors in Tech & Innovation at the renowned have some authority to make. Kellogg School of Management Ratzesberger is EVP and Chief at Northwestern University. He’s a Product Officer globally recognised at Teradata, a thought leader, company that’s been scholar, consultant at the forefront of and speaker. He has commercial data written many books, analytics for more now including this one. than 35 years. The Sentient Teradata can list 1,500 Enterprise of the world’s largest methodically lays and most data-rich out a framework for companies among a company’s digital – EVP and Chief Product Officer its clients, including transformation at Teradata the likes of Maersk, journey. It is designed VW, HSBC, AT&T, and to be applied major airlines (practically all of them). by leaders in businesses of any Teradata has been deeply involved in size, and with Ratzesberger and the remarkable turnaround of US telco Sawhney at the helm it’s a course Sprint, too, which you can read all informed by a qualified blend of about here. Prior to joining Teradata, hard science and hard practice. Ratzesberger developed a unified “We’ll be a North Star for that data platform at Sears Holdings and journey, rather than and end point,” led data warehousing and big data Ratzesberger tells Business Review at eBay, shepherding knowledge USA. “It’s not something you arrive
“It is the journey towards the ultimate goal of how to disrupt the rest of your industry, rather than be disrupted yourself”
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at and put a check mark against and say, ‘okay, I’m done’. It is the journey towards the ultimate goal of how to disrupt the rest of your industry, rather than be disrupted yourself.” The “a-ha moment” for The Sentient Enterprise philosophy occurred to the pair as they shared wine and cheese in a Chicago bistro in November 2013. Four years of further contemplation – and not a small amount of advancement in analytics technologies - has resulted 14
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in a book that seems perfectly timed. A tipping point has arrived, says Ratzesberger, where the convergence of data processing and increasingly universal sensorisation is fully upending entire business models and industries, confronting established players with radical challengers like Tesla, Uber, Airbnb, Square, and many others. “Our journey started years and years ago. We have both had the opportunity to see early adopters do very specific
THE SENTIENT ENTERPRISE
work in this space. Over the last 15 years, I have had the opportunity as a practitioner to drive some of the more advanced companies. But it is now scaling so much faster than the capabilities of most companies around the world,” he says. Articulating an approach to guide companies through the maelstrom has been a central goal in constructing The Sentient Enterprise concept, adds Sawhney. “The paradox, or disconnect, that we have anchored on was asking: ‘How do you make decisions at the speed of data?’ If the velocity of
data is exploding, humans simply don’t scale and can’t manually sense and respond to what we call micro-events as they take place in the enterprise environment. “So that’s where we came up with this idea of an ideal state of where we need to get to from a capability standpoint and we have developed the model to complete that journey. The tipping point is here, but the root of the problem is in scaling your decision-making capabilities to match the explosion of data and speed and volume of things to which you need to respond.”
“How do you make decisions at the speed of data?”
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5 THE
CAPABILITY PLATFORMS OF THE SENTIENT ENTERPRISE
1.
THE AGILE DATA PLATFORM The technology backbone for analytics capabilities and processes. Outmoded data warehouse systems are shifted to a balanced and decentralized framework, incorporating cloud and built for agility. Virtual data marts, sandboxes, data labs, and related tools deployed to create the foundational technology platform for agility moving forward.
2.
BEHAVIORAL DATA PLATFORM Insights from transactions, but also mapping complex interactions around the behavior of people, networks, and devices. CXOs leverage to build a customer-centric
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THE SENTIENT ENTERPRISE
model, where customer sentiment and behavior are elevated to mission-critical importance.
3. THE COLLABORATIVE IDEATION PLATFORM Insights are socialised across the community of analytics professionals. Democratized data, crowdsourced collaboration, incentive based gamification, and social connections within the enterprise are leveraged to connect humans and data in a fast, selfservice manner. A “LinkedIn for Analytics” environment to analyze how people both use and talk about data – social media conventions elevate ideas, projects, and people.
4. THE ANALYTICAL APPLICATION PLATFORM Leverage the simplicity of an exploding app economy across the
organisation to boost enterprise listening. Visualizations now become more than just a pretty picture on an executive’s wall; we instead put these visualizations to work to drive change and act on insights.
5. THE AUTONOMOUS DECISIONING PLATFORM Where true sentience is achieved as the enterprise starts to act as an organism to make more and more tactical decisions on its own. People can put more focus on strategic planning and major decisions. Trends, patterns, and outliers are examined as real-time context for human analysts and decision makers about shifts in behaviors. We take the bulk of data sifting and decisioning off people’s shoulders and save human intervention for critical junctures. This is where true sentience is achieved in the enterprise.
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Hence the concept of a company that thinks autonomously – a sentient enterprise. An organisation that might be better called an organism, built to sense, process, interpret and respond, almost in real time. Ratzesberger and Sawhney are quick to admit this sounds “a bit sci-fi”, but are equally quick to stress that the means to create such organisational ecosystems already exist and what they lay out in their book is a methodology to obtain them. Above all, they say, what they’re not describing is a simplistic and fantastical notion of companies 18
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replacing human decision makers with AI. Rather, they lay out what they call a Capability Maturity Model in five distinct stages, where technology and process are thoughtfully and holistically deployed by leadership to provide maximum possible utility to the people using them. It begins with the development of an Agile Data Platform. This is a technology backbone that ingests, analyses, and presents data to the whole company in ways that break down traditional siloes and removes error. However, it also enshrines a principle of properly
THE SENTIENT ENTERPRISE
managed and very human, cultural agility that Ratzesberger and Sawhney say is the keystone to unlocking every other stage. “If you don’t manage to get good at agility, nothing else will happen,” says Ratzesberger. “Agility is this misunderstood thing that often turns into a wild west in companies. So many companies are so quick to declare that they are agile, but when you ask them some of the very basic questions you see that actually all they’re doing is running fast. That may work for 30 or 90 days, but in a year’s time they realise that they have created so much debt in their organisation that it overwhelms them and stops them in their tracks.”
applications to elevate ideas, projects and people in the Collaborative Ideation Platform; • Embrace what Sawhney calls “data ergonomics” by leveraging the exploding app economy to provide simpler, more effective access to data insight with the Analytical Application Platform; • And finally, the ultimate goal, the Autonomous Decisioning Platform – a sentient enterprise where culture and technology have matured to the degree where tactical decisions can happen autonomously, freeing people to focus less on data sifting and more on critical strategy.
Only when the technology, culture and effective governance of agility is in place can you move on to tackle the four other stages, each as human as it is technological: • Pivoting data analysis and company mindset around customer satisfaction instead of customer transactions in the Behavioural Data Platform; • Distributing data insight across the organisation via social-media-like 19
“A recent TCS survey of companies across 13 global industries suggests the most progressive companies are spending $100mn or more annually on AI alone, and intend to ramp that spending by a further 30% by 2020�
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THE SENTIENT ENTERPRISE
In The Sentient Enterprise Sawhney and Ratzesberger succeed in articulately expanding on the detail within each stage of their transformation journey. At each turn, they qualify their methods with realworld examples drawn from their own experiences and from interviews with leading practitioners at the likes of General Motors, Uber, Dell, Siemens, Verizon, and many more. The result is something akin to a Six Sigma approach to driving datadriven success – an analogy they are happy to make within its pages. “To build The Sentient Enterprise we spoke with 300 C-level executives over the last two or three years about
the concept, and many of them walked away saying: ‘Oh my god, you’ve just given me my next seven-to-10 years of work to focus on!” says Ratzesberger. “We believe that executives are not looking for theoretical scenarios, they’re looking for a very practical approach to this. They want to benchmark themselves against what could be seen as world class, and then lay out a roadmap as to how they get there.” The Sentient Enterprise: The Evolution of Business Decision Making is available in hardback or e-book now via publisher Wiley and other major retailers.
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TECHNOLOGY
Looking to invest? WATCH THIS SPACE
W r i t t e n b y : M AT T S M I T H
What were once seen as the preserve of the ultra-rich, investments in space tech are now moving away from vanity projects and into the realms of profit, with the US leading the way…
S PA C E I N V E S T M E N T S
SPACE, AS CAPTAIN Kirk famously described, is the final frontier, and that has held true for all but the wealthiest investors – until now. Technological advances have made low-orbit satellites cheap to build and launch, democratising space by enabling private sector involvement in an industry whose high-orbit, fixed-geometry satellites were historically the preserve of government and academia. Welcome to Space 2.0: a brand new ecosystem, attracting an increasing amount of investment from US business. As of 2016, over 110 venture capital firms had invested in space companies, according to a report by The Tauri Group, now renamed Bryce, which estimates that more venture capital was invested in space in 2015 than in the previous 15 years combined. “Investment is being driven by either private individuals or by venture capital-type funds accustomed to putting big cheques behind small businesses to drive rapid change in an industry,” says Daniel Domberger, co-lead of Media & Technology at Livingstone, an M&A and debt
advisory firm that has participated in such deals within the space sector. “The money coming in is not yet what we would call mainstream private equity. They will need more scaling, more established management teams, more tangible business cases.” Space start-ups received about $2.83bn in funding in 2016 as 114 investors bought into 43 ventures across 49 deals, Bryce estimates. This aggregate figure was up from $2.43bn in 2015, while three acquisitions last year were worth $963mn in total. Most money is coming from the United States, with Europe and Asia lagging. Major private equity investors include Bessemer Ventures, RRE Ventures and the Space Angel Network. These firms see profit potential in the new generation of low-cost satellites, which are primarily used for communications and observation; for example, satellite images could be used to monitor climate change on agricultural land, which is then used to make investment decisions. Other uses include city planning and mapping population growth.
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Space 2.0 SpaceWorks estimates that over 3,000 microsats will be launched between 2016 and 2022. Only 130 were launched in 2015. These microsats represent a real disruptive influence in the space industry. Rocket Lab – recently valued at $1bn – will be delivering to its customers a rocket (The Electron) that will carry ‘payloads of microsats’ into orbit. The cost of these microsats is coming down significantly, thus attracting even more interest from commercial partners. Satellite data ignores borders, providing clear views of things that 24
October 2017
can be seen no other way. Taking multiple photos over time can show development trends, every half hour over months or years. Both the photo itself and then the changes that are shown over time are of massive value. “What’s important is how directly you can commercialise this,” says Graham Carberry, a partner at Livingstone and an aerospace specialist. “The shorter the route to the money, the more money will flow. We’ve reached a tipping point where people are seeing direct commercial benefits to controlling the data. “There will be a point when the data
S PA C E I N V E S T M E N T S
Space startups received about $
2.3bn
in funding in 2016 as 114 investors bought into 43 ventures across 49 deals
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becomes sufficiently widespread that it’s less valuable and then growth will taper out, but we’re a million miles from that right now. The potential is still very, very significant.” About 450 nano-satellite launches have been announced for 2017, of which roughly half are already in orbit. That compares with 471 launches in total from 2012-2016, according to nanostats.eu. Big data goes intersteller “There’s a heap of opportunity for private capital that up until a
few years ago wasn’t really viable. Now that it is, we’re seeing a lot of relatively early-mover capital. Space will see a lot more investment, because we’re creating a whole new ecosystem,” says Carberry. “Companies with a viable use for satellite data need someone to help them control, build or rent space on satellites and get that data back down, so we’re seeing growth in space services as a market as well, it’s not just manufacturing services that relate to space.” Early leaders in the sector are attracting some “racy” valuations, but Carberry downplays the danger that the influx of cash will lead to
“I wouldn’t bet against Musk…
He’s transformed the automotive industry and it’s not like it’s his first rodeo” – Graham Carberry, Partner at Livingstone
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a bubble developing, with most private equity money still reluctant to invest. Also, supply and demand are creating one another, with loworbit satellites creating new uses that were previously unviable – as such, it is similar to waves of investments in other technology-led industries. However, a shortage of launch sites is creating supply constraints. “Whenever you create a new market, there is always a risk that it doesn’t work out,” says Domberger. “The technology may not be appropriate
for what it’s being applied to. Or the market maybe be smaller than once thought. People may be less willing to pay for it than you think. A lot of these possibilities go into these business plans and investment cases. Some are over-enthusiastic and some are over-conservative.” With scores of start-ups in the nascent and fragmented small satellite sector, consolidation is all but inevitable. “This market is developing so quickly and a lot of consolidation will be driven 27
TECHNOLOGY
“Space will see a lot more investment, because we’re creating a whole
new ecosystem” – Graham Carberry, Partner at Livingstone
by the need to secure access to either componentry, or platform, or capability,” says Domberger. “There are relatively few people who know how to do this stuff well and if you’re one of the big aerospace and defense groups, and you can get your hands on the best teams doing the best work in the sector, then you can be in a very strong position to drive further consolidation and dominate the market.” Big players in space Space holds a unique fascination and it’s the likes of entrepreneurs 28
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Elon Musk, SpaceX Makes History | MARS
S PA C E I N V E S T M E N T S
Elon Musk, Richard Branson and Jeff Bezos who have captured the popular imagination with their daring schemes to offer commercial flights beyond our atmosphere. Such plans may seem to sceptics like little more than elaborate publicity stunts, but Livingstone believes these could prove to be highly profitable. “It depends on what your investment timeline is. If you’re an Elon Musk or a Jeff Bezos you can afford to be quite long in terms of your position around these things and make investments over time,” says Carberry.
Richard Branson: ‘Thousands’ will go to space soon
Bezos is thought to have invested more than $1bn in Blue Origin, while Google and Fidelity invested $1bn in Musk’s SpaceX in 2015, according to Bryce. “I wouldn’t bet against Musk,” Carberry explains. “He’s transformed the automotive industry and it’s not like it’s his first rodeo; the guy knows what he’s doing. Amazon is famous for selling stuff online, but Amazon Enterprise is an extremely large and lucrative business. And there’s a reason these two individuals are heavily focused on space.”
Jeff Bezos on the importance of expanding into the solar system 29
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US cities for social
enterprise
Forbes has recently listed the top 21 cities in the US for social enterprise, based on a survey over 400 entrepreneurs. The cities were ranked in four key areas: funding, human capital, quality of life, regulation and receptivity. The report was funded by Halcyon Written by: OLIVIA MINNOCK
Incubator, CapitalOne, The University of Maryland’s Robert H Smith School of Business and Deloitte. We take a look at the top ten cities on the list, and find out what they are currently doing to earn their ranking for social entrepreneurship
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LOS ANGELES, CA sealosangeles.org
The Social Enterprise Alliance of Los Angeles currently has numerous enterprises in brand development, media strategy, public relations, social media marketing, training and mentorship, and workforce development. Some of the notable social enterprise organisations include Skid Row Housing Trust, LA Kitchen, Chrysalis, GameDesk, A Better LA, CicLAvia and Friends of the Los Angeles River.
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SEATTLE, WA sos.wa.gov//corps/SocialPurposeCorporation.aspx
Seattle is a hub for social enterprise, with a growing social entrepreneurship movement. The northwestern city developed the 220 & Change workspace, which houses hundreds of individuals who currently use the space for social enterprise ventures. In 2012, the state passed legislation allowing for Social Purpose Corporations (SPCs), which encourage socially and environmentally accountable businesses.
US CITIES FOR SOCIAL ENTERPRISE
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MINNEAPOLIS, MN seatwincities.org/blog
Minneapolis (and its twin city St Paul) has a number of social enterprises, with meetups and other activities to support the growing number of organisations being formed to make both a profit and a difference. Social enterprises in Minneapolis are broken down into different categories: social by sharing, social by selling, and social by sourcing. Some leaders in this area include: Ten Thousand Villages, Cookie Cart, Calera, Revolution Foods, The Databank, Finnegans, Latitude, BAM Essentials, Fair Anita, Tech Dump, Converge and Urban Ventures. Most of these ventures fall under the Social Enterprise Alliance: Twin Cities.
7 DENVER, CO Denver utilises a number of resources to assist social enterprise through Sprout Tank, a hub dedicated to helping acquire funding from investors for initiatives that focus on enhancing Denver’s community-mindedness through acts, contributions and community networking. 33
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CHICAGO, IL sealosangeles.org
6 AUSTIN, TX Austin, Texas, has an active social entrepreneurship environment, with a number of organisations in place. One of these organisations, UnLtd USA, provides funding and support to local entrepreneurs working to help combat environmental and social problems. Applicants to this program are educated and relatively young. Over 80% are under the age of 40, with one-third under the age of 30. Most of them have at least a bachelor’s degree. Social entrepreneurs most often choose to deal with the following issues: 20% education, 12% poverty, 23% environmental, 9% civic engagement, and 9% health.
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Chicago has long been part of the social enterprise trend. In 2009, a new law was enacted for social enterprises to raise funds, allowing ventures with socially beneficial missions to be classified as Low-Profit Limited Liability Companies, which can pursue profit while still attracting investments from foundations. Chicago is home to the Clean Energy Trust, spearheading programs to revolutionise the Midwest as a clean energy ecosystem, with many more organisations working within the social enterprise platform. Organisations are required to distribute 5% of their assets annually for charity purposes when classified as a foundation. Impact Engine is also building an engaged community of impact investors, bringing together a number of organisations to make a difference.
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WASHINGTON, DC www.usaid.gov
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NEW YORK, NY besocialchange.org
In the past 25 years, New York has taken on the challenge of solving problems that were once delegated to non-profits, government and charitable foundations. Social enterprise is alive and thriving in the Big Apple for businesses trying to make a profit while making the world a better place while applying private sector practices to societal problems. A number of organisations have addressed issues such as prisoner recidivism, endemic poverty and rampant unemployment. Additionally, New York State authorised the incorporation of B corps in 2011, which helps companies embrace the double mandate of profitability and social good.
Washington, DC was dubbed the best US city for social entrepreneurs by S&R Foundation’s Halcyon Incubator in 2016. The Social Enterprise Ecosystems Report gave Washington, DC high marks, giving it the designation “Silicon Valley of Impact”. A few of the reasons why DC is so attractive to social enterprise is its access to embassies and large amounts of intellectual capital for mentorship and recruiting. There is an abundance of social enterprises here, supported by a vibrant and ever-growing community of social entrepreneurs. Development agencies to note are USAID (US Agency for International Development) and its Development Innovation Ventures, DC Central Kitchen, Share Our Strength, Law for Change and many more.
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“IN THE BAY AREA OF SAN FRANCISCO, SOCIAL ENTERPRISE HAS HELPED THOUSANDS OF INDIVIDUALS WITH SOCIETAL BARRIERS GET BACK TO WORK”
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SAN FRANCISCO, CA In the Bay area, social enterprise has helped thousands of individuals with societal barriers get back to work. Social enterprise here combines the bottom-line benefits of business with the power of philanthropy to help overcome sordid histories by providing
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paid employment with on-the-job training and a strong support system. The Community Housing Partnership creates opportunities for long-term economic security while REDF has invested in over 60 social enterprises in California, with more than $163mn in revenue. The goal: employ 50,000 people by 2020.
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ACCORDING TO MATHEMATICA POLICY RESEARCH, SOCIAL ENTERPRISE CREATES A 123% RETURN TO TAXPAYERS AND SOCIETY, WITH A 268% INCREASE IN INCOME FOR THOSE EMPLOYED.
BOSTON, MA besocialchange.org
Boston, MA, is known to have one of the most advanced innovation ecosystems in the world, respected for its collaborative nature, open innovation and willingness to create an environment of excellence. Filled with big companies and 122 colleges and universities, Boston is ranked as one of the best places to launch a start-up
with $1mn of seed capital each year. Also, Massachusetts ranked third in volume of venture capital in the US with $6bn invested in 2014, and is first in terms of venture capital per capita. 40% of the jobs in Massachusetts are in innovation, which generates more than $227bn per year in social innovation. It’s the number one US state for early-stage-per-capita clean energy venture investment.
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HOSPITALITY
PROCUREMENT 101 Stephane Masson, Marriot’s Senior VP of Global Procurement, speaks about overhauling the company’s supply chain operations Written by: Nell Walker Produced by: Denitra Price
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MARRIOTT
T
he name ‘Marriott’ exemplifies the hospitality industry. It’s certainly among the first names that would spring to mind when considering hotels, and it has nine decades of expertise to thank for that level of prestige. Marriott International celebrates its 90th birthday this year, having established itself in Washington DC in 1927. Still a family-led business after all this time, Marriott’s current Executive Chairman – JW Marriott Jr. (Bill) – is the son of the company’s founder, J. Willard Marriott Sr. The latter was an entrepreneur who opened an A&W root beer stand at the age of 27 and swiftly expanded it into a thriving restaurant chain. By the time J. Willard Marriott died in 1985, the company operated over 1,400 restaurants as well as 143 hotels and resorts worldwide. Thanks to incredible expansion across these businesses, Marriott now controls over 6,000 properties in 110 nations, offering high-quality hospitality across most of the globe. Key to this level of success is supply chain operations – the process of ensuring consistent service across thousands of properties via the seamless acquisition and delivery of required products. Enter Senior Vice President of Global Procurement at Marriott International, Stéphane Masson. Masson has worked in procurement for over 24 years, beginning in European operations then relocating to the US as his role evolved into overseeing the global market Considering the age of the business, switching from region-specific operations to a global system is a relatively recent change. Masson explains how it began.
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S U P P LY C H A I N
w w w. b u s i n e s s re v i e w u s a . c o m
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MARRIOTT
“MY TEAM HAS DONE SOMETHING THAT’S NEVER BEEN DONE BEFORE, AND I AM VERY PROUD OF EVERYTHING WE’VE DONE SO FAR” – Name, Position
– Stéphane Masson, Senior VP of Global Procurement at Marriott International “Prior to 2001, Marriott operated procurement in a very US centric way. In 2001, the company decided to launch Avendra to support multiple companies, including Marriott’s procurement and hospitality supplies business in the Central and North American markets. At the same time,
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I was asked to put together and to lead a procurement organisation for the supply chain needs of Marriott outside of the US. So, for a period of time, we ran the two organisations in parallel – one for the US domestic market – Avendra – and one for the rest of the world, which was called
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Marriott International Procurement. “In 2010, I was moved to the US in order to find a way to coordinate procurement by making sure that North America and the rest of the world could work together. That’s where we developed a global approach, resulting in a much efficient structure.” A challenge came with the realisation that running a business within a domestic market is very different than running the same business internationally. The United States is self-contained, making logistical operations relatively simple, but the introduction of an additional 100+ nations significantly complicates matters. “That’s where it was more challenging, to unify the process,” Masson explains. “But the positive side is that once it is achieved, you have a much better overview of what you’re doing, and can harmonise better for increased benefits to the customers, the hotels, and the owners. For instance, a lot of products are manufactured overseas. If you only do procurement in America,
you don’t have access to the major manufacturing facilities in the world – you mainly work through distributors. “One of the outcomes of this global focus was that Marriott strengthened access and contracting expertise. While there are a lot of challenges, there are much greater benefits in becoming more coordinated.” People power This system only works with a stable team of talented individuals. Masson acquires staff who are willing to undertake the kind of fast-paced tasks required by a mammoth organisation like Marriott, and these are people who end up staying with the renowned business for many years. Marriott has divided the globe in continents. Each of them have a Continent Procurement Organisation reporting to Masson and to the concerned Continent Operation Leader. Each continent is divided into clusters, meaning a group of hotels in a country, city, state, or region. Masson identifies the best possible procurement leader within this cluster to negotiate contracts.
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The cluster leaders report to Marriott’s continent procurement leaders, and they grow into their roles in order to ensure a seamless supply chain. “We support the growth of our people,” says Masson. “When we identify a person who is doing an amazing job, a person we believe can grow further, we promote them within our procurement structure. “Most of our people already come from the industry and understand the requirements of procurement. Our job is to develop them further to develop their skills and meet the needs of Marriott International.” Mergers and restructures With expertise, reputation, and a dedicated staff in place, Marriott is prepared to create new success stories. One of its most impressive successes has been the recent
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acquisition of Starwood Hotels, a group of 1,200 properties. The deal to merge was finalised in September 2016, and the two companies now operate under the same Marriott name. One would expect a deal of this size to cause some disruption, even to a hospitality giant like Marriott, but such was the level of preparation, the potential for difficulties were avoided. “What we tried to achieve has never been done before,” Masson explains. “At least on this scale. In the US, the Starwood integration went very smoothly – we had far many more hotels and a solid structure to absorb 600 or 700 hotels. Outside of the US, where procurement is more complex, the process was potentially more difficult. The integration of Starwood spurred us to divide
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“WE’VE BEEN EXTREMELY LUCKY TO WORK WITH SUPPLIERS – PARTNERS, REALLY – WHO HAVE HELPED US TO GROW THIS PROCESS IN A WAY THAT’S NEVER BEEN DONE BEFORE” – Name, Position
– Stéphane Masson, Senior VP of Global Procurement at Marriott International
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procurement into five work streams.” This restructure, was designed to make Marriott’s supply chain as manageable as possible. It is part of the company’s Procurement 2020 Vision. The goals are:
1. Ensuring supply chain continuity: “Number one was to
make sure the hotels can continue to order whatever they need to serve guests, meaning we had to put a number of steps behind the scenes to ensure this continuity,” says Masson.
2. Maintaining procurement support: “This is to make sure we maintain or improve the structure we already have.”
3. Mitigating risks: “Making
sure that any contracts we’re absorbing will reflect the new structure of the organisation, and will be globally applicable.”
4. Integrating procurement systems: “This is integrating the two procurement structures under one a single umbrella, so they operate as one.”
5. Implementing costsaving measures: “This focusses on promoting saving. As you can imagine when we are merging two major organisations, there is a high level of expectation that there will be savings. So we put in place the necessary processes to leverage as much as we can in order to create savings for the benefit of the hotels, the owners, and making sure that our guests benefit from improved quality and better products.”
This restructure will ensure that any future acquisitions Marriot inevitably makes will be a fluid, simplified process. According to Masson, the development of the 2020 Vision has been encouragingly received with anticipation of positive outcomes. “This was designed about 18 months ago, and we began to implement the integration in September of last year,” Masson says. “Step one, two, three, and four are almost complete. We are currently focused on the hotels and haven’t had a single disruption in the supply
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chain. We’ve also taken the best from each cluster team and created a new procurement organisation with them, and ensured that all the current agreements were in place before the Starwood merger. Now under a single format, as per the requirements of the brands, we work with and merge every line of procurement. This is almost complete for the North American market, so we’re now concentrating on delivering excellent service.” Masson is quick to point out that this success is far from a one-man show: “It’s not my work – it’s the work of the entire procurement structure and the people we have in the field. We’ve been extremely lucky to work with suppliers – partners, really – who have helped us to grow this process in a way that’s never been done before on this scale. “It really has been a team effort to get where we are today.” Technology Technology has been the axis on which Marriott’s transformation pivots. Any alteration to technology in an organization of this size can be
a mammoth task, and one which has to suit every segment throughout the world in order for it to work effectively. For Marriott, Masson says, the changes required for our supply chain are just common sense. “The technology has changed the way we contract dramatically, and also the way that the hotels work. The deployment of Procurement 2020, which is basically a sourcing-to-pay strategy, is not something revolutionary. We know what to contract and where to source products, but we were missing the critical information which needed to be added.” Marriott’s latest two-pronged attack includes a single platform for accounts payable, as well as a single platform for e-procurement. These streams work together so that the company negotiates a contract, uploads the contracting terms on the e-procurement platform, and when the goods reach the hotel, the invoice is paid automatically through the accounts payable system. A simple, effective process that ensures data that can be analysed and be
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transparent, enabling Marriott to better determine where commodities are needed, in real-time. “This technology has changed the way we approach our business,” Masson explains. “For example, everybody believed that bacon was the largest spend item in a hotel. That was the perception. The fact is, we have seen that tomatoes and mushrooms overall represent a greater spend than just bacon, and by having
access to this information – what the hotel really spends – you can change your strategy and behaviour. Right now, my team, in some markets, spends more time on tomatoes and mushrooms than trying to find new spend from bacon, because that’s where the most value can be found. “This helps us to rationalise and focus on what we really need
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“THE TECHNOLOGY HAS CHANGED THE WAY WE CONTRACT DRAMATICALLY, AND ALSO THE WAY THAT THE HOTELS WORK”
– Name, Position
– Stéphane Masson, Senior VP of Global Procurement at Marriott International
to get for the benefit of improved efficiency across the organisation.” Marriott began using a centralised procurement structure, then moved to a decentralised one to make US-international business simpler, and now it uses a hybrid system which allows a much more flexible approach to procurement. The business centralises what makes sense to be centralised globally, and localises what makes sense to be procured locally from a business point of view. “We do not contract everything centrally,” says Masson. “We have
different layers of contracting support, so there is no overlap between deals. It’s whatever makes sense for a specific commodity. There is always a contract in place, but it must be in the best interest of the needs of the property. We take the best of both centralised and decentralised systems to form a workable hybrid.” A hybrid process This hybrid system, Marriott’s procurement vision, and the e-procurement process will all contribute to Marriott’s ambitious goal of reducing costs by $100mn. According to Masson, improved visibility, efficiencies, and contracting are helping the hotels to buy the right products, and the combination of this is allowing “synergy savings” to come through. “The merger with Starwood has accelerated these opportunities,” adds Masson. The Starwood acquisition has also meant Marriott must step up its game with regard to sustainability, something the business is always
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MARRIOTT
“WE’RE ALWAYS LOOKING AT HOW WE CAN BE “GREENER” WITHIN OUR SUPPLY CHAIN”
– Name, Position
– Stéphane Masson, Senior VP of Global Procurement at Marriott International
looking to improve. Sustainability and diversity in procurement are paramount to the business, and things which are embedded in its contracting requirements when choosing a vendor. “We’re always looking at how we can be “greener” within our supply chain,” Masson says. “Part of our e-procurement tool is allowing the hotels to identify which products are the ‘greenest’ products coming from diverse vendors. So it’s not just about finding the right product with the right vendor, but how we can educate and keep our hotels informed about what are the right products for their businesses.
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That’s why we are a step ahead.” For now, Marriott’s focus is that improved visibility is a critical component of the business. Having achieved a high level of maturity in contracting, Marriott is now able to explore new areas as a result of the sheer volume of data which is now accessible. “This is an exciting time for our organisation. We’re leading the hospitality market today, and we’re glad to be going through these acquisitions and mergers. Again, my team has done something that’s never been done before, and I am very proud of everything we’ve done so far.”
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Reinventing the Hotel Experience | Future Stay
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BDP’s
IN-HOUSE TECH HAS REVAMPED ITS OPERATIONS Written by: Leila Hawkins Produced by: Denitra Price
Logistics organisation BDP was founded over 50 years ago. Over this time, one of the most dramatic changes it’s undergone has been its implementation of new, in-house technology
L
ogistics organisation BDP was founded over 50 years ago. Over this time, one of the most dramatic changes it’s undergone has been its implementation of new, in-house technology. Thanks to a team of around 200 programmers, BDP is not beholden to anybody outside of the business. “We’ve been on an upwards technology curve for the last 15 years,” says Gary Phelps, Senior Vice President of Global Air Freight. One important initiative has been SmartVu a tool that integrates all the company’s logistical operations around the globe. It can be tailor-made to the format customers require, whether that’s by containers, kilos, deliveries or pick-ups. Customers are trained to use the tool by staff in their region, and they can choose how they want this information delivered, whether it’s on a dashboard screen or by
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getting frequent real-time alerts to notify them of what is arriving, when, and of any potential issues. SmartVu is proprietary to BDP, whereas Phelps explains most competitors use third party systems. “It works great,” he says. “It allows customers who are procuring logistics services from us whether by air, ocean or ground to stay ahead of competitors.” Last year BDP became a member of Cargo IQ, a consortium of carriers, airlines and other freight forwarders from around the world who help with efficient forecasting for deliveries from door to door. Three years ago, the company began its Unit Load Device (ULD) program, enabling it to build its own pallets to streamline services, so a customer’s goods don’t get split into separate deliveries, making it possible for delivery times to be up to a day earlier,
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Accessing information through the BDP Smart Suite
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and reducing damages like scuffing, crushing, and damp. The programme is currently expanding, and Phelps says that most competitors don’t have a system like this in place because building the pallets would add an extra step to the process. A close-knit business Another key differentiator is that BDP is still a family-run organisation owned by four brothers, making for a more tightknit feel perhaps when compared
to its larger competitors. Throughout his extensive career in logistics, Phelps says this is the best company he’s ever worked for, citing less bureaucracy as one example. “BDP is a definite breath of fresh air. They want you to succeed and they want the customers to succeed. Maybe you can make more money and get more stock options, but it’s a 90-day grind [at other companies]. “Whereas here I get up every day, I love what I do, I love the customers I work with, and they
“I get up every day, I love what I do, I love the customers I work with, and they seem to love us back because they’re spending more of their hard-earned kilos with us, so that’s always a good sign” – Gary Phelps, Senior Vice President of Global Air Freight
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BDP team at Colombia Expologistica event
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seem to love us back because they’re spending more of their hard-earned kilos with us, so that’s always a good sign. “They have a choice, they can use their kilos with whoever they want but they’re choosing us over the competition.” The freight market Phelps says the industry is hugely competitive. “There’s huge pressure on yields right now, you’ve got to find a balance where you save the customer money and still make money. When freights are priced too cheaply they just sit there and don’t move. You get what you pay for.” There is a constant up and down of supply and demand, Phelps says. “Right now, you’re seeing fewer freighters, some being retired in many cases from a passenger point of view, and also from a freight point of view, everybody’s moving into mini freighters. “We try to work with global carriers that have both capabilities, a limited fleet of freighters, and also with a large
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fleet of 350s or Boeing 777s. Then we leverage based on that and spend 80% of our funds with those carriers, and we meet with them every 90 days to put together dynamic pricing for people who want to play in the stock market. “For people who want to play longer, we put together block space agreements or soft block agreements to carriers saying you will deliver x number of kilos per week. It just depends what you’re looking for.” The biggest challenge is, and always will be forecasting. Phelps explains that just like hotels can never predict how many rooms
they will fill, the same applies to air freight. They might know what capacity there is, but there is no way of knowing if a truck will break down or a driver will get lost. “The market is very dynamic at the moment,” he says. “2018 will continue to be a space vs. rate scenario - I see continued pressure on the market for increased rates, I see that our larger competitors and larger contracts with customers are going to continue to see yield problems and, as long as the fuel stays where it’s at, the airlines are going to continue to increase their pricing by 15% next year. “It’s up to us as procurement
Rich Bolte at Ernst & Young Awards
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BDP Smart Vu The smart approach to vendor management
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professionals to find a way to mitigate that back to the customer.” Vision BDP has just opened its second European gateway in Frankfurt, alongside its existing one in Amsterdam. Additionally, it has Asian gateways in Hong Kong and Shanghai, and in the US it operates via airports in New York, Atlanta, Chicago, Houston, LA and Miami. “We have 12 lanes that we stick to and focus on,” Phelps says. “Those are the key lanes, and we know we can do things with those lanes, both from a procurement and from a logistics movement standpoint. We try to work with our air and ocean partners to make sure we see the visibility on savings so we can pass those on to our customers.” However BDP’s vision is not to vastly expand and become the biggest in the industry, but to provide the best logistics service for customers globally. As Phelps says, “we’re adding new logos to our portfolio constantly.
We don’t try to become too big too quick, we’re slow and methodical in what we’re doing to provide the best value and solutions for our customers. “We never like to say we’ll be the cheapest or the most expensive,” he continues. “We like to say we’re going to design what you’re looking to purchase.” By looking at customers’ individual logistics spend and model, BDP is reducing transit time to create savings for the customers, which additionally expands its wealth. In 2017 BDP has been up by 50% on air freight in terms of kilos, compared to the rest of the market which is at approximately 8%. “We’re working on our 2020 plan right now,” Phelps adds. “I can see a lot of good things from what we’ve done in the US, Europe and Asia. We have an excellent ocean and air freight plan in place to secure additional kilos and containers as we move forward.”
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The Main contender Written by: Fran Roberts Produced by: Denitra Price
Main Street Renewal is a private company focused on buying, renovating, and leasing homes across the US. By taking a traditional supply chain approach to its operations, the company is building efficiencies in a highly competitive market
M A I N S T R E E T R E N E WA L
The beginnings Main Street Renewal buys and renovates homes before selling them in tranches to investors. Based in Austin, Texas, the company has branches in 19 cities, with more coming soon including Las Vegas, Phoenix, and Denver. What sets Main Street Renewal apart from its competitors is the standardised approach it takes to its properties. Of course, it wasn’t always this way. When Main Street Renewal entered the SFR industry in late 2012, the contractor mentality was standard across the renovate-to-rent platform. The practice consisted of obtaining multiple bids for a single project, and whoever came in the cheapest, was usually awarded the job. After the project was completed, the vendor would return to the pool for the next round of bidding with no guarantee of future work. Supply chain principles and processes remained obscure in an industry that had become comfortable with the status quo. With any successful business, sustainability lives and dies in the margins. Profit margin is the most
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discussed measure in the public space, but cost control is not the only factor that drives Main Street Renewal’s business model. Equal importance is placed on both quality of product and the ultimate margin, time. Cost, quality, and time form what Cavanaugh calls the triangle of success. Each key measure occupies a single corner of the triangle and is positioned at a 45 degree angle from one another as a reminder that if one side breaks symmetry, the triangle, as well as success, becomes skewed. In the early stages, Main Street Renewal had standardised materials (granite, carpet and paint, for example) at a set price to create a uniform aesthetic within their properties. However, with multiple different vendors cycling in and out of each house every time, quality became inconsistent and repair completion timelines extended. The Main Street Renewal team identified inefficiencies within the process and decided to break rank from the industry norm and pursue a different approach. With this deviation, a dedicated supply chain team was formed.
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Senior Vice President of Supply Chain
MIKECAVANAUGH After years of fun working with great companies around the world, I took a chance to apply my experience to something truly unique, to think completely outside the box. That drive is what led me to Main Street Renewal, a Real Estate Developer and Property Manager focused on the Single-Family Residence (SFR). There are very few industries left where you can take an opportunity to implement change and best practices from other industries in a unique way. This is an industry that has not fully matured to have the norms and is full of potential. I get to tap into that potential on a daily basis, take what I have learned in other industries where I have experience like high-tech or consumer and apply it to how we not only renovate a home but how we interact with our investors, vendor partners and our residents.
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M A I N S T R E E T R E N E WA L
- WE HAVE 405 PEOPLE AT
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Strength in partnership The Main Street Renewal team recognised the fundamental base of each business lies within the processes by which it operates, and at the most elementary level, the principles driving those processes are synonymous across all industries. Their team saw the potential of applying traditional supply chain methodology in a non-traditional setting. “A house is unique each and every time – you don’t necessarily know what you’re going to get with any particular house,” acknowledges Cavanaugh. “We’ve tried to think about it a bit differently. We’re going to bring every home we buy to a certain standard, so we’ve taken traditional supply chain principles of sourcing, strategic partnerships and demand forecasting and applied those into that construction environment.” A typical supply chain team oversees the development, production, and maintenance of a product and is no different within Main Street Renewal. The home and service are the end products with all contributors and
resources falling under a structured network, therefore, can benefit through specific supply chain processes. The first step was directly approaching distributors and suppliers using volume and exposure to negotiate pricing on raw materials. Main Street Renewal chose a single colour and grade of each product put in their homes as a way to not only reduce cost but also create consistency and a standard of quality across all markets. This has certainly provided advantages for Main Street Renewals in terms of pricing. “If you think about a manufacturing site taking all the parts and pulling them together, we’re doing the same thing. It’s the same part we use each and every time, so that’s given us the opportunity to really go deep inside of our supply chain and work directly with our distributors and suppliers on raw material pricing,” remarks Cavanaugh. Main Street Renewal’s vendor partners can buy directly from those suppliers and distributors at a nationally agreed upon rate. “That allows us additional cost focus inside and throughout the
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Integrity First Maintenance & Restoration 7859 Walnut Hill Ln., Suite 310, Dallas, TX 75230
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supply chain. We can start to now Partnering prowess optimise logistics routes and where Main Street Renewal very much sees different raw materials are located, its vendors as partners. “You won’t positioning, and where, how and hear us call our vendor partners what we buy,” Cavanaugh advises. contractors although predominantly With control over the material supply, the industry thinks about our vendor Main Street Renewal set out to partners as contractors,” streamline the ‘assembly Cavanaugh comments. process’ for their “The contractor products. Even mentality in the after providing whole building standardised industry is very materials at a much ‘you are below market my contractor cost, the for this job Main Street right here and – Mike Cavanaugh Renewal team when I go build Senior Vice President found repair that house next of Supply Chain timelines and to it, everybody’s quality standards going to have continued to fall below the opportunity to expectations. The deficiencies bid for that next job’.” were a direct result of the vendor Deviating from the industry standard selection process which made it can be risky, but Main Street Renewal possible that a different vendor could believed the best long term strategy work on every home within the MSR was to form partnerships with quality portfolio. By eliminating the contractor vendors in each market and have mentality, Main Street Renewal both parties agree to a set labour soon realised the benefit of forming and material pricing through one partnerships with quality vendors. statement of work that would apply to
“WHEN LEADERS GET
BETTER WE ALL WIN”
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M A I N S T R E E T R E N E WA L
Ronald McDonalds House
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S U P P LY C H A I N
all properties within a given market. This resulted in the dissolution of the bidding process and reduced the vendor pool by a significant volume. The contracts with suppliers and distributors for the price of materials meant Main Street Renewal can renovate homes at an all-in cost that’s below market and their competitors. Agreeing to standardise pricing didn’t guarantee work as potential vendor partners needed to meet additional standards of quality and timelines to become a primary vendor. Once on-boarded, vendor partners needed to maintain those standards to continue receiving work. Main Street Renewal would fulfil its side of the relationship by providing volume, material price, and payment timelines with a reporting cadence implemented to provide feedback to vendors on both theirs and Main Street Renewal’s performance. Vendors were initially wary of the new process but warmed up quickly when they realised volume and material premiums could provide a steady income stream. The relationship between Main Street Renewal and its vendor partners is
a two-way street, encouraging both sides to perform to a high standard. “If we have a vendor whose performance starts to slip, we prefer to spend the time and invest in that vendor – to give them the opportunity to turn around, to share with them what’s going on, to give them ideas and tools and help them potentially perform better,” Cavanaugh explains. High standards Maintaining high standards is key to the success of Main Street Renewal clients, both investors and residents want to get the best value for their money. “When we walk through a house with an investor, it’s always worth hearing the feedback from their point of view, often it is this is a higher level of standard than what they were expecting,” states Cavanaugh. “That’s really attributed to the people who develop and support the processes we have throughout our entire supply chain, everyone focuses on delivering a Great House.” Quality is an important goal for the company, as Cavanaugh illustrates: “Every year we strive to hit a level of
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“A HOUSE IS UNIQUE EACH AND EVERY TIME – YOU DON’T NECESSARILY KNOW WHAT YOU’RE GOING TO GET WITH ANY PARTICULAR HOUSE” – Mike Cavanaugh, Senior Vice President of Supply Chain
quality that exceeds the expectations from our customers. This is where our Great House mantra is derived from. We define what a Great House is with data from previous residents, input from our current residents and investors and designs from our parent company. These inputs create a standard that is higher than what you would expect allowing us to set the bar so unbelievably high in terms of quality. Often companies are afraid of setting a high bar but
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we would absolutely rather aim high and miss than aim low and achieve. We encourage people to develop, to push themselves beyond what they believe the normal barriers would be for them to achieve a higher level of success and so we spend the time to invest in people to develop.” Main Street Renewal recently attended a leadership conference to help its leaders get better. “When leaders get better we all win,” Cavanaugh explains. “We have approximately 405
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Main Street Renewal - Your Home Leasing Partner
people at Main Street Renewal, monthly we have Lean Six Sigma lunchand-learn session that anybody in the company can sign up for, leadership series offered by our training and learning department and an Area Manager in Training programme. These programmes are just an inkling of what we do to invest in our people.” Process modernisation Lean Six Sigma has formed an
integral part of Main Street Renewal’s drive to always be looking for ways to work smarter. “We’ve taken Lean Six Sigma principles. This isn’t the rigorous often confused approach that forces structure, but the way of thinking about processes where you look at what you do differently, through the lens of how can we better profitably service our customers,” reveals Cavanaugh. “We’re using those Lean Six Sigma principles to give us tools
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that provide us a foundational way of thinking about how we do work, how we get work done every day.” One great example of how Main Street Renewal has integrated the Lean Six Sigma way of thinking into their business is through the Hoshin Kanri. Cavanaugh explains that: “We use Hoshin as a key driver of our business goals and strategic direction setting. We ensure through the Hoshin matrix that the results expected by our investors and residents are directly tied to our one- and three-year plans. In the typical business approach, there are always great ideas but too often those ideas outnumber resources. With the Hoshin matrix we ensure through alignment the priorities we all agreed on are the ones that are actively being worked on.” Increased competition As the US economy picks up – 209,000 jobs were added in July 2017 alone – Main Street Renewal is seeing an uptick in its business. “People are buying again and it’s a great time to invest in single-family housing. The trend that we’re seeing in the industry
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LSS Certifications
is a lot more competition in the market and we’re approaching that by trying to become more efficient in not just how we buy homes but how we rehab homes,� Cavanaugh observes. With
the support of its vendor partners, things certainly look set to continue getting better for Main Street Renewal over the coming years.
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A lesson in leadership Kristy Knichel, President and CEO of Knichel Logistics, describes how she injected new life into her company by creating a streamlined business and a loyal workforce Written by Nell Walker Produced by Denitra Price
KNICHEL LOGISTICS
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ew businesses come as family-orientated and dedicated to people as Knichel Logistics. Originally an intermodal marketing agent for a third party logistics company in 1997, the business took the expertise it had and formed its own logistics company in 2003. Fourteen years later, Knichel Logistics is in a position of prestige created by hard work and a love for people power, its loyal team led by President and CEO Kristy Knichel. Leaving college to work for her father, William, Kristy worked a variety of roles to ensure the smoothest possible running of the business; beginning as an intermodal dispatcher, she also worked in sales, finance, and HR. Soon after Knichel Logistics began, William was hospitalized, leaving his daughter to learn how to run the business on-the-job. “I just had to take the knowledge I had and get things done,” she explains. “I ran pretty much everything, working seven days a week to make sure everyone was doing their jobs. My role changed quickly – I learned what it meant to run a business.” In 2007, after four years of decreasing involvement from her father, Kristy became CEO. During this time, she had been training other managers to take over her previous roles, including the business’s intermodal arm, and getting the company more involved in truck brokerage. With sales and finance teams stable, Knichel Logistics began to experience massive growth, taking on a COO who – among others – helped Kristy to gain more confidence in her leadership.
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“I’m all about giving a chance to everybody.” – Kristy Knichel, President and CEO
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“Other companies
might have a tonne of money behind
them, but we find
ways to do the same things they can on a Kristy Knichel (CEO) with her brother William Knichel Jr (EVP), otherwise known as JR. 94
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smaller scale”
– Kristy Knichel, President and CEO
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“I didn’t go to school for this, but I had lots of people around to help me and figure out what my role was, because I had been an operations person and it was tough for me to put that aside.” The support Kristy had within Knichel has sometimes been challenged by a lack thereof outside of it. She admits that, sometimes, customers and partners have shown unwilling to display the respect Kristy deserves simply due to her gender. However, her determination not to be marginalized has spurred her on to prove those naysayers wrong, and she is happier than ever to help create a diverse environment – both within Knichel and along the supply chain. “After 2010 was when I really started to find myself as CEO,” she explains, “and this is important, especially for a woman in this industry because it’s very male-dominated. Sometimes I’ll go to executive industry meetings and I’m the only woman in the room, and it can be intimidating at times, but I’ve pushed myself to get involved and talk to the men there. It’s been a challenge, but I felt I was up to that challenge.”
With a large portion of Kristy’s staff being female – 29 out of 42 – she is passionate about giving women opportunities they might not be given elsewhere. That being said, this choice is one borne of a desire for equality: “I’m all about giving a chance to everybody – men and women of all ethnicities. It’s crucial to me because I’ve had a really, really hard, rocky road to get where I’m at, and I don’t want other women to feel they have to go through that.” Follow the leader It is Kristy’s leadership skills, after all, that have created the close-knit, successful business Knichel is today. In her own words, she surrounds herself with people who are smarter than her, and places them where they are the most valuable. In an industry that typically has a high turnover of staff, Knichel boasts an average employee tenure of 10 or 11 years. Why? Because the business takes care of its employees. “When I took the business over from my father, my goal was to keep the employees happy and take care
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“I had to find out what my staff want to see and what would motivate them to stay - I’m a people-pleaser” – Kristy Knichel, President and CEO
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of them so that they stay,” Kristy explains. “Training people takes six months to a year, and I don’t have time to do that over and over again, so one of my first initiatives as CEO was to continue the company’s focus on employee engagement and retention. I had to find out what my staff want to see and what would motivate them to stay – I’m a people-pleaser.” Knichel takes part in Customer Service Week, buying gifts for staff, allowing them to play games and
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JR Knichel, Kristy Knichel, and Jonathon Krystek flanked by the sales team in the conference room.
earn tickets to win prizes, offering free massages and activities – all designed to entertain and incentivize them. Kristy also promotes flexibility in the workplace, as many of her staff have children. Knichel even pays for gym membership, promoting healthy living with an extra-long lunch break for those taking time to exercise. Making employees feel heard and appreciated is core to the business, according to Kristy.
Digital devotion Knichel Logistics’s stable core team and slick working environment has enabled the business to earn numerous awards over the last few years, plus a positive status as a certified woman-owned company. All of this has given Knichel the best foundation, atop of which it has built up a reputation and the technological and sustainability expertise required to make it a
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strong competitor in the market. Knichel has cleverly shopped around for the software the business uses, with every choice designed to improve efficiency and streamline operations. For marketing, Knichel has been using a platform called HubSpot as of last year to manage its online content, as well as revamping its website and further developing its social media presence. For overall data visualisation and business
intelligence, Knichel utilises a software called Tableau. This system allows for large amounts of shipment and quote data to be analyzed graphically, which provides a different perspective when it comes to data interpretation. With the ability to keep a close eye on analytics, Knichel Logistics has been able to drive more business and chart its revenue growth, enabling it to see its successes in more detail. In order to enhance the operational
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effectiveness of its pricing department, Knichel partnered with Logistical Labs, utilising its LoadDex platform. This software is a consortium of various data sources that give users a quick snapshot of ballpark pricing per lane entered. “We’ve really tried to embrace tech as much as possible,” adds Sheila Weatherly, Director of Pricing. “We’re able to load monthly data of what shippers are seeing out there in the market on a contracting spot basis. Using LoadDex, the data is pulled into one place, and very little training is required to circumnavigate it. It’s made it possible for someone who has very little background in truckload – including my team because they were mainly intermodal in their background – to be able to quote relevant and accurate data in a timely manner.” Without LoadDex, the pricing team would have to go to several separate sources and then manually calculate the averages – obviously, this system has been a game-changer in regards to time. On the environmental front, Knichel is a SmartWay Transport Partner, which means that it employs specific
“Larger customers are noticing us now, and we can offer the kind of service you might not get from a bigger logistics provider” – Kristy Knichel, President and CEO
reporting functionality to organise its carrier data in an effort to create a clean supply chain, by using carriers that are compliant with the SmartWay program. Along with numerous other innovations, these technologies are helping to ensure Knichel Logistics can compete with industry giants. “There’s a lot we can do,” says Kristy. “Other companies might have a tonne of money behind them, but we find ways to do the same things they can on a smaller scale.”
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Kristy Knichel (CEO) and Jonathon Krystek (COO).
Customer service Customers are reaching out to Knichel Logistics wanting to be part of its unique dynamic. Knichel has a team to work with them – talking to them, emailing, and arranging visits – and something they appreciate about the business the most is honesty. “We have processes in place that our people have been trained on, and they need to follow them as far as informing customers of certain situations in a timely manner, so that the customers are happy,” Kristy explains. “It would surprise you how many big companies we’re competing with don’t do simple things like this, because they don’t have the time to personalise customer needs. Giving that extra touch to the customer – as well as treating our carriers well – is key.” Knichel’s determination has paid off. The company is being noticed by big names – notably, Walmart Direct – and this is feeding into Kristy’s desire to create a more diverse supply chain. She wants Knichel Logistics to become involved in many different fields, thus widening
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A shot of the intermodal dispatch floor with Jonathon Krystek and Kristy Knichel the possibilities for its future. “I don’t want to grow too fast, but I think we can grow $5-10mn a year with this new focus on the diversity end of it,” says Knichel. “I have a goal to get my company to $100mn in the next six to 10 years. Larger customers are noticing us now, and we can offer the kind of service you might not get from a bigger logistics provider. They will get special attention from us, and they have the luxury of speaking to the same
person every time we communicate. “All companies have to be able to streamline things and become more efficient, and that includes listening to customers’ needs and providing what they need, if not more. When people ask why I’m successful, I say it’s because of my people. I’ve surrounded myself with better people than me, and taking care of them keeps them here. That has grown the business tremendously.”
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THE SCIENCE & THE ART OF WAREHOUSING
THE SCIENCE & THE ART OF WAREHOUSING
H
anging from the ceiling of Intermountain Healthcare’s Utah facility are bright banners with photos of patients, doctors and nurses. Among the towering shelves, pallets and forklifts, one of them reads, “Patient-centered.” It might seem incongruous, but it’s demonstrative of the company’s commitment to its core function: helping people live the healthiest lives possible. The $40mn, 327,000-square-foot space is home to the first health care distribution center certified by the Warehousing Education and Research Council (WERC). “WERC is a unifier among a vast, vast industry that knows no bounds across sectors,” said WERC CEO Michael Mikitka. “We compile reams of qualitative and quantitative research and translate them into meaningful baselines by which warehousing companies can measure their performance and define their success.” In addition to its vastness, the warehousing industry is surprisingly dynamic. Warehouses themselves
stay put, but everything they contain shifts in response to consumer trends and changes in how goods are moved around. For example, the push toward online transactions has retailers large and small exploring different ways to distribute. The push also pressures retailers to occupy more warehouse space than ever before, and in some cases, rely more heavily on third-party providers. And as warehouses grow, so to does the need for additional employees and more sophisticated systems. WERC, the only national association that represents warehouse and logistics professionals, helps companies stay ahead of these market curves. “The best tool in the kit of any warehouse operator is metrics,” says Mikitka. “One can only manage what they measure, so we provide evidence-based best practices and solutions that empower our members to make meaningful improvements.” Back in Utah at Intermountain Healthcare, the team was challenged with improving the organization’s value
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WA R E H O U S I N G E D U C AT I O N A N D R E S E A R C H C O U N C I L ( W E R C )
by reducing operating costs. Director of supply chain logistics, Gordon Slade, set out to bring the supply chain up from hospital basements, which they did in 2012 with the opening of the Kem C. Gardner Supply Chain Center. Dedicated to logistics, distribution and almost all related functions, the company created a central standardized foundation — not to mention, many efficiencies. What’s on the inside is what counts, though. With facility construction underway, the Intermountain team still had a lot of work to do in ensuring the operations were the best they could be to support better patient care. Enter WERC Attending his first WERC Annual Conference and Solutions Center, Slade realized how valuable the organization could be in helping them achieve their goals. “This was the group we needed to work with,” said Slade. “WERC’s resources enabled us to benchmark our performance against others outside the health sector. Our thinking was no longer boxed in.
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We had industry-wide knowledge from across the country pointing us to the best methodologies for warehousing and logistics.” Two years after opening its central facility, Intermountain elected to participate in WERC’s Warehouse Certification Program. Through independent, third-party audits, WERC certification assesses a warehouse facility’s capabilities and performance against industry standard grading methodology. But as Slade will attest, it gives participants something much more than an unbiased review. “The evaluation process tells us where we are today and what we need to work on tomorrow to continuously improve,” said Slade. “And in our world, improvements mean better health outcomes for patients.” WERC certification audits are completed by Steve Murray, principal consultant and chief researcher at Supply Chain Visions and WERC’s senior research associate and lead warehouse process auditor. In addition to a deep understanding of supply chain processes, technology and
THE SCIENCE & THE ART OF WAREHOUSING
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data integration, Murray brings to the process extensive experience in supplier/customer relationship management and team training. “Certification is very much an active and engaging process,” said Murray. “I make sure to connect directly and meaningfully with employees at all levels so that I can frame assessments with lived experience. Standards are only standard if they’re understood in the same way by everyone. Internal relations and communications are a significant factor in preventing disconnected processes.” Since the inception of the WERC certification program, Murray has completed more than 60 facility audits. With each one, WERC is pushing warehousing and logistics companies to raise the bar. Furthermore, audits generate first-hand, qualitative experience to inform WERC’s benchmarking and best practice guides, professional development offerings and key learning events — keeping them fresh and relevant. “We bring people outside their facilities to explore beyond the
numbers and data, to examine what others are doing in the industry,” said Mikitka. “We’re constantly spurring new standards and innovations.”
The largest exchange of warehousing know-how is WERC’s Annual Conference and Solutions Center. The next conference is May 6-9, 2018 in Charlotte, North Carolina. Do you have a product, service or technology with warehousing or logistics applications? Executives and managers attend WERC’s Annual Conference and Solutions Center in search of the latest innovations and tested innovations to improve their operation. As an exhibitor or sponsor, you’ll be in a prime position to make direct contact with warehousing professionals who have decision-making and purchasing power. Download WERC’s exhibitor and sponsor prospectus today at www.werc.org/2018.
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DATA BA N K :
Centers of excellence DataBank has enjoyed a hugely successful 18 months, characterized by acquisitions and organic development and super-charged by its takeover from Digital Bridge Written by: James Henderson Produced by: Tom Venturo
D ATA B A N K LT D
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he last couple of years in the data center industry have been characterized by a high level of mergers and acquisition (M&A) activity, with a record 2016 set to be comfortably surpassed in 2017, with the value of deals expected to run into multi-billion-dollar territory. One of the companies that has been particularly busy is DataBank, which was itself the subject of a takeover from Digital Bridge in June 2016. Headquartered in the historic former Federal Reserve Bank Building in downtown Dallas, TX the company is a leading provider of enterprise-class data center, cloud, and interconnection services, offering customers 100% uptime availability of data, applications, and infrastructure. DataBank’s managed data center services are anchored in world-class facilities, and after a recent flurry of activity the company currently boasts 13 data centers located across Dallas, Minneapolis, Kansas City, Cleveland, Pittsburgh, Salt Lake City, Baltimore and Atlanta, operating within or managing major
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Databank data center
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• Lower pPUE • Free cooling to increase energy efficiency • Data Centre air fully separated • Energy efficiency: Evaporative Cooling ESEERs over 45 • 3 modes of operation • Munters heat exchanger technology • Any fresh water type • Configurable design • Efficiency internal fan wall
ADV Oasis™ Indirect Evaporative Coolers Munters Oasis™ Indirect Evaporative Coolers (IEC) save you money, provide optimal operation and serve as an energy efficient solution for cooling your data center. We are also proud to offer 1st class dedicated global sales and service teams plus fully operational test facilities for Factory Acceptance Testing and simulation. The facilities follow ASHRAE Standard 143-2015 guideline method for indirect evaporative cooling testing. More information about our testing facilities can be found on our website. www.munters.com/dctestfacility Call to find out how much the Oasis™ IEC can meet your data centre cooling and efficiency needs.
Munters 225 S. Magnolia Ave Buena Vista VA 24416 USA / Tel: +1 540 291 1111 E-mail: datacenters@munters.com Web: munters.com/datacentres
Munters a ''Cool Partner'' DataBank is a leading provider of customized colocation solutions and services that are designed to help organizations manage risk and improve business performance. With 10 data centers located in various parts of the country, the DataBanks team of experienced professionals are familiar with various challenges faced while creating energy efficient design strategies. In a due diligence process consisting of comprehensive technical analysis and discussions with existing clients, DataBank has chosen to partner with Munters and utilize the proven Oasis TM IEC data center cooling technology. Focusing on the latest DataBank location in Minneapolis, Munters Oasis TM Indirect evaporative cooling (IEC) units with the patented EPX polymer heat exchanger have been installed to effectively reject heat from the data center. The Oasis system are 100% Indirect Air Side Economizers and do not introduce outside air. With no leaks, and a re circulating system, the data center is cooled without the introduction of outdoor air pollutants that might adversely impact the servers.
In Minnesota, there is only 10% of a year when the outside temperatures are too high and moist for the evaporative cooling alone. During this time a small mechanical cooling system (trim DX) supplements the evaporative process, so that the air supplied to the data center is maintained at the right temperature. This condition where refrigeration is required to supplement the IEC only occurs during conditions with simultaneous high heat and humidity.
VERT
Munters OasisTM IEC unit installation on the roof of Minnesota DatBank facility
The weather in Minneapolis goes into extremes regardless of the relative humidity (RH), with high RH in the summer and extremely low RH in the winter. The Munters Oasis IEC operates in one of three modes, depending on the ambient air temperature, dry, wet and wet +trimming DX. On cold and cool days, the Oasis heat exchanger operates dry and simply acts an air-to air heat exchanger. Outside air (commonly referred to as scavenger air) indirectly cools the data center air through normal heat exchange, without the use of any water. The EPX polymer tubes have been tested ยบand are proven effective despite the extreme cold in the northern climate of Minnesota where wind chill can drop to -35ยบF. Once the ambient temperature rises to a certain point, the Oasis heat exchanger will not be able to provide enough cooling while operating in dry mode. When this happens, water is pumped from internal sumps to the air handlers spray nozzles that wet the outside surface of the polymer heat exchanger tubes, cooling them with a thin layer of water. The scavenger air evaporates water on the exterior of the tubes, which causes heat to be extracted from the re circulating data center air flowing, internal to the tubes. In this evaporation mode, the Oasis heat exchanger will be able to cool the re circulated air even when outside temperatures are quite high.
Munters OasisTM IEC cooling unit installation on Minnesota DataBank facility
The highly effective Munters Oasis cooling system saves in annual operating costs resulting from lower power and water consumption compared to conventional water cooled chiller systems. The choice of DataBank to partner with Munters and integrate the Oasis IEC cooling technology has resulted in a pPue = 1.06 and a PUE = 1.12. The low PUE, proven reliability of the Munters Oasis Units has contributed to the overall capital savings experienced by DataBank, allowing them to operate with a competitive edge.
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Databank Downtown Dallas
Databank Richardson
6688 N. Central Expressway Suite #100 Dallas, TX 75206 214 363 7870 k2gc.com
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network interconnect facilities within each of the regions. This footprint of top-tier facilities is dedicated to providing uninterrupted access to customer data, applications and IT equipment. DataBank’s services provide business solutions for corporate enterprises, including hybrid cloud services, customize IT deployments, and industry compliant regulations to meet the outsourcing needs for IT management, maintenance and operations. The company serves a wide range of customer verticals including media and content distribution, cloud infrastructure providers and telecom networks. The business has consistently made headlines in recent years – both before and since the Digital Bridge takeover – as a result of a number of eye-catching deals to buy or build facilities in some of the United States’ fastest emerging data center hotspots. In the last 12 months, DataBank has announced:
Raul Martynek, CEO
Raul Martynek joined DataBank in June of 2016 as the Chief Executive Officer. In this role, he provides overall strategic direction of the company and its operations. Raul is a 20+ year veteran in the telecom and Internet Infrastructure sector. He most recently served as a Senior Advisor for Digital Bridge Holdings LLC. Prior to Digital Bridge, he served as Chief Executive Officer for New Jersey-based data center and managed services operator Net Access, LLC. Net Access was acquired in November 2015 by Denver-based data center operator Cologix. Prior to Net Access, he was the CEO of Voxel dot Net, Inc., a global managed hosting and cloud company, which was acquired by Internap Network Services Corp. in early 2012. Mr. Martynek also served as the Chief Restructuring Officer of Smart Telecom, a Dublin, Ireland-based fibre carrier which was acquired by Digiweb in 2009. businessreviewusa.com
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DataBank’s New DFW-3 Data Center
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the development of a purpose-built 94,000 sqft data in partnership with Georgia Tech; the construction of a third data center in Dallas; the acquisition of C7 Data Centers, the primary interconnection hub and largest data center service provider in Salt Lake City; the construction of a third 15,000 sqft data hall at its Minneapolis-area data center; and the acquisition of carrier-rich downtown data centers in Cleveland and Pittsburgh from 365 Data Centers. Its most recent activity, announced on September 21, saw DataBank acquire Edge Hosting. DataBank said the acquisition will provide both market expansion and additional expertise in the delivery of cloud solutions and managed services, especially for clientele requiring comprehensive operational controls for a number of commercial and government compliance standards. Raul Martynek is key to the story, having acted as a Senior Advisor to Digital Bridge before taking over as CEO at DataBank when the acquisition completed. Speaking exclusively,
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he reveals: “The majority of the work I did for Digital Bridge was around the DataBank acquisition, so it was obviously something that I felt very strongly about and thought would be very positive for the business. “Now that I’ve transitioned to CEO of the company, I feel the best component of the Digital Bridge relationship is that it is a group with very, very well-established access to long-term capital. To be successful in the data center space you really have to have a long-term plan and access to funds. The investments
we are making in building new data centers are not something that you get an immediate return on. “We are in the process of building two new data centers, one a 145,000 sqft with over nine-megawatts available in Dallas, which is nearing completion, and we’ve also started on a 94,000 eight-megawatt facility in Atlanta. Those types of investments would not be possible with any kind of traditional private equity type of vehicle, where people are looking to get in and out of investments in a five to 10-year period.
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“That’s really been, to me, the most exciting part. Having run private-equity backed businesses in the past, and now contrasting that with our situation here at DataBank with Digital Bridge. We can have a long-term viewpoint on the marketplace. It allows us to make different types of investments, which we believe will return very favourably to shareholders in the future.” Key to the appeal of the purchase for Digital Bridge was DataBank’s continuing ambition to grow into underserved markets, where there is huge potential for expansion, says Kevin Ooley, President and CFO of DataBank, who has been with the business since 2011. “From 2011 to 2016, the plan was to capitalize on the Dallas presence, grow into underserved markets, and then add a layer of services on top that we knew our clients wanted. And we did that. We invested in Minneapolis and in Kansas City and built a second facility in Dallas,” he comments.
Kevin Ooley, President & CFO
Kevin Ooley took on the role of President in May of 2017 and has served as the Chief Financial Officer of DataBank since 2011. He has over 20 years of extensive experience in delivering shareholder value through the creation and implementation of growth and operational strategies. Prior to joining DataBank, Ooley served as the CFO for the Thompson Media Group and as a Principal at Lovett Miller & Co., a growth capital private equity firm based in Florida. He was also a Director of Strategy for iXL Enterprises and a Manager in Accenture’s Strategic Services practice. Ooley holds a Bachelor of Industrial Engineering from the Georgia Institute of Technology and a Master of Business Administration from Duke University.
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DATABANK’S DATA CENTERS PITTSBURGH
DALLAS
DataBank currently operates three Dallas area data centers. It’s Legacy Park facility is underconstruction in Plano, another in the telecom-rich northern suburb of Richardson, and its downtown data center facility and headquarters is the former Federal Reserve Bank of Dallas, now a connectivity-rich carrier-hotel.
DataBank currently operates one data center facility in Downtown Pittsburgh. This site is within the telecom-rich business park, Nova Place. The site came into the DataBank portfolio through acquisition in January 2017.
KANSAS CITY
DataBank currently operates one data center facility in the heart of Downtown Cleveland. The telecom-rich location, boasting a number of toptier providers, came into the DataBank portfolio via acquisition in January 2017.
Both Kansas City data centers came into DataBank’s portfolio through the acquisition of Arsalon Technologies in April 2014. The data center sites are built out to top-tier standards and operate as the managed services hub for the company. The facilities host a number of prominent local and state-wide businesses as clients.
MINNEAPOLIS
ATLANTA
CLEVELAND
DataBank has two Minneapolis-Area data centers. Our West Twin Cities data center is located off of France Avenue in Edina, MN and its newest data center is located in Eagan, MN. The Tier-III certified purpose-built facility opened in the Spring 2015 and features unmatched power availability, connectivity and security.
SALT LAKE CITY
DataBank currently operates three data center facilities in Salt Lake City area. All three of these top-tier data center sites came into the DataBank’s portfolio via acquisition in early 2017. One is located in downtown SLC and the other two are just to the South at our campus in Bluffdale, UT.
Salt Lake City
Kansas City Dallas
DataBank currently operates one data center in the Atlanta area. DataBank’s Atlanta data center is currently under-construction in midtown Atlanta, GA, nearby anchor-tenant Georgia Tech’s campus.
BALTIMORE
DataBank currently operates one data center in the Baltimore area. DataBank’s downtown Baltimore data center came into the DataBank’s portfolio via the acquisition of the compliant-cloud and managed service specialized Edge Hosting, late in 2017.
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“When Digital Bridge came on like Pittsburgh and Cleveland and board, they liked that strategy, Salt Lake City and Minneapolis and they agreed with it. It was a natural Kansas City. If you look at DataBank’s transition that the larger ownership evolution that’s exactly what we’ve group and dollars behind it allowed done. We started in a tier-one market, us to continue with that plan, but which is Dallas, and it’s still a very on a much-accelerated schedule, important market for us, but all our and really take it beyond the Central expansions since then have been time zone. So, we still focus into these other markets where on underserved markets we see demand evolving and, using a football as the internet of analogy, American everything becomes football, underserved more important.” NFL cities: Chicago, The recent New York, Northern announcement Virginia, Silicon that DataBank has Number of Employees Valley are very well partnered Georgia at DataBank Ltd served, with a great Tech to develop a deal of competition. So, new 94,000 sqft data we’re going after that Salt center in downtown Atlanta, Lake City, Pittsburgh, Cleveland, housing high-performance computing Atlanta, that secondary market nodes and unique datasets for that has served us very well.” university research, has certainly Martynek is on the same page: piqued the interest of the data center “What we see is that as the internet world. Located in Midtown Atlanta, continues to evolve, that there needs DataBank’s ATL1 data center will to be infrastructure in secondary serve as a HPCC (High-Performance markets; this trend that’s called the Computing Center) and will house the ‘edge’ – our view is the edge is alive Southern Crossroads providing high and well today. It exists in places speed, high bandwidth connectivity
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to research and education sites throughout the southeast and across the nation. Construction of DataBank’s ATL1 data center is scheduled for Q4 of this year, with construction slated for Q4 2018 completion. Martynek says that the opportunity to work with academia and parachute the DataBank into a new business space was too good to turn up. “This is a very high-profile project, a very major investment, and all indications are that it’s going to be very successful because it’s starting with an incredible foundation, which is Georgia Tech.” “We saw an opportunity to insert ourselves into an ecosystem that we hadn’t been in before. We’re very well established in the corporate enterprise ecosystem, we’re very well established in the carrier network ecosystem, and we’re very well established in what we call SMACC, which is social, media, analytics, content and cloud, so the internet ecosystem. “This project represents a fourth ecosystem, that we really didn’t have any exposure to. We felt that given the profile of Georgia Tech,
OVER 500,000SQ FT AND COUNTING DataBank’s recent acquisition of Stream Data Centers’ latest development in Legacy Business Park, Dallas, Texas, has expanded the company’s portfolio to more than 500,000 sqft. The data center dubbed DFW3, will be a multi-tenant, Tier-3 data center largely aimed at IT outsourcing. Located on an owned 16-acre site, the initial building will comprise 145,000 sqft with 60,000 sqft of white-space and the ability to expand to 265,000 sqft and 120,000 sqft of whitespace. “The larger footprint we have, the more we can address different customer requirements; larger customers want to deploy in multiple markets and then different types of configurations, enterprise and interconnection,” says Martynek. “That footprint facilitates our ability to be a good partner with our partners. It’s one of the benefits that we think will accrue to us as we expand.” Ooley concurs, commenting: “The larger the footprint, the more scale you have, the more attractive you are to Fortune 500 clients and large technology companies. It means that we can serve customers that need locations on the east or west coast, as well as a central location as well. “Aside from the potential for clients, the spread of locations has enabled us to attract more talent, and deepen the strength of our employees. In addition, it helps drive down our cost to capital. So just like customers find us more attractive, so do banks and equity partners.”
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D ATA B A N K LT D
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it would be just a tremendous way to get into that ecosystem. We’re hugely excited about it and the conversations we’ve had with Georgia Tech have been extremely positive.” The project is also one close to Ooley’s heart, not just because of the potential it represents for DataBank, but also due to the time he spent as an undergraduate student at the University. “I’ve experienced the emphasis and resources that they put into research. It’s one of the highest rated engineering institutes in the US, and the commitment to this area and the broader Atlanta community is unparalleled. I’m really pleased to be a part of that, and we will benefit because a lot of our customers will see us providing this for them and we’ll gain credibility to be able to take this and offer it in other markets,” he comments. Away from academia, DataBank has entered Cleveland and Pittsburgh after its acquisition of network-neutral data center facilities from 365 Data Centers. “Cleveland and Pittsburgh offer very highly connected facilities, so it was a positive way for us to enter
into the marketplace,” says Ooley. “This opportunity aligned with one of our two acquisitions strategies, which is to go into a market and pick up an asset and then build our data bank design, data centers around that.” Elaborating on strategy employed by DataBank, Martynek reveals: “We look at markets analytically – not every market is going to be a good one. Cleveland, Pittsburgh and our Atlanta announcement, all three of those markets were on our radar as good markets that had good characteristics from a long-term absorption of incremental data center space. “We’re reticent to go into a market without an established presence, in other words greenfield. That’s a really big difference between what’s happening now and what happened in the bubble era. “I’ve been in the sector since 1994, so I’ve seen the evolution. In the bubble era, companies planted flags, they would set up operations in a location without a single customer. That doesn’t happen today in data center land. People realize it’s very difficult to convince users,
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D ATA B A N K LT D
sophisticated enterprise users, in a given market, to give them business just by coming up and saying ‘Hi, I’m the new guy on the block. I’m going to do a good job for you.’ “You have no track record, and this is a business of trust. The enterprise person is going to be loathed to trust you over someone who’s been in the market for three years, five years, ten years, and has that track record. That’s why we look to seek out acquisitions as our market entry method, after we’ve underwritten the viability and attractiveness
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of a given market. That’s exactly what we did with 365’s assets.” Amongst the myriad of challenges of operating a clutch of data centers across the United States is one of sustainability. Data centers are by their nature power hungry beasts that demand round-the-clock attention. To that end, DataBank measures the energy output of its centers on a PUE (percentage utilisation effectiveness) basis. “It’s a pretty simple concept, which is how much power is the entire data center using? That’s what’s on
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Legacy Park Data Center (DFW 3) - Plano, TX
the numerator. The denominator is how much power are our customers consuming?” says Martynek. “The closer you can get that number to one, the more efficient you are, because I can’t change the power usage of my customer’s equipment, that’s his decision, but I can ensure that my facility operates as efficiently as possible. We’ve been doing a lot there to ensure that we get to a very low number. Our facilities in Utah are at like 1.2, 1.3, which is very, very strong. We’re only using 200 to 300 KW per megawatt to run the entire facility.
That’s how we measure sustainability. “The market’s starting to evolve where we’re able to purchase power from more sustainable long-term renewable type of sources. I think you see, across the industry, big commitments, not only from the large customers, like the Apples and the Googles and the Amazons of the world, but even our larger data center competitors are demanding that type of option. I think those are going to trickle down to us, because we’re still a small consumer compared to them. I think we’re
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D ATA B A N K LT D
BIG IN TEXAS While DataBank has made its intentions to grow into secondary or ‘edge’ markets clear, its homes state of Texas – very much a primary market – remains hugely important to the business. It recently announced the acquisition of Stream Data Centers’ latest development in Legacy Business Park – known as DFW-3. The state-of-theart, multi-tenant, Tier-3 data center in Plano, will offer Dallas area businesses a new highquality option for outsourced data center capacity in the rapidly growing Legacy business corridor. Located on an owned 16-acre site, the initial building will comprise 145,000 sqft with 60,000 sqft of white-space and the ability to expand to 265,000 sqft and 120,000 sqft of whitespace. “The Plano submarket is one of the hottest office parks in the US
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right now. A lot of companies are moving either their headquarters or material or a substantial portion of their business to that area,” says Ooley. “And for example, Toyota, Liberty Insurance, these are companies that have moved a lot of their operations to that submarket. We wanted to be right in the heart of it. “Texas has sold itself number one as being a very businessfriendly state. Two, I think from an affordability standpoint, relative to the coast, California, New York, the cost of doing business here is still very affordable. There’s a huge talent pool here. From really, across the board. This is a big telecommunications and hightech hub, so it’s just a good labour pool from which to tap. it’s just a really good place to do business.”
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going to benefit from their activity.” It is also likely that DataBank will continue to benefit from the consolidation that is evidently taking place in the data center industry, with Martynek of the opinion that the sector is very fragmented compared to industries such as wireless, telco or cable. “When you look at this space it’s ten years behind where those other sectors are,” he says. So, plenty of potential for further acquistional activity. In addition, Marytnek believes the service offering Databank is bringing to market sets it apart from some of the competition. “We’ve adopted what is called the hybrid approach. What that means is we offer not just co-location solutions, but we offer managed service and network solutions, on a single platform in the same building. That’s not something that a lot of people do. “It’s much harder to do that,
because obviously, your expertise has to expand into a wider set of products and services. Ultimately, we see that as the winning formula in that enterprise market. We see our enterprise customers that are one megawatt and below asking us to do more for them around managed services, around network. That is a huge source of differentiation for us.” He concludes: “Our plan over the next 12 - 18 months is to continue to dig deeper in our existing marketing. That’s our function of what I described earlier in terms of bringing on new inventory, new capability. “With DigitalBridge we have a very active M&A program. We’re constantly looking at new opportunities. I do envision us continuing to expand geographically through incremental acquisitions into attractive secondary markets that fit our strategy.”
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Supplying Norman with a
safe and stable water supply Written by: John O’Hanlon Produced by: Tom Venturo
In the third week of June 2019, the new water treatment plant for the City of Norman, Oklahoma, will come online. It is breaking new ground in many ways, and will be the first in the state to use noninvasive UV as its primary means of disinfection
K
eeping a large population supplied with clean, reliable drinking water is a complex business. The State of Oklahoma has a reputation for extreme and erratic weather, but the City of Norman, located around 20 miles south of Oklahoma City, averages about 38 inches of rainfall a year, so it is not exactly arid. All the same, it relies on a variety of different sources to satisfy the demands of an estimated 122,000 citizens.
In its earlier days, the city, which was first settled towards the end of the 19th century, relied on wells sunk into the Garber-Wellington aquifer, a large sandstone formation lying
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under central Oklahoma. By the 1940s, it became clear that the rapidly growing city would need to add more resources. City leaders decided to dam the Little River in 1965 and create 6,000-acre Lake Thunderbird to provide Norman and other communities with a dependable drinking water source of around 7bn gallons a year. To date, these two sources - direct supply from the lake and 31 GarberWellington wells - provide Norman with almost all of its supply. However, since 2000 the city has had an arrangement with Oklahoma City to provide emergency connection
and supply a base flow of 1mn gallons per day (mgd) when needed. Since 1988, when Norman first exceeded its allotted extraction, the water treatment plant (WTP) has exceeded its allocation 15 times. The demands on Lake Thunderbird have increased to the point that it cannot provide the City’s supply requirements on a continual basis, so the city is sinking an additional 12 wells into the aquifer to yield another two mgd. As Chris Mattingly, City of Norman Capital Projects Engineer explains: “We are out of reserves; we are treating all the lake water we are allowed to.” Currently the city
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GREAT INFRASTRUCTURE SHOULD STAND THE TEST OF TIME. WILL YOURS?
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The ancient Romans knew the importance of building durable infrastructure. So do we. At Carollo, we believe today’s infrastructure problems require sustainable solutions that can last not just years, but centuries. If you’re facing the real-world problems of aging infrastructure, we can help. Since 1933, Carollo has provided complete infrastructure engineering services, financial strategies and innovative technology. We handle it all, from initial planning of your project to final completion and beyond. Far beyond.
1.800.523.5826 | carollo.com
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is looking at innovative ways to re-use more of its water, including putting treated wastewater to good uses. For example, on an average summer’s day the University of Oklahoma uses 500,000 gallons of treated effluent to irrigate its golf course. The bulk of Norman’s water supply is treated at the city’s WTP, which was built in 1965. The plant was expanded in 1981, increasing its capacity from 7 to 14 mgd, and again in 2010, when the Phase I upgrade added a generator and a new clarifier, replaced the filter system, upgraded much of the electrical system and replaced lime slakers. Today it can deliver 17 mgd of treated water. However, as technology evolved and regulatory demands on water and process quality from the Department of Environmental Quality (DEQ) became more stringent, it became apparent that the City needed to look at a complete upgrade of the disinfection processes at the WTP. The City embarked on Phase II, a project that will see the introduction of ultraviolet light (UV) as the primary disinfection process, new ozone and chemical processes, a new pumping
“All of the citizens of Norman have to vote to approve any rate increase – not just the water users” – Chris Mattingly, City of Norman Capital Projects Engineer
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station and new administration and maintenance buildings. The City has an interesting way of raising money for infrastructure, explains Chris Mattingly. “All of the citizens of Norman have to vote to approve any rate increase – not just the water users. We have to be very transparent, educate our public to make sure they are aware of all the issues and why we need the funds, and then we put it to a vote.” The case was set out in detail, based on a pilot study carried out
by Carollo Engineers, a hugely experienced and highly respected consulting firm, and the $35mn project was given the go-ahead by the voters. Norman is borrowing $31mn at a low rate of interest that will save Norman ratepayers about $7mn for the construction phase of the project through a state fund administered by the Oklahoma Water Resources Board (OWRB). Driving the design was the request of the DEQ to move to a more substantial disinfection process
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“All of the processes work together to deliver the improved water quality that water users in Norman will see” – Amber Wooten, Project Engineer Carollo Engineers, Inc.
than the chloramine they were using as a primary disinfectant, says Mattingly. “We tried chlorine but that generates trihalomethanes (THMs), which are regulated and we were not sure we could meet those standards - so we ended up thinking about ozone. Then Carollo came up with the recommendation that UV would be the most effective as our primary disinfectant, with an ozone cycle to improve the taste and quality further.” This will be the first use of UV in Oklahoma to disinfect a large WTP, though the technology has been
used elsewhere, notably at New York City, which has the largest potable water UV treatment plant in the world. As Amber Wooten, Project Engineer at Carollo explains: “As part of the pilot study, we evaluated placing ozone at different points along the water treatment process. We found that ozone was not the best solution for disinfection, but that it offers some other benefits, such as taste and odor reduction. The combination of ozone and UV allowed the City to make the most efficient use of the treatment as well as the most cost-effective way to attain the levels they wanted.” The design is sophisticated. For example, the City had concerns that the introduction of ozone could interact with bromine in the water to form bromates. “We found that adding a little chloramine upstream of ozone reduces bromate formation.” says Amber. “The other interesting thing is that we converted the WTP’s existing filters to biofilters to further enhance treatment with minimal capital cost. All of these processes work together to deliver the improved water quality
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that water users in Norman will see.” The other key partner in the Phase II upgrade is the Foley Company, which has performed many water treatment projects and is constructing the new facilities. Foley’s project manager, Dave Hoover, admits that although his firm has completed many downstream wastewater UV installations, this is its first on the water supply side. “In most wastewater installations the UV lights hang down in an open channel, and because the water is soiled you need a lot of them. What I like about this is that it is in an enclosed pipe,
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the water is clearer; so you can do it more efficiently and use less energy.” The preliminary building excavation and piping rerouting has been completed and now the critical path for the project is through the Chemical/Ozone Building. “We are scheduled to install the piers soon,” Hoover says. “The soil condition is quite unstable, and Carollo has designed the facility with 104 deep piers drilled 11ft into the shale.” Teamwork between the partners is key. During construction, the plant has to run continuously. The longest period it can be shut down
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is at the time of lowest demand in the winter, when the city can be supplied for a maximum of three days using water stored in the city’s storage towers and emergency supplies from Oklahoma City. Geri Wellborn has been manager of the plant for the last year and is the first woman in Norman’s history to manage a utility. She’s looking forward to the challenges of running the new advanced facility. “I think it will change the way we operate. We are still waiting to hear exactly what the DEQ will require of us in the way of recording and reporting. UV hasn’t
“Foley has been great at communication with us. We see their guys on the ground every day and talk with them regularly. This has been a really positive collaboration” – Geri Wellborn, Water Treatment Plant Manager for City of Norman
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been used for disinfection in this state. But we have been busy making sure our operators understand that they are going to have a lot more options as to where they dose chemicals, how they monitor chlorine residuals, for example and not just making sure that the levels at the back and the front of the plant are correct but at points in between.” All of that data has to be collected,
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and it will involve a lot more quality and control testing for her team. Much of this can be automated, but that too will involve staff training. New systems being put in place include an upgrade to the existing SCADA system, software for the filters and monitoring software for the UV and ozone circuits. Chemical feed systems dating back to the 1960s will be largely automated too, which will make life much easier for the operators once they get used to it, says Wellborn. All of this has been foreseen by Carollo. “As part of the construction process, the manufacturers are required to provide training on all of the new equipment, both operations and maintenance,” explains Amber Wooten. “Some of them are asked to provide longer term maintenance, giving staff the opportunity to continue learning. From the engineering perspective, we also talk to them about holistic operation and including control testing we discussed.” As Chris Mattingly insists, the
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fixed goal that keeps the teams from Foley, Carollo, the WTP itself and the City working so well together is to see that the citizens of Norman get a reliable supply of high-quality water. “We have monthly planning and coordination meetings, and meet on site every two weeks. Foley will give us warning of any shutdowns,” says Geri Wellborn. “Foley has been great at communication with us. We see their guys on the ground every day and talk with them regularly. This has been a really positive collaboration.”
At the peak of construction Foley will have up to 150 people on site, most of them hired locally. It is a safe bet that the people of Norman will find their money well spent and enjoy unrivaled water quality over the coming decade.
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INFOMART AND THE
15MW POWERHOUSE Written by: Stuart Hodge Produced by: Tom Venturo
Situated in Loudoun County’s famous Ashburn Corridor, the former Dulles Technology Center is being transformed into a 15MW powerhouse by Infomart Data Centers – we spoke to two of the project’s key players
I N F O M A R T D ATA C E N T E R S
I
n the growing industry of data centers, it’s all about differentiating yourself from the market, and Infomart Data Centers is a company that prides itself on flexibility of design. With its latest data center project in Ashburn, Virginia, Infomart is leveraging all of its capability when it comes to adaptive, customizable and efficient design as it looks to renovate and upgrade what was formerly AOL’s Dulles Technology Center. Infomart describes the Ashburn data center as its “most efficient, sustainable and flexible product to date,” and we spoke to some of the individuals at the forefront of the project about the electrical and mechanical transformation the building has undergone. It’s changing from a 10MW facility to a 15MW facility, but without a massive increase in size. It’s the flexibility of design which will allow Infomart to tailor its solutions to a customer’s exact requirements. Shawn Kane, Infomart’s Vice President of Engineering, was the first operations manager at the site when AOL originally opened the facility around two decades ago, and he has been part of the team which has overseen the transformation. “The kind of technology that was put in to support the infrastructure 20 years ago is dated,” says Kane. “So we’re either retrofitting or directly replacing the vast majority of all of the controls and most of the power conditioning equipment.” “It’s almost a complete strip out of the
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Shawn Kane Vice President of Engineering
Shawn Kane served as the original operations manager for the AOL Dulles Technology Center, and worked with the company from 1998 until 2015, when he joined Infomart as Vice President of Engineering. He holds a BS in Electrical Engineering from the University of Pittsburgh.
“I’ve been working in critical centers and data centers for most of my 27-year career” existing infrastructure for new, updated infrastructure.” Kane’s colleague, Doug Shotwell, Vice President of Development for Infomart, is just as excited about the refurb, saying that the building itself is “robust” and “stout.” “When AOL built the facility, they spared no expense,” he says. “We’re leveraging the quality of the building that AOL was able to construct and building upon that
with the latest power and cooling technologies available today. “It was the original AOL mega data center, one of the first large-scale data centers built in the country, and AOL spared no expense in building it, so it has great bones. “Renovating all the facility’s infrastructure from a UPS standpoint as well as renovating generators, buying new UPSs and chillers, augmenting the piping, and changing
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Doug Shotwell Vice President of Development
Doug Shotwell’s background is primarily in development and construction. He joined Infomart as a Solutions Architect in May 2012, before making the step up to Vice President of Development in December of last year.
“I work with individual customers as well as our own group to create and build data centers that meet the flexibility needs of our customers.” the design is going to give us the flexibility to deliver highly-efficient data center services backed by IT-critical power and cooling for our customers. “In the years since it was built, we can now get more capacity, more infrastructure and more efficiency in the building itself.” “While the building’s footprint will not undergo immense changes,
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other than a 20,000 sq ft addition, the size of IT critical power and storage that we’re putting inside the space will nearly double.” Months in the making The Infomart Ashburn renovation got underway several months ago, beginning with the upgrade of electrical assets such as the
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generators and main switchboards. “From there on out, it almost a complete renovation: new UPS systems, power distribution systems, monitoring and controls, metering, mechanical cooling, fire alarm systems, and security systems. “We’ve gutted all of the mechanical assets,” Shotwell continues. “This includes the chillers and many of the pumps; we’ve also taken apart the cooling towers and we’re putting all of those new assets in place. “The first phase of our deployment is going to be 6MW of IT critical power and cooling capacity — all brand-new infrastructure from an EPS and chilling capacity standpoint. “The second phase is where we augment about 20,000 to 40,000 sq ft of building, to build some additional infrastructure. We’re on the downslope of the first phase of implementation right now, so we’re about to commission our first 2MW of capacity.” Phase I of the project consists of 6MW of supply with 15MW of supply in the master plan for the building, with 50 new jobs expected to be created
as a result of the augmentation. These staff members will be trained in ensuring Infomart Ashburn operations meet the requirements of the Uptime Institute Management and Operation (M&O) Stamp of Approval, the highest ranking of its kind in the world. Among the most impressive aspects of this facility renovation is Infomart’s ability to substantially increase capacity without needing to increase its size. The company’s adaptability allows it to install anything from 200W to 600W per sq ft, enabling Infomart to accommodate the customized needs of its clients, rather than having them resort to a standardized design. “We’re trying to keep flexibility in our design process,” Shotwell adds. “We had some real success at our data center in Oregon with active rear-door heat exchanger technology and because of that, we’ve elected to transfer some of the same design elements to Ashburn in order to enable the same success. “We’ve also left some of the underfloor infrastructure, with the
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Go Green With Infomart
intent that if there’s a customer who has a need for high-density, we have the flexibility to easily provide that capability within the facility.” “Our existing data halls are going to be managed from a 2MW to 3MW footprint, with as much as 6MW of capacity within a 10,000 sq ft space, with no major modifications. “Our mechanical design also boasts a higher water temperature than most facilities, with chiller plants delivering chilled water supply at 65 degrees Fahrenheit. This will give us an opportunity to use more outside air as pre-cooling and to make the facility much more efficient.”
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Data stronghold Infomart Ashburn sits at the center of Loudoun County’s famous Ashburn Corridor, benefiting from the strong power grid and fiber-dense networks in the area - key features which have led to (and have been supplemented by) the vast number of data centers in the region. Kane says: “In the 20-plus years I’ve been here, I’ve witnessed a tremendous growth of data centers in the area. With new data centers come system upgrades, substation renovations, new transmission lines and new capacity to support them. “So, from a power standpoint, we’re
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well-positioned. With most of the Ashburn data centers, there’s plenty of power capacity and power capacity planning, which is crucial because many of these power transmission lines can take three to five years to install. Because of this, there was no issue in increasing the capacity of our data center - it was readily available. “Another significant feature of the Ashburn market is its network connectivity. The AOL facility was the first data center in Loudon County. The market grew from there, leaving the building in the center of it all, and therefore, very well-connected. “The connectivity in Ashburn
stems from a vast ecosystem of providers and carriers in the market, connecting all of the United States as well as Europe and the rest of the world. It’s also very easy to get from data center to data center to make that connectivity happen.” In addition to its connectivity, Loudon County boasts a number of tax benefits for data centers like Infomart, as well as their tenants and other service providers in the area. “Loudoun County and the general Northern Virginia market is very prodata centers,” Shotwell explains. “With lower property taxes as well as tax rebate programs for data center
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Colocation suites will be available in sizes ranging from 500KW to upwards of 2MW
construction and overall build, Loudon County offers a variety of incentives to attract new business to the region.” Track record The word “flexibility” is prominent throughout Shotwell and Kane’s commentary, and it really underpins everything that Infomart does. In addition to showcasing the capability throughout its Ashburn renovation, the company also
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proved its agility with client LinkedIn at its Portland facility during the aforementioned implementation of active rear-door heat exchanger technology. Although the installation of this particular technology was something Infomart hadn’t done before, the company worked in close collaboration with LinkedIn to not only install it, but also took the added step of training its staff
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on how to service and maintain it. LinkedIn’s Portland data center is now considered one of the most efficient IT operations in the world. “Our ability to drive higher-density design, as well as the innovative thinking and the creativity we employ to enable it, are what makes Infomart unique,” Shotwell adds. “We’ve built Infomart Ashburn with that same flexibility and customer customization in mind.
“Design flexibility is amongst the most common requirements from our potential customers, and what differentiates Infomart in the marketplace.”
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Innovative education at your fingertips Written by: Laura Mullan Produced by: Adam Turner
L A U R E AT E O N L I N E E D U C AT I O N D I V I S I O N O F L A U R E AT E E D U C AT I O N , I N C
Laureate Education has cemented itself as a major player in the education industry, providing innovative online degree programmes and technology solutions to students. A keen innovator, Laureate Online’s CIO Rob Hilliard is passionate about delivering an unforgettable student experience
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nline education or e-learning is a rapidly evolving market and it seems no company is driving innovation in the industry quite like Laureate Education. As the first publicly traded public benefit corporation, Laureate Education, Inc. is the largest global network of degree-granting higher education institutions, with more than one million students enrolled across nearly 70 institutions in 25 countries at campuses and online. Laureate Education provides access that helps reduce barriers to education and foster a culture of inclusive learning; however, Laureate Education is going one step further by also offering online courses across its network of institutions and has a division,
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Laureate Online, which focuses on the fully online degree programs. Rob Hilliard, CIO of Laureate Online, oversees tech solutions at Walden University, the company’s largest online university, as well as Laureate Education’s partner institutions - the University of Roehampton, the University of Liverpool, and the University of Miami. “When we talk about our vision, there’s a phrase we often use called the ‘triple bottom line,’” notes Hilliard. “This means we’ve got our financial bottom line as a company, a student outcome bottom line, and a social impact bottom line.” “We want to make sure we’re driving student outcomes. Not just simply giving students an education, but
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Rob Hilliard
CIO of Laureate Online w w w. b u s i n e s s re v i e w u s a . c o m
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Doug Becker Founder, Chairman, and CEO
Ricardo Berckemeyer Chief Operating Officer
Eilif SerckHanssen President and Chief Administrative Officer
“It’s important to build relationships. You can’t do it alone. Everyone’s got to try to pull together and focus on trying to do the right thing for the student” – Rob Hilliard, CIO of Laureate Online giving them the education they need to achieve their life goals and ambitions. “Finally, the third bottom line is our impact on the world and how we can drive positive social change,” continues Hilliard. “We’re focusing on those three levels so we can drive improvements for the company,
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the stockholders, the students and for the world in general.” These may seem like ambitious aims, but they are ones which Laureate Education aims to deliver, through innovative digital transformation and technology leadership.
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Changing mindsets The last few years have been transformational for Laureate Online as it has revamped its IT operating model and moved from a projectbased culture to a product-based one. “By thinking of your technology solutions as products you have to keep iterating it, changing it, and adjusting it, just as the world around it changes,” Hilliard explains. “You might not make big changes every day, but having a team thinking
about the next improvement builds relationships, collaboration, and teamwork - so there’s less focus on the lines of the department and more focus on the student.” Much of Hilliard’s focus has been on creating innovative technologies but as the company evolves and develops, he’s also keen to make sure the staff are well trained to deal with the new advancements. “We have started to think about innovation in terms of change
Culinary students at Universidade Anhembi Morumbi, a Laureate network institution in Brazil
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enablement,” reflects Hilliard. “We now recognize that when we’re implementing a new system, there’s a change to the technology, certainly, but there’s also a change to the people and the process. “We ask ourselves, if we are going to make this technology change, are the people trained properly, are they prepared for it, did we communicate it to them properly, and have we adjusted the processes properly?” Driving innovation One notable product that Hilliard is proud of is Walden University’s newly revamped student portal. “Just like every technology, it gets old over time, and so we made a real effort to build a contemporary student experience,” says Hilliard. “Not only am I proud of the solution, I think it’s also a great example of the teamwork between the different facets of the organization that needed to come together to think about the student,” he adds. “It’s important to build relationships,” adds Hilliard, “you can’t do it alone. Everyone has to pull together and focus on doing the right thing for the student.” Laureate Online is also embarking on a new technological innovation by migrating
Laureate Education is the largest global network of degree-granting higher education institutions with nearly 70 campus-based and online universities in 25 countries
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to a new Customer Relationship Management (CRM) platform, Salesforce, and a new marketing automation tool called Marketo. They are also working with companies such as GoKart Labs on experience design and innovation initiatives. “Everyone who touches a prospective student will have their interactions updated in our systems. This way, we’ll have a much better 360-degree view of our customer and we can then provide them with the exact product they want,” adds Hilliard. Focusing on the individual Offering an eclectic range of undergraduate and graduate degree programs such as business, nursing, education and social work, Laureate Education’s individualistic and innovative approach to education could well be a deciding factor for prospective students when choosing whether to enrol. Indeed, it is the company’s dedication to providing a rewarding student experience which is at the core of Laureate Education’s ethos and it is a mission which Hilliard is passionate about. “I would say that my personal overriding goal is really focused on student experience - broadly classifying ‘student’ as prospective students, current students, as well as alumni,” he says. “It’s making sure that the organization is aligned properly to satisfy the student’s needs as they go through that lifecycle.” By looking at education from a refreshing angle,
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Voices that Impact the Future
The Laureate Education, Inc. headquarters in Baltimore, Md
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“In an age where a lot of companies are trying to define what their purpose is I think most employees and students feel good to come to an institution where there’s a focus on driving improvement in the world” – Rob Hilliard, CIO of Laureate Online
Laureate Education is not just reducing barriers to education access but is also questioning the ways we learn. “When you think about revolutionising and transforming education there are a lot of things out there that are beyond technology,” says Hilliard. “You can think about the way people go to class but you can also consider what types of education you can offer. For instance, Walden has developed a competency-based education experience that’s centered on the idea of learning at your own pace. “It’s an innovative solution, and I think if people understood it
better and knew how it worked, they could achieve the educational outcomes they desire.” At the forefront of a changing industry As a public benefit corporation and a Certified B Corporation®, Laureate Education is committed to making a positive and enduring impact, not only for students but also in the communities it serves. Best expressed by a commitment to be ‘Here for Good’, the company is a strong believer that when its students succeed, countries prosper and societies benefit.
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Laureate offer undergraduate and graduate degree programmes to over one million students worldwide 170
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“Overall it’s a great mission,” says Hilliard. “In an age where a lot of companies are trying to define what their purpose is, I think most employees and students feel good about coming to an institution where there’s a focus on making the world a better place.” A lot has changed in the education sector over the last decade, and certainly one of the trends is more online programme offerings. Therefore, Hilliard recognizes the need to innovate so that the company can stay ahead of the curve and offer
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Antonio Guterres, the ninth Secretary General of the United Nations, being awarded an honorary doctorate at the Universidad Europea de Madrid in Spain, a Laureate network institution
a student experience like no other. “From a technology perspective, we need to make sure we are innovating in ways that are providing the best student experience and the best student outcomes,” Hilliard says. “My goal is for Laureate Education to be a leader, an organization you could look up to and say they have the best online education, they have the best student experience, and their students achieve their goals - from my perspective that’s what is most important.”
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