CFO India - April 2012 by Bhupinder Sharma

case study how emami acquired zandu p. 42

INsIght riding on hope: mckinsey survey p. 52

travel mesmerising macau p. 62

volume 03 issue 04 75 april 2012

THE SECOND ANNUAL CFO100

ROLL OF HONOUR P. 46

BENEFITS OF

SOCIAL

MEDIA

@ WORK Why & how it will help you save time and cost while improving employee productivity a 9.9 media publication

GE Capital

Flexible financial solutions to grow your business Whether it is debt to fund your business expansion, growth equity capital, local or cross-border acquisition financing, or buying/leasing assets such as corporate aircrafts, cars or equipment, GE Capital can help you grow your business. Contact indiaenquiries.gecapital@ge.com or +91 124 4808000 or visit www.gecapital.in In India, GE Capital operates through several locally registered legal entities. Please contact GE Capital Services India for specific product information. GE, GE Capital and the GE logo are registered trademarks, trade names and service marks of General Electric Company. All rights reserved .

gecapital.com

CFO april | 2012

COVER: roi in social media 22 THE MANY METRICS TO ASSESS TRUE SOCIAL MEDIA VALUE

Inside

14 COVer story

Many corporations in the US and Europe now have dedicated social media teams headed by a director-level person. The debate is on how to assess its true ROI and value

in practice 28 Building a Culture That Energises Innovation Creating an innovation culture is notoriously difficult. Here are some fresh insights and a roadmap for tackling the culture conundrum

the benfits of

INSIGHT

SOCIAL MEDIA @WORK

52 RIDING ON HOPE Executives are much more optimistic today about the global economy than in December, despite concerns about Eurozone and rising oil prices, finds a McKinsey Global Survey

i THINK

CASE STUDY 42 HOW EMAMI ACQUIRED ZANDU

The CFO of CEAT talks about why risk management strategies and creating the right balance between short and long term plans keep him on his toes

Naresh Bhansali, CEO-Finance, Strategy, & Business Development of Emami Ltd, recalls the challenges during the much talked-about Zandu Pharma acquisition

SUNIL SAPRE

Why using social media as a business tool could save cost and time, motivate employees and increase an organisation’s bottomline

Cfo lounge 58 ON WHEELS | FIAT LINEA 2012 61 M&E | Dome, Mumbai

leader’s world 56 SOCIAL MEDIA FOR CXOS

How social media can be best utilised by CXOs without spending much time

62 TRAVEL | MACAU

Regulars 04 LETTERS TO THE EDITOR 64 NOT JUST THE LAST WORD

case study how emami acquired zandu p.

INsIght riding on mckinsey hope: survey p.

travel mesmerisin g macau

p. 62

CFO I ndIa

volume 03 issue 04 50

april 2012

Case study

Cover design atul deshmukh

: emamI 42 lOunge: maCau 62 I thInk: sunIl sapre

BENEFITS

SOCIOF M AL

IA @ WORK

vOlume

AD index 03

Issue

Why & How It will Help You cost whileSave time and employee improving productivity a 9. 9 media

publication

GE Capital IFC | Finacial Executive 02 | Cleartrip 13 | Bharti Realty IBC | India Factoring BC

THE VALUE OF FEI MEMBERSHIP Financial Executives International (FEI) is the professional association of choice for senior-level finance executives.

"Member relationships with financial thought leaders from large, highly-diversified global corporations and conglomerates to smaller private companies and non-profits.â&#x20AC;? Mary Jo Green Senior Vice President & Treasurer Sony CorPoraTion of ameriCa

"Leading-edge content and objective research for the competitive advantage I need to meet the demands of a multinational computer technology corporation.â&#x20AC;? Taylor Hawes Cfo intellectual Property & Licensing miCroSofT CorPoraTion

membership a newly-established category of fei membership that empowers talented, motivated financial professionals with ongoing opportunities for personal and professional growth as their careers advance Choose FEI to support your advancing career as a financial professional.

Interested in learning more about the Financial Executives International India Chapter? Contact Tom Thompson at tthompson@financialexecutives.org

More than 15,000 Members | 85 Chapters Worldwide | 79 Year History FINANCIALEXECUTIVES.ORG | MEMBER SERVICES 877.359.1070

from the

managing editor

dhiman chattopadhyay dhiman.c@9dot9.in

Managing Director: Dr. Pramath Raj Sinha

Get Social, Get Smart

I had several ‘things-to-do’ on my agenda this week: Hire a journalist with knowledge of online media for the CFO India team; create an exclusive platform where CFO100 winners would be able to interact with each other; set up meetings with colleagues in Delhi to discuss a plan of action to launch our new website. Business decisions all. So, how did we go about it? We conducted most of our meetings over Skype, started the exclusive CFO100 Roll of Honour Alumni page on LinkedIn and posted the ‘journalist with online experience needed’ message on several Facebook and LinkedIn communities. End result? One: we saved time and money by not travelling for the meetings and sharing files over Skype even as we did our video chat. Two: we received applications from high quality young journalists who saw our posts on the social media sites. Not only did we receive quality applications, but also saved the cost of hiring a executive search firm! Three: by creating the CFO100 Roll of Honour Alumni on LinkedIn, we made sure many of you can now share polls, discuss top-of-themind issues and get most of our curated articles, surveys and special reports before anyone else. We already have many of our award-winning CFOs as members and this number is growing as I write. The point I am making is that we saved time and money and probably generated better goodwill—all because we used social media as a business tool. Across sectors and across the world, social media is increasingly being recognised as a tool that will save cost and time, generate a buzz, motivate employees and help the company grow. Our cover package this time deals with the various aspects of social media at work—the benefits, the ways of measuring ROI, the legal aspects you must consider and even ‘how-we-did-it’ case studies from Indian and American corporations. One final data: A recent global survey of over 1000 companies across Asia, Europe and the Americas revealed that social media has become a crucial part of business strategy in 93 per cent of the companies. Think about it. Are you getting left behind? While we are on the subject, all CFO100 winners: please log on to your LinkedIn accounts and key in CFO 100 ROLL OF HONOUR ALUMNI and send in a request. We will be delighted to welcome you.

Editorial EDITOR: Anuradha Das Mathur managing editor: Dhiman Chattopadhyay managing EDITOR (Copy Desk): Sangita Thakur Varma SUB EDITORS: Radhika Haswani, Mitia Nath Design Senior Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Director: Atul Deshmukh Visualisers: Prasanth TR, Anil T & Shokeen Saifi Senior Designers: Sristi Maurya & NV Baiju DesignerS: Suneesh K, Shigil N, Charu Dwivedi Raj Verma, Prince Antony, Binu MP, Peterson, Midhun Mohan & Prameesh Purushothaman chief photographer: Subhojit Paul SENIOR photographer: Jiten Gandhi The CFO Institute Executive Director: Deepak Garg Assistan Brand Manager: Nisha Anand ASSISTANT MANAGER: Dr Leena Narain Assistant Manager - Corporate Initiatives: Deepika Sharma Sales & Marketing VP SALES & MARKETINg: Krishna Kumar KG (09810206034) ASSISTANT REGIONAL manager (sales): Rajesh Kandari (+91-9811140424) National Manager (Events & Special Projects): Mahantesh Godi (+91-9680436623) Assistant Brand Manager: Arpita Ganguli South: Vinodh Kaliappan (+91-9740714817) West: Sachin N Mhashilkar (+91-9920348755) For any customer queries and assistance please contact help@9dot9.in Production & Logistics Senior General Manager (Operations): Shivshankar Hiremath Manager Operations: Rakesh Upadhyay Asst. Manager - Logistics: Vijay Menon Executive Logistics: Nilesh Shiravadekar Assistant Production manager: Vilas Mhatre Logistics: MP Singh, Mohamed Ansari officE addrEss Nine Dot Nine Interactive Pvt Ltd Kakson House, A & B Wing, 2nd Floor 80 Sion Trombay Road, Chembur, Mumbai- 400071 INDIA. Published, Printed and Owned by Nine Dot Nine Interactive Pvt Ltd. Published and printed on their behalf by Kanak Ghosh. Published at Bungalow No. 725, Sector - 1, Shirvane, Nerul, Navi Mumbai - 400706 Printed at Tara Art Printers Pvt ltd., A-46-47, Sector-5 NOIDA (U.P.) 201301 All rights reserved: Reproduction in whole or in part without written permission from Nine Dot Nine Interactive Pvt Ltd is prohibited. subscriber services: Call +91-120-4010999 Visit CFO India’s Website www.cfo-india.in

april 2012

CFO india

Letters

CFO INDIA

april 2012

Kudos to CFO100! It was indeed a pleasure to receive the CFO100 Roll of Honour this year. The show was awesome and I believe the execution and attention to details showed. The turnout of people—I must compliment you here once more specifically— was really great. I am happy that I was able to reschedule my meetings and make it. — Gopal Mahadevan, CFO, Thermax, Pune

04.12 THANK YOU FOR A GREAT CFO100 It was my pleasure to be part of the event. It was good to catch up with peers. The only regret is I had to leave and missed the Zila Khan show. — Jaimin Bhatt, President & CFO, Kotak Mahindra Bank, Mumbai

Your voice can make a change: Share your viewpoint on what’s happening in the community and your feedback on the magazine at editor@cfo-india.in

interesting, relevant and provided an insight into thought-provoking topics. Radhakrishnan Pillai’s correlation of Chanakya’s principles to our dayto-day corporate existence provided some very effective management tips. — Urmil Khurana, Regional Director Finance, South Asia, Starwood Hotels & Resorts, Gurgaon

KEEP UP THE GOOD WORK It was indeed very nice to catch up with you and your wonderful team. I would have loved to spend more time with all my peers. The interactions were interesting and useful. Please keep up the good work. — Robin Banerjee, CFO, Suzlon, Pune

excellent event It was an excellent evening and it felt good to interact with like-minded friends. Also, great effort in organising from your side. — Sunil Nayak, CFO, ACC Ltd, Mumbai

AN ADMIRABLE INITIATIVE I really enjoyed the evening, interacting with so many peers who were there. I realised the hard work that had gone into the event and I express my sincere appreciation to the entire team at 9.9 Media. This will play a huge role in the CFO fraternity and can be utilised to send across important messages too. The CFO magazine is the only one where CFOs are able to communicate with peers based on their experience and in that way you are unique. — S. Varadarajan, ED & CFO, VA Tech Wabag, Chennai

INSIGHTFUL SESSIONS Thank you very much for inviting me to the second CFO 100 conference and the recognition. It was a pleasure to meet and interact with some stalwarts from the corporate world, particularly Mr Mohandas Pai, who I admire enormously. The sessions and panel discussions were 4

CFO india

april 2012

well-conducted As always it was a pleasure to attend the CFO100 event. Also, congratulations on a function wellconducted. All the best. — G.Subramaniam, CFO, Hathway Cable & Datacom, Mumbai

04.12 BUZZ

Meditate for higher eq

Those who practice meditation in a short yet intensive programme are more calm and compassionate, a new study has found. According to the study, conducted by scientists, schoolteachers who underwent a short but intensive programme of meditation were less depressed, anxious or stressed—and more compassionate and aware of others’ feelings. A core feature of many religions, meditation is practiced by tens of millions around the world as part of their spiritual beliefs as well as to alleviate psychological problems, improve self-awareness and to clear the mind. Previous research has linked meditation to positive changes in blood pressure, metabolism and pain, but less is known about the 6

CFO india

APRIL 2012

specific emotional changes that result from the practice. The new study was designed to create new techniques to reduce destructive emotions while improving social and emotional behaviour. “The findings suggest that increased awareness of mental processes can influence emotional behaviour,” Margaret Kemeny, lead author of the study, said. “The study is particularly important because opportunities for reflection and contemplation seem to be fading in our fast-paced, technology-driven culture,” she said. Altogether, 82 female schoolteachers between the ages of 25 and 60 participated in the project. Teachers were chosen because their work is stressful and because the meditation skills they learned could be immediately useful to their daily lives, possibly trickling down to benefit their students. CFOs and financial executives could well take a lesson from this. Considering the increasing job stress and the role they are playing in their organisations, a daily meditation and yoga routine could help them not only remain calm in a crisis and come across as a person in control of the situation but also help spread that sense of calm and assurance down the line to their respective teams.

Whatâ&#x20AC;&#x2122;s AROUND ZONE CFO Book: Badri Sanjeevi.................................... Pg 08 Jargon Decoded: Bleeding Edge........................... Pg 08 CXO Movements..................................................Pg 09 Pop Vitamin, Recall Dreams................................Pg 09

THE CFO POLL result

Have UP election results dealt a blow to chances of FDI in retail?

17% Maybe 80% Yes

03% No

current POLL question

Have real estate prices been fully corrected in Indian metros? Vote now at www.cfoinstitute.com/poll

JOBS

India set to hire!

PROJECTS SHELVED

Infra gloom? Soaring interest rates together with a volatile and uncertain global economic outlook, has forced organisations across India to delay the implementation of investments worth Rs 53,000 crore in the last quarter of the 2011-12 Financial Year. This has been stated in the Centre for Monitoring Indian Economyâ&#x20AC;&#x2122;s (CMIE) latest quarterly survey on investment projects. Project investments revived during Q4 2012 FY was a little over Rs 8000 crore, a steep drop from the Rs 29,500 crore revived YoY in the previous quarter. The report states that over the last two years, only half the projects scheduled for completion at the beginning of the year eventually saw light of day during the year.

Both India Inc as well as government sectors will go on a hiring spree in the 2012-13 financial year, creating as many as 1.6 million new jobs, says a study. While global economic slowdown cut down jobs in many developed nations, India will probably become the heart of the global job market and see a significant spurt in new jobs. The new Ma Foi Randstad Employment Trends Survey (MEtS) reveals the recent major employment trends in India and draws a picture of the changing pattern of employment in different sectors of the economy. The study was done by surveying 639 companies across 13 industry sectors in eight major Indian cities. 2011 was not a great year for hiring. Despite of the expected job openings of 1.6 million, 2011 CY witnessed only 1.4 million new jobs in the Indian job market. However, most of the surveyed employers are optimistic about 2012 as the last quarter of 2011 Calendar Year witnessed a hike in job creation than the expected 0.33 million. Pharma, real estate, media & entertainment and IT are the four sectors that will probably see the biggest spurt in hiring, the report concludes. Some good news for those graduating this year! APRIL 2012

CFO india

O-ZONE dy9 cfobook

JARGON BUSTER

THE PHRASE: BLEEDING EDGE

Badri Sanjeevi Wall

Info

Boxes

What’s on your mind? Attach

Share Badri Sanjeevi supports the Anna Hazare-led movement to eradicate corruption at every level in India April 18 at 19.35 · 4 people commented · 2 persons like this

Personal

Badri Sanjeevi expects to take Mauj Telecom - Mobango to new heights in FY 2012-13

odiac: NA Z Views: Liberal

April 15 at 19.22 · Comment · 3 people like this

WORK

Badri Sanjeevi likes Mashable and Stave Madden India

CFO People Group & CEO Mauj Mobile Telecom Strategy Consultant at Deloitte Consulting Senior Finance Manager at T-Mobile UK Limited Manager at Arthur Andersen

EDUCATION MBA from INSEAD DAV Gopalapuram

April 09, at 22.45 · Comment · 14 people like this

I Read...

Books on poetry 3 people commented · Like

I Listen... Quratulain Baroch Comment · 2 person likes this Recent activity Badri Sanjeevi likes CFO India and two others

CFO India, Angry Birds, India against Corruption March 18 at 11.55 · Comments · 2 people Like this

ARCHAELOGY

A ‘perfect’ woolly mammoth unearthed The body of an “exquisitely preserved” young woolly mammoth has been found in a frozen cliff in Siberia. The mammal, which has been named Yuka, is thought to have been between three and four years old when it died and still has its foot pads and ginger hair in tact. Experts said it remained unnoticed in its icy tomb for more than 10,000 years, with its injuries being perfectly frozen in time. Kevin Campbell, associate professor of environmental and evolutionary physiology at the University of Manitoba, told the BBC one of the most striking things about Yuka was its “strawberry-blonde” hair. Mammoths have previously been thought to have darker fur, with the possibility of lighter-coloured coats only being proposed in 2006. 8

CFO india

APRIL 2012

THE MEANING A notch higher than ‘cutting edge’—an idea or a product that is quite revolutionary in nature. Probably a jargon invented by an overworked genius. THE USAGE The next time you hear about a “bleeding edge product about to hit the market,” outfox your colleague by asking him to “peel the onion” to find the truth about the product!

O-ZONE

PEOPLE movement MEDICINE

Pop Vitamin, recall dreams Taking vitamin B-6 may not only give people more vivid dreams but also help in recalling them the next morning, according to a new study. While we supposedly all have 4-6 dreams a night it is usually hard to remember them, particularly in their entirety. The vitamin, which is found in meats, whole grains, vegetables, nuts and bananas, has long been thought to help recollect dreams and enhance their lucidity but this was based on theory rather than a concrete study. However, a small study done back in 2002 has come to light which apparently goes some way to proving

the familiar theory. In the preliminary study, 12 university students were given different amounts of the vitamin over a period of five days. Four participants were given 100 milligrams, four were given 250 milligrams, while the rest were given a placebo. The participants who were given the biggest dose of the B-6 had a higher rate of dream salience as determined by vividness, emotionality, and colour, the Daily Mail reported. It is thought that the vitamin has this effect as it converts amino acids into serotonin, which wakes the brain up during Rapid Eye Movement sleep.

RIL rejigs CFO role Reliance Industries (RIL) has reorganised its finance operations under two different chief financial officers for the first time in its 37-year-old history. V Srikanth, who joined RIL from Citibank as deputy CFO in August 2010, has been elevated as CFO, placing him on an equal footing with the incumbent Alok Agarwal. Agarwal, who managed the company’s treasury operations before becoming the CFO, will focus on global risk management practices. Srikanth has taken charge of the day-to-day operations.

CXO change at Max SCIENCE

‘Super Solar’ power Intensive research around the world has focused on improving the performance of solar photovoltaic cells and bringing down their cost. But little attention has been paid to the best ways of arranging those cells, which are typically placed flat on a rooftop, or sometimes attached to motorised structures that keep the cells pointed at the sun. Now, a team of researchers from Massachusetts Institute of Technology (MIT) have come up with a very different approach: building cubes or towers that extend the solar cells upward in 3D configurations. Amazingly, the results from the structures they’ve tested show power output ranging from double to more than 20 times that of fixed flat panels with the same base area. The biggest boosts in power were seen in the situations where improvements are most needed: in locations far from the equator, in winter months and on cloudier days. The findings are published in Energy and Environmental Science.“I think this concept could become an important part of the future of photovoltaics,” says senior author, Jeffrey Grossman a professor at MIT.

Healthcare and insurance group Max India has roped in Ms Vibha Paul Rishi to take care of its brand building and human resources operation. Rishi, who quit retailer Kishore Biyani’s Future Group in March, will join Analjit Singh’s Max India as executive director, brand and human capital, later this month. She will report to Max India MD Rahul Khosla.

CFO to CEO BPO services provider Firstsource has announced that Mr Matthew Vallance has resigned as MD and CEO of the company and Mr Rajesh Subramaniam has been appointed his successor. Subramaniam is currently the Deputy MD and CFO of the company. Vallance will continue serving the position till May 15, 2012.

APRIL 2012

CFO india

cfo

i think

Facts & Trivia EDUCATION: RA Podar College of Commerce & Economics, Mumbai; Sanmitra Mandal Vidyamandir, Goregaon LAST JOB: EVP(Fin & Com) & Company Secretary at Godrej Consumer Products (2001-2008) CAREER: Spent 14 years at Godrej Soaps before moving to Godrej Consumer Products and then to CEAT

THE CURRENT ECONOMIC environment is quite turbulent and volatile, to say the least. It is presenting its own set of challenges to those in politics, government, academics and business. The economic crisis of 2008-09 is again haunting us, though with some difference. The recent sudden depreciation of the Rupee against the Dollar, coupled with regular bad news from Europe makes one wonder how to read the current economic situation. I think there are enough positives as well as negatives. Positives include Indiaâ&#x20AC;&#x2122;s much talked-about demographic dividend, a rising middle-class driven by spread of education and a rising services sector. The negatives include stubborn inflation, unemployment, imbalances in growth across regions and the rising rich-poor divide. 10

CFO india

april 2012

SUNIL SAPRE The CFO of CEAT writes about why issues such as risk management, making the right investment decisions and getting the right balance between short-term measures and longterms view keep him awake at night in these turbulent times

It is the duty of the management to strike the right balance between the external turbulent environment and the internal reality of strengths and weaknesses

What are the challenges for CFOs of Indian companies in the current environment? To my mind, the first challenge is that of risk management. The foreign exchange risk, the interest rate risk and liquidity risk have to be dealt with mainly by the CFOs. On the foreign exchange front, the depreciation of the rupee has posed a major challenge to those who have kept their Dollar payables open, not expecting such depreciation. Some expect the Rupee depreciation to be a temporary phenomenon caused by the demand and supply gap for US$. Another view is that the very high inflation in the country for the last two years has resulted in the devaluation which was due to happen. The recent trigger of the devaluation has been the crisis in Europe. The

jiten gandhi

way Dollar has strengthened against the Rupee makes us forget all the talk about decoupling the Indian economy from the rest of the world. There are many views around how the problem in Europe will get

resolved, if at all, and in what time frame. While the news of likely default by Greece makes headlines, there is another view that a solution will be found out but not so easily as to encourage repetition of the behavior

leading to such problems. Such multiplicity of views will always be there. That is where a prudent Forex management policy and adherence to the same counts. The â&#x20AC;&#x2DC;stop lossâ&#x20AC;&#x2122; should also be triggered at a proper time if one folapril 2012

CFO india

i think

Another important issue...is what should be the primary focus of business in such an environment. Should it be on growth or costcutting? This is like asking: “Should I press the accelerator pedal or apply brakes?” lows rightly framed policies. If one has already landed in a situation where unexpectedly Dollar payables are open, one should decide on course of action based on facts and reality without being irrational about it. One has to look at the future from the standpoint of the present. The second challenge, in my view, is about investment decisions. It is clear that Capex decisions are likely to be very far and few in the current environment. The real issue is about past 12

CFO india

april 2012

investment decisions where assumptions behind them no longer hold true. The project team and the top management need to look at various options to make the investments viable. Such options could include cutting down the project size, altering the product mix, looking at different markets than originally intended. The CFO should be instrumental in bringing all to the drawing board once again. The third set of challenges is around maintaining the right balance of short-

term measures and long-terms view. On one hand, talks of long-term vision, strategy statements and expansion plans portray a picture of bright days ahead. On the other hand, the unspoken words behind some drastic measures may paint a gloomy picture. It is the duty of the management to strike the right balance between the external turbulent environment and the reality of strengths and weaknesses so that a properly distilled message goes down the organisation. The second area is about maintaining the right balance between own and borrowed funds. The world is moving towards de-leveraging as an answer to the crisis. It is imperative that a company has adequate own funds at this time. Though infusion of own funds may not look promising in the short run, it will be a great longterm step to ensure the continuity and viability of the business. Another important issue that is debated at such times is what should be the primary focus of business in such an environment. Should it be on growth or cost-cutting? I would compare this to the question, “Should I press the accelerator pedal or apply brakes?” The answer depends on where the car is, what is there ahead of the car and the objectives of the driver. To my mind, the answer to the business question depends on the type of industry, product category, stage of product life cycle and capacity utilisation vis-à-vis break-even option. It also depends on solvency of the company, capacity to borrow further or cash reserves already built-up. The over-leveraged companies may have no option but to contract. It does not mean that companies which can pursue growth should pursue the same for the sake of it because quality of growth is important. By quality of growth, I mean profitability and sustainability. Both growth and cost-cutting have to be evaluated on the criterion of value creation. Not only these two but all management actions have to be seen from the lens of value creation.

cover story

STATE OF SOCIAL MEDIA

BENEFITS OF

SOCIAL

MEDIA

@ WORK 14

CFO india

April 2012

cover story

STATE OF SOCIAL MEDIA

Why using and encouraging social media at work could be your next big bet to cut costs, save time, motivate employees and ultimately increase the organisation’s bottomline Dhiman Chattopadhyay

hief Social Media Officer....Chief Listener....Director of Social Media. Do any of these designations sound familiar? Not yet, for most Indian corporations. But we are willing to bet our money that they would be pretty common designations by 2015. Why do we think so? Think about it. Five years ago, 90 per cent of attendees at any CXO conference would have openly admitted that their companies had a blanket ban on social media sites such as Facebook, Orkut, Ryze or Linked in (Twitter hadn’t launched yet) at work, since it was a ‘time-wasting’ tool, reduced productivity and distracted employees. Cut to 2012. During a recent CIO event in Mumbai the same question was posed by a speaker to a group of 30 CIOs. At least 25 laughed and admitted that most such bans had been lifted and at least 10 of them said social media was now being looked at as a positive tool to reach out to customers, solve marketing issues, retain talent and improve productivity in their organisations. All of this sounds like music to any CFOs ears. After all, any tool that does all of the above must come with a magic wand! The questions many CFOs in India are asking however, is: How are all these gains measurable? And how does one prove that encouraging social media usage at work is not just a ‘feel good’ sop for employees and actually helps the company grow. There are several associated questions with this and the answers to some of them are still fuzzy, just as it is still not certain how some of the intangible benefits can be translated into hard numbers.

BENCHMARK AGAINST THE FIRST MOVERS One of the best ways to look at any new system is to study and even follow a successful model—examples of companies that

have ‘been there done that’. The US and much of Western Europe are miles ahead in this regard, with nearly 70 per cent of the large and mid sized corporations in both continents now boasting of at least one person who looks at social media (nearly half of them have a team of 6 or more). In many cases a C-level executive (either a director of social media or a chief social media officer) along with his or her team now lead the social media department. And almost in every organisation—social media spend is estimated to increase manifold in 2012-13. Why is that so?

WHY IS SOCIAL MEDIA @ WORK GROWING The rapid growth and proliferation of social media in just about every sphere is undeniable. The continued creation and adoption of new networks will not slow, but become more specialised over time as participants enjoy more and more niche communities. “Once a chatty playground, social media tools are now the most disruptive form of communication on the planet; one that businesses need to understand, take part in and monitor, in order to grow. However, the rapid rise of adoption means that many companies are still learning the power of social media and striving to understand how it can flow into their systems,” says Ryan Holmes, CEO of the US based firm Hootsuite which has just come out with an exhaustive report based on a global survey and research they conducted on social media usage in organisations. Holmes believes within most companies, social media is best employed as an inter-disciplinary initiative, crossing the verticals of each department to engage customers and audiences with the highest level of expertise. The study, which was commissioned by Useful Social Media, an organisation that provides business intelligence on how large corporations April 2012

CFO india

cover story can leverage social media for business advantage says there is no doubt that social media is growing in importance for business worldwide. A huge 77 per cent of respondents in the survey said their company’s budget for social media activity will grow in 2012. The US results are more emphatic, 88 per cent of respondents predicting a budget growth.

mate the level of change in the short term but underestimate it in the long term never seemed more apt.’ The best way to understand how social media at work is being viewed by corporations themselves, is by talking to the men and women who run the show. Jennifer Vogel, Communications Manager at the Rainforest Alliance, USA, describes the company’s first steps in social media, saying: “The evolution was one of fear. What happens when it’s no longer a one-way dialogue? Everyone has that fear. But gradually it’s just become normal.” Beth LaPierre, Chief Listener (check out the designation!) at Kodak, describes using social media as a market research tool: “We can understand how customers use the product in their life. There’s always going to be a value and time for that in the research process. When we’ve got some early product ready to go, we give them to heavy users and get some feedback,” she told the HootsuiteUSM research team. Social media specialists working in Adobe’s business units “need to look at the dirty laundry,” says Adobe’s social media director Maria Poveromo, in order to ‘figure out what to do to increase performance or change impact.’

That 40 per cent respondents in the study felt confident they are accurately measuring social media impact reflects a bullish attitude

MEASUREMENT OF SOCIAL MEDIA ROI But how will all this translate into profit, or at least a time, cost and energy saving device? “Establishing the impact of a social media campaign—be it for marketing, customer service or employee engagement—is a huge challenge and will continue to be so. Moving forward, determining the ROI of individual social media efforts is often seen as the ‘holy grail’. Efforts to establish benchmark expectations of social media ROI are continuing,” says Nick Johnson, founder of Useful Social Media. That 40 per cent of the respondents in the study felt confident that they are accurately measuring social media impact reflects a bullish attitude. However, it is not a huge surprise, simply an indication that companies are further along the path

than one would expect. Evidently, the measurement of ROI is seen as simpler than the more holistic ‘impact’— with a full 45 per cent of respondents measuring against this metric.

WHAT CXOS FEEL Exclusive USM data reveals that 76 per cent of social media heads of US and European corporations are ‘quite relaxed’ or ‘somewhat relaxed’ about ROI measurement. Over 50 per cent of respondents said they are ‘mildly’ or ‘very dissatisfied’ with the way in which their organisation undertake measurements, according to Useful Social Media’s industry-wide survey. Peter Kirwan, one of the team members that worked for this global survey, states in his conclusions: ‘Metrics are fundamental to success in the social space. The old saying that we overesti-

Figure 1: Where are our survey respondents based?

Figure 2: Who is the most senior member of staff working directly with social media?

7% Asia

8% Vice President

12% CEO

21% UK 18% Other

20% Director

5% West Coast, USA

46% Manager

30% Europe

19% East Coast, USA

CFO india

14% Executive

April 2012

cover story RULES OF THE GAME In the survey done by Hootsuite for USM, interviewees were asked how they measured users’ engagement with their social media presence. The answers fell into two categories: those who measured degree of engagement in a fairly straightforward fashion; and those who also measured kinds of engagement, largely by using offline survey techniques. Says Stefan Heeke a director at Siemens in USA, “We will look at the hashtag usage, how much buzz we’ve created, how many followers, the tonality of it. But I think the only thing you can really measure is reach. We sort of look at social impressions, how many people are posting things, or on Facebook, people putting something in the status. We apply a factor to that.” So, for instance, he says if someone uses an app and then they say, ‘I just used an application’ and posted that on their status—it becomes public to the friends of the person putting up that status update. So these are social impressions. If 10,000 did that, put it on their status, you can multiply it by 100—everybody has 100 friends. So one can actually have a reach of 1million people by people sharing information.

INFLUENCE OF SOCIAL MEDIA In the pre-web era, influencers were easy to spot: they were typically ‘experts’ (academics, financial analysts, business leaders, columnists). It was partly the job of publicists to influence these ‘experts’, whose opinions would subsequently be amplified by mass media and trickle down toward the broader public. Katie Delahaye Paine, an American expert on measuring social media response argues that social media has ‘officially signed the death certificate’ for this model of influence. But the idea of influence isn’t dead. On the contrary, it has persisted online. As early as 2000, the PR agency Burson Marsteller released the first in a long line of reports on America’s ‘e-fluentials’,

Guru Speak Sixty per cent of large corporations in the US have at least one employee working exclusively on social media and nearly 30 per cent have a dedicated social media team with many also boasting of a director level person heading the team, Useful Social Media decided to create a platform for these corporates to share their future outlook. They have now come out with a Top 10 Predictions for Social Media in 2012 based on what organisations said they were looking at in the months ahead. Excerpts

Sudha Jamthe Social Media Specialist Social Commerce, eBay “Social data and Analytics will offer business intelligence: Businesses will begin to appreciate social data better. I think companies will begin to see the value of social analytics and begin integrating it with business data. There will be hiring in social metrics jobs and metrics will become an integral part of marketing jobs.”

Melissa Newell Social Media Specialist, Mercedes-Benz “2012 will be the year for brands to go beyond the basic campaign and determine how social media not only adds value to their company, but how it adds value for their customers. Communication in social channels allow customers to build stronger emotional connections with brands. Social media will start to be the focus of the customer journey and move people up the fan ladder, from being a casual follower to a loyal customer.”

Maria Poveromo Director of Social Media, Adobe “Social media is maturing – it’s no longer the awkward teenager it once was…it now needs to prove its value (ie: get a job) and drive business forward. I think we’ll see the role of content becoming increasingly important this year. As well as the importance of influencers (how to court and nurture). So if last year was the year of ROI (although this continues to be important) 2012 is the year for content and influencers.

Jen McClure Director Social Media Thomson Reuters The term “social business” will become more ubiquitous as organisations of all types and sizes start to think of social technologies more strategically as business tools, not just marketing channels. And then it will eventually become a meaningless phrase as we come to realize that all business is, at its core, social.

To download the full report on the state of social media, go to http://usefulsocialmedia.com/stateofCSM.php

April 2012

CFO india

cover story Figure 3: Will your budget for social media activity increase over 2011?

Figure 4: Do you feel confident that you are accurately measuring the impact of your social media marketing?

12% Remain the same

11% No

40% Yes

77% Yes

Figure 5: By how much will your social media budget increase in 2011? 17% 1-5%

21% Over 100%

60% No

Figure 6: Is social media becoming a more important part of your company’s marketing strategy? 11% No

8% 75-100%

33% 5-10%

89% Yes

21% 10-25%

which suggested that the opinions of the most vocal and influential consumers were greatly amplified by the web. It came out in the Holmes Report, 2001. “Representing 8 per cent of the internet population (about 9 million users), this group influences more people on more topics than other online users. And, they are eight times more effective at communicating their views than Roper’s traditional influentials,” the report stated. From the mid-noughties onward, spurred on by Malcolm Gladwell’s book ‘The Tipping Point’, the ability to identify and sell stories to an influential elite of bloggers became a selling point for many PR agencies. In 2006, Technorati, the blog search engine, struck up a partnership with Edelman, the PR agency. On the basis of this exclusive arrange18

CFO india

April 2012

ment, Edelman promised to guide its clients through ‘a chaotic world of continuous discussion, learning from the crowd and remixed media where companies must cede control to gain credibility’.

CONCLUSIONS In India however, despite an overall change in the way we look at social media, the ‘social media department’ is an unpopular concept, and largely ignored by corporations. Social media is often added to existing corporate roles and very few companies have staff working exclusively on social media. Compare this with the fact that 90 per cent of companies in Europe and USA surveyed by USM, had one or more people working on social media as part of their role. The happy news? That a major-

ity of companies in developed nations expect social media to become integrated into more than just marketing in 2012 and a vast majority of companies expect social media budgets to increase over the next few years. Also the biggest change in corporate use of social media foreseen by these companies is in organisations using it for customer service (73 %), employee engagement (59%) and product development (52%). The message for India Inc. is on the wall: if companies do not integrate social media into their long term plans and use it to further everything from their marketing campaigns and employee motivation levels to urging sales teams to blog and saving time and money on physical conferences—they will get left behind and it just, just might be too late then to play catch-up.

cover story

SOCIAL MEDIA & LAW

IS YOUR

LEGAL STRATEGY

IN PLACE?

As social media grows in importance, It is important that companies get their social media strategy right Manishi Pathak Use of information from social media by employers According to a survey conducted by Kelly Global Workforce Index in 2011, more than one-in-five job aspirants surveyed in India access social networking sites to hunt for the right job. The survey highlights that 35 of respondents 20

CFO india

april 2012

are scouring social media sites, such as Facebook, LinkedIn and Twitter, seeking job openings or promotions. As per the survey conducted by CareerBuilder India in the year 2010, out of the 1,000 employers who participated in the survey, more than seventy three percent employers admitted that they are using social networking sites

to research and access profiles and information of job candidates which are available in the public domain, and another 15 percent of them have planned to implement the policy to start using social networking sites for screening job candidates. While these social networking sites have bridged the gap between employ-

cover story er and employee, it is also necessary that employers should be watchful as regards the means which are being adopted to access information of the (present / prospective) employee. As per Indian law, breach of privacy by having unauthorised access to personal or sensitive information (not accessible to the public) of a person would be construed as a cyber crime and would squarely fall in the ambit of violation of the privacy rules applicable in India. However, notwithstanding the above law, an employer may monitor its employees’ social media use with respect to private content if the employee is utilising employerowned or controlled equipment or networks and the employer has a clearly-written computer usage policy informing employees that they have no right to privacy in their usage of company systems and that such usage may be monitored at any time by the employer.

posting private information: is it considered consent for employers to use the information? It may be pertinent to note here that any private information posted on a social networking website by a person shall not be construed as rendering his/her consent for use of such information by the employer. If such information is in the public domain and can be accessed by any person, then such cannot be considered as private information. However, from a practical perspective, any such information may be unreliable. At present, India has an express legislation governing data protection or privacy, viz., the Information Technology Act, 2000; and the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 As per the Privacy Rules, the ‘sensitive personal data or information of a person’ as such

personal information consists of information relating to: password; financial information such as bank account or credit card or debit card or other payment instrument details;physical, physiological and mental health condition; sexual orientation; medical records and history; Biometric information; any detail relating to the above clauses as provided to the employer for providing service; and

Employer may monitor employees’ social media use...if he she is utilising employer-owned equipment any of the information received under above clauses by the employer for processing, stored or processed under lawful contract or otherwise. Further, as per the privacy rules, an employer holding sensitive personal data or information (as defined above) is not allowed to retain such information without the prior consent of the person for longer than is required for the purposes for which the information may lawfully be used. The employer is required to obtain consent in writing from the provider of the sensitive personal data or information regarding purpose of usage before collection of such information. The format of the consent should generally contain the following: • Purpose of collection and usage of Information • Clause relating to disclosure of such Information • Reasonable Security practices and procedures taken for the protection of Information, etc. As per the privacy rules a person who has provided his personal information or sensitive personal data or information to the employer with his written

consent has the right to correct or amend such information in case he / she finds the same to be inaccurate.

Common enforcement tools against an employer and Data protection officers As per the privacy rules, the employer is required to designate a grievance officer and publish his name and contact details on its website. The officer is required to redress the grievances of the provider of information expeditiously but within one month from the date of receipt of the grievance. In order to implement the private policy, the employer is advised to adopt the security practices and procedures in either of the following formats: • IS/ISO/IEC 27001 standard; • Or the codes of best practices for data protection as approved and notified by the Indian Government. The legislation also provides penalties for the violation of these provisions. An employer contravening the provisions shall be liable to pay a compensation not exceeding INR 50 million (approx USD 1 million) to the person affected by such contravention. The Indian Government is empowered to appoint an adjudicating officer for the purpose of adjudging the contraventions made under the aforementioned legislations. The adjudicating officer shall exercise jurisdiction to adjudicate matters in which claim for injury or damage does not exceed INR 50 million (approx. USD 1 million).

Manishi Pathak is a Senior P artner in the C orporate Practice of Kochhar & Co. He also heads the firm’s regulatory practice. Kochhar & Co is a member of Ius Laboris, the world’s largest human resources law firm alliance. april 2012

CFO india

THE MANY METRICS TO ASSESS TRUE

SOCIAL

MEDIA

VALUE

ocial media has been a ‘buzzword’ in boardrooms for several years now. According to a research done by Useful Social Media’s State of Corporate Social Media 2012 briefing, 93.4% of large corporations across the world say that social media is becoming a more important part of marketing strategy1. Budgets are increasing, teams focused on social media are growing, and time spent by large companies on social media is booming. And with that comes increased expectation of results.

CFO india

april 2012

While India Inc is still toying with the idea of giving ‘official’ status to social media at work, the question before American & European corporations, many of whom have CXO level people heading their respective social media divisions, is how to assess the true value of social media and look at different scales to measure RoI Nick Johnson

As large corporates begin to start receiving the bills for social media activity by their companies, they begin to look for real evidence of value. Boardrooms across the USA and rest of the world are now putting pressure on ‘Social Media Directors’ and their teams to prove that their work is impacting the corporate bottom line.

ROI—the best metric? There has been a debate over the last couple of years about the ROI of social media. Several leading practitioners

at large companies in the US & UK believe that the ROI of social media is impossible to find. At the end of 2011, 53% of all businesses were still unable to link revenue to social media activity2. And that’s because the impact of social media on a company is wideranging - and is often unclear. Social media is not like other forms of marketing. Indeed, to refer to social media as simply a ‘marketing channel’ is rather a blinkered view. At its best, social media is a conversation— between companies and their consumers (or potential consumers). It allows

cover story

RoI on Social Media companies to build closer and more robust relationships. It has been difficult for companies to track the financial impact of this rather less well-defined activity. Social media engagement impacts on many different areas of a company—brand perception, consumer satisfaction, risk mitigation, product development, marketing. It has been—and is, and will continue to be—a huge challenge for the social media practitioners within a company to pull together all these impacts into one single—and dollarbased—metric to track success. There are no ‘clear’ metrics like CPC and CPM in social media—yet. Perhaps, this would be missing the point. Social media’s impact is ‘softer’ than the driving of leads from a group of potential customers into a database. It’s about more than simply e-commerce success. The increasing calls for measuring things like ‘Return on Engagement’, ‘Return on Influence’ and ‘Return on Activity’ show an increasing acceptance from the corporate world that perhaps an unrelenting focus on £, $ and € is unsatisfactory. In this essay, we will investigate some of the more important ways that social media can create value for your business—and a couple of ways it can eradicate it.

Domino’s Pizza, WWE and the financial impact of social media campaigns While the jury is out on whether a financial-focused ROI is the best social metric, that does not mean that progress has not been made in attempting to find the financial impact of social media activity. Indeed, 47% of companies now say that they are able to link revenue to their work on social media3.

In 2011, Domino’s Pizza increased their pre-tax profits by 29%. That’s a rise of £16m, and the company credited it directly to their social media campaigns via Foursquare. Foursquare is a location-based social network, allowing participants to ‘check in’ at physical locations to earn points - and sometimes discounts. Domino’s CEO Chris Moore has said that the company’s various social media activities have “offer[ed] a dual benefit of driving pizza sales online and building customer loyalty.”4 World Wrestling Entertainment, the US-based wrestling franchise, has an advanced social media strategy - and also track social media in financial terms. According to Corey Clayton, the full-time social media manager at the company, “on certain promotions, we’re able to track concrete outcomes in a very detailed way.” 5 How? Using tracked weblinks and tools like Google Analytics to track conversions to payment from social media sources. Just as they would with an email campaign. It’s not too hard to do this. But it is limited. It’s important to note that both of these ‘financial’ examples show a relatively simplistic approach to both social media marketing—and tracking success. In both cases, financial impact has been tracked by focusing on ‘discount codes’. Giving customers vouchers when checking in at Domino locations on Foursquare, offering special discounts to Dell followers on Twitter, tracking social media visitors to WWE e-commerce sites—and then simply totting up the money made by these initiatives. Note that Chris Moore said that social media had a dual benefit

for them—not only the driving of sales online, but “building customer loyalty”. A social media measurement system that simply focused on £ would miss 50% of the value, according to Moore.

Coca Cola, Whole Foods and the increasingly engaged consumer Perhaps the most popular metric outside of financial ROI is increasing consumer engagement, brand loyalty and customer sentiment. Social media can have a huge impact against this hugely important metric. Social media touchpoints allow brands to engage with their customers in new and interesting ways—and importantly, allow the customer to talk back. This is no longer a company shouting into the abyss, hoping they’re heard. This is a real two-way conversation—and having the right conversation generates real value. One company that has chosen to look at consumer engagement as a Key Performance Indicator is Coca Cola. The company recently ran two

Social media touchpoints allow brands to engage with their customers in new and interesting ways—and importantly, allow the customer to talk back major campaigns focusing on ‘Happiness’. Both were focused on leveraging the emotional ties the company has with consumers, and link the brand to ‘happiness’ as closely as possible. This was a branding—not a commerce— april 2012

CFO india

cover story exercise, and the social media metrics used reflected that. As well as tracking against a common metric—number of followers/fans for the company’s Facebook and Twitter pages, the company also looked at engagement—so the number of views for videos, and whether people interacted with the brand’s other social media presences. The aim—to stimulate further engagement with the brand through social media—was broadly successful. In Useful Social Media’s recent report on measuring social media impact, Bill Tolany of Whole Foods Market in the USA said that “A lot of what we do in addition to customer service and product promotion is about content. So we will talk about why a healthy diet is better for you, how you can incorporate more fruit and vegetables into your diet... We believe the more people know and the more transparent the food production system becomes, serves our needs as well.”6 Rather than simply promoting a sale or product, Whole Foods look to educate their consumers, and talk to them

about issues broader than simply the products on their shelves. These customers see Whole Foods as something more than simply a store hawking products, but a useful contact, a relationship that is worth something, and a resource. And this stronger relationship enhances the value of the Whole Foods brand, and encourages consumers to be increasingly loyal to the retain chain. Understandably, Whole Foods tracks this increasing level of engagement—and views it as a critical value creator. As Tolany says, “We measure engagement: how many people interact [with our content], specifically people retweeting, people replying, forwarding, liking it, sharing it. We measure all of that, so we know the specific content that resonates with customers.”

BP, the Red Cross and risk management Up until now, the only examples have been those to show social media’s

power to positively impact business goals. Unfortunately, this is only one side of the coin. Social media has revolutionised brand-consumer communication, and the standard is now a conversation, not a statement. But this means that control of brand messages becomes far harder. When your community can speak to—and about—you, there are big risks to manage. Not only do you have to ensure that your own company makes no mistakes online, which will be amplified by social media - but you have to ensure that if you are facing broader issues, you have a social media crisis mitigation policy in place to ensure the fallout is dealt with efficiently and effectively. The Red Cross had to deal with the former risk—of an employee making a mistake, and accidentally using social media to send out inappropriate messages to the NGO’s social media contacts. In February 2011, one employee at the Red Cross found a few packs of beer in the office, and decided to share their excitement with the world. They used the hashtag #gettingslizzerd— slang for getting drunk. Unfortunately, this message was sent from the Red Cross account, not the

Figure 1: What do you use social media for?

120 100 80 60 40 20 0 Communications

Marketing

Customer Service

Employee Engagement

Product Development

Other

n USA Now

n USA 2011

100

n Europe Now

n Europe 2011

NB: The ‘Other’ column includes investor relations, recruitment, competitor analysis, brand engagement, customer satisfaction analysis, PR, philanthropy and ‘nothing yet’. The figures above are percentages.

CFO india

april 2012

cover story employee’s personal one. The message was retweeted quickly, and while the Red Cross acquitted themselves well with a friendly, transparent and rapid response, the situation is now a case study across the world. Mistakes on social media spread fast. Borrowing liberally from Mark Twain, a social media mistake can be halfway around the world while the response is still getting its boots on. BP had an altogether bigger problem. When the Deepwater Horizon deep sea drilling rig exploded and spilled oil began to spread throughout the Gulf of Mexico, it became one of the biggest news stories of the year. The discussion of the disaster was happening everywhere - in the Senate, in the newspapers - and all over social media. Parody videos were filmed and shared (over 12 million times), fake Twitter accounts were set up (and followed by hundreds of thousands of people), and the BP logo was ‘brandjacked’, altered and shared to reflect a widespread anger at BP’s failure to address the problem. The anger continued unabated because BP also failed to address the discussion. They had no social media policy, and were utterly unable to affect the discussion happening on social media. They had a Twitter account for BP America, but while the explosion occurred on April 20, the first tweet wasn’t until April 27. That’s aeons in social media time. Eventually, BP got their act together, and started to Tweet more actively, address the issues on their Facebook page, and put out corporate videos to give their side of the story. Importantly, they also began to respond to the public—and not simply use social media channels as an excuse for a monologue. But both examples should give any corporate leaders pause for thought. Without a social media policy—and a real attempt to not only speak to, but speak with, consumers and the public via these new channels, social media is a risk. And it’s a risk that

will explode into problems—or exacerbate existing ones. Quickly. Remember—the conversation about your company is already happening on social media. Make sure you’re part of it.

Other metrics to track social media value Alongside those listed above, there are many more areas that social media can create real value for your company. Look at product development—a company with 1,000 engaged followers and fans has a fantastic audience for market research. Popular US beverage company Mountain Dew realised just that - and engaged their social media community to help develop a new flavour. The ‘Dewmocracy’ campaign allowed engaged consumers to suggest everything about the new product— from bottle design, to name, to flavour. Not only was the engagement excellent—with nearly half a million people voting in the first stage of the campaign—but a successful product was created. ‘Mountain Dew Voltage’ had “one of the most successful product launches in PepsiCo beverage history” according to Frank Cooper, Pepsi’s Chief Consumer Engagement Officer. Or look at recruitment—after a social media campaign, Disney received over 40,000 applicants for a recent job post. Or look at enhanced customer loyalty and retention through social media customer service—Zappos now have one of the most respected and admired brands in the world, in large part down to their delivery of excellent customer service over social media.

Conclusions In summing up, it’s important to note that social media value is a many-faceted thing. A company that looks exclu-

sively at the direct financial impact of a social media campaign will not only fail to see the whole picture, but will likely set up a basic, finance-driven campaign that fails to harness the real power of social media. The most simple way to track financial impact is to put together glorified discounts and ‘money-off voucher’ schemes—and measure how many vouchers are used. But not only will such a basic strategy alienate your potential consumers, it fails to appreciate the more complex value-creation opportunities that social media offers. Be a little more holistic. Look at the impact on your corporate reputation, look at brand awareness, look at consumer loyalty and engagement. And always consider the risks of a simplistic (or non-existent) strategy. 1

Johnson, N, The State of Corporate Social

Media in 2012 (London, Useful Social Media) ibid.

2 3

Johnson, N, The State of Corporate Social

Media in 2012 (London, Useful Social Media) Moore, C, Pizza.com, http://pizza.com/news/

making-social-media-work-pizza Kirwan, P, How to Measure Your Social Media

Impact and ROI (London, Useful Social Media) ibid

N ick J ohnson is founder of Useful Social Media. His recent business briefing on the state of corporate social media adoption and use around the world is available for free at http:// usfl.so/Briefing The company provides business intelligence on how large corporations can leverage social media for business advantage. For more, go to www.usefulsocialmedia.com april 2012

CFO india

cover story

Case Study

COMPUTING ROI OF ENTERPRISE

SOCIAL

SOFTWARE While some returns on ESS are tangible and easy to quantify, others are not. But instead of putting number to everything, one should look at social media as a tool to solve multiple problems Ajay Deshpande

ocial Software has gained tremendous ground in the consumer space today. Social tools have helped people with similar likings, similar goals and similar ambitions come together like never before. Social tools have been instrumental in toppling disliked governments and replacing them with more democratic ones. Recently social software is also making inroads into enterprise. It will not be long before Enterprise Social Software (ESS) becomes the norm and starts having a large impact on enterprises—in the way people interact, exchange information and in general the way a large enterprise is run. However, that time when ESS will have a large impact is still some distance away in India. There are quite a few successful deployments of ESS but

CFO india

april 2012

there must be quite a few unsuccessful ones that are not published. Deploying ESS is not similar to deploying other software in many respects. A typical software product is targeted towards solving a particular problem or a particular group of problems. However ESS is very elastic and can solve many different problems. Therein lies the difficulty—enterprises have to choose the problems they want to solve using ESS. In other words, the users have to decide on the ‘Use Cases’ they want to address. Hence we see longer decision times for ESS purchases at the CIO level. One of the key resources for CIOs (and of course for CFOs too) is the ROI calculation. Most important software buying decisions are accompanied by ROI calculations. Because of the situ-

ation discussed above, ROI calculation for ESS can be involved and confusing. In this article I wanted to discuss steps we took at Persistent Systems in computing ROI for our ESS deployment.

Background To understand these ROI computations, one needs a bit of a background. Persistent Systems provides services in Outsourced Product Development (OPD). We have a varied customer portfolio. As a company we decided to go Social in March 2011 and went live around November of the same year.

Use cases we addressed • Use Case 1: Bringing in efficiency in the interactions between Sales and

cover story Delivery. As with most enterprises, our sales team is geographically spread and almost always on the road meeting customers. The delivery team on the other hand is inward focussed concentrating on customer commitments. Typically there are weekly global sales calls on which all the team members describe their customer meetings in that week. Going round the table for every sales team member meant at least an hour spent in these updates. To inject efficiency into this process we turned to ESS—specifically Micro-Blogging. Today all our sales team members write a small blog about all their meetings with customers as the meetings happen (using smartphones). They use Hash tags to mark important topics. The delivery team can obtain a quick report of all the sales meetings before the weekly meetings. We no longer spend time on updates, but instead jump into issues that need attention. • Use Case 2: The second interesting use case is regarding Initiative Management. At any point in time we have a couple of initiatives going on in the company. These could be business initiatives (Planning for the next fiscal year) or fun initiatives (Annual Employee gathering). We chose ESS to address this issue too. Today we have created ESS communities that correspond to the various initiatives. A community brings employees from across business units, geographies and functions together under the initiative umbrella. People can access information on the move (via smart phones). This has significantly reduced the overheads in managing such initiatives. • Use Case 3: The third use case addressed the social connect between employees. We have left the ESS open such that any employee can create a special interest group, drive the participation on this group and keep it vibrant. Thus over time we have multiple vibrant communities sharing media, articles and creating / achieving common goals.

• Use Case 4: The final use case is that of Corporate Communication. Before we went to ESS all corporate announcements at Persistent were done over emails. This communication was one way and not engaging. Now the communication is done over Persistent Buzz a community on our ESS platform—employees read it there and can comment and share it with others.

Computing ROI But what about computing the ROI for our ESS platform? If you look at the above use cases, the ROI computation for Use Case 1 and 2 is relatively easier than for Use Cases 3 and 4. This is because in the former use cases, the

status report (per customer visit) by a sales team member had to be filed on an online system which used to take roughly 15 minutes. Currently, conveying the same information via Micro Blogs takes about five minutes—a saving of 2/3rd of the original time. Further in any of the global sales calls we had an average of 25 attendees. Presenting and prioritising all the customer visit reports for that week usually took about 45 minutes. Currently, it takes less than 15. Overall our estimate is that we have trimmed this process to about 20% of the efforts it used to take us originally.

Conclusions It is interesting to note the ROI computation for Use Case 1 is not the end of it. I mean even this use case has a few other intangible benefits. I consider these benefits even more important than the ROI shown above. The meeting reports are now available in a searchable format as and when needed later. The sales team members discovered that they get extra bits of information related to their meetings because the audience of their Micro Blogs is now much larger than before. These extra bits of information has more often than not opened other opportunities. So while the ROI looks good, I feel these intangibles are even better. My message is simple—ESS is a tough nut to crack in terms of ROI. The numbers are important to facilitate decision making and to get stake holders on your side. But you know that ESS has tremendous potential in solving problems that you might not even know of today.

Today...sales team members write a small blog about their meetings with customers as the meetings happen. They use hash tags to mark important topics benefits can be quantified in terms of time savings whereas the benefits in the latter use cases are more intangible in nature. As mentioned earlier, ESS is very elastic and can continue to solve more problems in the future that we have not even thought about today. Or more interestingly we might not even have these problems today (for example collaboration problems for a company with 7000 employees are at a very different scale when compared to those of a company that has 50,000 employees). I would like to demonstrate how we computed the ROI for Use Case 1. We have implemented this use case for a team of 60 members. Earlier a

Ajay Deshpande is Chief Architect, Collaboration, Persistent Systems Ltd. The views expressed here are personal. april 2012

CFO india

in practice

STRATEGY

Building a Culture That Energises Innovation Creating an innovation culture is notoriously difficult. Here are some fresh insights and a roadmap for tackling the culture conundrum Barry Jaruzelski and Jon Katzenbach

ertain companies always appear to be first to market with clever new ideas, while others manage just fine by making numerous incremental improvements on their past successes. Some companies seem to generate one great new product after another, while others depend for years on the same old stand-by offerings. Some companies seem to slide slowly into irrelevance and bankruptcy, while others succeed in emerging reborn from years in the doldrums. What drives these fundamental differences among companies and how they innovate? All else being equal, there are two things working together: strategy and culture. Strategy encompasses the conscious decisions companies make regarding how they plan to innovate and take their products and services to market. Some organisations are determined to be first to market with products developed in tight col-

CFO india

april 2012

photos.com

in practice laboration with customers (such as The Procter & Gamble Co.). Others leverage their technological expertise to develop new products with a singular focus on having a deep understanding of customer needs (think Apple Inc.). Still others prefer to be so-called “fast followers,” picking up quickly on what’s working in their markets and introducing similar products at less expense to the company and its customers (such as Samsung Group). Culture, on the other hand, is typically a much less conscious element of corporate life. Within the realm of corporate culture, innovation cultures differ, just as innovation strategies do. Companies with cultures that strongly support innovation capabilities—such as Google Inc. and P&G—usually combine openness to new ideas from within and without with a healthy respect for the opinions of customers. Those with cultures that do not support innovation capabilities, by contrast, are frequently the victims of their own past success—when old ideas continue to bring in revenue, even if less and less each year, the drive to innovate can all too often seem little more than a hard to-justify expense. The key to success in innovation, of course, lies in making sure these two critical aspects of innovation—strategy and culture—are in alignment and working together. So companies that seek an advantage through innovation are well advised to choose a strategy that fits within the context of its overall corporate strategy. Perhaps more importantly, leaders in innovative companies must ensure that their culture fully supports and energises their specific innovation strategies and goals. It is critical to seek a synchronicity between a firm’s business strategy, innovation strategy and innovation culture. There is no single “right” culture, but rather the one that is aligned with a company’s business and innovation strategy. That the two elements of innovation work together is critical. For the past

The key to success in innovation lies in making sure these two critical aspects of innovation— strategy and culture—are in alignment and working together. Companies that seek an advantage through innovation are well advised to choose a strategy that fits within the context of its overall corporate strategy seven years, Booz & Co. has conducted an annual study of the link between corporate research and development spending and innovation performance. And, for the seventh year in a row, the 2011 study showed that there is no correlation be-tween the amount of money companies spend on R&D and their overall financial performance. Last year, the survey also looked at how innovation strategy and culture affect financial performance. Here the correlation was considerably stronger. Just 44 percent of companies surveyed report that their innovation and corporate strategies are strongly aligned— and that their innovation cultures support their innovation goals. But those companies significantly outperformed other, less well-aligned companies in terms of growth in both profits and enterprise value over the past five years. Innovation strategy is, or should be, a deliberate choice on the part of companies, given their industries, products, capabilities, markets and the like— though it is worth noting that 19 percent of companies say they do not have any particular innovation strategy at all.

Culture, on the other hand, is a much more ephemeral variable in the innovation equation. At most companies, culture has evolved over many years out of historical circumstances. As a result, it is very difficult to change much in any realistic time frame. However, it is possible to re-direct how key elements of a culture influence innovative behaviour. So how best can companies shape and maintain a cultural influence that accelerates and supports their innovation efforts?

Cultures Supporting Innovation Capabilities Whether they know it or not, every organisation has a culture (or cultures), defined as its self-sustaining patterns of behaving, feeling, thinking and believing that determine “how we do things around here.” At their best, cultures that are supportive of innovation encompass a healthy tolerance for risk, embrace change, are open to new ideas from internal and external sources alike and influence people to think long term. Trust is key in such a culture, because it promotes a collaborative but challengapril 2012

CFO india

in practice

Strategic Innovation Requirements

CULTURE EVOLUTION FRAMEWORK Culture FROM-TO • Understand the current culture • Define aspirations • Define culture priorities to be addressed

Behavior-Focused Cultural Evolution

Progress Measurement

• Design tailored cultural evolution program • Create implementation work plan • Start pilot before roll-out • Ensure sustainability

• Build on strengths

Identify appropriate ways

to measure progress and to understand whether the culture evolution programme works

Critical Few Behaviors Identify the critical few behaviours that will make

Formal Levers

Informal Levers

the biggest difference toward your cultural aspiration

ing working style that aims for constant improvement. And each step of the innovation value chain—from ideation to commercialisation—is supported by sustainable patterns of behaviour. Bottom line, culture isn’t just about how people think about innovation, but how they behave. And these two aspects of cultures—the emotional and the behavioral—are mutually reinforcing. Consider Google Inc., a company that has long been viewed as the embodiment of such a culture. It is famously open to risk and tolerant of failure. As Eric Schmidt, its former CEO and current chairman, said: “Please fail very quickly, so that you can try again.” Every employee is encouraged—indeed, obliged—to dedicate time to his or her own ideas, ideas that are welcomed and supported through mechanisms such as an idea management system. Google’s management expects all of its employees not just to think innovatively, or to believe in innovation, but to behave in such a way as to reinforce the perceived value of innovation. That type 30

CFO india

april 2012

of approach is the key to generating a culture that supports and aligns with innovation strategy: Work to change employees’ behavior (not mindsets), and mindsets will follow. The science of neurology teaches that it is easier to act your way into new ways of thinking than to think your way into new ways of acting. Thus, a framework for promoting and evolving a more supportive and energising culture emphasises working to change behaviour first and foremost (see the chart).

Innovation Strategy First, no attempt to change the culture of a company will succeed outside the context of its innovation objectives. Rather, the goal of most successful cultural evolution programmes is to realign the culture in step with evolving objectives, perhaps as market conditions change. Indeed, the programme should be tied specifically to measurable business objectives, as it keeps the effort focused, allows for the demon-

stration of successes along the way and helps to rally people around the effort and gain buy-in. Former IBM Corp. CEO Louis Gerstner’s well-known effort to transform IBM in the 1990s depended for its success on carefully aligning the cultural side of the equation with the company’s new strategic emphasis on services.

Culture, Before and After The next step in promoting and evolving a more supportive and energising culture involves identifying the existing culture at a deep enough level to recognise its strengths and weaknesses and then determining how the future state of its cultural situation should differ from the present. The currentstate analysis should reveal both the pain points of the culture and indicate which aspects need to diminish or be counter-balanced—whether it be lack of collaboration, lack of customer focus or something else.

in practice At this stage, it is critical not to ignore cultural attributes that are working well, as these will likely become critical building blocks of the future state of the culture. And over time, of course, important missing elements can be added to the culture if the focus is on the key behavior required. That future state needs to be defined in terms of realistic aspirations—the traits most likely to promote the company’s innovation efforts. Here, simply choosing a wide variety of positive attributes won’t work. Instead, the relevant traits (and the behavior they imply) must be decided on deliberately keeping in mind the company’s vision, mission, strategy and business objectives. It is critical to build on current strengths, rather than trying to create an entirely new culture out of whole cloth. This will help accelerate the culture evolution process. By the same token, it is likely that some of the negative aspects of the current culture will have to be counter-balanced by positive ones, at least for the time being, as the effect of trying to do away with them may be too drastic this early in the game.

leadership, impact on business objectives, receptivity to emotional influence and relative ease of implementation. The behaviour chosen must also be differentiated by the roles and responsibilities of all employees affected by the change.

Critical Behaviour

formal processes, such as the introduction of an idea management system, complete with incentives for its use, will help promote and perpetuate the desired behaviour over time. Here, the right message is critical: Making a rational case for changing behaviour will likely be necessary, but it will only work if it also produces positive emotional support among peers and colleagues at multiple levels. Ultimately, it is the emotional appeal that will generate sustainable change, by altering how employees think and feel about innovation and what they believe about its value.

Only by changing how people behave can the culture have a positive impact on innovation—changes in thinking, feeling and believing will then follow in ways that sustain the innovative capability over time. But it is best to focus on changing just those few kinds of behaviour that will have the greatest effect on promoting the desired cultural influence. Determine which behaviours to concentrate on and what “reminder mechanisms” can help ensure those behaviours. The 3M Corp., for example, makes technical collaboration across divisional boundaries a normal way of operating, having become such a standard practice that sharing talent and cross-silo collaboration does not entail the battles common in other companies. Then decide which ones to work to change first, using such criteria as support of senior

The Cultural Evolution Programme Once all of the above elements are in place, it is time to develop a specific programme for promoting a longer-term cultural evolution. This will involve choosing the proper mix of formal and informal elements. On the one hand, it will likely be necessary to informally identify employees who can serve as role models for productive innovative behaviour. On the other hand, more

innovation and business performance, and whether behaviour is actually changing, as well as the accompanying shifts in thinking, feeling and believing. The use of quantitative metrics is essential to ensure accurate and repeatable measurement results, and the metrics chosen must be relevant, specific and achievable. The most successful programmes go well beyond the normal financial, operational and engagement metrics to track behaviour changes that matter most. Companies such as Apple, Google, 3M, the Palo Alto Research Center Inc. (PARC), Pixar Animation Studios, P&G and dozens more have demonstrated strong records of innovation success and the cultures needed to support that success.

Only by changing how people behave can the culture have a positive impact on innovation

Measure Progress The only really effective way to know that the program is working is to actively measure its progress in terms of both

But culture evolution does not simply happen. These companies have worked hard to create their culture, as well as to maintain and nourish it. And they understand that doing so is a combination of the rational and the emotional, formal and informal, topdown and bottom-up. Changing a culture is hard, but by keeping in mind both sides of the equation and measuring the results carefully it can be done—with profound innovation gains the result.

Barry Jaruzelski is a partner with Booz & Co. and serves as global leader of the firm’s innovation practice. Jon Katzenbach is a senior partner with Booz & Co. in New York. @financial executives international april 2012

CFO india

in practice

Innovate

Optimising value through business carve-outs Proactive business carve outs have become a strategic necessity for many companies to survive in the current economic environment. Hereâ&#x20AC;&#x2122;s what you should consider when considering a carve-out Pankaj Chadha

hanges in economic environment over the past few years have made the current environment more complex, challenging and uncertain. The pressure to survive in such an economic environment encourages competition that often creates new business relationships. Ever increasing demand for expansion to new markets or utilisation of scarce resources forces organisations to think strategically for divesture options. Many divesture strategies involve a part of the group represented in a division/unit or subsidiary or a combination thereof rather than the entire company. Carve -outs may consist of disposal of subsidiaries, business segments, business units, or any product line of a business. Proactive business carve outs have become a strategic necessity for many companies to survive in the cur32

CFO india

april 2012

in practice

photos.com

rent economic environment. Even in uncertain times, carve outs, when strategically aligned, can unlock value for seller and provide buyers with a platform for growth. There are numerous examples of carve-outs in India arising out of business reorganisation over the years. To optimise shareholder value, these would become more common over the coming years. When a seller and buyer enters into any carve out transaction, each side has different objectives. The terms ‘carve-out’ and ‘combined’ financial statements have similar meaning. The term used varies in different parts of the world. Combined financial statements are an aggregate of financial statements of segments, separate entities or groups, which fail to otherwise meet the definition of a “Group”. Carve-out financial statements are separate financial statements of a division or a lesser business component of a consolidated or a larger entity. Whilst carve-out financial statements are usually prepared as part of a reorganisation of the group for a potential divesture, combined financial statements are required by certain regulators as filings for raising capital through an IPO. Preparation of carve-out or combined financial statements is seldom easy. Once a decision is taken, determination of whether carved-out financial statements can be presented; measurement of assets, liabilities, intangibles and contingencies; and allocation of costs, income, taxes of different types are among some of the difficulties that

“Each carve out transaction has unique challenges. Carve-out strategies under different economic environments may vary for buyers and sellers; however, the ultimate goal for all carve out transactions is to provide maximum benefit to the company and its shareholders” commonly emerge. The preparation of comprehensive financial statements of carved-out business provides a base for appropriate valuation, due diligence, raising bank or public debt financing for the divesture. Carved-out financial statements or combined financial statements are possible to prepare only in cases where these business segments form part of a “Common Control” group. Business segments are considered under a common control group if the ultimate beneficiaries prior to and after carve out remain same. The preparation of carve-out financial statements requires special attention to ensure that all of the assets and liabilities of the separate business have

been properly identified and that all relevant costs of doing business reflect in the carve-out financial statements. While generating the carve–out financial statements, the following points should be considered: (i) Determine what kind of financial statements are needed: whether the carve-out financial statements need to be audited? Usually, both the seller and buyer may require audited (or auditable) financial statements for funding or compliance purposes. (ii) Determine the scope and related complexity of the carve-out: This includes clearly defining the business segment(s) being carved-out and identifying the assets, liabilities and related

Seller’s objectives

Buyer’s objectives

Both buyer’s & seller’s objectives

Always looking for maximum deal value

Sustainability of business acquired

Smooth transfer on day one

Package the business effectively for sale

Understand and minimise the different risk associated with the carve-out business

Least separation cost and risk

Reduce disposal cost

Valuing the carve out business

Smooth transition and integration of business

Deconsolidation of business from financial statements

Due diligence of sellers financial statements Additional accounting and reporting consideration of carved out business

april 2012

CFO india

in practice

“In any carve-out transaction the preparation of carveout/combined financial statements is one of the most challenging exercises” operations to be included in financial statements. It is important to understand whether significant inter-segment/business transactions exist and if these transactions are arising from the same customer/supplier. In such a case, careful understanding of commercial terms would be necessary prior to execution of transfer. (iii) Identify key financial data and their resources: Necessary data includes previously reported statements, separate general ledgers and sub-ledgers or other relevant documents and agreements for the carved out business. (iv) Cost allocation: Cost allocations can be made only to the extent where such costs were incurred by the larger group and do not include costs that might be incurred in future on a “what if ” basis. Wherever an inter34

CFO india

april 2012

unit recharge of costs have been made and would continue to be so, after the carve out of that unit, it is important to ensure that these are made using a fair arm’s length principle. (v) Communicate with auditors: An early and ongoing dialogue with auditors will speed the process of auditing and finalizing carve-out statements to ensure positions taken are well explained and are appropriate under the applicable Accounting Standards. Other than carve-out/combined financial statements the following are the other key areas which must be addressed for smooth transition of the carve-out transaction. Personnel- If there are any critical employees who are vital for running the business should be specifically mentioned in the transition agreement.

Assets and Liabilities: identify which assets and liabilities are staying with acquired business and which should go with the seller. Services provided by seller: Mention clearly in transition agreement the nature of services to be provided by the seller during the transition. Legal Contracts: Will any contract need to be renegotiated or named parties changes to enable the existing or carve out group to operate under these contracts. Open regulatory positions: Tax, indirect taxes, customers, suppliers, banks and other significant stakeholders could have claims to settle and relating to the segment being carved out (this statement needs to be rephrased). These need careful evaluation at the time of preparation of the carve-out financial statements. Timing for planning and executing exist strategies is important for any business carve out decision. Knowing when and how to sell assets through carve-outs becomes a powerful means of managing capital within a business to increase shareholder value. For buyers, carve-out acquisitions can dramatically improve the ability to exploit the pipeline of growth opportunities. With experience, a company becomes more adept across a range of essential carve-out and buy-side tasks. Essential skills range from identifying likely prospects and estimating future business costs and revenues, to understanding tax and supply chain implications, fine-tuning bids and ultimately integrating new assets. While each presents unique challenges, developing strong capabilities across the full range of carve-out tasks can deliver a profound competitive advantage.

Pankaj Chadha – is a Partner in a member firm of Ernst & Young Global. Views e x p r esse d h e r e are personal

in practice

technology

Leading the Change In the 10 months since Andrew Miller took over as the CEO of Polycom, he has been leading the company from the front. In conversation with Yashvendra Singh, Miller talks about the metamorphosis undergoing in the unified communications market, and how Polycom is addressing it

How is the overall enterprise communication and collaboration space changing? There are lots of exciting changes and strong growth drivers that are propelling the market for unified communications (UC). First, we see an expanding market for UC both within and beyond the enterprise to SMB, mobile and consumer applications. This growth is driven by three factors: adoption of open standards and integration into best-of-breed UC solutions like Microsoft Lync; accessibility of telepresence solutions ranging from consumers and the mobile market to SMBs, enterprises and service providers; and the widespread availability of cost-effective bandwidth. Second, the underlying business drivers for UC are increasing as more businesses of all sizes are operating globally and looking for ways to improve communication and collaboration across locations and time zones to accelerate decision making and time to market, and to lower operation costs and better leverage existing resources. The market for Unified communications has immense potential. Accord-

CFO india

april 2012

ing to a Frost & Sullivan research study in 2009, the APAC market size of video conference-infrastructure is around 330-350 million dollars, of which, India’s contribution is around 9%. But, by 2015 this industry is expected to reach around 850- 900 million dollars and the growth in India is expected to be 15%.

You have been leading Polycom’s Open Collaboration Network initiative. How has the progress been so far? The Polycom Open Collaboration Network (POCN) is a key strategy for Polycom that provides significant value for our customers. By working with leading unified communications platform providers, Polycom is able to deliver its productivity-enhancing and cost-saving telepresence, video and voice collaboration products as an integrated part of core unified communication environments, making the technologies easily accessible as part of the everyday workflow within a comprehensive solution that is easy to deploy and manage. Our strategic Polycom Open Collabora-

tion Network partners include Microsoft, Avaya, BroadSoft, HP, McAfee, IBM, Juniper Networks and Siemens. Through this initiative, our customers can stay assured their solutions continue to interoperate in a best-in-class environment, rather than being tied to one particular vendor.

2010 was the year when you believed in “sell-through philosophy” where the service provider sells and fulfills services to customers. Will this strategy continue in 2011 too? It will definitely continue. In fact, we think 2011 and moving into 2012 will be when the service provider market for UC really gains momentum. One of Polycom’s key strategies is to enable the next generation of cloud-based services in conjunction with our service provider partners. We will do this by powering service provider networks through the Polycom UC Intelligent Core infrastructure platform, and by bringing together partners around standards and open interoperability to drive a network effect for customers.

in practice

How is Polycom enabling the service provider channel to host and manage services for end users? In India, Polycom has a 2-tier distribution structure. There are 3 distributors and 50+ channel partners. By first quarter of 2011, Polycom will be launching ‘Polycom Choice Programme’ for defining its channel partners, their certification and growing their reach. To enable service providers to deliver UC services reliably, cost-effectively and with a differentiated experience,

Polycom is building the most scalable and robust platform to deliver these services through the Polycom UC Intelligent Core.

How do you see consolidation in the industry affecting technology advancement? Consolidation is happening, but Polycom is winning in the market, because we remain focused on delivering greater customer value, flexibility and investment protection. Polycom believes it is critical to continue to innovate in a stan-

dards-based way and to provide seamless UC integration through our POCN partners, while also solving the interoperability challenges for our customers by connecting the islands of communications that exist between enterprise, mobile and consumer applications. This is also proven through Polycom’s commitment to UCEverywhere, a strategy for seamlessly connecting communications across the continuum of consumer, mobility, SMB (small to medium businesses) and the enterprise, regardless of platform or netapril 2012

CFO india

in practice

work. These same innovations enable service providers to deploy open cloudbased UC telepresence services, giving customers the capability to communicate outside their organisations and across their supply chain to suppliers, partners and customers.

While yourn ‘UC Everywhere’ strategy includes a cloud computing solution, there are issues such as end-point equipment installation, training, lighting and sound, and operating procedures in migrating video conferencing to the cloud. What is your take on it? There is no doubt in my mind that realtime communications in the cloud is coming and will drive broader adoption, because it solves many of the issues limiting adoption today that we have discussed previously. However, you question is a good one. Regarding equipment installation, the barriers for businesses today is not actually plugging in the cameras and codecs, it is making sure they systems can easily connect across the network and between firewalls. The cloud will solve these issues. Areas like training, specialised lighting and sound, etc. provide a great opportunity for value-added services through service providers and channel partners. One example is BT, which has created reference architectures to give customers the assurance that Microsoft and Polycom technologies will be deployed and managed in solutions that not only consider the server and software platform, but also at the full network impact and utilization.

Telepresence adoption in India seems to be quite far. What is your strategy to push its growth? Yes. Polycom believes there will be several major factors driving growth of telepresence. Polycom is helping to enable the cloud-based services that will simplify how customers purchase and use visual communications technologies like telepresence and make it easi-

CFO india

april 2012

“There is no doubt in my mind that real-time communications in the cloud is coming and will drive broader adoption” er to extend video use across business, mobile and consumer applications. Regionally, there are two key areas that need to align so that you see growth, namely broadband infrastructure deployments and then industries see the bottom benefits of adopting the telepresence solutions. Firstly the India government is very committed to the deployment of highspeed networks both wireless and fixed broadband across the breadth of India, this then becomes the foundation to build from and we are working closely with them on this initiative. Next, we have aligned with a number of key channel partners in India which include leading telecommunications player. Together with these channel partners and our PCON partners, we are developing innovative solutions for many end user customers especially in the verticals of Government, Healthcare and Education.

But why is the market still reaching out for closed technologies as opposed to open, standards-based ones? The market is undergoing a sort of metamorphosis. We are seeing tremendous traction for open and interoperable technologies. Enterprises are realising multiple benefits by choosing open platforms based technologies. There is also confusion in the market, some of it propagated by other vendors, about the current state of interoperability. For example, we hear from Cisco Telepresence customers all the time that were promised interoperability, but find themselves locked behind proprietary walls. It is this customer demand that led us to support Cisco TIP on our infrastructure platform. We are breaking these customers out of the proprietary walls and providing a way to leverage their existing systems, but scale their network with standards-based solutions moving forward.

UC’s full IP-based approach can introduce reliability, security and regulatory issues that are frightening to certain industries such as healthcare, for instance. What is the way ahead? On the Healthcare front, organisations face challenges mainly in three areas; delivering quality patient care, streamlining care delivery processes, and improving business processes. These challenges are compounded by an environment with many time-dependent critical processes, multiple modes of communication, and many mobile caregivers and other workers with widely varying availability throughout the day. Polycom offers a portfolio of end-to-end, scalable, secure, Unified Collaborative solutions, which increases productivity of healthcare professionals, are used extensively for training of hospital staff, can extend patient care and expertise to remote areas, and also improve patient care with mobility solutions.

in practice

HR & FINANCE

Employee Benefits – preparing for the unexpected For Indian companies the focus on employee benefits is increasing. And the CFO will have to play a key role here, working closely with the HR department. Kulin Patel and Anuradha Shriram

he most common fear we encounter when speaking with CFOs is the fear of the unexpected. A large part of a CFOs mind is occupied with minimising volatility, forecasting and unexplainable variances. Traditionally, employee benefits have been the realm of the HR Director, why then should the characteristics and management of employee benefits feature in a CFOs mind ? As a CFO, here are some early thoughts to get you thinking: • When was the last time you were made aware of large variations in costs of employee benefits that impact the profit and loss account or the balance sheet as the accounts are being closed ? • When was the last time you were informed about a significant unexpected cash contribution requirement to be made into a Trust that has been set up to meet the benefits as and when they are due to employees? april 2012

CFO india

in practice • Have you found yourself being insufficiently aware of the impact on the finances of any new legislation regarding employee benefits ? • Have there been unknown or hidden employee benefit costs that are unearthed in an acquired company due to a plan that has been designed or introduced? • Do all relevant stakeholders know where the detailed information and documentation is available if you are subject to a due diligence ? These are just some of the situations that are now gaining prominence on account of employee benefits governance and the role of CFOs and their finance team. There is of course an equally important aspect of working with HR on these issues as well.

Drivers for increased Governance The question is always why now? For Indian companies the focus on employee benefits is increasing for a number of reasons: • Increased disclosure in financial accounts, especially listed companies, since the introduction of revised accounting standards for employee benefits in 2007-2008. The Towers Watson 2011 Employee Benefits Accounting and Risk Study revealed that the benefit obligations recorded as part of balance sheets for BSE 100 companies as at 31 March 2011 stood at approximately Rs.2,90,000 crores (covering 95 companies). • Increasing liabilities on account of employee benefits which are also subject to certain amount of volatility. Again, with BSE companies as at 31 March 2011, from 83 companies that were common to the 2010 and 2011 TW studies, illustrated a whopping increase of 50%, with only a 27% increase in the combined assets backing those obligations. • The corporate focus on all areas of governance is filtering to employee benefits as well. We have especially seen an increase in multinational 40

CFO india

april 2012

companies getting more involved with matters related to employee benefits governance. • Regulators are becoming more stringent despite their policy making being uncertain too. • Indian companies need to grapple with the financial, people and regulatory issues surrounding employee benefits as they continue to expand overseas.

So what next? It usually starts with an overall framework from which one can build a detailed governance process. We have found it to be scaleable to cover one company, group companies and global companies. The framework facilitates a process for structured management; a robust risk management procedure and a framework to make strategic decisions.

bilities and set up a monitoring mechanism. Task trackers and an annual goal and timelines setting meeting for the Trust each year is a great way to ensure stakeholders are aware of the priorities. Simple steps like fixing calendar dates for trustees meetings ahead of time to ensure compliance as well suitable monitoring of issues can go a long way. • Financial: In a TW global database of more than 100 multinational organisations, the top five governance practices are mostly related to finance. • Knowing where the company has material compensation and benefit plans from an accounting perspective • Knowing what proportion of the total liability is represented by plans • Having a clear definition of materiality • Having a core team managing and monitoring compensation and benefit programmes globally

CFOs should be aware of longer term plans that HR have... so that the impact on P&L and the balance sheet are assessed Essentially, you have to know what you have, assess gap areas, put some structure in place and then monitor. Let’s take each segment in turn: • Assessment: It seems simple to do an audit. However, it is very important to establish what such an audit will cover. There is a substantial amount that could be covered including plan designs, compliance status, operational roles and responsibilities, financing status, employee awareness and accounting. Once you have established scope, it is often finding out the answers that can be tough. • Planning: Once everything is known, actions can be prioritised and a structure built to allocate responsi-

• Not being surprised by a significant financial liability Interactions with HR here are crucial. CFOs should be aware of longer term plans that HR have for headcount increase or the introduction of new plans, so that the impact on P&L and the balance sheet are assessed. • Compliance: We find this is one of the top issues for CFOs in India - ensuring the company is on top of its compliance requirements. For the employee benefits environment in India this tends to be focused on Provident Fund compliances, whether your company runs its own Trust or not. We find monitoring compliances in a structured manner to be an increas-

in practice ingly challenging area for group companies and companies that have grown inorganically. Interestingly, though regulatory compliances are more visible, there is also compliance to any Trust Deed and Rules in operation to consider. This aspect can get overlooked and it is important that stakeholders are aware of the key provisions and that the Deeds are regularly reviewed to ensure they are relevant, reflect the businesses intention and are flexible enough to facilitate any changes required. â&#x20AC;˘ Investment: Investments against employee benefits are mostly limited to Gratuity, Superannuation and Exempt Provident Funds in India. There is considerable room for suitable governance. Firstly, being clear that investments are monitored against the stipulated patterns. Secondly, being aware of all that the patterns entail so a suitable investment policy can be decided by the Company and Trustees. The policy would cover items such as performance benchmarks and outline any decision making delegations. â&#x20AC;˘ Administration: Regular monitoring of the operational administration is critical to minimising risk of paying the wrong benefit to the wrong person at the wrong time. Mapping who does what is the first key step. Following that, dashboards should be developed that report key activities to the business and Trustees. This not only ensures compliances but also gives early warning signals of issues that may impact the employee experience. When administration is outsourced to a third party, the issue of holding them accountable becomes an additional item and SLA monitoring has to be woven into the activities. â&#x20AC;˘ Co m m u n i c a t i o n : U l t i m a t e l y employee benefits are about the employee. Clear, simple and regular communication should be made part of the governance framework. This may be done through suitable handbooks, regular employee sessions or an annual Trustee report. When the entire system is answerable to employ-

Understand Understand Understand

Achieve Achieve Business Business Results

Manage Manage

Assessment

Drive Growth

Risk/Opportunity Financial Compliance Fiduciary/Governance Accounting Operational Reputation

Strategy Strategy Structure Structure

Manage Costs

Structure

Planning Planning

Oversight Oversight

Optimise Risks

Local Local Objectives Objectives and and Design Design

Communication Communication

Administration

Financing Financing

Investment Investment

Conduct a Current State Assessment: Inventory & Governance Audit Build/Refine a Governance Structure

Every year, Plan and Prioritise what areas to focus on in the coming year Continually Oversee plans and programmes

Assessment

Structure Structure

Planning

Oversight Oversight

Local Local Objectives Objectives and Design and Design

Communication Communication Administration Administration

Financing Financing

Investment Investment

ees, it will encourage improvements and highlight any risks and issues that need to be fixed. There is a clear trend all over the world that an increasing amount of responsibility is being placed on those who are entrusted with looking after the liabilities and assets of long term employee benefit plans. Much of this trend is dictated by legislation such as in the UK or USA. However, another driver has been the increased visibility of these liabilities on the companies financial statements. This will drive the need for a greater focus on scheme governance in India. There is currently no legislation to govern the operations of an occupational long

term employee benefit plan except the requirements of the Income Tax authorities and EPFO. The income tax authorities role is limited and not necessarily too robust. There is a good opportunity to establish some best practice in operating and managing these schemes through a practical governance framework. It should go a long way for CFOs in making the unexpected become the expected. *Kulin Patel is Director, Client Account Management, Towers Watson, India. Anuradha Sriram is Director, Benefits Practice, Towers Watson, India. april 2012

CFO india

Case

Study

Project Map The challenge: Closing the Zandu acquisition and convincing the erstwhile majority shareholders to sell TIMELINE: January â&#x20AC;&#x201C; November 2008 People Involved: Core team consisting of three members KEY CFO TAKEWAYS: Ensure fairness in any deal; do your homework well

CFO india

april 2012

Case Study

The Balm Effect:

How

Zandu was acquired

Naresh Bhansali, CEO-Finance, Strategy & Business Development, Emami Ltd, talks about the company’s muchtalked about `730 crore acquisition of Zandu Pharmaceutical and how perseverance and great teamwork finally paid off Dhiman Chattopadhyay

n January 2008, Emami Ltd, the Kolkata-based FMCG firm, took a business decision that was jaw-dropping, to say the least. With an annual turnover of a little under `600 crore (at that point) and a market cap of `1500 crore, the management of Emami considered acquiring the century-old pharmaceutical firm Zandu at its future potential value. Ultimately when the deal was closed, they paid a valuation of over `1000 crore for Zandu which was merely one-fourth of that size. “Initially in May, we acquired around 24 per cent stake from the Vaidya family, one of the co-promoters of Zandu. However, the other partners, the Parikh

family who held 18 per stake in Zandu, were unwilling to sell, landing us in a difficult situation right at the beginning,” recalls Naresh Bhansali, President & CEO-Finance, Strategy & Business Development of Emami Ltd, as we sit in his corner office at Emami Towers in Kolkata. The reason Emami went in for the deal in the first place was the “strong brand potential” that the promoters of Emami saw in Zandu. “At that point they had a turnover of just `150 crore with a PAT of `15 crore. But even initially, we valued it far higher, looking at its brand potential,” says Bhansali. “Even acquisition of the initial stake of 24 per cent was difficult. Because

of the diametrically opposite stands of the Vaidya family members, the share purchase agreement had to be drafted several times. In fact this was a;so the case with earlier bidders which ultimately forced them to back out,” recalls Bhansali.

THE CHALLENGE The biggest challenge, says Bhansali, was convincing the Parikh family to sell their stake. “Soon after we acquired the 24 per cent from the Vaidya family, the Parikhs went to court arguing that they had the first right of refusal and sought suspension of voting rights on these shares. They even refused to regapril 2012

CFO india

Case Study

“We had put in around `150 crore already and could not back out...Yet we did not have controlling power...” ister the transfer of shares acquired by Emami,” he recalls. Legally, Emami was in a tight corner, since they now had to make an open offer, having already acquired over 15 per cent. “We had put in around `150 crore already and could not back out. Yet, with just 28 per cent, we did not have controlling power nor could we enter the management,” explains Bhansali.

HOW IT WAS TACKLED The case dragged on for a few months. Then in June Emami made an announcement for the open offer. The offer price was initially fixed at Rs 6315 per share. The legal battle with the 44

CFO india

april 2012

Parikh’s continued. In September 2008 the open offer was cleared by SEBI. Meanwhile the Parikhs also entered into talks for settlement and finally agreed to sell their stake at `15,000 per share. We also raised our open offer price to `16,500,” recalls Bhansali. At this point, almost as if to test Emami’s determination, the global meltdown happened. Luckily, loan sanctions from banks had already been taken and, despite the slowdown, the company also mobilised resources internally. The entire deal required a lot of patience as well. Getting the Parikh patriarchs together was in itself a chal-

lenge. “After several rounds of discussions and negotiations, we finally convinced them that the deal would be great for them.” Once they realised they would collectively make at least `240 crore from this deal, the family yielded. Finally in November 2008, the Emami-Zandu deal was sealed. “Remember, this was a very hush-hush deal. Even within the company, only a few of us knew what was going on. A core three-member team, including me, was on the job for 12 months. And yes, there were several moments during the challenge when I felt the deal would just not go through,” admits Bhansali. It is here, he says, that the vision and guidance that the deal team received from the owner/promoter Mr R. S. Agarwal, stands out. “His conviction inspired us to carry on,” Bhansali states in unequivocal terms. Immediately after the acquisition, all strategic, operational and financial structuring steps were implemented. A real estate business was carved out, equity was raised through private placement. The rest, as they say, is history. In the first full year of operation post the takeover, the Zandu business grew rapidly and its profits almost trebled. Today, Emami Ltd is a `1500 crore company under the `4500 crore flagship Emami Group. “Today our market cap is close to `6500 crore and the great thing is (thanks to some great financial management), we became debt-free within two years of the Zandu deal,” he concludes.

LESSONS Bhansali says the entire exercise taught him the value of sincerity and integrity. “You need to be sincere and at the same time ensure fairness in the deal, to make all stakeholders happy,” he says. “It was because we ensured fair play that we finally managed to make all stakeholders happy while ensuring we got great value out of the deal,” he adds. The other lesson: “Do your homework well before any deal,” he smiles.

cfo100

event

The second annual cfo100 Roll of Honour was a thumping success with almost all the 100 winners and an equal number of guests and invitees in attendance at the gala evening 46

CFO india

april 2012

THE OSCAR NIGHT has some serious competition. If you had walked in to the Presidential Ballroom at Vivanta by Taj President, Mumbai on the evening of March 20th, you could well have thought there was a summit conference in progress or a black-tie celebrity awards going on. The latter in fact, wouldnâ&#x20AC;&#x2122;t be far off the mark, for indeed there were a 100 celebrities in the room albeit not the ones who sing and dance in films. These were 100 men and women who

jiten gandhi

An evening to remember

HOUSEFULL: CFOs listen in rapt attention to a speaker during the CFO100 event at the Vivanta by Taj on March 20, 2012

event have, with their superb financial and business acumen, taken India Inc to a position of pride and honour today. The event? CFO India’s 2nd Annual CFO100 Roll of Honour, 2012, where

WORDS OF WISDOM: Mr O.P.Bhatt, Former Chairman SBI and chief guest for the evening, addresses the assembled CFOs during his key note speech

the country’s premier magazine for the powerful finance community honoured a 100 CFOs for their exemplary contribution to corporate finance in the previous financial year. Despite being a weekday, over 175 people including some of the biggest names from India Inc. made it a point to attend the ceremony—a 9.9 Media initiative. Last year, at the inaugural awards, 9.9 Media (the parent company that publishes CFO India along with eight other magazines) had initiated India’s first CFO India Hall of Fame to honour 15 financial leaders for their lifetime contribution to finance. This year, all 15 members voted unanimously to welcome two new leaders to this club—Mr Keki Mistry, Vice Chairman & MD of HDFC and Mr Ravi Sud, CFO Hero MotoCorp. Mr O.P Bhatt, former Chairman SBI and the chief guest for

the evening, presented the scrolls of honour to the new inductees. Mr Sud and Mr Mistry join Mr Mohandas Pai (formerly of Infosys), Mr Suresh Senapaty of Wipro, Mr Y.M Deosthalee of L&T, Mr Bharat Doshi of M&M, Mr S Mahalingam of TCS, Mr Partho Datta (formerly of Murugappa Group), Mr Hari Mundra, (formerly of Essar Oil) Mr D Sundaram of TVS Capital, Mr Anil Singhvi of ICAN, Mr Ishat Hussain of Tata Sons, Mr Praveen Kadle of Tata Capital, Mr Akhil Gupta of Bharti Enterprises, Mr S.V Narasimhan of IOC, Mr B Hariharan of Avantha Group and Mr K Vaidyanath, (formely for ITC) in the Hall of Fame. This was followed by the CFO100 Roll of Honour in 12 categories, namely, excellence in cost management, M&A, strategy, growth, risk management, raising capital, financial control, use of tech-

COFFEE & CONVERSATIONS: Mr Anup Vikal, CFO, Interglobe, Urmil Khurana, CFO, Starwood Hotels and Pratibha Advani, CFO, NIIT catch up over coffee

LET THE SHOW BEGIN: Mr Gulshan Dua (in red tie), Country Controller, Freescale Semi Conductors India, checks in to the CFO100 conference at Vivanta

MAKING A POINT: Mr Sunil Kakar, Group CFO, IDFC (Right) discusses a point with Ms Anuradha Das Mathur, Director 9.9 Media

NETWORKING TIME: Mr Charanjit Attra, CFO, ICICI Securities discusses finance over tea with a fellow delegate at the CFO100

april 2012

CFO india

event nology, green initiatives, collaboration, innovation and finance in a start-up. The chief guest for the evening, former SBI chairman Mr O.P Bhatt, along with three of the jury members, Mr Mohandas Pai, Mr Sankar De & Mr Hari Mundra personally handed over the citation and the trophy to each of the winners. Keeping in mind the huge leap that India Inc has taken in the past few years, each category saw awards being given in the large (above `1000 crore) and mid-size (below `1000 crore) company segments. Welcoming guests to the evening session, Co-founder and Director of 9.9 Media Ms Anuradha Das Mathur explained the process through which the 15 member jury had selected the 100 winners from the over 300 nominations received. In his key note address Mr O.P Bhatt spoke about new

and emerging challenges before the finance community and the increasing role technology will play in businesses in future. He also commended all the winners and added a warning note when he said, “today’s recognition only means the path ahead for you just got tougher. The real challenge will be to live up to the faith and honour that your peers have just bestowed upon you.” In his impromptu and highly motivating speech, Mr Mohandas Pai told the CFOs, “The responsibility on your shoulders is huge. In 10-15 years we will be the 3rd largest economy in the world. CFOs are the backbone of any organisation and the path we take will often determine the path an organisation takes. That is not a small responsibility.” The audience enjoyed the spirit of the evening, applauding every winner as

they walked to the stage to collect the roll of honour. And as one winner mentioned, there was no greater honour than to be recognised by one’s peers. Earlier in the day the event began on an exciting note with a panel comprising CRISIL’s Chief India economist Mr Dharmakriti Joshi and Managing Partner of Pacific Paradigm Advisers Ms Punita Kumar Sinha joining Ms Anuradha Das Mathur to discuss ‘India’s economic future in the global context.’ This was followed by a series of interesting panel discussions and presentations. The panel on ‘Social Media in Business’ saw a number of questions from the audience about how to best utilise social media at work to save time and cost as well as motivate employees. Speakers at the panel, Mr Sujit Sircar, CFO, iGate, Mr Rajesh

FOOD FOR THOUGHT: CFOs and other guests exchange visiting cards as they enjoy a lavish dinner and cocktails at the end of the gala evening

WELCOME IN: Mr O.P. Bhatt inducts Mr Ravi Sud, CFO, Hero MotoCorp, into the CFO India Hall of Fame as jury members Mr T.V. Mohandas Pai and Mr Hari Mundra look on

ROLL OF HONOUR: Mr Sunil Kakar, Group CFO, IDFC receives the Roll of Honour for ‘Winning Edge in Raising Capital’

TAKING CONTROL: Ms Pratibha Advani (C), CFO of NIIT with her CFO100 Roll of Honour which she won for her contribution in the area of ‘financial control’

CFO india

april 2012

event

WINNERS ALL: Winners in the ‘Winning Edge in Corporate Governance/Financial Control’ category pose with their rolls of honour during the ceremony

PEER HONOUR: Mr G.S. Subramaniam, CFO of Hathway Cable receives his Roll of Honour from Mr T.V. Mohandas Pai and Mr Afzal Modak , CFO of GE

KHWAJA MERE KHWAJA: Iconic Sufi singer Ms Zila Khan enthralls the audience

WELL MANAGED: Ms Vibha Padalkar, CFO HDFC Life receives her roll of honour for ‘Winning Edge in Cost Management’

CHANAKYANITI: Mr Radhakrishnan Pillai explains how Chanakya strategised during challenging times

Ghonasgi, CFO at Presistent Systems and Mr Aditya Jha, CEO of Krayon Pictures spoke about how using social media had benefitted them in their own organisations. The session was moderated by Mr James Joseph, Director, Executive Engagement, Microsoft India. An earlier panel saw Mr Sunil Kakar, group CFO of IDFC, Mr Anish Shah, President & CEO of GE Capital and Mr Loknath Mishra, Country Head, commercial banking group, ICICI Bank debate if CFOs should look beyond numbers and quarterly results and focus more on long term value creation.

Another session that saw massive audience interest was one on ‘Strategies for challenging times: Lessons from Chanakya and the Arthashastra.’ Dr Radhakrishnan Pillai, author of the best-selling book ‘Corporate Chanakya’ and a scholar on the Arthashastra, regaled the audience with stories and lessons from Chanakya’s life and times. As the winners and the guests headed for the cocktails and the gala dinner at the end of the session, they were entertained by a scintillating performace by acclaimed sufi singer Zila Khan whose rendition of “Khwaja mere Khwaja...” mesmerised the audience. As the evening ended, CFOs and other dignitaries were seen sharing insights with each other and enjoying their moment of glory—a sight that definitely pleased not just the 9.9 Media family but also the key sponsors of the event, Principal Sponsor GE Capital, Gold Sponsors Microsoft and Airtel, as well as Risk consulting Partner Towers Watson, Silver Partners Bharti Realty and ICICI Bank, Document management partner Ricoh and Corporate Travel partner Cleartrip.com. The event ended with a major announcement from CFO India—the launch of the CFONEXT100 awards , slated for later this year. april 2012

CFO india

event

Roll of Honour ‘Winning Edge’ in Collaboration Revenues above `1000 cr Natarajan R, Managing Director 1 and CFO, Helion Advisors Ramesh Swaminathan, Chief 2 Financial Officer, Lupin Ltd Giri Giridhar, Global CFO, 3 Wockhardt Revenues below `1000 cr Yogesh Shroff, Finance, IT & 4 Supply Chain Director, Nivea India Pvt Ltd

‘Winning Edge’ in Corporate Governance/ Financial Control Revenues above `1000 cr Mayank Bathwal, Chief Financial 5 Officer, Birla Sun Life Insurance Co Ltd Arun Gupta, Head (A&R) and 6 Company Secretary, Bombardier Transportation India Ltd Umang Vohra, Chief Financial 7 Officer, Dr Reddy’s Laboratories Ltd Seshagiri Rao MVS, Jt. Managing 8 Director & Group CFO, JSW Steel Ltd Pratibha K Advani, Chief 9 Financial Officer, NIIT Technologies AK Singhal, Director (Finance), 10 NTPC Ltd Jatin Kapoor, Chief Financial 11 Officer, Phillips Carbon Black Ltd V Sundaresan, CFO, TTK Prestige 12 Ltd Revenues below `1000 cr Rajendra Khetawat, CFO, Godrej 13 Properties Ltd 50

CFO india

april 2012

Pramod Kumar Sanghi, 14 President Finance & CFO, Nucleus Software Exports Ltd Raakesh Vishwakarma, Director 15 Finance, Oberthur Technologies India Pvt Ltd Rajesh Ghonasgi, CFO, Persistent 16 Systems Ltd

‘Winning Edge’ in Cost Management Revenues above `1000 cr Sunil Sapre, Chief Financial 17 Officer, CEAT Ltd Vibha Padalkar, Chief Financial 18 Officer, HDFC Standard Life Insurance Company Ltd Bhaswar Mukherjee, Director 19 Finance, HPCL Kushal Singh Singhvi, Sr. Vice 20 President & Principal Officer, KJS Cement Ltd Ajay Jain, Executive Director 21 Finance, Lloyds Steel Industries Ltd Ganesh Murthy, Executive Vice 22 President & Chief Financial Officer, Mphasis Ltd Pramod Gupta, Country CFO, 23 Novartis India Sathya Kalyanasundaram, 24 Finance & Operations Director, Texas Instruments Revenues below `1000 cr Rakesh Mistry, CFO, Elitecore 25 Technologies Pvt Ltd 26

Gulshan Dua, Country Controller And Company Secretary, Freescale Semiconductor India Pvt Ltd

Ganapathy Subramaniam, Chief 27 Financial Officer, Hathway Cable & Datacom Ltd

Sundeep V Bambolkar, 28 Whole-Time Director (Finance & Operations), Indoco Remedies Ltd Yatindra Sharma, Managing 29 Director, KHS Machinery Pvt Ltd Raj Nath Pandey, Advisor 30 (Finance & Accounts), Petron Engineering Construction Ltd Amitabh Johri, Chief Financial 31 Officer, Quatrro Global Services Private Ltd Vinay Kshirsagar, Chief Financial 32 Officer, Shreyas Shipping & Logistics Ltd

‘Winning Edge’ in Finance In A Start Up Ramesh Subramanyam, CFO, Coastal Gujarat Power Ltd Prakash Sharma, Chief Financial 34 Officer, PL Engineering Ltd 33

‘Winning Edge’ in Green Initiatives Revenues above `1000 cr Robin Banerjee, Chief Financial 35 Officer, Suzlon Energy Ltd Gopal Mahadevan, CFO, 36 Thermax

‘Winning Edge’ in Growth Revenues above `1000 cr Narayan V Prabhu Tendulkar, 37 Director Finance, Hewlett Packard Gautam Sen, Director (Finance), 38 Rashtriya Chemicals & Fertilizers Ltd 39 Deb Nath Pal, CFO, RP Group Subramanian Varadarajan, 40 Executive Director - Finance, V A Tech Wabag Ltd

event Revenues below `1000 cr Pramod Dubey, CFO, Accutest 41 Research Laboratories Sandesh Chonkar, Executive 42 Director, Arshiya International Ltd Rishi Gupta, Chief Financial 43 Officer and President - Sales and Marketing, FINO Naresh Goel, CFO & Company 44 Secretary, JBM Auto Ltd Nagaraja Rao MK, SVP & CFO, 45 SBI Capital Markets Ltd Urmil Khurana, Director Finance, 46 Starwood Hotels

‘Winning Edge’ in Innovation Revenues above `1000 cr Anjali Bhadbhade, Chief 47 Financial Officer, DHL Express (I) Pvt Ltd CS Venkiteswaran, Chief 48 Financial Officer, Gateway Terminals India Saumil A Daru, Chief Financial 49 Officer, Oberoi Realty Ltd Satish Patel, Chief Financial 50 Officer, Schaeffler Group India Revenues below `1000 cr Devesh Pandya, Chief Financial 51 Officer, ITZ Cash Card Ltd Ravi Shanker Gupta, President & 52 CFO, Jubilant Foodworks Ltd 53 Nishant Fadia, CFO, Prime Focus

‘Winning Edge’ in M&A Revenues above `1000 cr Srinivas Palakodeti, CFO, 54 Hinduja Global 55 Sujit Sircar, CFO, iGate Vardhan Dharkar, Chief Financial 56 Officer (CFO), KEC International Anil Patwardhan, Vice President 57 - Accounts & Finance, KPIT Cummins Infosystems Ltd Revenues below `1000 cr Aloke Ghosh, CFO, Mahindra 58 Holidays Ltd

‘Winning Edge’ in Raising Capital /Fund Management Revenues above `1000 cr Prabal Banerji, Chief Financial 59 Officer, Adani Power

Anil Rustogi, President 60 (Corporate Finance Division), Aditya Birla Nuvo Ltd Tapash Majumdar, Chief Financial 61 Officer, C&C Constructions Ltd 62 Sunil Kakar, Group CFO, IDFC Jaimin Bhatt, President & Group 63 Chief Financial Officer, Kotak Mahindra Bank Ltd Ravi Venkatraman, Chief 64 Financial Officer, Mahindra & Mahindra Financial Services Ltd Radhakrishnan Nagarajan, 65 Director (Finance), Power Finance Corporation Ltd Venkat Narayan, Executive 66 Director - Finance & CFO, Prestige Estates Projects Ltd Sowmyan Ramakrishnan, 67 Executive Director- Finance, The Tata Power Company Ltd Revenues below `1000 cr Ranganath Sampath, Group 68 CFO, ACME Telepower Ltd Prasad Jahagirdar, Chief 69 Financial Officer, CMI FPE Ltd Anil Bansal, CFO, Cocoberry 70 Resturants And Distributors Pvt Lrd Rajesh Magow, Co-Founder & 71 CFO, Makemytrip India Pvt Ltd Milind Mehta, Chief Financial 72 Officer, Micro Technologies India Ltd Mahesh Kalmane, CFO, Netafim 73 Irrigation Ltd Rajesh Pasari, Group CFO, 74 Netambit Mukul Gupta, Chief Financial 75 Officer, Om Logistics Ltd Narinder Kumar, Group-CFO, 76 VLCC Health Care Ltd

‘Winning Edge’ in Risk Management Revenues above `1000 cr Sunil Nayak, Chief Financial 77 Officer, ACC Ltd Nitin Parekh, Chief Financial 78 Officer, Cadila Healthcare Ltd Balraj OK, Group CFO/Director, 79 Escorts Ltd Rajeev Kachhal, CFO, Fiserv India 80 Private Ltd Chandrasekar Kandasamy, Executive Vice President-Corporate 81 Finance And Investor Relations, Mahindra & Mahindra Ltd TK Ananth Kumar, Director 82 Finance, Oil India Ltd

Ajay Kapoor, CFO, TATA Power 83 Delhi Distribution Ltd (formerly know as NDPL) AK Somani, CFO & Company 84 Secretary, Usha Martin Ltd Revenues below `1000 cr Charanjit Attra, CFO & Head 85 Structured Finance Group, ICICI Securities Ltd

‘Winning Edge’ in Strategy Revenues above `1000 cr CM Sharma, Global Chief 86 Financial Officer, Aegis Ltd, An ESSAR Enterprise Yogesh Dhingra, Director 87 Finance & Chief Operating Officer, Blue Dart Express Sugata Sircar, Finance Director, 88 Gujarat Gas Co Ltd Anand Singhal, Chief Financial 89 Officer, India Glycols Ltd Anup Vikal, Group CFO, Head 90 Of Strategy And IT, InterGlobe Enterprises Rostow Ravanan, Chief Financial 91 Officer, Mindtree Ltd Subramaniam Krishnan, Executive Director - Finance, 92 Orchid Chemicals & Pharmaceuticals Ltd Revenues below `1000 cr Sreenivasan Iyer, Chief Financial 93 Officer, Global Infonet Distribution Pvt Ltd Hariharan Iyer, Chief Financial 94 Officer, Gujarat Pipavav Port Ltd Badri Sanjeevi, Group CFO, 95 People Group

‘Winning Edge’ in Use Of Technology Revenues above `1000 cr Anuj Aggarwal, Director 96 -Finance, Accounts And Legal, Canon India Sunil Sayal, Vice President97 Finance & Company Secretary, Ericsson India Pvt Ltd Girish Bhat, Chief Financial 98 Officer, Gammon India Ltd Dilip Kumar Banthiya, CFO, 99 Radico Khaitan Ltd Sunjoy Podaar, Jt. Executive 100 President, Ultratech Cement Ltd april 2012

CFO india

insight

Economic Conditions Snapshot

Riding on hope Executives are much more optimistic about the global economy than they were in December, despite their concerns about the eurozone and rising oil prices, finds a McKinsey Global Survey in March 2012

xecutives are increasingly positive about current economic conditions at both the global and national levels, according to our most recent survey on economic conditions. The future of the eurozone economy remains uncertain—60 percent expect a minimal contraction or recession there within the next six months—but, compared with three months ago, significantly larger shares of executives around the world expect improving conditions in their own countries. Concern about sovereign-debt default as a barrier to growth is down, while worries about commodity prices and geopolitical instability are up since December. There are also positive indicators at the company level: low demand is still the most-cited risk to growth in executives’ countries, yet larger shares expect demand for their companies’ products

CFO india

april 2012

photos.com

insight and services to increase. Profit expectations continue their upward trend, while workforce changes and investment decisions are consistent with results from three months ago, perhaps indicating broadly that companies aren’t yet ready to move on these newly optimistic expectations.

Country expectations rebound For the first time since June 2011, executives are more optimistic than pessimistic about their national economies (Exhibit 1). The share saying economic conditions in their countries are better now than six months ago has more than doubled since December, even in the eurozone, and an even larger share expect their economies will be better in six months. Unlike what we saw in December, expectations appear to be moving in a more consistent, upward direction across regions (Exhibit 2). Sixty-five percent of executives in India—the largest share—expect their economy to improve, while 59 percent in North America and 49 percent in developed Asia say the same. At the regional level, expectations about unemployment vary. Respondents in North America notably have the most positive view, with 52 percent expecting the rate to decrease in the next six months. In developing markets, a nearly equal share expect the unemployment rate in their countries to stay the same, and only 22 percent predict a decrease. At the global level, concerns about inflation rates have held steady but differ across regions (Exhibit 3). Inflation is cited as a risk to economic growth in respondents’ countries by the same share as three months ago, yet views on other risks have shifted notably since December (Exhibit 4). Low consumer demand still tops the list but is now followed by government regulation, geopolitical instability, and lack of credit; three months ago, volatility and sovereigndebt defaults were in the top three.

Exhibit 1

A positive outlook % of respondents1 Moderately better

Substantially better

The same

Current conditions in respondents’ economies compared with 6 months ago

Moderately worse

Substantially worse

Expected changes in respondents’ economies, in 6 months

Mar 2012, n = 2,060

Dec 2011, n = 2,299

Sept 2011, n = 1,321

June 2011, n = 1,720 1 Figures

may not sum to 100%, because of rounding.

Exhibit 2

Consistent optimism % of respondents,1 by office location

Mar 2012 Dec 2011 Sept 2011 June 2011

Expected changes in respondents’ economies, in 6 months Asia-Pacific 49

Better

24 Same

19 18

36 29 32 29

34 27

Eurozone

45 32 39 50

43 44

Worse

1 Figures

Developing markets2

35 44

39 30 20

North America

35 29 26 37

39 41

India

65 58 62

14 13 13

30 39 41 35

37 29 26

52 57

11 19

may not sum to 100%, because of rounding. China and Latin America.

2Includes

Survey 2012 Economic conditions Exhibit 3 of 5 Exhibit title: Varied views on inflation Exhibit 3

Varied views on inflation % of respondents,1 by office location

Mar 2012 Dec 2011

Expected changes in inflation rates, next 6 months AsiaPacific

Total 46 45

Increase Stay the same Decrease

33 40

39 36 14 18

Developing markets2

45 46 19 13

Eurozone 53

North America

44 55

28 25 19

India

31 13 12

44 43

47 43

27 19 28 38

48 47 3 8

1 Respondents 2Includes

who answered “don’t know” are not shown. China and Latin America.

april 2012

CFO india

insight Cautious global optimism Executives’ optimism also extends to the global economy. Indeed, 42 percent say conditions are better now compared with six months ago, and 48 percent expect better conditions six months from now—up from 26 percent in December. Respondents in India report the most positive outlook on the world’s prospects, and the share in the eurozone expecting improvement climbed 17 percentage points since the previous survey. The eurozone remains, unsurprisingly, a locus of uncertainty: 60 percent expect either a minimal contraction or recession there in six months, while only 23 percent expect at least minimal growth. When asked about potential eurozone outcomes, fewer expect either short-term or long-term integration than in December, though nearly half expect rescue packages to maintain the status quo. A larger share in Europe expect integration than do their peers in other regions. Executives expect uncertainty in other areas, which hints that the recent optimism may still be tenuous. One area of concern is around resources: 58 percent say oil prices will be higher in six months, and a growing share (19 percent, up from 11 percent in December) cite high commodity prices as a barrier to growth. More executives also cite geopolitical instability as a barrier to growth than did three months ago; at 31 percent, it’s the barrier cited most often in North America.

Exhibit 4

Shifting risks % of respondents,1 n = 2,060 Biggest barriers or risks to growth in respondents’ countries, next 12 months Mar 2012

Low consumer demand

While low demand is still seen as the biggest threat to growth, more respondents expect customer demand to increase than have said so since last June (Exhibit 5), and executives are especially positive in emerging economies. The share expecting their companies’ profits to increase continues to grow: 62 percent say so now, up 54

CFO india

april 2012

Mar 2012

Rank in Dec 2011 (out of 18 answer choices)

Inflation

Government regulation

Loss of business activity to lower-cost countries

Geopolitical instability

Insufficient support from government

Lack of credit

Protectionist policies

High commodity prices

Access to talent

Increased economic volatility

Volatile currency exchange rates

Low levels of innovation

New asset bubbles

One or more sovereigndebt defaults

Higher interest rates

Higher corporate or personal taxes

Natural disaster

1 Respondents

who answered “other,” “no particular risk,” or “don’t know” are not shown.

Exhibit 5

Demand on the rise % of respondents,1 by office location

Mar 2012 Dec 2011 Sept 20113

Expected changes in customer demand, next 6 months Total

Asia-Pacific 44 37 30 49

Increase

36 33 22

42 41 48 42

Stay the same

Decrease

Company prospects also positive

Rank in Dec 2011 (out of 18 answer choices)

13 20 21

22 26 26

Developing markets2 49 38 40 58

42 39 50

India

36 28 21 39

37 42 43 33 12 19 17

June 2011

Eurozone

44 42

45 43 47 51

18 26 31

North America 58 31

35 43 37 33 6 4

12 18

48 48 47

42 40

54 44

7 10 14 7

1 Respondents

who answered “don’t know” are not shown. China and Latin America. the September survey, respondents were asked about their expectations for customer demand by the end of 2011, and in June, about their expectations for demand in the second half of 2011.

2Includes 3In

from 56 percent in December and 45 percent in September. As in December, executives in the eurozone are less positive about profits than elsewhere,

but even their overall expectations have improved over time.1 Executives report smaller changes with respect to their companies’ hiring

Sixty-five percent of executives in India—the largest share—expect their economy to improve, while 59 percent in North America and 49 percent in developed Asia say the same and investment decisions: they are still likeliest to say their workforce size will stay the same in the next six months,2 and slightly smaller shares say their companies are postponing capital investment decisions. They indicate no change since December in their companies’ willingness to pursue (or not pursue) M&A deals.3

These results also seem to reflect a cautious optimism: while executives are more positive than not on the future of the economy as a whole, their companies aren’t readier to make major strategic decisions than they were in December—or perhaps they lack confidence that conditions will improve substantively.

At 74 percent, respondents in India are most

likely to say their companies’ profits will increase in the next six months, followed by respondents in North America (69 percent), developing markets (66 percent), developed Asia (59 percent), non-eurozone Europe (54 percent), and eurozone countries (52 percent). 2

Forty-eight percent say they expect the size

of their companies’ workforce to stay the same, 32 percent expect an increase, and 18 percent expect a decrease.

POINTS TO PONDER • The future of the eurozone economy remains uncertain—60 percent

expect a minimal contraction or recession there within the next six months

Thirty percent say their companies are post-

poning or deciding not to pursue capital investments they would typically consider good for growth, compared with 33 percent in December. In both this survey and December’s, 24 percent say their companies are postponing M&A decisions they would consider good for growth.

• But, compared with three months ago, significantly larger shares of

executives around the world expect improving conditions in their own countries • For the first time since June 2011, executives are more optimistic than

pessimistic about their national economies • At the global level, concerns about inflation rates have held steady but

differ across regions • 58 percent say oil prices will be higher in six months • And 19 percent, up from 11 percent in December cite high commodity

prices as a barrier to growth • Respondents in India report the most positive outlook on the

world’s prospects • The results seem to reflect a cautious optimism: while executives are

more positive than not on the future of the economy, their companies aren’t too eager to make major strategic decisions

The online survey was in the field from March 5 to March 9, 2012, and received responses from 2,060 executives representing the full range of regions, industries, company sizes, titles, and functional specialties. The data are weighted by the contribution of each respondent’s nation to global GDP to adjust for differences in response rates. This article was originally published in McKinsey Quarterly, www.mckinseyquarterly. com. Copyright (c) 2012 McKinsey & Company. All rights reserved. Reprinted by permission. april 2012

CFO india

leader’s

world

Social Media for

CXOs in 5 Minutes or Less Social media is something CXOs may ignore at their own peril. Here’s how social media can be best utilised by them David Lim

ABOUT THE AUTHOR David Lim, Founder, Everest Motivation Team, is a leadership and negotiation coach, best-selling author and two-time Mt Everest expedition leader. He can be reached at his blog http:// theasiannegotiator. wordpress.com, or david@everestmotivation.com

CFO india

april 2012

One of the key rules I teach in our negotiation skills masterclasses is that people negotiating to stop being fixated with positions and look at competing interests and needs. By moving away from positions, we really begin to be able to get the kind of output and results needed for the issue at hand. In the same vein, many CXOs have already taken fixed positions about their use of social media on a personal basis or on a corporate basis. Our language creates our reality. As a result how useful do you find statements like “ I don’t do Facebook”, or “ Social media—waste of time”—or “it’s just not me”. Instead of taking such positions, I’d like to explore how our own interests as CXOs can be served in small, niched areas in just less than 15 minutes a day. Here are a few useful things you can do: 1) create a separate persona on Facebook if you wish to separate your private ‘friends’ and what you broadcast and your corporate persona. Visit daily to post matters of interesting discussion with your associates and colleagues that can be carried over to the workplace. Time to create a corporate persona—5 minutes. 2) Linked in—the ‘corporate Facebook’ is where most CXOs should be at. Why? You have a non-classified question? Post it in one of many categories and wait for plenty of expert and other answers coming in within days. Want to glean some opinions about a certain topic from a specific target group or groups? Join these groups,

leader’s world and then create Linked in Polls and then post these to your Linked in connections, and the Groups you have joined. Then wait for up to a month as comments and ‘votes’ stream in. I’ve had responses ranging from 15 votes to 1000 over votes which I have successfully used on a professional basis. Time to create a Poll: 5 minutes.. Time to ‘share; the page, inviting others (groups or individual connections) to participate: 5 minutes. 3) A Linked in update from a CXO could be followed widely to gain a pulse of the organisation. Once your organisation has decided what kind of information can be shared, you could be ‘followed’ by thousands for your nuggets and views. But do avoid the terribly over-used fortune cookie wisdom one–liners that are commonplace. Say something useful or of interest to those connected to you. Time to update your status: 5 minutes or less 4) Use Linked in Groups or FB pages/ groups to create communities of interest. These Groups can be moderated, and as the ‘owner’ you can visit daily to moderate comments, and add fresh value in the form of incisive comments, or share news. This can keep employees and peers engaged in a conversation that is key to long term strategies for example. Caution: Many corporate pages are set up with poor follow up and follow through. When unmoderated comments which are inappropriate are posted, the non-response of the group owners shows a lack of Net-savviness, not to mention behaviour on the Net amounting to “ I don’t really care what people say”. So once you create something open to receiving comments, make sure you maintain the page. 5) The overriding approach and strategy is to create engagement and conversations. Too many Linkedin posts I have seen are self-serving or pure promotion. It’s about being part of a greater community, sharing, responding , challenging and learning from the group or tribe you have joined. A good rule is the 10:7:3—that of 10 comments or posts you make, 7 should be of use to others, and only 3 should self-serving. 6) Enhancing organisation engagement increases morale, allows people to feel they have been “heard” even if it’s only a positive reaction to something they have posted in a Group or on a Page 7) Simple features like polling mechanisms in a closed group i.e. a group limited to only a specific individuals; can help you derive quick responses, or a quick idea of the level of support for a range of options, ideas, proposals or decisions.

Linked in—the ‘corporate Facebook’ is where most CXOs should be at. Why? You have a non-classified question? Post it and wait for plenty of expert and other answers coming in within days I use them all the time with my professional organisation. Set up time: 5 minutes. 8) Once the page you have created on Facebook has more than 20 “likes’ by others who have visited it; you can assign to it, on a one-time only basis, a specific name—like http://facebook.com/everestmotivation. This is a much shorter ‘handle’ to the page, and it can be recalled or disseminated a lot easier to a wider, relevant public in your organisation. 9) Before you get all excited about ideas (1) to (8), it’s probably good practice to consult and discuss a company-wide use of social media so as to have an idea of the overall corporate red flags; as well as a unified strategy to use. 10) Last but not least, be prepared, as mentioned at the beginning of this article; to change the reality you are creating yourself about the use of social media. Challenge the basis of some of your present beliefs and positions on social media. After all, it’s just about 5 minutes at a time, right? I would be happy to connect with you on Linkedin or Facebook: http://www.linkedin.com/in/everestmotivation, https://www.facebook.com/everestguy april 2012

CFO india

Lounge

04.12

CFO

Test drive the new Fiat Linea this month. Or take that long vacation you were planning and head to mesmerising Macau (or do you have one to Hawaii planned already?) If its good food or five-star luxury that excites you, head to the Dome at the Intercontinental at Mumbai’s Marine Drive. Have a cool summer break!

Fiat Linea

More, for less!

In its 2012 avatar, the Fiat Linea plays host to more features and smart changes in a bid to win you over. Does it succeed? Amit Chhangani There’s no dearth of enthusiasts in India who would vouch for the aesthetic appeal and dynamic prowess of the Linea. This Italian beauty always has, and still manages to be one of the nicest products this side of Rs 10 lakh. All those qualities, however, have not been able to turn into sales volumes for the brand. Now Fiat is taking corrective measures to alter the

trend, with the recent decision to build exclusive dealerships being the most important one.

The Subtle Changes Let’s make one thing very clear at the outset the 2012 Linea is more of a mild upgrade and doesn’t feature any big changes over its prede-

DID YOU

KNOW?

The Fiat Linea was first released on March 26, 2007 at Tofas plant in Bursa, Turkey as a world car in developing countries. The Linea was designed by Fiat Style Centre and co-developed by Tofas and Fiat do Brasil

cfo lOunge

on Wheels with improved features for all its models and increased ground clearance the new linea is a pleasure to drive

cessor. But Fiat has indeed increased the ground clearance to let the Linea gobble potholes with more confidence. Its ride quality has always been good, and now with the increased clearance it literally wafts over even the most vicious potholes. But the gap between the wheel arches and the tyres has also grown, making it slightly odd to look at from certain angles. As a remedy, Fiat is offering 16 inch alloy wheels for the top-of-the line Emotion variant.

Features There aren’t any significant differences between the Dynamic and Emotion variants now though. Most features have trickled down to the middle-of-the-range Dynamic variant, which now represents great value. The only features differentiating the Emotion and Dynamic Variants are folding rear seat, leather upholstery (fabric for Dynamic) and 16 inch alloys (15 inch for Dynamic). Key safety features like ABS and dual front airbags have been included in the Dynamic variant now. Apart from that, new features such as light sensing automatic headlamps, rain sensing wipers and a new, two tone light colored dashboard.

The Inside Story Inside the cabin, the most significant change is the new two tone dashboard with lighter colors enhancing the feeling of space. While only the Emotion variant gets leather upholstery, a leather steering wheel and gear knob is standard even in the more basic Dynamic variant. Air conditioning is claimed to have been improved, and we experienced it first hand, as we didn’t have to wait much before the searing hot cabin of our car parked in an open parking lot was cooled down to a comfortable 22 degrees. The rear AC vents help a great deal in making the back benchers feel comfortable without taking much time. The space within the central armrest comes as

Fiat Linea Mileage:

18kmpl

(diesel)

Power: Torque: Engine: Price:

93PS 209Nm 1.3L diesel and 1.4L petrol `6.83 – 7.80 L

(petrol)

`7.83 – 9.18 L

(Diesel)

a big respite in a cabin which otherwise lacks in terms of cubbyholes and storage spaces. The instrumentation backlight is dimly lit, and can be difficult to read with ambient light from the city streets.

Ex-Showroom Delhi Positives • Classy, timeless Italian styling • Robustly built • Good handling • Comfy ride and assuring handling Negatives • 1.4 petrol slightly underpowered • Backseat space not best in class VERDICT Good value for money on city roads. Good for small families

The Drive On the move, the Linea feels sturdy as ever. The 1.4 liter FIRE engine is a sweet sounding motor, and emanates a throaty note when revved hard—something which would sound music to the enthusiasts’ year. However, this engine isn’t quite powerful enough, with every other competitor offering a more powerful option. Fiat also has the 1.4 T-Jet trubo petrol with 114PS, which really delivers great mid-range performance and aces its counterparts in most departments, but comes for a price. The 1.4 FIRE engine produces a rather low 90 PS, while the 1.3 Turbojet diesel dishes out 93PS. However, the 1.3 diesel with its 209 Nm of torque is more tractable and fun to drive. The 2012 Linea is a competitive product. With an elaborate strategy to enhance its distribution network, Fiat is working hard to rekindle us Indians’ love affair with the Italian brand. april 2012

CFO india

cfo lounge

Gizmos new launches

The New iPad

Contrary to speculation, Apple came out with not the iPad 3 but “The New iPad”. It features retina display, an A5X chip humming at its heart, a 5 megapixel iSight Camera & 4G LTE. Depending on the model this will cost you anywhere between `25k to `35k. It still hasn’t officially launched in India. One day, soon...

Hot Spot

LG Optimus Sol E-730 Bland but functional looks, consistent performance Vishal Mathur Straightaway, we have to pick a fault. Nothing major—we think the Sol looks a bit bland. There are better looking smartphones in this price bracket—Motorola Defy+, Nokia Lumia 710 and the Samsung Omnia W. Powering the Optimus Sol is a 1 GHz Qualcomm Snapdragon MSM8255 processor and an Adreno 205 GPU, with 512MB RAM. This phone delivers consistently solid performance. The Optimus 2.0 UI doesn’t have the HTC Sense’s visual punch, but comes quite close with an impressive variety of widgets. The 3.8-inch display is the Ultra AMOLED type. The brightness range of the display is excellent, so much so that it can be uncomfortably bright if not adjusted. The on-screen keypad doesn’t work well in portrait mode. While the key size could have been a little bigger, the larger problem lies with the surprising lack of precision. While you’re certain that your finger is pressing the correct key, it’s actually flirting with 60

CFO india

april 2012

the neighbour! Things improve a bit in landscape mode, but even then, you can’t type out an SMS quickly, without rechecking the spellings. The 5MP camera is a pretty decent clicker, meant for the casual photographer only. Its lack of flash cripples utility. While the phone has a 1540mAh battery, the backup time isn’t very good—lasts about a day. The Optimus Sol is a very competent mid-range Android phone. The performance is consistent, with the only issue being a disappointing battery for heavy users. Specifications: Platform: Android 2.3.4; Processor: Qualcomm Snapdragon MSM8255 @ 1GHz, Adreno 205, 512MB RAM; Display: 3.8-inch Ultra AMOLED, 480 x 800 pixels, Gorilla Glass; Storage: 1GB with microSD slot; Camera: 5MP with 720p videos; Battery: 1540 mAh Price: 19,000

Canon EOS 5D Mark III

Canon 5D Mark III is the much awaited successor to the 5D Mark II. It sports a new DIGIC 5+ imaging processor, a full-frame CMOS 22.3 megapixel sensor, 61-point High Density Reticular Autofocus system and many more modes and frame rates for HD video recording. Price? Around `1.79 lakhs

NVIDIA GTX 680

NVIDIA announced its latest and greatest graphics card the Kepler GPU, sporting GeForce GTX 680 packed with 1,536 shaders, PCIe 3.0 support, GPU Boost, Adaptive Vsync, TXAA and more. Pricing is around `33k- 35k. powered by

ad Re Y st OG Mo L E ’s NO ZIN dia CH GA In TE MA

cfo lOunge

M&E

The best new Meeting & Eating places

A feast with a view

The Dome at The Intercontinental, Marine Drive in Mumbai offers a brand new menu, as tempting as its location Dhiman Chattopadhyay If you are have work or meeting someone for dinner in south Mumbai, try out the new menu at Dome—the rooftop poolside restaurant at The Intercontinental, Marine Drive. We dropped in here one evening to try out their new menu. First things first: this is not a ‘family’ restaurant, in the sense Dome does not allow children under 18 since it also is home to a pub with a stunning 360 degree view of Mumbai—the sea on one side, the expanse of Marine Drive and a grand view of the Cricket Club of India (Brabourne

DOME LOCATION: The Intercontinental, 135 Marine Drive, Mumbai TELEPHONE: +91 22 39879999 TIME: 5.30 PM TO 1.30 AM CUSINE: Asian, Indian, Mediterrenian CAPACITY: 100+

Both the seafood as well as the vegetarian cuisine at dome is worth the money

Stadium) as well. Dome is open to guests from early evening. We were ushered in to the terrace restaurant and since most tables were occupied, even at 7.30 pm, found ourselves ‘upgraded’ to the lovely luxurious couch-tables around the swimming pool. This also meant that one could have a fairly private conversation and perhaps discuss a business proposition in relative peace, without the fear of being overheard. We started with a drink—a cooling, bright-red Scirocco (a vodka based cocktail) and then move on to starters—Cheddar and caramelized nut tortellini, Baby spinach and feta phyllo parcel and Bonsai chicken burgerettes. All of them turned out to be smart choices, and the burgerettes were most impressive—good to taste and just the perfect size to hold between your fingers and gobble! No messy two-hands here. For the main course we ordered the Chargrilled lobster which is good but falls in the “could-do-better” category and the Grilled Brazilian tenderloin. Bliss! For those with a taste for fine wine, my tip would be to ask for a Pinot Noir or a Merlot. Both would go superbly with the lobster and the meat. Some of the seafood here is also worth its weight in gold. Try the Seared Garota Bay scallops or the Beer battered Cambodian bassa. There is plenty of choice for vegetarians too, particularly for those who love their cheese! The Barbeque mushroom, Chargrilled asparagus or the Wok tossed Asian vegetables are good bets as well. It is a tad expensive, but then if you are dining at the rooftop restaurant of a five star on Marine Drive with a view to die for, `4000 for two people (with alcohol) doesn’t sound that bad, does it? april 2012

CFO india

cfo lounge

travel

Macau

Lose Yourself In Macau Gamble through the night if you so want, explore a hotel that is larger than a village and take a walk around the historic sites of this old Portuguese colony Anil Mulchandani Macau is the prodigal playground of Asia. Yet, there is more to Macau than the Las Vegas-like razzmatazz of swanky shops, glitzy buildings and majestic casino hotels. Once a Portuguese colony, Macau also offers a Mediterranean ambience with cobbled streets, grand staircases and historical Portuguese buildings. This island state has more than 20 interesting museums exhibiting everything from automobiles to Portuguese wines. We arrived by ferry from Hong Kong’s airport and took the ‘Venetian Macao’ coach to the Cotai Strip which has spectacular casinos, nightclubs and resorts. Our room was booked at the Venetian Macao where we could experience Macau’s casino scene. Asia’s largest casino, the Venetian literally has thousands of slot machines and hundreds of gaming tables. And that is not all—there are more than 330 shops, several restaurants and bars, more than 3000 suites and an artificial lake that runs through the premises. After the lunch, we wandered around the resort which is themed on Venice—the architecture is Venetian, performers entertain visitors at squares reminiscent of Venice and ‘the Grand Canal’ has gondoliers who sing while taking you for a Gondola ride! A little later, we visited the Manchester United Experience, a store selling soccer equipment and Manchester 62

CFO india

april 2012

United merchandise (including a T-shirt printing facility). Team group shots, video images of players, mannequins make this a must-visit for Manchester United buffs, while upstairs there is an incredible interactive football experience where we could test our skills in the five training pods and compare scores. As evening approached, we visited the waterfront Boca Restaurant for Sangria and Tapas but for mains walked

cfo lounge

travel BELOW: THE IMPRESSIVE FACADE OF THE VENETIAN MACAO HOTEL. THIS IS FOR ALL PRACTICAL PURPOSES A MINI-CITY. CHECK OUT THE MALL, THE RESTAURANTS AND THE GONDOLA RIDE APART FROM THE CASINO. YES, THE SUITES ARE GREAT TOO

TOP: MACAU LOOKS SURREAL AT NIGHT. BOTTOM LEFT: THE OLD PORTUGUeSE QUARTERS ARE A POPULAR TOURIST HAUNT. LEFT: THE MASSIVE CASINO AT THE VENETIAN MACAO CAN Accommodate OVER 10,000 PEOPLE AT A TIME

down to Fogo Samba, a Brazilian speciality restaurant. We tucked hungrily into their charcoal grills from grilled pineapple to beef, pork and lamb. The next morning, we booked our seat on a coach for a tour of Macau’s old Portuguese quarters. We started at the 15th century A-ma Temple, situated on a hillside with pavilions housing shrines to the goddess of fishing people and seafarers called A-ma, Taoist and Buddhist figures, painted boulders, and upper gardens with good views. From here, we wandered down to the former Portuguese quarters around Lilau Square, the majestic facade of the fire-damaged St Paul’s Cathedral with the Museum of Sacred Art and crypt to its rear,

the St Dominic’s Church illustrating the history of the Roman Catholic Church in Asia, and the Senado Square surrounded by neoclassical public buildings. Around this historic square, we were assailed by delicious smells of cooking and baking from the cafes and bakeries that abound in the old quarters. At various bakeries, we tried egg tarts, almond cookies, egg rolls with seaweed and pork floss, peanut candies, nougats and delicious sliced pork meat. I bought some cookies for my family at Koi Kei Bakery. The coach took us next to the Macau Tower, one of the 10 tallest freestanding structures in the world. We enjoyed a view from the observation decks and a drink at the revolving 360° Café with a superb panorama. We spent the afternoon exploring Macau’s swanky streets, with shops offering glassware, porcelain, Chinese furniture and lacquer work. At night, Macau looks surreal when casino hotels in all shapes and sizes, like the unusual-looking Lisboa, are illuminated. We strolled down to the Sands Macao for dinner at Perola, a classy place with chandeliers, dark wood furniture and turquoise tiles. About the gambling: No tips here! Walk in to the mindboggling casion at The Venetian at your own risk! HOW TO GET THERE: There are several daily flights to Hong Kong from most Indian metros. Macao is a 60 minute ferry ride away from the HK Harbour WHERE TO STAY: The Venetian Macao. There are several other

hotels too april 2012

CFO india

not just

the last word

Speed me up, Darwin!

two-day workshop on ‘digital strategy’ would have sounded futuristic and paranoid for the editorial teams of a small, niche media company some time ago. No longer— the ‘do or die’ moment is here. I don’t need to tell you this but the all-pervasive digital world, combined with the profusion of social media, are transforming the lives of editors as much as the lives of corporations and people. It has never been this tough nor has it ever been this exciting. And, like for everything else, the choice is for us to make. Die or ‘speed up evolution’! Scores of new businesses have been born and have created enormous new value thanks to the internet, including social media. Amazon, Google, Facebook and closer home naukri.com and makemytrip.com are household names today. And while we take them for granted, it is worthwhile to spare a moment and consider the fact that they didn’t exist till quite recently. In fact, a friend said this morning that we didn’t even know Instagram existed till Facebook bought it (reportedly with its 13 employees) for a billion dollars. While new businesses are getting created, older traditional businesses are dying or transforming into new beings. The web and social media have even nudged Darwin along into speedier evolution! How we sell, where we sell 64

CFO india

april 2012

and what we sell has changed. How we ‘do’, where we ‘do’ and what we ‘do’ has changed as well. And how we say, where we say and what we say is rather different from anytime in the past. You get the drift, I suspect. And the last piece is where we come in as editors i.e. those committed to providing content and insights in this quick-paced world of change. ‘Print is dead’ is what we were told a few years ago. A world without newspapers and books? Not possible. But it is... anything is. However, a world without content? I would still venture to say, not possible! So what does this mean for you and for us, say, very specifically at CFO India? First, without employing a market research firm for door-to-door surveys, we can—thanks to digital access— ask you what you want. Secondly, once we know—without employing a whole new army of editorial staff—we can

deliver high quality content. There are specialist content companies, vendors, audit firms and banks and opinionleaders writing and sending out material that is relevant to the CFO community—but often there is ‘too much’. Therefore, there is the whole new skill in identifying ‘worthy-of-your-time’ content and directing it to you. This is the world of ‘curation’—the future for niche communities and editors. And finally, there’s you. You have a wealth of expertise and experience that must be shared—partly because in a rapidly changing world, history has no answers and we have to find them together (my all-time favourite mantra ‘the power of collective wisdom’); and partly because it has never been easier! Jot down your thoughts and share them. I am reminded of Lennon and McCartney’s song ‘Get by with a little help from my friends...’ We, on our part, will offer it to you— wherever you want, whenever you want and however you want. It’s a whole new world, with new rules. We make them up as we go along and...we have to speed up Darwin. What do you think? Anuradha Das Mathur, Editor, CFO India