#45- January 2016 by CPI Financial

Our Competence. Our Partnership. Your ProďŹ tability.

At Bank of Sharjah, we offer you a comprehensive range of premium investment solutions through our Private Banking Wealth Management division, in partnership with Commerzbank International S.A. This distinctive partnership brings together a committed team of professionals who take time to understand your requirements so you receive the personalised international and local asset management services you require. We have many years of expertise in onshore and offshore banking, and knowledge of the precious metal investment market. We also provide equity release and Lombard loans, as well as company structuring and succession planning. At Bank of Sharjah, we are your partner in progress.

Private Banking Wealth Management, Dubai Motor City, PBWM@Bankofsharjah.com, www.bankofsharjah.com

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2016 has kicked off at a rapid pace with no sign of slowing down as we are suddenly halfway into the first month of the new year. We are also on the final stretch for nominations for FinanceME’s Business Vision Awards. The nomination deadline is 31 January. More information regarding nominations and the varying categories can be found on our Awards page (Pg 42). The Awards are set to take place on 23 March 2016 at the Jumeirah Emirates Towers, Dubai. This issue our cover story is an interview with Faris Saif Al Mazrouei, CEO of Etihad Rail. He talks about the stages of development of the UAE’s national railway network as well as varying infrastructure challenges the company met along the way. The AED 40 billion Etihad Rail network will offer both freight and passenger services when finalised and with long-term plans to link the six Gulf nations from the United Arab Emirates to Saudi Arabia through Ghweifat in the west and Oman through Al Ain in the east (Pg 18). His Highness Sheikh Mohammed bin Rashid Al Maktoum, VicePresident and Prime Minister of the UAE and Ruler of Dubai recently said that 70 per cent of the UAE’s economy is independent from oil; which echoed the sentiments of the Minister of Economy who said that the UAE’s economy was resilient against the drop in oil prices. In our country report, Mahmoud Shehada, Founder and Managing Director at Allegoria Capital talks the about the UAE’s expected 3.5 per cent economic growth over 2016, how the economy is diversifying, which sectors are expected to perform and what we can expect moving forward (Pg 22). In light of questions around economic stability, approaching investors for funding is a bit of a trend in this issue. Our Facetime contributors, Fetchr founders Idriss Al Rifai and Joy Ajlouny, talk about receiving $11 million in funding from a venture capitalist in Silicon Valley. As the first home-grown brand to do so, the team hopes that this will encourage venture capitalists to look to the Middle East for talent (Pg 32). On the other hand, our case study for this month is customer service feedback site kanari.com, and Subhi Farah, Co-Founder, talks about the difficulties a home-grown start-up faces when trying to attract investors in the GCC. He says a large factor of this reluctance could be that investing in start-ups is not something investors want to do owing to the risk that the new company may not survive in the long run (Pg 34).

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18 32

I hope you enjoy this issue!

Jessica Combes Read my blog at: http://www.cpifinancial.net/blog/author/112/jessica-combes Follow us on Twitter: @FinanceMidEast

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PUBLISHED BY

NEWS ANALYSIS Slashing subsidies

FAST FACTS Noor Banks supports SMEs

5 TOP TIPS Five ways to handle rejection

OPINION A look at leasing

OPINION The rise of the anywhere, anytime office

LEGAL FOCUS Balancing end of service benefits

CHALK TALK Abdulla Al Gurg

CEO CHAT Riding the rails

COUNTRY REPORT Branching out

FEATURE Showing interest

FEATURE Toward being truly inclusive

FACETIME Fetch(r) and carry

CASE STUDY Out on the tiles

START-UP At your service

42 44

AWARDS

FRANCHISE McDonald’s lands sixth airport restaurant in Dubai

PRODUCT FOCUS Skimming the edge of cybersecurity

TECH IT department–zoo or a safari park?

TECH FOCUS Disconnect from cybercrime

LAST WORD Sticking to the rules

Chairman SALEH F. AL AKRABI Chief Executive Officer ROBIN AMLÔT robin@cpifinancial.net Tel: +971 4 391 4681 Managing Editor GEORGINA ENZER georgina@cpifinancial.net Tel: +971 4 391 3728 Editors JESSICA COMBES jessica@cpifinancial.net Tel: +971 4 364 2024

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NEWS ANALYSIS

SLASHING SUBSIDIES

audi Arabia has experienced a record budget deficit of $98 billion in 2015 and has accordingly made cuts to fuel and utility subsidies. The Saudi Arabian Finance Ministry said that petrol prices were expected to rise more than 50 per cent from mid-January. The Ministry is planning a series of measures to contain spending including a five-year programme to cut subsidies on electricity and fuel. The official SPA news agency said the Government would also cut subsidies for electricity, water, diesel and kerosene. Dr. Walid Fayad, Executive Vice President at Booz Allen Hamilton, MENA said that restructuring subsidies on fuel and water is a necessary move for the Saudi Government to achieve economic resiliency, especially at the current lower oil prices.

“The key to successful subsidy reform is the targeted redistribution of state subsidies, away from fuel and water and into industries that support long-term growth and stability in the Kingdom, while prioritising the needs of the socially disadvantaged among the population. Economic diversification and social mobility are both important pillars of successful growth for Saudi Arabia over the long term and both must be the beneficiaries of fiscal reform,” said Dr Fayad. Dr Fayad added that new industries such a s alternative energy sources have struggled to scale up because the cost has been uncompetitive and economically unviable in a system where fuel has been so cheap. By removing subsides on utilities, the net benefits are twofold. The first is encouraging a positive shift in demand side behaviour, therefore reducing consumption levels of fuel and electricity, and secondly,

through a more targeted subsidy approach, the Kingdom can ignite new industries, create thousands of new jobs and develop a young skilled workforce able to carry Saudi Arabia forward into the 21st century. Looking ahead, Jaap Meijer, Head of Equity Research, Arqaam Capital, said a budget deficit of 13.5 per cent is expected for 2016 on the back of a 13.8 per cent cut in spending and 15.5 per cent lower in Saudi revenues as fiscal consolidation already began towards the end of 2015. While Saudi Arabia’s military involvement in Yemen could continue, it does not seem to be included in the budget. Meijer added that reforms would be implemented, including a review of government subsidies over the next five years, coupled with implementation of increased taxation, most notably VAT, and the removal of red tape to encourage more private sector investment.

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SHUTTERSTOCK

The highest deficit in Saudi Arabia’s history has resulted in slashing of fuel subsidies in an attempt to rein in spending

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SHUTTERSTOCK.COM

FAST SHUTTERSTOCK.COM

SHUTTERSTOCK.COM

FACTS

NOOR BANK SUPPORTS SMES SHARJAH ENTREPRENEURSHIP CENTER (SHERAA) LAUNCHED The Sharjah Entrepreneurship Center, "Sheraa" was launched at the American University of Sharjah. Najla Midfa, General Manager, Sheraa said that the centre aims to nurture a vibrant start-up ecosystem in Sharjah, and provide entrepreneurs with a launch pad for success. “Through Sheraa's programms and activities, we will foster a dynamic entrepreneurial environment within University City, to promote innovation, support the commercialisation of ideas, and contribute to Sharjah's economic development. Sheraa also seeks to catalyse an inclusive dialogue where policymakers, entrepreneurs, and other stakeholders come together to discuss challenges and find solutions,” said Midfa.

Noor Trade, a division of Noor Bank providing Shari’ah-compliant products and services to SMEs, has signed an agreement with the Mohamed Bin Rashid Fund (MBRF), an initiative of Dubai SME, to support small and medium sized businesses owned by UAE nationals. Hussain Al Qemzi, CEO, Noor Bank, said, “Our partnership with Mohamed Bin Rashid Fund (MBRF) will enable us to cement our offering to small and medium sized businesses set up by UAE nationals. We will continue to provide innovative solutions to SME businesses through our Noor Trade division. The SME segment is a large contributor to the Dubai economy, and remains strategically important for Noor Bank as a business that we will continue to focus on, over the long term.”

Rashid Mahboob

EDB TO INVEST IN SMES AND INFRASTRUCTURE PROJECTS Emirates Development Bank (EDB) is expanding in the UAE and focussing on the SME sector. EDB strives to play a role in boosting the growth and support the UAE economy by supporting SMEs, enhancing the role of the UAE entrepreneurs, and helping Emiratis to purchase homes. Rashid Mahboob, Acting CEO of Emirates Development Bank, said SMEs are the backbone of modern developed economies, particularly in the UAE. One of EDB’s founding principles is to support and foster this crucial segment of the national economy, which has grown considerably and today accounts for approximately 70 per cent of the UAE’s GDP. “As the UAE economy continues to diversify, EDB’s partnership with SMEs will augment economic growth, drive innovation, and create longterm employment opportunities for citizens. Furthermore, EDB aims to build strategic alliances with all local and federal authorities to encourage citizens to establish their own work and engendering an entrepreneurial society. As a result of this, the UAE’s economic competitiveness in the world can be boosted and long-term prosperity secured,” he said.

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FAST FACTS

SHUTTERSTOCK.COM

AHRAIN’S NONO OF B CT Q3 2015 INCLUDES IL GR A P N : I OW M I TH E TH

4,2%

SHUTTERSTOCK.COM

GROWTH OF NON-OIL SECTOR IN Q3 2015

JOB SITE CREATES SCHOLARSHIP FOR ENTREPRENEURS INSEAD, a global business school has received a EUR 1 million gift to enhance the school’s scholarship offer by stimulating broader diversity among aspiring entrepreneurs. As it is a global scholarship, candidates across the Middle East are encouraged to apply. By easing the debt burden for students, the scholarship aims to encourage candidates to follow their entrepreneurial ambitions early on. Ilian Mihov, Dean of INSEAD, said, “In a highly competitive business school environment, a robust scholarship programme is the most powerful means to attracting and retaining the best candidates. Scholarships, such as the one from Indeed, continue to make a tremendous impact at INSEAD, allowing students from all over the world and diverse backgrounds to join the school. Each scholarship sends the message that INSEAD stands for true diversity, and talent before means.”

$3,7 BILLION INFRASTRUCTURE PROJECTS TENDERED

DU INITIATIVE TAKES ON 10 ASPIRING ENTREPRENEURS Ten entrepreneurs have been chosen by du as the first-ever students to join in the Agent 055 Network Initiative. The Agent 055 Initiative provides an opportunity for the students to be trained in both sales and marketing during their time at university. Following this training period, the students will be asked to meet monthly sales key performance indicators. The candidates will also be given with tablets so that they can conduct sales and take customer information. They will also be supervised by specifically assigned store managers who will provide the students with advice and mentorship throughout the project. Hala Badri, Executive Vice President, Brand and Communications, du, said the company was thrilled to be empowering these students to succeed and contributing to their professional growth story. “More importantly, du is confident in the students’ abilities to become the UAE’s future movers and shakers,” she said.

$1,3

BILLION OF INFRASTRUCTURE PROJECTS COMMENCED

2,4% OVERALL ECONOMIC GROWTH IN Q3

GROWTH IN PRIVATE SECTOR JOBS

Source: Bahrain Economic Development Board

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TOP TIPS

FIVE WAYS to handle rejection A NUMBER OF ENTREPRENEURS GIVE ADVICE ON HOW NEW BUSINESS OWNERS CAN COPE WITH A ‘NO’ FROM INVESTORS

1. Look at rejection logically, not emotionally

Ask what went wrong during the application. Often investors will provide constructive feedback to help start-ups improve their pitch. Focus on what can be done or changed, and then follow through with it. Remember, rejection isn’t personal. The rejection may be due to the type of lender approached. Some investors specialise in specific industries and may regard smaller businesses or unfamiliar industries as greater risks.

2. Focus on the desired outcome

Rejection is a necessary part of the fundraising process. Fixating on it will only waste valuable time that

could be spent on preparing for the next pitch. Instead of getting defeated by rejection, owners will be able to see it as just one step on the path to their ultimate goal–finding an investor to get the company off the ground. Priorities matter more than the rejections encountered along the way.

to make some adjustments. Does the business plan present a clear vision of how to grow the company? Does the plan show how the funds requested will be used as well as the projected return on that investment? If the business plan is vague then it needs to be revised as soon as possible.

3. Request feedback and listen to the answers

5. Rejection is a step forward, not backwards.

When an investor is not interested in buying into the company, ask them their reason for saying no– and listen carefully to their answer. The objective is not to try and change their mind but simply to learn. Urge them to be completely honest–and don’t get defensive. Simply listen to their reasons, ask more questions if needed, and then thank them for their honesty. Their reasons for saying no may be unexpected. While rejection never feels good, it is best just to have a good attitude and move on. This makes rejection a lot easier to handle.

Rejection is often associated with failure. Most people see rejection as a regression for their business and that their time and effort were wasted. By seeing rejection as bringing the business one step closer to perfecting their pitch and their products the more business owners can eliminate all the blind spots in their pitch.

If the same issue is brought up by different prospects or if efforts to form strategic partnerships with other businesses are regularly rejected due to concerns about the business’s ability to deliver, it’s time

SHUTTERSTOCK.COM

4. Make the necessary changes

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bleed g

INSURANCE

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OPINION

A new look at

LEASING

ASHISH NANDA, SENIOR GENERAL MANAGER, SHIFT CAR RENTAL, DISCUSSES THE FINANCIAL ADVANTAGES OF LEASING VEHICLES

Ashish Nanda

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MEs often find long-term financial commitments to be much more difficult than that of large, established organisations, particularly when it comes to vehicles. It is a common misconception that a company pays ‘so much’ for leasing the car without ever owing it. Leasing requires payment for the depreciation of the vehicle, not the whole car. For example, if the cost of the vehicle is AED47,000 and the residual value is AED26,000, the principle amount over a three-year period will be calculated on AED47,000–AED 26,000/36= AED585 per month. Whereas buying the same car means the principle amount would be AED47,000/36=AED1,305 per month. Also, the residual value calculated at the beginning of the lease protects one against any drop in the residual value in the future as the lease provider carries this risk–which may not be possible when purchasing a car. The other costs included in the lease rate are maintenance, insurance, registration, interest and varying replacement costs plus a small charge to provide the business with the aforementioned convenience. The fair comparison between leasing and buying is to compare the total cost of ownership when buying a car vs the total lease rentals for the same period. There are other factors that show why leasing provides a much better option for small businesses. Maintenance is the next big cost of owning a vehicle. An SME may not get the special maintenance packages offered by a dealership as the big fleet operators. A dealership may only give a basic service package leaving the SME exposed to unplanned expenditure on

“NOT ONLY CAN THE BUSINESS BUDGET BETTER AS IT HAS A DEFINED COST, BUT ALSO ENJOY THE BENEFIT OF A LOWER MAINTENANCE COST PASSED ON BY THE LEASE PROVIDER” – Ashish Nanda, Senior General Manager, Shift Car Rental

maintenance. While leasing a vehicle with a maintenance plan included the small business owner has peace of mind as all maintenance expenses, including tyre replacement, are covered. Not only can the business budget better as it has a defined cost, but also enjoy the benefit of a lower maintenance cost passed on by the lease provider. Leasing agreements also allow SMEs the flexibility to terminate the lease contract with penalties well defined at the inception of the lease, which could be helpful if the business needs change. Alternatively, SMEs can extend the lease period at a lower rate, return the car and sign up for the new

contract, or even buy the car at an agreed residual value at the end of the contract. The choices are many and flexible. Therefore a business’s capital can be put in to more profitable use rather than buying a vehicle which depreciates over time. The leasing option also provides the company with off balance sheet financing which helps to keep a low debt-to-equity ratio which helps with borrowing money in the future. Leasing not only provides the SME with added peace of mind which helps the business owner to concentrate on their core business, but financially also makes good business sense.

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OPINION

The rise of the

ANYWHERE, ANYTIME OFFICE

GARY NOLAN, VICE PRESIDENT OF EMEA AT LOGMEIN, DISCUSSES HOW REMOTE WORKING IMPROVES EMPLOYEE PRODUCTIVITY AND REDUCES THE COST TO SMES

Gary Nolan

en years ago, a typical day may have played out something like this–get dressed for work, brave the morning rush to get to the office, spend eight to nine hours rooted to a work space, join the evening post-work rabble to get back home, only to be too exhausted from the commute to do anything other than collapse on the couch in front of the television, and finally, sleep. The next day? Repeat. This may sound awfully monotonous, but that’s just how things worked in the old set-up of desktop computers, fax machines, and bulky storage servers– back then heavy-duty technology limited mobility and solutions that supported working remotely hadn’t made a convincing debut just yet. Today, however, the traditional office with its fixed hours, back-to-back cubicles, and often stressfully noisy environment, is being laid to rest; beaten down by portable hardware, mobile devices, and cloudbased apps. Unsurprisingly, a recent survey revealed nearly 80 per cent of the survey’s 1,000 respondents worked remotely in the last six months, and 96 per cent of businesses see mobility as important for employees to be productive and efficient in today’s workplace. Working remotely has also made its mark in the UAE–as per a recent

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study conducted by YouGov for The Federal Authority for Government Human Resources (FAHR), 74 per cent of employees believe a remote and flexible work schedule increases their productivity, and seven in 10 say they are given the opportunity to work remotely across the nation. Remote working is fast gaining popularity within the small and medium-sized enterprises sector in the Middle East, and in Dubai in particular. It allows employers to save on the costs associated with a large central workspace and increases employee productivity, while negating commuting costs and time. Incidentally, as per recent research, SMEs form the backbone of Dubai’s economy: they represent 95 per cent of the emirate’s businesses and account for 42 per cent of its workforce. The Government, therefore, is heavily focused on enhancing the performance of SMEs, which remote working can help achieve.

SECURING REMOTE ACCESS

To capitalise on the benefits of remote working, mobile workers, or telecommuters as they are often called, require top-notch connectivity solutions to access information and resources effortlessly. Which brings us to the subject of security–if employees are accessing company files and apps from remote locations, it needs to be done so as securely as if they were in the office. But between telecommuters and the proliferation of the BYOD (bring-yourown-device) trend, IT departments are often overwhelmed–they have to enable secure access for a diverse range of workers, while simultaneously grappling with shrinking budgets and compliance mandates. SMEs and their IT providers, in particular, need technology and tools that let them scale up productivity without increasing costs or IT overheads.

My advice to companies when it comes to security is simply let your business needs drive deployment. It can be very helpful to take a step back, inventory business access needs and associated risks, and then map those onto potential solutions and acceptable use policies. Some cases might be met more effectively by non-traditional secure access, but you cannot determine that without a top-down needs and risk assessment. Additionally, remember to build for mobility: with SMEs especially, which are much more severely affected by downtime than their larger counterparts, it might be helpful to adopt a ‘mobile-first’ mindset when planning new content and collaboration tools. Today's endpoints are mobile, roaming from home to office to other locations throughout the business day. So when evaluating any secure access expansion or alternative, consider how well an approach will work both on and off the premises. On a side note, even in the age of the cloud, it might be against company policy to store and retrieve official documents from party servers. But decent remote access apps always transmit data over a heavily encrypted SSL connection so it’s worth considering these when looking to implement security solutions for remote access.

SUPPLEMENT THE REMOTE CONNECTION

Whether providing tech support for employees or customers, a support organisation no longer needs to be run out of a centralised helpdesk or call centre. With remote support tools, support experts can access employee and customer devices (including mobile devices) from anywhere, at any time. In fact, remote tech support apps have become so sophisticated these days that unless there is a

hardware issue, valuable man-hours of the network team can be saved. So ensure the remote connection is supplemented with remote assistance. On the topic of storage solutions; through third-party providers all the storage space and bandwidth needed can be accessed, when needed, for as long as it is needed–so opt for these instead of big bulky pieces of hardware. In terms of back-up, advanced, secure, centrally managed backup software can now protect all of an organisation’s computers, no matter where they’re located. This lets a company scale up or down to easily back up all the devices in the organisation. And management will not have to worry about employees forgetting to backup. It’ll all be taken care of. These are just a handful of solutions that are making virtual offices and remote working viable for small and medium-sized businesses. In addition, video conferencing and smartphones are also helping small businesses grow while keeping the costs of maintaining a large central office down. In the past, SMEs have been largely unable to take advantage of IT systems and solutions due to the high up-front costs of sourcing and deploying them. Today, the best technology that they can opt for is cloud-based solutions. The cloud reduces the cost burden of IT for SMEs, especially because cloud services can provide access on a usagebased pricing model and eliminate the overheads associated with installing and maintaining a technology infrastructure. Other benefits like scalability, flexibility, and on-demand service make this a highly attractive proposition to SMEs. So whether considering a virtual office, or injecting a remote-working policy, ensure employees are set up with the right technology to be secure, efficient, and just as productive as if they were in

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LEGAL FOCUS

Balancing

END OF SERVICE BENEFITS

Michael Brough

lmost half of companies in the Middle East offer an enhanced End of Service Benefit (ESB) to their employees, according to Towers Watson’s 6th Middle East End of Service Benefits Survey Report . Although ESBs are a legally mandated requirement under labour law, the number of companies providing an enhanced benefit has remained stable and the reasons for offering an enhanced ESB are broadly unchanged from

MICHAEL BROUGH, DIRECTOR AND INTERNATIONAL BENEFITS SPECIALIST AT TOWERS WATSON IN THE MIDDLE EAST, DISCUSSES THE FINE LINE BETWEEN PAYING END OF SERVICE BENEFITS AND RETAINING CASH FLOW IN SMALLER COMPANIES

the 2014 survey; with organisations offering enhanced ESBs in order to comply with local or industry best practice or perhaps, more importantly, to retain key talent within the organisation. This latter reason was cited in 2015 as the most common reason for providing enhanced ESBs and the prevalence has increased since 2014, according to Michael Brough, Director and International Benefits Specialist at Towers Watson in the Middle East.

“The ESB is a clearly defined legal obligation for all employers, regardless of the size of the organisation, so all businesses have to be aware of it. The costs are based on length or service, salary and future leaving date which creates an uncertainty in terms of cost,” said Brough. However, Brough added that smaller businesses tend to have much greater strains on their cash flow so are less able to fund the ESBs. In fact, in the early years of many companies, there simply isn’t funding because

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“THE END OF SERVICE BENEFITS IS A CLEARLY DEFINED LEGAL OBLIGATION FOR ALL EMPLOYERS, REGARDLESS OF THE SIZE OF THE ORGANISATION, SO ALL BUSINESSES HAVE TO BE AWARE OF IT.” – Michael Brough

the liability is relatively small. But as the business grows and employees’ salaries rise and their service gets longer, then the costs associated with their ESBs start to increase. The challenge is to ensure that these smaller businesses have funds set aside to pay those obligations when they fall due. There may instances where businesses face a large number of leavers at the same time which could trigger a potentially significant cost; and if they haven’t set aside any money for it which could be detrimental to the business. Brough said it’s a balancing act between being aware of what the ESB liabilities are and being aware that it’s a future obligation they will have to settle and having the money set aside somewhere, while ensuring the business can grow and survive. “The main challenge is that businesses can’t predict the obligation–as it is based on an unknown variable which can’t be judged. All business owners know is

the accrual rate. But it’s not the same across the Gulf–the formula differs in each of the six countries in the GCC. They also differ in the wider Middle East as well which also makes it challenging for businesses that operate in multiple countries since one formula can’t just be applied across the board,” said Brough. Out of the companies that enhance the ESB in some way, 59 per cent responded that they offer a supplemental defined contribution (DC) plan to employees which continue to be the most popular way to provide benefits above and beyond the mandatory end of service benefit. Long term savings or retirement plans were most commonly offered in the UAE, Egypt, Saudi Arabia and Turkey. The report indicated an expectation that employees intended to stay at their organisations based in the Middle East for five to 10 years, as people are spending longer and longer periods in the Middle East region. Accordingly, the importance of long term savings and pension

arrangements in the region is expected to increase. Furthermore, nearly 60 per cent of companies providing enhanced ESB do so to all employees, contrasting with the organisations that do so to specific employee categories only such as non-nationals or top management. Over 70 per cent of the respondents indicated that the length of service is the most important factor to consider when providing an enhanced ESB to an employee, followed by grade, key talent and intra-company transfers. The report also showed that most companies have currently relatively small ESB liabilities–39 per cent of companies indicated that their ESB liability is between $1 million and $5 million followed by 23 per cent having liabilities below $1 million. This largely explains why the majority 83 per cent of organisations continue to settle employees’ benefits as they become due from company assets rather than prefunding the liability.

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Abdulla AL GURG

Group General Manager of Easa Saleh Al Gurg Group LLC, talks about family–at home and at work

eople will say they can do everything all the time, that they’re a working mum with several kids and they’re doing great and managing everything. But when someone makes a choice regarding their career they have to put their heart and soul into it. I’m very blessed to have a good support system behind me. My wife is very supportive; I do see my kids on the weekend, but not really during the week. I think if you want something, you have to sacrifice something else. My family has an amazing life and I’m available to them, but I don’t have to be there 24/7. I’m a hands-on father and I used to take my kids to school quite often. But now they’re growing up and lately my eldest asks me to stop the car down the street so he can get out and walk. He doesn’t want to be seen being dropped off by me. I’m a completely local product. First I attended Dubai National School and then I went to the American University of Sharjah–I was a guinea pig. I was one of the first recruits to the university where I studied marketing management and my first position was as a sales rep with tejari.com. Shortly after, I moved to Dubai Holding, which was established during the initial hype of Dubai’s development. The Dubai Development Investment Authority (DDIA) had an

offshoot establishment for young business leaders. A budget of AED 700 million was allocated to support small and medium businesses and I was the third employee to set up that establishment with the current CEO. I then moved to the strategy department. I think they saw I was more of a thinker than a doer. I mean, I did a lot! I came up with many ideas and Dubai was all about those ideas as part of the development of the strategy department of the DDIA. I was called into the family business in 2009, when I was actually still the Managing Director of the Tiger Woods project. Being part of a family business is very different to working for governmental or semi-governmental departments so it took me a while to change my mindset. The biggest difference is that every mistake you make affects your own pocket, so you really don’t want to gamble there. The other difference is in private business you have to learn to listen rather than talk. You’re usually wrong more than you’re right and it’s better to sit quietly and listen more. Finding a balance is critical. It took me two years of listening and keeping quiet. It’s now my seventh year in the company and I feel I used to be much more rash and aggressive but now I’m much more calm. I think the market is getting very competitive these days. Things

can be done so easily and people are really quite replaceable. The only thing that’s balanced is the relationship part. I mean the Middle Eastern principle of ‘wasta’ is applicable globally; it’s not just a phenomenon in the Middle East. If I know you, I care about you and I want to help you. Those are the three elements. To achieve that relationship, you need to be out there. Rather than being stuck on a laptop and being very tech-oriented, you need to be very outgoing, you need to make friends, connections, deal with the right people, connect with the right people. If you want to waste time with people who will not add value to your career, that’s fine. But establishing different interests and meeting people in different areas where you want to flourish in is a very big stepping stone. People will notice that sense of initiative and there are not many people doing that. People who are less fortunate are actually putting themselves out there more. The only drawback for them is they tend to be neglected. Currently the world is about appeal and making things look sexy and approachable, and for some people that’s what’s missing–the right packaging. Anyone who is doing all the right things for their careers and not succeeding–packing is the only thing that’s missing.

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CHALK TALK

In a family business you’re usually wrong more than you’re right and it’s better to sit quietly and listen more.

Abdulla Al Gurg WWW.FINANCEMIDDLEEAST.NET

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Riding THE RAILS

FARIS SAIF AL MAZROUEI, CEO OF ETIHAD RAIL, DISCUSSES THE DEVELOPMENT OF THE UAE’S NATIONAL RAILWAY NETWORK

n the UAE, the delivery of an integrated transport infrastructure is a major part of the UAE vision 2021 and Abu Dhabi Economic Vision 2030. Etihad Rail, the developer and operator of the UAE’s national railway network, is therefore a key player for realising the country’s economic and trade ambitions. The company has been granted authorisation to commence commercial operations on stage one of the rail network running the Habshan– Shah–Mirfa–Ruwais route, an investment estimated to be AED 40 billion. Faris Saif Al Mazrouei, CEO of Etihad Rail, said the network will promote growth in various business sectors, provide jobs for the local workforce, expand the UAE’s logistics capabilities and ultimately contribute to the national vision of diversifying the economy away from

reliance on oil and petrochemicals. The 1,200 km railway network is being built in three stages to link the principal centres of population and industry of the UAE. Stage one is 264 km long and comprises the Shah-Habshan-Ruwais route and construction is completed. Approval was granted for full commercial operations by the Federal Transport Authority in December 2015, and the route is seeing granulated sulphur transported from sources in Shah and Habshan to the point of export in Ruwais. To date, close to four million tonnes have already been transported, and this will increase to seven million tonnes annually once the sulphur-producing plants are running at full capacity. As of 26 January, the tendering process for stage two has been suspended. This news followed a week

after the company said it would cut jobs, citing operations efficiencies. A company spokesperson said that, as any other company, operations are reviewed in light of strategic priorities. As the company entered 2016, it introduced a restructuring initiative across the company to further streamline operations as well as internal procedures and processes. Stage two, will cover 628 km when completed, will extend the network in the rest of the Abu Dhabi Emirate by connecting to the Saudi Arabian border at Ghweifat and the Omani border at Al Ain, as well as connecting vital areas such as Mussaffah, Khalifa Port and Jebel Ali Port in Dubai. Furthermore, as part of this stage, Etihad Rail will pass through two free zones. The first free zone is Khalifa Industrial Zone Abu Dhabi (KIZAD), the first semi-automated port in the region, cont. overleaf

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CEO CHAT â&#x20AC;&#x201C; Eng. Faris Saif Al Mazrouei, CEO of Etihad Rail

Faris Saif Al Mazrouei

Challenges faced, during the construction of stage one in particular, have been due to the geological surroundings of the region such as desert conditions.

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ndelēz rating to a ntries mpany heese colate tegory s a full et and forms et and

Etihad Rail will also form a vital part of the planned GCC railway network linking the six countries of the GCC. cont. from pg. 19

located in Taweelah, midway between Abu Dhabi and Dubai. The second is Jebel Ali Free Zone (Jafza), located 35 km southwest of Dubai. “Furthermore, the Jebel Ali connection is especially significant as it will help to significantly reduce congestion in the port. It will help facilitate the port’s expansion plans, thereby enhancing its attractiveness as a regional port hub,” said Al Mazrouei. Al Mazrouei said preliminary design and engineering of stage two has also been completed. Construction is expected to commence soon after the contracts have been finalised and awarded, at which point Etihad Rail will have a more clear indication on the completion timeline. Finally, stage three entails the implementation of the rest of the network in the Northern Emirates of Sharjah, Fujairah, and Ras Al Khaimah. Currently, the focus is on

developing freight services across the UAE with a future focus on passenger services towards the end of stage two and stage three. “We anticipate that upon completion, the railway will quickly be carrying up to 70 million tonnes of freight and 16 million passengers per year, and excellent progress is already being made. Ultimately the railway could easily carry more than 130 million tonnes of freight–say after 10 years of operation after 2030–based on projected freight demand increases,” said Al Mazrouei Al Mazrouei added that Etihad Rail will also form a vital part of the planned GCC railway network linking the six countries of the GCC. “We expect significant freight volumes to be transported by rail from UAE ports to Saudi Arabia in particular, therefore further enhancing the vital trade corridor between the two countries,” he said.

BENEFITTING BUSINESS

Al Mazrouei said Etihad Rail will provide a more efficient, sustainable and financially sound transport alternative for both big and small businesses across the region. Purely from a physics standpoint, rail is a more efficient mode of transportation than road. Steel wheels on steel rails have the lowest friction and trains run at a more constant speed and they don't have to endure stop-and-go traffic. He added that trains have a huge aerodynamic advantage as well as all the railcars are essentially drafting the lead locomotive. From a business perspective, Al Mazrouei said rail is a generally more efficient mode of transportation for large quantities. The use of standard containers allows many smaller bundles of a great variety of products to be efficiently handled and transported, benefiting from the economy of scale that that rail offers. And logistics companies allow for even smaller than container-load shipments to

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FACING CHALLENGES

Al Mazrouei said that an expansive 1,200 km of railway track laid across

CEO CHAT

be combined with others, which is also efficient. Al Mazrouei added that in many cases such intermodal transport involves a truck carrying the cargo to the departing rail yard, the cargo is then lifted onto the train, the train hauls it most of the way, then the cargo is lifted off the railcar and put onto another truck to be transported the last few miles from the rail yard to the final destination. “This takes advantage of the railroad's higher efficiency for long distance transportation, and the truck's ability to go all the way to your front door,” said Al Mazrouei. Etihad Rail also plans to serve smaller businesses another way–aggregates. By providing shared loading terminals in the quarry areas in Ras Al Khaimah and Fujairah and distribution centres near the main areas of consumption, smaller quarries and construction companies have access to the more efficient rail transport without having to carry the burden of investing in rail loading and unloading terminals and wagons which they would not be able to utilise fully by themselves. Etihad Rail is actively working with key Government stakeholders to optimise the development of passenger services, which the company foresees running once stage three is operational. Per the current plan for the network, there are around 15 passenger stations planned across the UAE, of which three are in Dubai–Dubai South (located close to Al Maktoum Airport), Dubai East (close to Arabian Ranches), and Dubai Central (close to Meydan). The exact number and locations of the stations will be more of a focus in stage two and stage three of the railway, as progress is made into detailed passenger service planning.

Etihad Rail will also form a vital part of the planned GCC railway network linking the six countries. the UAE was an ambitious engineering project so Etihad Rail is bound to face unique challenges. For instance, when the company launched the project, there was no established railroad industry to support it. “We were tasked with setting up the entire infrastructural support in order to build the corridor that we were going to be setting the tracks through. While we received much encouragement from various Government institutions, there was no regulatory framework present at the institutional level. We identified global benchmarks and adapted them to the local environment and conditions” said Al Mazrouei. Other challenges faced, during the construction of stage one in particular, have been due to the geological surroundings of the region such as the harsh desert conditions. Other factors were stress and health concerns during construction caused by extreme heat, soft-packed sand and limited mobile coverage. In some areas, the water level was so high that earth had to be moved and packed as construction progressed. “We assigned special consideration to topographic and climate issues such as the sand dune landscape, wind-blown sand, high temperatures and humidity. We also sought the expertise of countries dealing with similar challenges, such as Saudi Arabia, Mauritania and China to share

their insights and best practices,” said Al Mazrouei. Etihad Rail is creating a brand new industry in the UAE and effectively revolutionising the transport sector. The sheer size, scale and complexity of the project are a testament to newfound infrastructural capabilities in the 21st century. “Technically Etihad Rail combines the best railway technologies of both worlds–the heavy haul double stack efficiency of US type freight railways with an axle load of 32.5 tonnes and the signalling and control systems ETCS Level 2 from Europe. These control systems allow for the highest levels of safety at shorter headways and speeds of up to 120 km per hour for freight and 200 km per hour and more for passenger trains,” said Al Mazrouei. And the significant economic impact that this project will have on the UAE and the wider GCC region is truly unique. In monetary terms, Etihad Rail is expected to bring a significant overall increase in the national GDP through 2030 and beyond, which highlights the vast potential inherent in connecting major centres of population and industry across the country. It will stimulate economic activity and industrial and social development and population mobility.

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COUNTRY REPORT

Branching OUT

MAHMOUD SHEHADA, FOUNDER AND MANAGING DIRECTOR AT ALLEGORIA CAPITAL, TAKES A LOOK AT THE STABILITY OF THE UAE’S ECONOMY AND WHAT CAN BE EXPECTED HEADING INTO 2016

Mahmoud Shehada

ubai’s reputation has been buoyed by the decision of Morgan Stanley Capital International (MSCI) to upgrade the UAE to emerging market status in 2014, and Expo 2020 is slated to create a number of opportunities for private investors across a variety of sectors, according to the Oxford Business Group. Real GDP growth in the UAE will remain modest in view of much weaker oil prices, which will keep the fiscal position in deficit until 2017, according to a report by The Economist. Economic diversification will be prioritised in order to promote non-oil growth. The report added that Dubai has made progress with managing its debts and this will remain a focus. Mahmoud Shehada, Founder and Managing Director at Allegoria Capital, said that the UAE has distinguished itself from other countries in the GCC by having the most diversified economy, with over 70 per cent of the country’s total GDP coming from non-oil sectors, making it the most resilient of its neighbours to falling oil prices. It is clear that the UAE is on the right path to developing a

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The stability of the economy is further amplified by the prudency of the government’s spending. – Mahmoud Shehada

stable and sustainable economy that grows beyond the production of oil; however, this does take time. The UAE’s economy, like all six member countries in the GCC, is experiencing a crunch because of an array of factors, most notably the situation with lower oil prices and this will most likely carry through to 2016. The UAE’s forecasted growth is expected to be 3.8 per cent this year and it is expected that as 2016 progresses, the economic growth will be seen which will possibly be closer to 3.5 per cent. This is in line with the findings by BMI Research, who released a report stating relatively solid growth is expected over the coming quarters, with real GDP growth at 3.8 per cent and 3.4 per cent in 2015 and 2016 respectively. “The stability of the economy is further amplified by the prudency of the government’s spending and the steps taken by the sovereign wealth fund to repatriate investments back to the UAE in light of falling oil prices,” Shehada said. Shehada said that the $100 a barrel days are done for now. Members of the GCC have partially offset the expected revenues from

higher oil prices by increasing their output volumes, which further puts pressure on oil prices. The battle to maintain market share in the oil industry, combined with the lifting of sanctions in Iran, allowing for another oil producer to enter the playing field, meaning competition in an already heavily covered market will be fierce. As a result, it will be difficult for the prices to increase significantly. Shehada said that the $40-$60 a barrel would probably be the most plausible range. At these levels, Government spending will undoubtedly have to be much more focused and scrutinised, and a pinch will undoubtedly be felt. The drop in Government spending will create a knock on effect across all sectors, so a softening in the economy is eminent. It’s not all negative, as Shehada said that focus will be on the essentials; therefore it is likely that healthcare and education would be the least affected. He added that given the strategic geographical position of the UAE and its renowned ports and port services, it would be likely to continue to see a steady flow to and from the ports of the UAE. “The UAE also remains a tourist attraction for its neighbouring countries

and while there will be a softening in that area, budget airlines and all-inclusive packages may serve to maintain the tourism sector,” he said.

THE UAE

The Ras al-Khaimah Tourism Development Authority (RAK TDA) has targeted raising the sector’s contribution to the GDP to nine per cent in 2016 and seems to be on the way to achieving this. In February 2015, RAK TDA said that tourism revenues in the Emirate exceeded AED 1 billion in 2014, while hotel visits rose by 72 per cent. Furthermore, Dubai is also expected to outperform Abu Dhabi, with the former benefitting from increased activity in the trade and tourism sectors, according to the BMI report, in addition to the expectation that the real estate industry is now set for sustained growth. The sector that drew the most attention in 2014 was real estate and in January 2015 property agent Jones Lang Lasalle (JLL) said the average villa prices dropped by one per cent in the last three months of 2014. In 2015 the Dubai Land Department reported that the cont. overleaf

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COUNTRY REPORT

Abu Dhabi’s real estate sector has made a recovery in the last two years and is expected to sustain its economic growth. cont. from pg. 23

number real estate deals fell by 15 per cent in 2014, compared to the preceding year. Abu Dhabi’s real estate sector has made a recovery in the last two years owing to a rationalisation of supply and demand in the market and the Emirate is expected to sustain its economic growth. Overall the UAE has a consistent track record of drawing

foreign investment into real estate– according to the Financial Times the sector attracted $5.5 billion between January 2003 and July 2013. However, Shehada said that to rank anything above oil would be unrealistic. The domino effect of falling oil prices is what will really impact the economy. A slowdown in government spending will mean that there fewer projects will

be commissioned, there will be fewer companies to engage and therefore less money to change hands. Lack of preparation and setting unreal expectations can have the biggest negative impact on the economy. Shehada said the UAE has demonstrated a robust economy as it came out of the financial crisis in 2008 and has subsequently shown growth year on year.

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FEATURE

Showing INTEREST RADHAKRISHNAN, CEO OF RADIUS CONSULTANTS, EXPLAINS HOW BUSINESSES CAN CALCULATE EXACTLY WHAT THEY REPAY ON LOANS

hen a customer is set to approach a bank for a loan they would like to know a very simple, yet important, piece of information– how much is it going to cost? If they think that the rate of interest which is quoted is the answer, then they are in for some surprises and confusion. There are different ways to determine interest rates and so many ways to calculate the actual interest payment itself. One often hears terms like fixed rate, floating rate, flat rate, and reducing rate. But what they actually mean requires some unravelling. The rate of interest offered by a bank (for both borrowing and savings) depends on a benchmark rate, like the London Interbank Offered Rate (LIBOR) or Emirates Inter Bank Offered Rate (EIBOR), and these are not fixed. While a floating rate will reflect the movements on the benchmark rates, a fixed rate does not change throughout the loan period. Both the offerings have their own pros and cons. While the fixed rate protects the borrower from a rise

in the benchmark rates, it does not allow the borrower to take advantage or enjoy a lower rate when the benchmark rate falls. In the case of floating rate, when the benchmark rates move up, so will the interest rate and therefore the expense to the borrower. So the rate that is chosen depends upon how one foresees the future movement of interest rates, which is not an easy call. Generally speaking, the option of fixed versus floating rate is offered for the longer term loans whereas short-term facilities like overdraft are offered at a fixed rate only. Next, one has to look at the ways in which the payment of interest is calculated. This could be either a flat rate or reducing rate, both of which are misnomers. What is meant by a flat rate is that the rate of interest is applied on a flat or fixed principal amount irrespective of the repayments that occur during the term of the loan. A reducing rate means that the rate of interest is applied on the reducing balance of principal amount outstanding after each repayment.

Now here’s the confusion–when the bank says and interest rate is at 10 per cent, do they mean a flat rate of 10 per cent which is effectively 17 per cent or a reducing rate of 10 per cent which is effectively only 10 per cent? While advertised flat rates are generally lower, it is best not to be fooled. The best way to compare different advertised rates to ensure the best deal is to convert all financing options into either a flat rate or reducing rate before starting the comparison. As a rule of thumb, flat interest rates range from 1.7-1.9 times more when converted into the effective interest rate equivalent. That is the true measure of the cost of financing. The other important component in the total cost of the loan, in addition to the interest, is the various forms of charges– both transparent and hidden. In every loan there are processing charges, legal fees, valuation fees, registration charges for mortgages, stamp duties, and insurance premiums in addition to penalties for late payment in the case of default and penalties for early repayment. In summary, close attention needs to be paid before entering into a loan transaction.

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CALCULATING INTEREST ON A FIXED RATE

This method is mainly used to calculate the interest payable for personal loans and car loans. Interest is paid on the entire loan balance throughout the duration of the loan. Flat interest rate calculation formula works as follows: Interest payable per installment = (original loan amount * no. of years * interest rate p.a.)/number of installments This is less desirable for the borrower, because even as they repay the loan, the interest payable does not decrease. The interest rate quoted in this case is not the actual or the effective rate. Calculating interest on a reducing rate: This method is mainly used to calculate the interest payable for housing/mortgage/property loans and other interest payable such as overdraft (OD) facilities, and credit cards. Interest is only paid on the remaining loan balance. The formula for calculating reducing rate of interest is as follows: Interest payable per installment = interest rate per installment * remaining loan amount The interest rates quoted for such loans are the effective interest rate. To illustrate, suppose an amount of AED 250,000 is borrowed at the rate of WHAT TO KEEP IN MIND 10 per cent and the loan has to be repaid in five equal yearly instalments. WHEN APPLYING FOR See Figure 1. A LOAN

Figure 1 Fixed rate method

Reducing rate method

The total amount paid is much higher under the fixed rate method and if the actual rate is calculated it works out to be approximately 17 to 18 per cent instead of 10 per cent.

• Read all the forms and documents provided, especially those that have to be signed. Take time to understand everything and ask the bank officer if there is anything that is unclear. • Read the small print carefully or seek help from a professional to understand the implications before signing any papers. • Factor in all the charges, including penalties for early repayment in the calculations for the total cost of the amount borrowed. • Ask the bank to explain how the interest rates are determined and calculated to be fully aware of the complete cost of the loan. • Once the documents are signed, it is assumed that all the terms and conditions are understood and they will be contractually binding. • Prepare, monitor and follow up regularly on cash flow projections to ensure that funds are available on time for the repayments. • Make sure the funds are used only for the purpose for which they were borrowed. Source: Radhakrishnan, CEO of Radius Consultants

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FEATURE

Toward being TRULY INCLUSIVE OMAR FAHOUM, CHAIRMAN AND CHIEF EXECUTIVE AT DELOITTE MIDDLE EAST, DISCUSSES WHAT MENA CAN DO TO HARNESS THE POWER OF DIVERSITY IN THE WORKPLACE

In short, having women as leaders in the business world improves an organisation’s bottom line.

Omar Fahoum

tanding at 26 per cent, the figure for female labour participation in the Middle East and North Africa (MENA) is the lowest in the world. Even when women are hired, there is high attrition so that very few women reach senior level positions; in fact men occupy an overwhelming 98.5 per cent of boardroom seats in the region.

The facts are sobering, especially considering that studies have shown that women can be and are a key driving force of the economy. Indeed, there is supporting evidence that paints a clear and strong business case for women in the workforce, and as leaders in the workforce. Companies with more women on their boards, for example, have been found to outperform their rivals.

– Omar Fahoum, Chairman and Chief Executive at Deloitte Middle East The rationale behind this is that board diversity triggers more creative solutions to business problems and enhances corporate performance and competitiveness. In short, having women as leaders in the business world improves an organisation’s bottom line. The obvious conclusion to draw from this is that companies in MENA must strive to build a diverse

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workforce in order to drive business results and value. To achieve that, they need to implement an integrated, holistic diversity and inclusion strategy. This is not a regional issue alone, though. Diversity is lacking globally, and a look at other regions and some of their success stories can shed light on how to achieve a more diversified workforce. Although women constitute about half of the worldâ&#x20AC;&#x2122;s population, when it comes to female representation on company boards across the world they make up only 12 per cent of board seats and four per cent of board leadership, according to Deloitteâ&#x20AC;&#x2122;s fourth and latest Women in the Boardroom: A Global Perspective. The good news, however, is that the representation of women on corporate boards is on a continuing upward trend. Digging deeper into these statistics throws up some nuances worth noting.

The Deloitte report took into account 49 countries across the world, and some of them proved to be progressing better than others when it comes to gender diversity in the boardroom. Norway, France, Sweden and Italy all ranked high in this respect. What such European countries are getting right is their implementation of successful policies. Italy, for example, introduced a gender balance quota in 2011. This has helped to provide a significant increase in the number of women represented on boards, with the percentage of women board seats and board chairs currently at 22 per cent. France reinforced its boardroom gender diversity quotas in 2014. As a result, the number of women serving on boards (currently 30 per cent) continues to increase, while three percent of board chairs are women. It is clear that having government intervention can provide a valuable stimulus to increase labour diversity.

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Representation Representation of of women women on on corporate corporate boards boards isis on on aa continuing continuing upward upward trend. trend.

It is also fair to say that change is happening, but this change is too slow and needs to be driven from the top. Fifty per cent of companies globally have not yet introduced programmes aimed at supporting women in executive advancement and management retention, and 50 per cent of governments have not taken steps to support these outcomes. A spirited debate continues around the effectiveness and in fact the appropriateness, of mandated quota policies with a clear divide on views. It is evidently clear however that when such policies have been introduced, the participation of women in boardrooms was positively impacted. Non-governmental organisations (NGOs) and voluntary business programmes also have a viable role to play. There are a number of fledgling success stories in the region which give hope that more is to come. cont. overleaf

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FEATURE

Companies have to implement an integrated, holistic diversity and inclusion strategy. cont. from pg. 29

Non-profit organisation Reach, incorporated in the Dubai International Financial Center (DIFC), has celebrated a successful first year of operation in 2015, in its role as dedicated to professional women mentoring and leadership. The 30 Percent Club GCC Chapter was launched this year as a regional corporate sector led effort that brings companies together to collaborate on advancing women to boardroom positions. Still, there is something with the potential to be more powerful than governments or NGOs in accelerating the pace of change. The Deloitte study pinpointed the institutions that have the greatest multiplier effect on advancing womenâ&#x20AC;&#x2122;s economic empowerment. Top of this list is active company programmes. It is important to point out here that companies should not think along the lines of simply introducing a diversity and inclusion programme; rather, they have to implement an

integrated, holistic diversity and inclusion strategy. A truly inclusive organisation adopts multiple engagement strategies to create an inclusive, diverse culture. Deloitte research also confirms that the multiplication effect is best when led by the CEO, board members or others in a supervisory role within a company. The most common practices to advance women into leadership positions are the introduction of high potential development plans, workplace flexibility policies, and diversity and inclusive leadership development for current leaders. From our own experience at Deloitte Middle East there are a number of diversity and inclusion lessons on which we can draw. Before anything, the business case must be articulated and then leadership commitment should be made clear. Then it turns to the task of building and cascading accountabilityâ&#x20AC;&#x201C; i.e. deciding what needs to be done and how results will be measured.

Part of this process must involve highlighting how the benefits of diversity accrue to the entire organisation. It is not enough to simply set up such a process: there needs to be continual innovation. It is also important to engage allies and have them very much on board with the process from the very beginning; allies being non-minorities and men. Lastly, sharing best practices is the key to leveraging the momentum and maximising its potential for change across the business spectrum. Generally speaking, there needs to be more focus on changing perceptions of women and their role in the labour market. Also efforts need to be made to tackle stereotyping through awareness, learning and role modeling. This should take place alongside the adoption of laws that support gender diversity and introduction of policies that allow women to advance their careers while managing their demanding family roles. The region can only benefit as a result.

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Joy Ajlouny

Idriss Al Rifai

Fetch(r) and CARRY

IDRISS AL RIFAI AND JOY AJLOUNY, CO-FOUNDERS OF FETCHR, THE FIRST SILICON VALLEY FUNDED APP IN MENA, DISCUSS OPENING THE DOOR FOR FUNDING IN THE REGION

hree years ago, Idriss Al Rifai and Joy Ajlouny launched Fetchr; a mobile parcel delivery app is designed to offer a solution to the problem of no physical addresses in emerging markets in the Middle East. The Fetchr app uses a customer’s phone as a GPS location, which allows Fetchr to deliver packages efficiently.

The Dubai-based business raised $1.4 million in seed funding locally in 2013. In 2015 it raised $11 million in venture capital from New Enterprise Associates, the largest and most successful venture capitalist in Silicon Valley, as far as IPOs and mergers and acquisitions are concerned. “We feel a lot of pressure because our success opens the door for other

venture capitalists to look at talent here. We feel responsible for having this gateway position because all eyes are on us,” said Ajlouny. Al Rifai said the company has 300 clients, all of which are SMEs in the region. Their clients are often not big enough to have an account with a shipping company so Fetchr focuses on these SMEs as they have to deliver their goods quickly.

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FACETIME

We feel a lot of pressure because our success opens the door for other venture capitalists to look at talent here. – Joy Ajlouny

The co-founders have drawn comparisons between their company and Uber, the taxi company that partners with drivers and uses a customer’s phone’s GPS to connect them with the nearest taxi driver. However, Fetchr owns its assets–it is the app and the logistics company. Al Rifai said that Fetchr needs to have quality control over the delivery, which is a much bigger responsibility than Uber has. “If an Uber ride doesn’t go well, they lose a customer. If one of our deliveries doesn’t go well, we lose an entire company like eBay that would otherwise trust us with thousands of packages per day. Also, we’re not yet confident enough to hand over the logistics side to somebody else. We feel we have to do it ourselves to ensure our service level agreements are met,” he said. Ajlouny said another factor that sets the company apart is their transparency and their utilisation of technology. Generally e-commerce deliveries happen within a six-hour window and the customer doesn’t know if their package will be delivered at the beginning or the end of it. Also, the customer might miss the call from the driver for any number of reasons and miss their delivery. “Our drivers have tablets. Everything is live–if a customer places an order and changes their mind, the driver gets notified immediately because the customer is notifying Fetchr directly through the app. If a customer wants to

change the time of delivery, the driver gets notified in real time and the routes can be recalculated. It makes everything transparent and efficient,” she said. After her first company in the US was sold, Ajlouny was sitting in on pitches in Silicon Valley as a mentor. It was during a pitch by Al Rifai on solving the problem of no addresses in the Middle East that Ajlouny grabbed the opportunity to partner with him.

CHALLENGES

The main challenge facing any startup is their evaluations. Ajlouny said that investors in the Middle East ask if the start-up is making money, and if a company is not then they are told to try again once they have started making money. “The thing is I will not need to call them when I am making money. The start-up environment is still very new here, this area is still learning what that means to fund companies that don’t make money on the premise that they will,” said Ajlouny. Al Rifai added that there are many groups in the region that also want to have control over the company which does not always bring the company where it needs to be. The answer to overcoming that problem was to go to Silicon Valley, along with their lead investor. Ajlouny said that Silicon Valley is there to help the entrepreneurs and the evaluation they gave the Fetchr Source: Eros team was fair.

“You need a lead investor in every start-up when you try to raise money. The lead is very important because it sets the tone for the evaluation. We got the top venture fund which made other investors think ‘They are onto something’. It makes everyone want to jump on board. When we got NEA, everyone else got FOMO [fear of missing out],” said Ajlouny. The company has developed quickly from four people in a garage, to about 150 people to date. Fetchr operates in three countries and is opening up in two more in the next four months. The client base is growing; the company is working with most of the top ten ecommerce companies in the GCC region as well as international retailers.

THE FACTORS THAT SET FETCHR ASIDE AS A LOGISTICS COMPANY 1. A low return rate The better job a company does of finding the customer, the higher the number of completed transactions. Fetchr boasts a return rate that is 80 per cent lower than anyone else. 2. Speedy delivery If a customer receives their product the next day, they are less likely to regret the purchase. Fetchr guarantees a 96 per cent same-day or next-day delivery. Source: Idriss Al Rifai, Fetchr Co-Founder

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Businesses are interested in using survey tools to hear back from customers.

Word of MOUTH

SUBHI FARAH, CO-FOUNDER, KANARI, DISCUSSES THE CHALLENGES FACING HOME-GROWN BRANDS, AND PERSEVERING REGARDLESS

n 2013, Subhi Farah and Edmond Husseini came up with the idea for Kanari–a Dubai-based mobile app that could give businesses realtime feedback from consumers–as a way of enhancing the customer service experience in the Middle East. Farah and Husseini found that

consumers’ word of mouth was becoming more and more powerful with the advent of social media. While this benefits consumers, airing these views in the public space could be detrimental to a business’s brand image. “We came up with this idea of creating an app where customers

can give businesses feedback and the businesses will reward them in return. Businesses obviously want to hear from their consumers on what they can improve on and at the same time they are willing to spend a bit on of money on incentives or providing discounts in exchange for this information,” said Farah.

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CASE STUDY

All sorts of statistics are available supporting the notion that customers are willing to spend a bit extra for a good customer experience and that is ultimately what builds loyalty to brands. – Subhi Farah, Co-Founder, kanari.com

SHUTTERSTOCK.COM

client as the restaurant wanted to monitor their customers’ experiences and were willing to try using the app to do so. Farah said that they felt sure having a big customer on board would ensure business development would flow from there.

After a period of research and talking to varying restaurants to gauge the level of interest, it took about eight months to develop the initial app, with the help of an outsourcing company from India. Kanari went live in 2014. The initial app was geared towards servicing the restaurant industry because, owing to the many cafes and restaurants in Dubai, the co-founders thought consumers were more likely to visit them frequently as opposed to visiting businesses such as an insurance company or a bank. Farah and Husseini signed Shakespeare and Co. as their first

PROBLEMS AND PROGRESS

Unfortunately companies did not commit as was expected. While restaurants were quite keen on running the pilot, they would not commit when it came to signing a contract. During the pilot, the team also received requests to build specific features into the app platform, but at that stage the way the app was developed would not allow them to do so. However, they continued trying to bring new clients on board while collecting feedback from every customer who didn’t sign up by asking what they felt was missing from the app. This allowed them to keep improving the app to get it to the ideal set of features, according to market requirements. Throughout this process of gathering information and getting

a better understanding of their potential customers and the market, they were invited to speak at a conference about digital innovation and the importance of a good customer experience. It was at this conference they highlighted how Shakespeare and Co. had been able to improve their customer experience levels by receiving live feedback through the app, allowing managers to respond to customer complaints quickly. After their talk at the conference, Farah and Husseini started getting a number of enquiries about Kanari’s app from people in the audience who represented a variety of sectors– such as financial services, banking and even retail. “ That was the moment we realised that we were onto something and that this app could actually work everywhere. That was also when it became very clear that a good customer experience is a key differentiator for businesses in all sectors. All sorts of statistics are available supporting the notion that customers are willing to spend cont. overleaf

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CASE STUDY

smartphone which will direct consumers to a website that is fully branded to the company being surveyed. Farah said that as soon as a customer completes a survey at any of these touch points the data is automatically uploaded to a database where it is analysed and aggregated and then presented to the business in an easy to digest fashion with reports and infographics. When Farah and Husseini first launched Kanari, they assumed that customers would want to give feedback anonymously. That assumption was proven false as they found that people who had left feedback, especially negative feedback, wanted to include their information so that the business could contact them for follow up. So initially it was an anonymous model but now customers have the option to leave their details.

2016 AND BEYOND

Subhi Farah, Co-Founder, Kanari cont. from pg. 36

a bit extra for a good customer experience and that is ultimately what builds loyalty to brands,” said Farah. Farah added that they had a great opportunity as there were a number of businesses interested in using tools such as Kanari to measure customer experience levels and improve them. That is when they shifted away from the mobile app model, which allowed consumers to use the app at businesses they visit and be rewarded for feedback that they left.

“Now we have a survey tool that plugs into any business’s existing infrastructure to survey customers in an automated fashion. One option is having the surveys sent out to customers via SMS or email, say after a call to a bank, with an embedded link to the survey. At certain bank branches a number of consumer touch points on tablets are available at the exits with a quick 30-40 second survey running on a loop,” said Farah. Restaurants still have QR codes that can be scanned by a

CMY

Farah said even though the company is still young and only comprises a team of four, he and Husseini are focusing on attracting larger organisations as clients. This means that their sales cycles now tend to be much longer as well, taking about six months to close a big client from the initial discussion to signing a contract. “We’re still in the early stages and we’re still fundraising but we do have a number of new clients. We also have a number of pilot projects and our focus for 2016 is to continue working with larger food and beverage groups but also to make headway into retail. Retail is huge in Dubai and there are many big players– getting one or two of those on board would really give us a good foothold in the market,” said Farah. Farah attributed Kanari’s success to patience and perseverance. He

cont. overleaf

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CASE STUDY Social media is useful for consumers but may damage a company's image.

SHUTTERSTOCK.COM

CHALLENGES FACING START-UPS

cont. from pg. 36

said that in order for a start-up to succeed, business owners need to keep at it, especially since the hardest time for any new business the first three years and 80 per cent of start-ups do not survive past the two-year mark. “It is not a sprint but a marathon. In our case we started with something very different and the market did not respond as well as we thought it would. We had to change direction, more than once, to reach where we are. Many people would have lost hope and given up; but in our case we just stuck to it knowing that if

we continued to follow the market and the indicators and incorporated the feedback we were getting from potential customers, then we would zero in on a solution that fits the market needs,” said Farah. One way Kanari is meeting a market need is by focusing on servicing the Middle East. While there are other companies in the market, they are all based in the US and they are all busy in their own markets that are growing. Farah said that many of these companies cannot keep up with their demand, so none of them are focussing on the Middle East region.

• In this part of the world businesses are still not used to working with smaller companies. They would rather work with a more established company as there is no guarantee that a start-up is going to stay around for the long term. There is no culture of working with small startups like there is in Silicon Valley or the west but that is changing– programmes are being introduced that are trying to connect startups with larger corporate players in different sectors to try and help them innovate. • It takes that much longer for a smaller business to go through a procurement process. Wellestablished players will always charge higher fees and clients don’t really like that. When a smaller company offers a better deal, they still get haggled on the price. Larger companies do not appreciate that the start-up is smaller and already giving a good deal. • Hiring the right people is a challenge–it’s expensive. Hiring someone who only stays with the company about three or four months will hurt the company financially on the visa fees alone. • The lack of availability of investments is a challenge. It is not easy to come across investors who are willing to part with their money which is possibly the nature of the market. If kanari.com was able to raise the money needed half a year ago, it would be a very different story–with that capital a sales team could have been hired, for example.

Source: Subhi Farah, Co-Founder, kanari.com

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START-UP

At your SERVICE ROB NICHOLAS, FOUNDER OF MYCONCIERGE.COM, TALKS ABOUT OFFERING A SERVICE TO GET THE MOST OUT OF ONE’S LEISURE TIME

Rob Nicholas

What was the inspiration behind the original idea for myconcierge.com? We saw a gap between the very utilitarian online travel agents and professional lifestyle concierge companies that request membership fees to access their services. Myconcierge.com sits between the two and offers a unique user experience on-site and also in terms of the services we ultimately deliver.

Everybody wants the instant access to services and experiences that the internet delivers, but when it comes to high-end purchases the satisfaction of knowing that it has been evaluated, clients are getting a good deal and having a team of people to take care of them makes a huge difference. Leisure time is precious and it is a terrible disappointment to spend it poorly–our aim is to make sure that never happens. What differentiates myconcierge. com from other concierge services in the region? So many things–we are more accessible with no price of admission and anyone can see our offers accompanied by engaging, varying media, such as video and images. Our services also involve a digital and a human interface that is several steps ahead of anything else in the market. We offer off-the-shelf experiences as seen on myconcierge. com and bespoke services that can be requested online or over the telephone. What unforeseen challenges did you face, as a start-up? The digital platform is the hub for various service spokes that we offer to the market. Sometimes it has been difficult to precisely align the delivery of new functionality with client demand, as this is an evolving and developing

project–not so much unforeseen, as challenging! What are your plans, if any, for expansion? Locally, we are just putting the final touches to our apps (iOS and Android) that will go live at the end of the year and we’ll have myconcierge.com in Arabic, Mandarin and Russian in early 2016. Globally, we have built a complex technological infrastructure that is very easy to use and administrate. We are also building a brand that is very recognisable as everyone knows what a concierge does–even if we do it a little differently. As myconcierge.com gains traction in the UAE we see it as being easily exported to other markets, and we are working with partners to make this happen. Several Asian cities are first on the radar. What do you think is the main contributing factor to a new business’s success? It requires a top-class team of people working towards the same vision with creativity, an inclination to experiment constantly, to question things, a huge amount of persistence and not a small helping of luck. Of course, the funding to do all of the above is necessary to even get your idea out of the gates and to then compete in the marketplace.

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AWARDS

BOOK your table now!

he Business Vision Awards, in partnership with Dubai SME, were created to reward people who have developed and grown businesses, whether a start-up or a mid-sized corporate, in the region. The evening will also give nominees the opportunity to network with business leaders. “Do you know where your business is going? The winners of our Business Vision Awards certainly will! Having a clear strategy and plan to grow profitably is one of the key factors for success in business. We’re looking for businesses that can see clearly now, helping us to identify not today’s success stories but tomorrow’s success stories today,” said Robin Amlôt, CEO, CPI Financial. Finance ME’s Business Vision Awards will take place on 23 March 2016 at the Jumeirah Emirates Towers, Dubai. It is still possible to nominate your company in one of our 20 categories. Nominations can be made on the website. Each nominated company qualifies for two free tickets to the awards, and if the company wishes to bring the team, tables of 10 are available for $2,000 per table. Nominees who book a table are invited to bring along marketing collateral to display in the networking area. For more information on how to reserve a table at the event, and the display space available, please fill out the booking form on pg. 43 and scan and email it to Rizza Infante on rizza@cpifinancial.net.

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AWARDS FOR BUSINESS SERVICES… • • • • • • •

Best Business Technology Provider Best IT Services Provider Best Business Advisory Service Best Accounting/Auditing Service Best Law Firm Best Business Consultancy Best Business Solutions Provider

AWARDS FOR BUSINESS… • Top Seller 2015 (retailing) • Top Trader 2015 (trading) • Top Manufacturer 2015 (manufacturing) • Top Developer 2015 (construction/development) • Top Services 2015 (service sector) BEST GIVING BACK INITIATIVE OF THE YEAR: This award will go the company, large or small, showing the most commitment to making a difference in their local or regional community. BEST PRACTICE IN EMPLOYMENT: This award reflects the commitment employers in the GCC need to make to create jobs for GCC Nationals. BEST START-UP: This category is reserved for new business ventures established within the GCC since 1 January 2015. MOST IMPROVED COMPANY OF THE YEAR: Open to businesses showing growth in staff, turnover, market penetration, or the most improved business practices in the last 12 months.

BEST ESTABLISHED BUSINESS: This category is open to companies with staff levels between 100250 and turnover that is between $28-$68 million. BEST SMALL BUSINESS: The ‘Small Business’ category covers those businesses with staff levels of less than 100 and an annual turnover smaller than $28 million. BEST HOME-GROWN BRAND: This category awards those GCCgrown businesses of all sizes that have shown business development, expansion and growth both in-region and internationally. BEST FRANCHISE: This award will look at the most successful franchises to hit the shores of the GCC in terms of expansion, turn-over and brand presence. INSPIRATIONAL BUSINESS PERSON OF THE YEAR: This Award will recognise individuals for their creativity and commitment in business, whether in an established company or in a new venture.

To enter, head to our nominations page on the website www.cpifinancial.net/events and navigate to the Events page to pick your category and submit 300 words explaining why YOUR company deserves to win the award! Documents illustrating your nomination, such as financials, company growth charts, or products, for example, can be uploaded in PDF format on the nomination form. HAPPY NOMINATING!

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The restaurant will have a completely new interior design.

McDonald’s lands sixth airport restaurant in Dubai RAFIC FAKIH, MANAGING DIRECTOR AND PARTNER AT MCDONALD'S UAE, DISCUSSES COMPANY GROWTH AND A NEW INTERIOR DESIGN

cDonald’s UAE will open its sixth restaurant at Dubai Airports featuring interactive technologies in 2016. Located at the new Concourse D, Terminal 1, the 310 square metre store, estimated to have 90 seats, will

be introduced once the facilities at Concourse D have been completed. Rafic Fakih, Managing Director and Partner at McDonald's UAE said that the new restaurant will have a completely new interior design with new interiors tailored to the location at Dubai International Airport.

“It’s a special design that is not used in any McDonald’s restaurants in the area. It was put together by an Australian designer and we are presenting a new look that is not a repetition of what we do normally,” said Fakih. The interiors will include interactive technology such as

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When considering expanding the franchise, factors also taken into account include area development and the growth of residential and retail areas. – Rafic Fakih Rafic Fakih willingness to devote full time to the McDonald’s restaurant business, retail experience, knowledge of the real estate market and significant capital. We also have a strong preference for individual franchisees, not companies,” said Yousif Abdulghani, VP and International Relationship Partner–McDonald’s Middle East Development Company. Abdulghani added that in the Middle East the master franchisees are prominent business people and nationals in their country of operation. Through its corporate office in Dubai, McDonald’s provides all levels of training and development, and support for the master franchisee and his team to open and operate a successful restaurant business. The corporate office in Dubai oversees the operations of McDonald’s in 17 markets in the Middle East, and provides support that covers the full spectrum of the business such as marketing, communications, operations, supply chain, finance, HR, Training, development and IT. On the topic of development in the UAE, Fakih said it was a case of the company expanding where

people go. While McDonald’s does not have a restaurant in every part of the UAE yet, there is a growth in the population in the UAE. “There is room for expansion as there is room for population growth owing to tourist growth. When considering expanding the franchise, factors also taken into account include area development and the growth of residential and retail areas. Growth of tourist numbers is also very important as consumers know the menu. Therefore the airport and malls are ideal locations,” he said.

CATERING TO EXPECTATIONS

Each restaurant has a universal menu which is available worldwide–the same burgers, drinks and sandwiches which may vary slightly in taste according to the corn used to make the bread. Fakih said the core McDonald’s menu consistently accounts for 90 per cent of sales as those are the items that consumers know, are used to, and expect. However, each region has one or two items adapted specifically for the region. In the UAE, for instance, consumers can enjoy the McArabian burger.

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FRANCHISE

a digital menu board and a kids’ interactive projector to attract techsavvy customers. Fakih said that when it comes to the McDonald’s brand, consumers know what to expect. “We have tried to create a restaurant where people feel that they’re in a nice setting with nice décor. We have tested this particular décor [that will feature in the airport] in Europe and the Far East. When visiting new restaurants in the UAE, outside the airport, a certain trend can be seen with the colours, the chairs and tables, the partitions and the walls. The look is very modern but is also adapted to the area,” he said, when asked how consumers will react to the new interior design. Regarding growth in the region, Fakih could only speak for the UAE region. “McDonald’s has been in the UAE for 21 years and we’re currently operating 135 restaurants. We want to open between 12-15 restaurants this year,” said Fakih. McDonald’s has one developmental licensee in the UAE, which means the franchise cannot be sub-contracted to another party. In other countries, like France or Germany, which are bigger, one owner can sub-franchise the restaurant. But in the UAE one licensee develops and operates all the restaurants. On a wider scale, the franchising model in Middle East is based on a master franchisee model, where one franchisee fully owns and operates McDonald’s restaurants in a single country. The exception is Saudi Arabia where, due to the sheer geographical spread of the country, McDonald’s has two master franchisees. “A McDonald’s franchisee must have the following characteristics: high integrity, business experience in the market, history of success, ability to work well with a franchisor, ability to complete a training programm that can take about nine months,

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PRODUCT FOCUS

Skimming the edge OF CYBERSECURITY ANTONIO ANTONUCCIO, VICE PRESIDENT AND MANAGING DIRECTOR FOR MIDDLE EAST AND AFRICA AT DIEBOLD, TALKS COMBATTING ATM CYBERCRIME

ecurity is one of the most critical features of an automatic teller machine (ATM), as this device is exposed to the risk of various types of attack including physical (e.g. safe attacks), fraud (e.g. skimming) and logical (e.g. installation of malware). Luckily, in the UAE the risk of physical attacks or assaults is low compared to other countries, with skimming, a fraud carried out by compromising an ATM by using a card-reader device, representing the most serious security threat local banks are facing. In fact, today skimming accounts for 98 per cent of financial losses at the ATM, according to Marketplace. com. It constitutes one of the most common ways that cybercriminals can defraud financial institutions worldwide, with the cost to the global financial industry amounting to more than $2 billion annually, according to the ATM Industry Association. A skimming incident at the ATM carries an estimated cost of $50,000 per ATM attacked.

An analysis of overall skimming statistics also suggests that skimming attacks are increasing across the globe. According to a 2013 study of data breaches by Verizon Enterprise Solutions, ATM skimming currently makes up the majority of breaches. Criminals continue to invest substantial time and effort in perpetuating card fraud and as some countries have moved to adopt Europay, MasterCard and Visa (EMV) security standards, fraudsters have refocused their attention on the markets that still have a prevalence of magnetic stripe based ATM transactions. We are seeing an increase in skimming attacks also in Middle East, including the UAE and Saudi Arabia, with various central banks in the region issuing alerts after skimming attacks were carried out by organised crime groups. Non-skimming-related ATM card attacks also continue to be a threat to financial institutions, with over 5,200 card trapping incidents reported in 2014 in Europe

alone, according to EAST’s 2014 European ATM Crime report. The first ATM malware incidents–‘cash out’ and ‘jackpotting’ attacks–were also reported in Western Europe last year, representing losses of EUR 1.23 million. In summary the threats that banks face with their ATM networks are continuously evolving and skimming attacks are some of the most damaging ones. Having led the inception and evolution of the ATM in the Middle East for over 15 years, Diebold is helping local banks to fight against skimming and other criminal activities by offering technologies to protect customers and also by promoting the development and adoption of industry best practices and standards. Diebold’s most sophisticated antiskimming solution to date is ActivEdge, a solution which has integrated security features in the design of ATMs. Following the product’s launch in the United States in 2014, it has been launched in the Middle East as cont. overleaf

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It is essential to improve and adopt security technology in order to stay ahead of today's sophisticated devices and fraud attacks. – Antonio Antonuccio, Vice President and Managing Director for Middle East and Africa at Diebold a response to the growing need in the region for protection against skimming. Current skimming technologies and devices rely upon their ability to read the full magnetic stripe to copy the card data. For a prolonged period of time, the industry has tried to outsmart and outpace fraudsters by adding alarms, disruptors, detectors and other secondary technology. The best way to address the skimming threat was to do so head on, i.e. approaching it from a different angle–literally. Users of an ATM equipped with the card reader are required to insert their cards into the reader through the long edge rather than the short edge. By shifting the card’s angle by 90 degrees, ActivEdge prevents modern skimming devices from reading the card’s magnetic stripe in full, thus preventing them from stealing the card data. Criminal alterations to the card reader or from the reader to the central

Antonio Antonuccio processing units are also prevented through encrypted technology, thus further limiting the criminal’s ability to capture and steal data from the card. When asked, consumers said they did not mind changing their card insertion behaviour for more secure transactions. Consumers inserted their cards correctly on the first attempt, or were quickly able to determine the proper way to insert the card.

With the strong prevalence of cash and the continued growth in the number and use of ATMs in this region, it is essential to constantly improve and adopt security technology in order to stay ahead of today's sophisticated devices and fraud attacks. Financial institutions and consumers should be aware of evolving threats and take the appropriate actions to reduce the risk of attacks, knowing that this is a race which never ends and needs to be fought every single day.

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IT department –ZOO OR A SAFARI PARK? NIGEL MOULTON, CTO EMEA, VCE, DISCUSSES WHY A COMPANY SHOULD CONVERGE ITS IT SKILLS

Nigel Moulton

ow often do business owners take a walk around their IT division? What do they see? More importantly, what do they not see? Are the professionals responsible for storage, networking and server virtualisation programme working together or apart? Could any of them step into another’s shoes, move across teams or come into work tomorrow morning prepared to turn things upside down and do it all differently? In short, does the average IT department resemble a free range safari park or a set of zoo enclosures? The answer is important. The skillset and culture of an IT infrastructure team could make or break a company’s chances of becoming a successful digital enterprise. The simple truth is that an agile, customer-centric business cannot be built on a disconnected IT infrastructure, managed by a disconnected team. To achieve the integration, speed, scalability and resilience a digital business needs, the company’s IT infrastructure needs to

be converged and the same must be done with the team. It is easy to underestimate how radical and unsettling this could be for the IT professionals in an organisation. First of all, IT convergence involves breaking down barriers between organisational siloes, standardising and automating processes and changing the way these are monitored and managed. Converged infrastructures can resemble IT services more than hardware systems. For many of the professionals working in infrastructure, that can be quite a leap, professionally and emotionally. Most IT professionals will instinctively translate these changes into, at best, a loss of familiarity, influence or authority and at worst, unemployment. Few will see it for what it can also be: a chance to upskill, future-proof their professional career and invigorate their skills, or a release from the monotony of maintenance to add creative value elsewhere. Secondly, today’s highly-trained IT professionals are likely to have followed an established course of education and

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– Nigel Moulton, CTO EMEA, VCE

professional development, sometimes up to chartered status and beyond. The learning frameworks for these qualifications can be slow to change. Many still reflect the requirements of an earlier, more traditional IT environment; with computing, networking and data storage covered in isolated modules. New courses are needed, and needed now. A converged environment, for example, requires a deep, blended skill set including all the above areas, as well as a good grasp of management, design, software, service delivery and wider business needs. Further, the introduction of convergence supports other emerging IT roles, which themselves combine different skill sets. These include information architects, who blend system administration skills with an understanding of how these systems integrate with existing technical operations and business processes; and DevOps professionals who fuse development and operations to transform the speed at which applications are created and deployed.

Change in one area influences and is influenced by change elsewhere. One by one established IT operations, development and service roles are being transformed. CIOs and their frontline IT managers need to work with HR to understand and address the implications of this ripple effect. Industry commentators are divided on how well CIOs understand this. According to Gartner, 81 per cent of CIOs are overly-focused on the near term, the next three years at most. At the same time, the IT industry trade association CompTIA expressed surprise at the revelation in its 2015 global workforce survey that in an age of digital technologies it’s the skills gaps in networking, storage and computing that are accorded the greatest priority. There is clearly a gap between the infrastructure skills companies have and the skills they need. Training in new infrastructure solutions such as converged and hyper-converged technologies is becoming business-critical. Not just informal, on-the-job training to meet immediate needs, but robust, certified

training. The practical benefit as well as the emotional reassurance of this should not be underestimated. CompTIA’s study showed that a significant 44 per cent of respondents in the UK say that IT certified staff offer more value to the organisation, with certification in infrastructure technologies topping the list in terms of overall added value and ROI. For example, our own VCE Certified Professionals Program, introduced in April 2014, helps IT professionals to develop the skills needed to design, deploy and manage converged infrastructure as a seamless, single environment. Every month, around 500 newly certified VCE converged infrastructure professionals return to their desks ready to change the world. It’s time to break down the walls of resistance and tradition that are suffocating IT. No-one embarks on a career in technology hoping that every day will be the same as the one before. IT professionals need to rediscover their thirst for knowledge, their passion and their aspiration to become more, and CIOs need to lead by example. The age of cages is over and the open savannah awaits.

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TECH FOCUS

The skillset and culture of an IT infrastructure team could make or break a company’s chances of becoming a successful digital enterprise.

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Disconnect from CYBERCRIME PAWEL MISZKIEWICZ, PRINT HARDWARE CATEGORY MANAGER, HP MIDDLE EAST, LOOKS AT THE INSECURITY OF NETWORK-CONNECTED PRINTERS

Pawel Miszkiewich

rinters are an integral and ubiquitous part of the workplace. They have their own hard drive, operating system, and direct network connection. They are essentially just like PCs. But while everyone is aware of the need to secure and protect PCs, people don’t think of printers as similarly fallible. Ponemon Institute research, commissioned by Hewlett-Packard, has shown just how many companies are ignoring the threat printers pose. Out of some 2,000 IT professionals across North America, EMEA, Latin America and Asia Pacific, surveyed by the institute, only 44 per cent of respondents said that their organisations’ security policy includes network-connected printers. If a printer is accessible via the internet, the field of potential hackers becomes virtually limitless. The main threat is that printer could provide hackers with a point of entry to access the company’s network. This could result in the installation of malware on the printer itself to control it remotely

or to gain access to it, which could lead to the theft or loss of sensitive or confidential data. According to the Ponemon Institute, 64 per cent of IT managers believe their printers are likely infected with malware. Yet at the same time, 56 per cent of enterprise companies ignore printers in their endpoint security strategy. As well as theft or loss of data via a printer, attackers could also send bizarre print jobs to it, use the printer to transmit faxes, change its LCD readout, change its settings, launch denial-of-service (DoS) attacks to lock it up, or retrieve saved copies of documents. The security risk that networkconnected printers pose is also expected to increase due to the expanded use of mobile technologies, the increased rate of malware infection, the growing army of remote workers and more and more network connected devices. This may explain why most respondents–some 57 per cent–predicted a data breach resulting from insecure network-connected printers in the next 12 months.

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TECH FOCUS

While secure printing technology is a key to safeguarding your network, attention needs to be placed to how employees interact with and use these devices, so that they don’t become the weak link. – Pawel Miszkiewicz, Print Hardware Category Manager, HP Middle East

REDUCING PRINTER VULNERABILITY

Technologies that help pinpoint highrisk printers, such as those containing malware, are critical, according to 70 per cent of respondents. HP has been working with end users to reduce the threat of malware, including the use of printers that detect and thwart malicious BIOS attacks; whitelisting, which ensures only known, good firmware can be loaded and executed on a printer; and run-time intrusion detection, providing in-device memory monitoring for malicious attacks. Securing printing technology can reduce internal threats as well as external threats (e.g. malware and hackers). This includes user identification, through PINs or other verifications, that can eradicate the risk of the wrong person picking up a document as can using printers installed with physical locks and shielding on input trays to avoid theft or loss of documents. Data encryption protocols can also prevent jobs / documents from being intercepted

while travelling across a network, while advanced security controls and authentication through PINs, biometric solutions or smart cards that have to be used before access is granted, can also secure a device’s control panel. While secure printing technology is a key to safeguarding your network, attention needs to be placed to how employees interact with and use these devices, so that they don’t become the weak link. According to HP’s research, 56 per cent of respondents believe employees in their organisations do not see printers as an area of high security risk. This could lead to negligence when using printers and other peripheral devices that contain sensitive and confidential information. To combat this, stringent training and to address the appropriate handling of sensitive and confidential information is required. This needs to be delivered and assessed frequently to ensure compliance. The types of information generated and/or printed in different

departments vary, as does the security risk these printers pose. According to our research the mostly likely places for a data breach to occur via a printer is in executive management, sales and human resources. In such departments, printer-related security practices and access controls must be strengthened. Currently only 30 per cent of respondents say their organisation has a process for identifying high-risk printers. At present, printer security is an overlooked security risk. As a result, most organisations are pessimistic about their ability to prevent the loss of data contained in printer memory and / or printed hardcopy documents; what’s more, 60 per cent acknowledge that they have experienced a data breach via a network connected printer. There are however a variety of measures, both in terms of policies, practices and advanced technology, that every company can take to stop hackers and malicious attacks in their tracks and keep their data and sensitive information safe.

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LAST WORD

Sticking to THE RULES

STEFANO IANNACONE, MANAGING DIRECTOR OF MAPEI DISCUSSES CONSTRUCTION, CHEMICALS AND CALIFORNIA An important part of my day is also spent in ensuring our team is ready to face all the daily challenges that come our way. I travel extensively throughout the region, visiting clients, distributors and project developers.

What plans do you have for the business over the next 12 months?

Stefano Iannacone

What does Mapei do?

Mapei was founded in Milan, Italy in 1937, and is now a world leader in the production of adhesives and chemical products for building. The Group counts 71 subsidiaries with 66 production facilities in operation over 31 countries and five continents with Mapei Construction Chemicals LLC as the UAE’s subsidiary. Products are manufactured to the most stringent health, safety and environmental requirements as well as complying with the latest material standards such as GSO: ISO 13007-1 and GEV.

What does your current role involve on a day-to-day basis?

In my capacity of Managing Director my role is to ensure that our organisation runs smoothly to ensure we are providing our clients with the best possible solutions. I also take an active role in meeting customers, authorities and all involved stakeholders and decision makers in our industry.

We are looking at expanding our presence in the region. From Dubai our activities span over a large geographical region going from Jordan to Pakistan, the Arabian Peninsula and selected countries in East Africa. Apart from Mapei Doha (established in 2014), the next 12 months will see our efforts put in setting up direct presence in some of the most attractive markets in the region.

What is the GCC market place like currently for solutions such as yours?

It’s well-known that governments in the GCC have started posting deficits in their budgets since the oil price has started falling last year. The construction industry, and especially those investments in infrastructure, is largely financed by public funds and there will be some delays in execution of some of the new projects. Despite this, I believe that the construction industry will still see a growth over the next 12 months.

What is the most challenging aspect of what you do? Being able to create a stimulating work environment and keeping my colleagues motivated to stand out in every activity they are responsible for.

WHO DO YOU CONSIDER A MENTOR AND WHY? I have met many people who inspire me and I treasure of their opinions and suggestions. Naming them wouldn’t be fair to them. WHAT IS YOUR FAVOURITE TRAVEL DESTINATION? I enjoy spending time in new destinations. I enjoy Southern California where I went to school and where I feel at home. WHAT ARE YOUR HOBBIES? I enjoy reading, playing golf, running and spending time with my loved ones. WHAT IS YOUR FAVOURITE QUOTE? “I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.” – Leonardo da Vinci WHAT IS YOUR FAVOURITE BOOK? Le Petit Prince by Antoin de Saint Exupery.

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