BMEU 2

www.bme.eu.com • Q4 2009

Child’s

Play Lego’s youthful CEO Jørgen Vig Knudstorp has made rebuilding the toy giant look easy. He explains why age is no barrier to success.

PAGE 28

PLUS Herbert Hainer, CEO, Adidas Robin Dargue, Group CIO, Royal Mail Kevin Eyres, European MD, LinkedIn BMEU COVER.indd 1

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FROM THE EDITOR 5

The future beckons Why nobody can afford to ignore the online networking phenomenon.

E

very second a new member joins the networking website LinkedIn. It’s a staggering statistic, matched only by the kudos of the site’s elite membership, which includes Bill Gates, Barack Obama and Hillary Clinton. That the world’s most powerful figures in business and politics have joined the LinkedIn club, is testimony to the fact that the site offers access to a vast global audience and a highly effective platform from which to be heard by that audience. As we hear from Kevin Eyres, European MD of LinkedIn in this issue, the site has become a powerful business tool that is used by executives to research investment opportunities and even recruit staff. Indeed, as a result of the rise in the use of the site as a recruitment tool, sign-ups by new members have increased, despite the economic downturn. This is particularly true in countries that have been the worst hit, such as Spain and the UK, where membership is up 60 percent and

“As CEO you are always a role model, whether you like it or dislike it, because people look to you and follow what you do, both good and bad” Herbert Hainer, Chairman and CEO of Adidas (Page 34)

40 percent respectively. The power of LinkedIn and its counterparts in the social networking space, Facebook and Twitter, and the pervasiveness of online social networking as a communications tool, is certainly not lost on the advertising industry. In this issue we also interview Simon Francis, CEO for EMEA at the advertising giant Saatchi & Saatchi. He describes how online social networking has transformed the way companies communicate with their customers and that traditional “push advertising” has been overtaken by the use of networking and content sharing websites as a means of establishing a dialogue among consumers about a product. In other words, social networking has put the power back in the hands of the consumer.

Evidence of this can be seen in the advertising campaigns it creates for Saatchi & Saatchi clients, including a recent award-winning campaign for T-Mobile, which involved 350 people breaking into a spontaneous dance routine at a London

train station. The campaign appeared in print and on television but it received the most attention on YouTube – a whopping 14.5 million hits.

The phenomenal success of LinkedIn, even against the backdrop of a global recession, shows that online social networking is here to stay. As companies emerge from the recession it is a business phenomenon they cannot afford to ignore.

Instead, like Barack Obama and Bill Gates, they should embrace the future of online business communications and harness it to their advantage. Those that do not keep up with the latest trends will be left behind as the European economy recovers from the gloom and enters a new business era. n

“Last year the wholesale curve went up or down on average by four percent every week. A weekly price change is much higher than our margins so you have to get pricing absolutely right” Kanat Emiroglu, MD of British Gas (Page 104)

“You can have brilliant ideas, but taking them from the idea phase to the stage where they really mean something for your customers is much more challenging than I anticipated” Werner Vogels, CTO of Amazon (Page 112)

Diana Milne Editor

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CONTENTS 7

Faster, stronger, higher

34

We go behind the scenes at Adidas to discover how boss Herbert Hainer is beating arch rival Nike into submission and why innovation is key to this sportswear giant’s future

28 Child’s Play Lego boss Jørgen Vig Knudstorp speaks candidly about his company’s reversal of fortune and the challenges of being a CEO aged just 34

48

42 From pillar to post Industrial action, modernisation and political controversy are all in a day’s work for Robin Dargue, Group CIO of the Royal Mail, as Business Management reveals

The Missing Link Find out from LinkedIn’s European MD Kevin Eyres why a new member signs up to the site every second

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CONTENTS 8

Defending the realm

86

A diplomatic approach to IT

Feeling the heat

72

104

54 Place your bets now

60 Phish tales

Dealing with security threats and dangers at online betting firm bwin

David Jevans on the growing threat from phishing crimes

EXECUTIVE INTERVIEW 58 Dr Artur Heil, TrustCenter 70 Brett Caine, Citrix Online 84 Philip Grannum, Cable&Wireless 108 Chris Methven, IHS 128 Dave Jackson, 328 Support Services

INDUSTRY INSIGHT

64 Meet the gatekeeper

HEAD TO HEAD 78 Unified communications 134 Hotel conferencing

With huge pressure on the shoulders of today’s security chiefs, we seek the advice of Paul Wood, CISO at Aviva

72 Defending the realm

94 Sky-high tech thinking

Meet Chris Coupland, Director of the Corporate IT Office at BAE Systems, one of the world’s most complex and high technology businesses

Taking technology to new heights with Lufthansa’s Dr Christoph Klingenberg

100 IT uncovered 82 Tomorrow’s communications landscape

Hear from the author of a book that sheds new light on the realities of being a CIO

With Frost & Sullivan’s Lavanya Palani Batcha

90 Charlotte Darth, Lawson Software 102 Dr Richard Sykes, Steria

104 Feeling the heat 86 A diplomatic approach to IT Technology transition advice from Tony Mather, CIO of the UK’s Foreign & Commonwealth Office (FCO)

British Gas Business Managing Director Kanat Emiroglu outlines the changing energy buying habits of Europe’s corporate customers

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ASK THE EXPERT

REGULARS

68 Francesco Chicchiriccò, Everett Italia 92 Fredrik Ring, Logica 98 Nick Mongston, JustSystems 116 Thomas S. Senger, Kofax

112 King of the jungle Why Amazon’s CTO Werner Vogels is focused on transforming the internet behemoth into the world’s most customercentric organisation

The knowledge

City guide

124 Life after a merger

14 The brief 16 European news 26 In my view 138 City guide 140 The knowledge 142 On the shelf 144 Objects of desire

With Stephen Archer of Spring Partnerships

118 Loyalty beyond reason The key to building brand value according to CEO for EMEA at Saatchi & Saatchi Simon Francis

130 Pillow talk Uncovering the secrets of the world’s most exclusive boutique hotels

King of the jungle

Place your bets now

112

54 118

Loyalty beyond reason

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The Park Hotel, Bremen, Germany 23 - 25 February 2010

CIOEU SUMMIT

CIO Europe Summit Spring 2010

Chairman/Publisher SPENCER GREEN Director of Projects ADAM BURNS Editorial Director HARLAN DAVIS Worldwide Sales Director OLIVER SMART

Editor DIANA MILNE Managing Editor BEN THOMPSON

The CIO Summit is a three-day critical information gathering of the most influential and important CIO’s from across Europe.

A Controlled, Professional & Focused Environment The CIO EU Summit is an opportunity to debate, benchmark and learn from other industry leaders.

It is a C-level event reserved for 100 participants that includes expert workshops, facilitated roundtables, peer-to-peer networking, and coordinated technology meetings.

A Proven Format This inspired and professional format has been used by over 100 executives as a rewarding platform for discussion and learning.

Associate Editor JULIAN ROGERS Deputy Editors NATALIE BRANDWEINER, REBECCA GOOZEE, STACEY SHEPPARD, MARIE SHIELDS, HUW THOMAS

Creative Director ANDREW HOBSON Design Directors ZÖE BRAZIL, SARAH WILMOTT Associate Design Directors MICHAEL HALL, CRYSTAL MATHER, CLIFF NEWMAN Assistant Designer CATHERINE WILSON Online Director JAMES WEST Online Editor JANA GRUNE

VP EMEA MAX FORD Sales Executives AMARINDER BAJWA, TONY KENNEDY, MOHAMED ATTIA, HELEN JACKSON, MAGGIE SCOTT

Finance Director JAMIE CANTILLON Production Coordinators HANNAH DUFFIE, LAUREN HEAL, RENATA OKRAJNI

“Great venue to meet with other CIOs and vendors in a single location; it really allows access to a lot of information in a short time”

Director of Business Development RICHARD OWEN Operations Director JASON GREEN Operations Manager BEN KELLY

George Vasquez, CIO, Community Medical Centers Subscription Enquiries +44 117 9214000. www.bme.eu.com

“It was of great value to me to participate in the summit.

I would definitely like to participate in next year’s summit. I got some valuable information and good contacts for future business relations” Birger Hague, CIO, Danske Bredband

General Enquiries info@gdsinternational.com (Please put the magazine name in the subject line) Letters to the Editor letters@gdspublishing.com

Business Management Queen Square House, 18-21 QueenSquare, Bristol BS1 4NH. Tel: +44 117 9214000. email: info@gdsinternational.com

Legal Information

Find Out More Contact CIO at +44 (0)2920 729 300 www.ciosummiteu.com

CREDITS BMEU2.indd 12

The advertising and articles appearing within this publication reflect the opinions and attitudes of their respective authors and not necessarily those of the publisher or editors. We are not to be held accountable for unsolicited manuscripts, transparencies or photographs. All material within this magazine is ©2009 BM.

GDS International GDS Publishing, Queen Square House, 18-21 QueenSquare, Bristol BS1 4NH. +44 117 9214000. info@gdsinternational.com

6/10/09 09:48:47

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UPFRONT THE BRIEF

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GREEN SHOOTS OF RECOVERY

Why cautious optimism is the order of the day in Europe.

It’s early days yet for the champagne corks to start popping in Europe’s financial districts, but a slow and fragile economic recovery across the region has begun.

Germany led the charge, with its economy growing 0.3 percent in the second quarter of this year. The news far exceeded the expectations of the government, which had forecast that the German economy would shrink by six percent this year. Several factors have contributed to its recovery, most prominently the €50 billion stimulus package launched by Chancellor Angela Merkel in February, accompanied by the car scrappage scheme which received over 1.7 million applications. These government initiatives have driven German exports to their highest levels in three years at seven percent France growth and have also experienced boosted growth in household and government expenditure. economic growth in the second Meanwhile, France too quarter experienced 0.3 percent economic growth in the second quarter – an upturn attributed by the government to increased consumer spending and strong exports. Like Germany, the French government announced a multi-billion euro stimulus package. It too is pushing for tougher financial regulations and signed the G20 Agreement in April, which provides for stricter controls on bankers’ pay and bonuses.

In contrast to the buoyant predictions of economists in France and Germany, the UK’s economic recovery is expected to be slow and fragile. The CBI Business Group has predicted that UK GDP growth will grow by 0.3 percent between July

0.3%

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UPFRONT

THE BRIEF and September from the previous three months and will rise by 0.4 percent between October and December. The growth has been prompted by the recovering global economy, the weak pound and the government’s quantitative easing programme. However the CBI has warned that this growth may not continue in the long term as there is no clear driver of robust economic growth. Also, unemployment in the country keeps rising, with the number of people out of work currently at its highest level in 14 years at 2.47 million.

The fragility of the UK’s economy is echoed across the region, where, despite positive economic indicators and green shoots of recovery poking through, the situation remains volatile and without the foundations needed for long-term growth and stability. This was certainly the message from the latest interim economic forecast from the EU Commission which warned that although the signs for an economic recovery are strong, thanks to government interventions, the sustainability of this recovery remains to be tested. It said it saw signs of an imminent recovery, but warned that the full impact of the economic crisis on labour markets and public finances hasn’t yet been felt so uncertainty is rife. And despite the unexpectedly positive outlooks in France and Germany, the EU’s overall forecast for the region remains the same with GDP expected to fall by four percent both in the EU and the Eurozone this year.

Much rests on consumer spending but while unemployment keeps rising across the region and banks remain cautious about lending despite having received government bailouts, businesses can only afford to be cautiously optimistic.

15

NEWS IN PICTURES

Belgian milk producers pour around three Illegal migrants stand behind a sign as they wait for the French police to million litres of milk on a field in protest over evacuate and dismantle ‘The Jungle’, a makeshift tent camp set up by illegal a growing industrial dispute about low prices immigrants near Calais, Northern France

French Prosecutor Jean Claude Marin arrives for the opening of the‘Clearstream affair’ trial in Paris. France's former prime minister and foreign minister Dominique de Villepin is suspected of orchestrating a leak in 2004 of a faked list of account holders at the Clearstream bank, which included French president Nicolas Sarkozy’s name

German Chancellor Angela Merkel inspects an Audi e-tron concept car of at the Frankfurt International Auto Show. Germany’s auto industry has been key to the country’s economic recovery thus far, fuelled, in part, by the car scrappage scheme

A waitress carries beer glasses at the annual beer festival‘Oktoberfest’in Munich, Germany.The 176th Munich Oktoberfest attracted around six million visitors

Italian Prime Minister Silvio Berlusconi on the set of RAI 1 television show Porta a Porta, in Rome. Berlusconi has been plagued by scandals since his wife announced in May that she would divorce him after he attended a young model’s 18th birthday party

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UK Online advertising has overtaken television advertising for the first time, according to new figures from the Internet Advertising Bureau and PricewaterhouseCoopers. According to the report, online spending grew by 4.6 percent to €1.85 billion in the first half of 2009, while TV spending shrank by 16.1 percent. Overall advertising in this period fell by 16 percent compared to the previous year. It claims that the recession had accelerated the migration towards digital advertising from print, radio and television.

UK retail giant Marks and Spencer has experienced a stable performance for the three months to September 26. Its UK sales dropped 0.5 percent but this was an improvement on the 1.4 percent drop experienced in the previous quarter.

Total clothing sales but increased by 2.7 percent and like-for-like food sales remained unchanged.

IRELAND Ireland is to receive €500 million to fund investment into wind power from the European Investment Bank. The loan will also fund an undersea power link with Britain that will enable the import and export of excess wind power between the two countries. Around €300 million will be allocated to fund the power link while €200 million will be allocated for wind farms. Ireland’s Energy Minister Eamon Ryan, said: “We are well on the way to becoming a world leader in green energy and the fight against climate change.” The loans bring the total amount of EIB support received by Ireland to €450 million so far.

FRANCE French bank BNP Paribas is to repay the emergency funding it received from the government early, by selling new shares to existing shareholders. It received the funding in March when the government bought €5.1 billion of its shares.

Investors will now be allowed to buy one share for each of the 10 existing shares they own at a price of €40 per share.

Following the announcement the bank’s Chief Executive Baudoin Prot said: “Thanks to the state’s intervention, French banks have played an important role in helping the economy and their customers during the recession.”

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EUROPEAN NEWS

SWEDEN The troubled Scandinavian airline SAS has signed a deal to sell off a majority stake in its Spanair unit to a Spanish investor group led by Consorci de Turisme de Barcelona and Catalana d’Iniciatives.

SAS also announced plans to sell its 47.2 percent holding in airBaltic to the airline’s management for €21 million.The carrier has suffered heavy losses in the economic downturn and has lost money in every quarter so far this year.

17

GERMANY Unemployment in Germany has fallen by three percentage points, according to the country’s Federal Labour Agency.

In September the jobless rate was eight percent, down from 8.3 percent in August.

A total of 3.4 million people were registered unemployed – 125,000 less than the previous month. However, Frank-Juergen Weise, the head of the Federal Labour Agency, warned that the figures were down to the usual seasoned upturn in jobs following the summer vacation and not a turnaround in the economy.

SPAIN Spanish authorities have called on the European Commission to ensure the planned takeover of Opel by Magna does not favour German workers. It is feared that Opel’s Spanish plant in Zaragoza could suffer heavy losses as a result of the takeover by the Canadian group.

Meanwhile, the German government has offered the Magna group loans worth €4.5 billion. This has prompted other countries with Opel factories to argue that there should be no link between jobs and aid. According to details published in the German media, Magna is planning to cut around 11,000 jobs from 45,000 in Europe.

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UPFRONT COMPANY NEWS

RELIABLE CHOICES

18

According to a new survey, UK internet users are more concerned about the reliability of their internet connection than any other aspect of their broadband service. The report, compiled by the comparison site broadbandchoices.co.uk, stated that over two thirds of those asked (70 percent) cited connection reliability as the most important factor when it comes to their online services.

In comparison, only 30 percent said the speed of their connection was the most important aspect of their internet access, whilst 25 percent said that value for money was what influenced their decision the most.

In a damning indictment of ISPs, over a third of people surveyed – 36 percent – said their top broadband complaint was poor customer service, with 55 percent of customers who had complained feeling, that they had not reached a successful resolution with their ISP. The findings follow research published by Ofcom, the telecoms regulator, in July.

eSIGNATURE SOLUTIONS– SAVING COSTS & ENHANCING SECURITY A handwritten signature is the most personBut the success of such a solution mainly al way of authentication. It is culturally ac- depends on its acceptance by the customer. With cepted and a clear expression of one’s own its STU-500, Wacom supplies a signature tablet will. In order to transfer these characthat enables the capturing of authentic teristics into the digital world, an signatures for internal documents eSignature solution should as well as for customer transacWith its guarantee maximum securitions, for example at cashier’s ty, not only as part of legal desks, points of sale, checkWacom supplies a requirements, but also as outs or self-service termisignature tablet that customers should fully trust nals.

The heart of this robust enables the capturing such a solution. It should tablet is a compact reflective of authentic signatures also be cost efficient with refive-inch TFT LC display. Users spect to the whole process and insign directly on the display with a frastructure involved. Finally – and this cordless, battery-free pen – exactly as they is the key feature for the acceptance of the so- would on paper. This is enabled by a real-time vilution by users – the visual signature quality sualisation of the signature screen and a paperhas to be extremely high so that the haptics of like surface of the screen. The reflective display the surface is as close to paper as possible. has a high contrast like The implementation of an eSignature normal paper. solution can speed up processes and reduce sources of error. It also enhances accessibility: electronic documents can be verified directly and can be viewed in connection with other documents without searching in different binders or archives. eSignature solutions also save a lot of time and money for copying or sending documents from a branch to headquarters and the other way round and make document transfer much quicker.

STU-500

FAST FACT THE RESULTS ARE IN AUTOMOTIVE

2%

CONSTRUCTION

€861,000 Average basic salary of a blue chip company executive Source: Guardian newspaper

On the Business Management website (www.bme.eu.com) we asked: which industry will recover from the recession first?”

These are the results:

23%

BANKING

48%

RETAIL MANUFACTURING

23% 3%

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COMPANY NEWS

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NEW SERVICES ACCELERATE E-INVOICING Basware, the leading provider of via the service. Strukton purchase to pay solutions, has Worksphere, a Dutch provider of launched further additions to its building-related technical systems Business Transactions e-invoicing and facility management, also has a service, allowing instantaneous e- similar strategy with their suppliers.

SITA NEWS Director of invoicing between customers and suppliers to speed up supplier acti- Financial Shared Services, Serge Flantua, says: “SITA NEWS is vation and rapidly increase the moving towards greater number of incoming euse of the Basware invoices. Senders can Strukton Business now mail invoices Worksphere Transactions instantly to their already recieves service with the customers by aim of reducing using their own of its invoices receipt of paper email software or electronically invoices to a miniprint their e-invoicmum in the next es by using a Baswarethree years. At the end of configured virtual printer.

The Basware Business Transactions 2009 we are aiming to receive 25 e-invoicing service is part of the percent of invoices through Basware Connectivity offering Basware’s e-invoicing service, which enable suppliers and buyers whether that is directly through of all sizes to transact electronically. true xml-invoices, PDF converSITA Northern Europe Waste sion or supplier self-service upServices (NEWS), the Dutch arm of load through the Basware the global recycling and waste man- Supplier Portal.”

Strukton Worksphere, which agement company, has a clear strategy in driving their suppliers already receives 40 percent of its intowards e-invoicing to reduce costs voices electronically, is aiming for a for both SITA and the suppliers. similar goal. By using Basware’s An existing Basware Business new services, Strukton is targeting Transactions customer, SITA is a 70 percent total e-invoice volume now encouraging suppliers to use after one year of using the service. the new sending options available www.basware.com

40%

CYBER CRIME IS ON THE RISE There was a 250 percent increase in 2008 in the number of computer bugs used by organised criminals to attack the IT systems of individuals, small businesses, governments and commercial organisations.

GLOBAL PERSPECTIVE With stability creeping closer in Iraq, the Middle East edition of Business Management took a closer look at the business opportunities in this resource-rich and battle-scarred Arab state. “Working in Iraq comes down to the risk versus benefit calculation for many company bosses...but there is a window open for all international companies,” says TIMOTHY MILLS, former President of the American Chamber of Commerce and practising international lawyer To read more go to www.busmanagementme.com

JOBLESS RATE CONTINUES TO SOAR The number of people out of work in the UK has risen again to its highest level in 14 years, official figures have shown. This is now the highest level since May 1995. In the

three months to July, unemployment increased by 210,000 to 2.47 million, which takes the jobless rate to 7.9 percent, according to the Office for National Statistics.

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UPFRONT COMPANY NEWS

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BRANSON GOES GREEN

ONES TO WATCH: TECH STARTUPS

Toon Coppens

Overview: Allows its users to meet new people and friends in and around their local area.

daily visitors: 500k YouNoodle Score: 93

Daily visitors: 250k YouNoodle Score: 86

Overview: A social video site that offers a mix of both amateur and professional content.

Founder: Benjamin Bejbaum & Olivier Poitrey

Mega-rich entrepreneur Richard in order or because we think a chalBranson looks as if he might be lenge is too great to achieve.”

Talking about one product he has about to turn Virgin into a mean, yet green, money-making machine. ‘discovered’, isobutanol, he told The He has started the Virgin Times, “isobutanol is wonderful, it Green Fund and has already in- doesn't absorb water, so you can pump vested a reported €50 million of it in the same way as petrol. And you his own money into the project, can make it from anything. Sugar is and has now turned his attention good. What if all the sugar that is now turned into soft drinks was to fundraising in order to instead, turned into add to the €170 The Virgin clean fuel?” Other remillion already Green Fund will newable energy in the kitty. plough around sources that will be Branson’s supported by the green enterinto growing Virgin Green prise is defying renewable energy Fund include biothe global ecosectors mass and solar power. nomic downturn, Branson has already inreaching its current total through a panel of institutional in- vested €2.5 million into the Carbon vestors and investment from War Room, a New York environmental ideas incubator. He has also led a €10 Branson himself.

The fund will eventually be million funding round in GreenRoad used to invest in renewable energy Technologies –a start-up that helps reprojects. Critics of Branson accuse duce car fuel usage. Then there’s the him of hypocrisy, because of the fact Virgin Earth Challenge, a €16 million that he owns an airline, a so-called prize fund which aims to find com“dirty business”, while simultane- mercially viable green technologies.

The Virgin Green Fund will ously campaigning for the environment. However, in response be based in London and San Branson has said, “We shouldn’t Francisco and will plough around stop trying just because we have not €100 million into growing renewyet put our own house 100 percent able energy sectors.

€100 million

Overview: Social media network for internet television and user generated content.

Founder:Ibrahim Evsan Daily visitors: 230k YouNoodle Score: 67

Daily visitors: 5m YouNoodle Score: 86

im services

Overview: Application service enabling on demand streaming of music.

Founder: Daniel Ek & Martin Lorentzon

Overview: Web-based messenger service.

Daily visitors: 160k YouNoodle Score: 78

Daily visitors: 210k YouNoodle Score: 80

Overview: First legal music search engine.

Founder: Daniel Marhely Daily visitors: 100k YouNoodle Score: 79

music

FAST FACT

social networks

Overview: Netlog (formerly Facebox) is a social network primarily used in Europe. As of Sep 09, it had over 52m users.

Founder: Lorenz Bogaert &

Overview: Performancebased multi-channel commerce.

Daily visitors: 1.5m YouNoodle Score: 71

Founder:Christian Heitmeyer Daily visitors: 3k YouNoodle Score: 57

commerce

€7.3 trillion Total cost to global governments of bailouts so far Source: BBC News

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NO REST FOR THE WICKED Where the startup parent companies/head offices are located

Belguim

France

Germany

UK

Netherlands

Spain

Sweden

Luxembourg

USA

Daily visitors: 30k YouNoodle Score: 71

Overview: Mobile software portal.

fashion

Overview: Mobile service.

Founder: Martin Smink & Evert Jaap Lugt

Daily visitors: 500k YouNoodle Score: 67

mobile

Daily visitors: 600k YouNoddle Score: 71

Daily visitors: 750k YouNoodle Score: 74

Overview: Web-based website editor.

Overview: Ad server for web publishers.

Overview: Search engine for finding people.

Daily visitors: 100k YouNoodle Score: 65

Daily visitors: 6m YouNoodle Score: 63

Daily visitors: 40k YouNoodle Score: 66

search

Overview: Pioneers of the personalised home page.

Founder: Tariq Krim

Overview: Virtual doll website for children.

web services

Overview: Social games for friends to play together over social platforms.

Overview: World’s largest online games website.

Daily visitors: 3.5m YouNoodle Score: 90

Daily visitors: 2.6m YouNoodle Score: 89

Overview: Games service which let’s its users put up small stakes on tournaments and games with the winner taking all.

As technology develops, the average British worker’s day appears to be getting longer, with 37 percent of Brits admitting to being a slave to their phone. One in five BlackBerry and iPhone users claim they spend a minimum of 10 extra unpaid hours per week making calls, responding to emails and sorting work problems in the evenings and at the weekends, according to a study by Rightmobilephone.co.uk. It found that around one quarter of the 1226 workers quizzed admitted to sleeping with their mobile beside their bed. The research also discovered that one in three work out of hours on a weekly basis; replying to emails via their BlackBerry and making urgent calls. Around 20 percent claim to spend a minimum of 10 additional hours of unpaid work per week in the evenings and weekends. Almost half consider their BlackBerry to have made their lives less stressful but almost 20 percent now feel pressurised to respond to client and colleague emails out of office hours and 35 percent claim to have had their evening or weekend ruined because of reading an email from an annoyed or demanding client.

Daily visitors: 1.6m YouNoodle Score: 81

gaming YouNoodle is an online platform for startups, early-stage ventures and the world’s top entrepreneurship clubs and competitions. It generates a score for every startup that is run through the Startup Predictor test. The YouNoodle Score acts like a personal credit score when a lender decides whether or not to take a risk and approve a loan. Based on a scale of 1000, the score indicates the feasibility and promise of a startup based on a number of complex factors.

SAVING FACE Everyone has heard of cigarette breaks, but how about a Facebook break? New research has shown that some employers in Europe are getting so fed up with workers wasting time on social networking sites that they are planning to introduce allotted Facebook break slots into the working day. The plan is set to be introduced after research from Employment Law Services showed that the European economy is suffering due to workers surfing the social networking sites. Giles Ridgeway, a leading consultant at (ELAS) described Facebook as

Overview: Online social strategy game.

Daily visitors: 40k YouNoddle Score: 58

a “curse”. He said: “Some companies feel some staff are failing to do the job they’re paid for because they’re spending too much time on such websites.”

“Some have said it appears to be a habit similar to smokers needing their fix of nicotine.” At the UK’s Portsmouth City Council for example, a ban has been introduced, and has been supported by leading business personalities, after finding out that staff were continuously logging into their Facebook accounts up to 270,000 times per month.

Ridgeway said that social networking sites are not a part of workers’ “legal entitlement” and therefore it is up to bosses to take this matter in

their own hands. He added that enquiries about how to control what some firms have described as “a new media menace” had been growing since the turn of the year. “In days past, staff would have gathered around the office tea trolley for a quick chat. Now, they can talk to friends on the other side of the globe from their desks,” he added. “But to remain able to do so means committing to doing the job they’re employed for. If they don’t and bosses take exception to what they believe to be an abuse, they could find themselves out of work and companies would be well within their rights to take such action.”

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IT CHIEFS SHOW SLACKNESS IT Security professionals admit that they are suffering from password fatigue when it comes to using their mobile devices, which leaves their data exposed to personal and corporate identity theft if these devices were to fall into the wrong hands. That’s according to a survey released today by endpoint data protection specialists CREDANT Technologies, who conducted the ‘mobile usage survey’ amongst 227 IT professionals with the majority drawn from companies that employ more than 1000 people. Thirty-five percent revealed they just don’t get around to using a password on their business phones and smartphones, even though they know they should as they contain sensitive and confidential information. Surprisingly, IT professionals are only marginally better at using passwords than the general population, with the survey discovering 40 percent of all users don’t bother with passwords on their mobile phones.

“It is alarming to note that the very people who are responsible for IT security are not much better at protecting the information on their business phones than most of their co-workers, who don’t necessarily know any better,” says Andrew Kahl, AVP of Operations and co-founder of CREDANT Technologies.

36%

FAST FACT

Number of European financial firms that are now more optimistic about the future of the economy compared to June Source: PricewaterhouseCoopers

ALLOW FOR THE ‘HUMAN FACTOR’ IN DATA SECURITY Any business manager knows that you can’t leg- engaged their laptop’s encryption solution. This is islate for human error. If you employ human be- why most stolen laptops still contain unencryptings, mistakes will happen, and these mistakes ed information, meaning businesses need safety nets, or technologies enabling them to remotesometimes involve confidential data. Laptops ly delete data from a stolen device. For are frequently stolen and criminals laptops stolen by opportunists in know it’s not necessarily the compubs, or on public transport, enputer that’s valuable – but the cryption protects data from prydata. So how do you protect asNumber of security sets from carelessness or malichiefs who have dealt ing but inexpert eyes – assuming the end user effectively engaged with a lost or stolen cious intent? Encryption should laptop encryption in the first place. If the be part of any layered approach to theft is targeted, the thieves sophistisecurity. It works well; it’s just a cated enough and the information desirable, shame so few companies enforce its use.

Research conducted by Ponemon Institute then even well-implemented encryption can be-

86%

found that 86 percent of IT security practitioners have dealt with lost or stolen laptops. In 56 percent of those cases, the loss resulted in a data breach.

Also, 50 percent of business managers polled dis-

come shaky. To account for the ‘human factor’, managers need to be realistic and plan for when a laptop goes missing.

Accidents will happen and laptops will get stolen. When they do, it’s vital that companies have a strategy to remotely delete sensitive data, keeping it from falling into the wrong hands. Computer theft recovery services are also useful, allowing businesses to retrieve stolen devices, determine if sensitive files were accessed, and contain the potential for further exposure. By anticipating the worst, businesses can mitigate the ill-effects of enduser negligence and arm themselves against data theft disaster. www.absolute.com.

WHICH BRANDS DID THE RECESSION HURT MOST? Along with the collapse of the world’s largest financial systems, and subsequent economic crisis, came substantial damage to consumer confidence. Shoppers put down their credit cards, sacrificed the big brands and made-do with less expensive products such as ‘supermarket-own brands’. With consumers cutting back on unnecessary purchases on a scale not seen since the Great Depression, which brands suffered the most as a result? According to the Business Week/Interbrand 2009 Best Global Brands Study, it is, unsurprisingly some might say, financial brands that have taken the biggest beating with some companies, like Citi and UBS, seeing their values halve. American Express is the most ‘successful’ financial brand in the list at No.22 (having fallen from No. 15 in the past 12 months), but it still saw its value drop by 32 percent. In comparison, Citi tumbled from No.19 to No.36, whilst UBS dropped massively from No.41 to No.72 after losing 50 percent of its value.

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TRANSACTIONS – THE LINK BETWEEN IT & BUSINESS

PROTECTION IS KEY

IT exists to serve the business. A business transaction is an end-to-end service that an IT application provides to end-users or to other related applications such as stock trade, account login, a product purchase or a billing inquiry.

Since businesses run on transactions, the best way to manage IT, from a business perspective, is to manage transactions.

Business Transaction Management (BTM) provides the highest level of application performance and availability, by helping IT to assure the quick and successful execution of end-user transactions and prevent problems. When we present BTM to organisations, a recurring question is, “How is BTM different than the monitoring tools we already own?” Many remain sceptical after hearing our value-based presentations, demos, use cases and ROI statements. However, there is a moment when prospects clearly see the power and uniqueness of OpTier’s BTM solution. It occurs when IT team members first see the flow of their own business transactions.

OpTier’s technology delivers end-to-end visibility of all business transactions, across all tiers, all the time. This unique ability allows IT applications and operations teams to isolate and resolve performance issues faster than ever before, using

Over the past year we have experienced extraordinary changes and disruptions to the traditional way financial services firms operate and investors function. Now more than ever, with the markets reestablishing a sense of normalcy, it is critical to refocus efforts to protect your business. Governments and regulators have ensured that corrective action is put in place to increase capital requirements and reduce risk. It is crucial to apply this collective focus on preserving the continuity of trading operations.

Snow storms, floods, earthquakes, power outages and even the flu have directly impacted the financial services industry over the past year. Of all the technologies available to traders today, voice communications are probably the most critical during an emergency. Traders need to make fast decisions, cover their positions and let customers know what’s happening. Are you prepared to address these issues head-on to protect your trading communications environment?

The continued evolution of communication technology at the trading desk and networks connecting financial service firms together has created an emergence of new trading floor designs and product solutions.

These new designs and solutions can improve business resiliency without putting a strain on IT resources and CAPEX budgets. ‘Thinbuilding’ and ‘Active-Active’ architecture techniques from IPC provide resiliency for traditional no building access or shutdown scenarios. The spread of swine flu has created the need to take a different approach. “It’s more of a mobility issue than a continuity issue,” explains Bjorn von Sydow, IPC VP of customer solutions. MAXaccess 1000, a soft turret solution from IPC addresses this scenario. MAXaccess allows traders to literally trade from anywhere, giving them access to all their private lines as well as preserving voice recording functionality and compliance. With just a PC, internet access, and a telephone, a trader can be up and running, virtually doing business as usual. While it’s difficult to be prepared for every possible contingency, specific proactive solutions can effectively minimise your risk.

far fewer resources. The combined effect of transaction visibility and problem resolution capabilities, simplifies the incredibly complex world of IT management and reduces cost and risk. Extra visibility is great, but the realisation of what BTM can achieve wouldn’t happen if the IT infrastructure were not discovered automatically. The additional value of capturing the business context of each transaction – the roundtrip, segmented response times and resource consumption – finally leads to, “Wow, now I get it! There’s no way I can get this information today.

This is the kind of view I really need.” Why do IT professionals need to experience BTM live before fully appreciating it?

Because seeing is believing.

For more information, email info@optier.com or visit www.optier.com

THE LOWDOWN: BUSINESS CLASS ONLY TRAVEL The news that British Airways has launched business-class only flights from London to New York has re-opened the debate over whether such services are profitable. In this infographic we break down the

business class fares* currently on offer from three European operators. In recent years three business class-only airlines, Maxjet, Silverjet and EOS, have collapsed after experiencing crippling low ticket sales.

BUSINESS CLASS

BUSINESS CLASS

BUSINESS CLASS

€3503

€3297

€3296

ECONOMY CLASS

€656

ECONOMY CLASS

€657

DIFFERENCE

DIFFERENCE

€2639

€2659

ECONOMY CLASS

€663

DIFFERENCE

€2839

®

Industry average for cost is €0.05 per kilometre * Fares displayed are for one-way journeys from London to New York

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NOW IS THE TIME TO START E-SIGNING Having a competitive advantage ic workflows. More and more is key for getting more business in companies realise that whenever all markets. As the customer is the paper is involved, a large amount core of all business transactions, of time and money is wasted streamlining the business process and security risks increase, thereby going paperless at the Point of fore many of them have already Sale/Service (POS) is a simple step started automating their business towards an improved bottom line. processes and document workflow procedures, leaving the xyzmo SIGNificant’s elecapproval stage as the tronic, digital and only component biometric signaThe goal is that requires the ture solutions need for paper. solve the chalDigital and elelenge of signing

virtualisation - ready IT network and infrastucture

electronic documents securely, while simultaneously reducing the costs and labour associated with paper-based processes, hence reducing the waiting time at POS, which generates more revenue and improves customer satisfaction. The fact that customers are used to signing with their handwritten signature, makes this solution an intuitive one thanks to its similarity to current paper-based processes, resulting in a facilitated integration process. All signs indicate that the time has definitely come to start embedding handwritten electronic signature solutions at POS in businesses of all sizes, as paper-based processes are rapidly being replaced by electron-

ctronic signatures replace the concept of traditional paper-based signing with an electronic one.

Signing the original electronic document saves companies the operational overhead of paperbased processes and enables them to truly optimise the way they work. Additionally, digital signatures safeguard electronic documents by allowing the authentication of the signatory and verification of the original document content. This cutting edge solution enables companies to take a step towards success and at the same time have a chance to contribute something to the environment.

Phishing may be down, but internet users shouldn’t rest on their laurels, as the latest research shows spam is rising as we move towards the Christmas holiday season. Symantec’s latest State of Phishing report has revealed a 45 percent reduction in phishing attacks in the previous three months.

However, this is likely to be a short-term lull, reflecting the end of a particular toolkit attack on social networking sites.

Symantec also anticipates an increase in holiday spam campaigns as spammers start to leverage the Halloween and Christmas holidays globally.

PHISH TALES

YOU CAN QUOTE ME ON THAT "For years statistics have registered an increasingly strong economic growth as a victory over shortage until it emerged that this growth was destroying more than it was creating” French President NICOLAS SARKOZY ponders the economic climate

“Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks” European Commission President JOSE MANUEL BARROSO on the EU blueprint to overhaul how banks and financial markets are policed

“If we don't move [now] there will be a problem. In two or three years it will be too late” CHRISTOPHE DE MARGERIE, CEO of French oil major Total, warns how underinvestment in the oil and gas industry, due mainly to the recession, will drive crude oil prices up to US$100 a barrel

Xymzo AD.indd 1

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UPFRONT 26 CHRIS VIEHBACHER, CEO OF FRENCH PHARMA GIANT SANOFI-AVENTIS, REVEALS HIS BUSINESS STRATEGY. My first objective is to continue to build on this notion of a global healthcare company, as opposed to a pharmaceutical company based in the US and Europe. This means having an acquisition strategy that really builds upon those things where we already have a strong presence. I don’t think the size of the acquisition necessarily matters. It’s a question of we all are looking to strengthen our companies as we face patent expiries, and some of us, like sanofi, have things upon which we can build internally; some of us have to seek more externally.

There will still be blockbusters, you just can’t count on them in terms of timing. You’ve got to have a business model in terms of cost structure, in terms of global presence, in terms of a broader health-care offering, that doesn’t make your growth and development of your company dependent on the next blockbuster coming.

I remain sceptical that we can always come up with them [blockbusters]. That doesn’t mean our research and development can’t come up with new medicines, but they may not always be blockbusters. And if they’re not, then it’s not a problem.

In terms of R&D we started off a little bit behind some other companies, so we needed to do some catching up. With our portfolio review our intention was to do what a lot of other companies already have recognised, and that is that you can’t develop a new medicine unless it adds value to patients. And in so doing we’ve established new processes where the market is represented at the decision table as to when we advance a product – nothing revolutionary there.

One of the reasons we’re having difficulty in discovery is that we’re still pursuing a lot of the same targets. At some point you have to branch out and go after some non-validated targets, some new frontiers of science. We haven’t allowed enough of a risk profile at that level of the organisation to branch out into new areas. If we’re all going after the same targets then we’re not going to get much innovation. We have to be willing to take on even more risk I’m prepared to be one of the rare examples of being optimistic about the outlook. We have such a focus on the patent cliff, but that’s not where the future is – the future is healthcare. Certainly in our company we’ve got a lot of talented people, we’ve got a lot of financial resources and there are a lot of patients out there. We’ve got a lot of medicines and vaccines that can help them so we’re going to be a company that grows well into the next decade. We need to get past the blockbuster phase, but the base business that we have and our ability to partner and do acquisitions gives me an awful lot of excitement for the future. Health care is still something that matters more than anything else – there is huge unmet need out there. It’s a massive marketplace, and if we’re a little bit creative and a little bit flexible in how we go after it there are big opportunities.

IN MY VIEW

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CFOS IGNORING SUPPLY CHAIN RISKS AS COST CUTTING TIGHTENS Chief Financial Officers (CFOs) in organisations across the globe are shunning risk management in favour of cost cutting, and are failing to treat supply chain dangers seriously enough according to a major new piece of research, The Cost of Control, released by a leading academic and Basware.

Findings from the study revealed that in spite of a highrisk economic environment, CFOs are failing to recognise the importance of closely managing supply chains through procurement, with just 28 percent of respondents to the study saying that they believe procurement has a significant impact on financial risk exposure.

Commenting on the findings, Professor Adrian Done of Barcelona’s IESE Business School said: “Businesses today are defined by their supply chains and some of the high profile business failures of the last 12 months point to this as a root cause.

Finance departments across the globe have been guilty of ignoring the real value that their procurement teams can bring for

decades now, so there is real truth in the suggestion that CFOs aren’t making the most of what can be an invaluable asset in the fight against the recession. The subsequent finding that only 46 percent of financial chiefs see real integration between purchasing and finance processes makes this particularly alarming, as it represents a major break between two departments that should be working closer than ever to combat the downturn,” he continued.

The Cost of Control also reveals that businesses are leaving significant levels of data and process out in the wild, making accurate visibility of corporate accounting next to impossible.

CFOs surveyed admitted that only 42 percent of indirect spending was being captured by their organisations, and that only 50 percent of purchasing processes were automated.

DON’T MISS...

130 PILLOW TALK Mr and Mrs Smith cofounder James Lohan reveals why every boutique hotel wants a spot in his esteemed guide

For more information visit www.basware.com

86

COMPANY INDEX Q4 2009

A DIPLOMATIC APPROACH TO IT

Companies in this issue are indexed to the first page of the article in which each is mentioned.

How UK Foreign & Commonwealth Office CIO Tony Mather manages IT transition for this globally dispersed organisation

328 Support Services 6,128,129 Absolute Software 22,65 Adidas 34 Air France 48, 140 AltaVista International 48 Amazon 112 Anti-Phishing Working Group 60 Apeptic 41 Astoria Hotel 134,137 Augustine Hotel 133 Aviva 66 BAE Systems 72 Bain Capital Ventures 48 Banque LBLux 100 Basware 19,27,63 Bluelock 4 British Airways 48, 140 British Gas 104 bwin 54 Cable&Wireless 84, 85 Capita 72 Central Telecom 2 Cisco 52 Citrix 70, 71 CNBC 48 Department for Work & Pensions 86 Detica 72 Diageo 42 Emirates Airlines 140 Everett 68, 69, 122

Facebook 72 Flextronics 28 Foreign & Commonwealth Office 86 Frost & Sullivan 60 Goldman Sachs 48 Google 48 IHS Global 108, 109, IBC Honda 132 Hotel Negresco 134, 135 IBM 72 IPC Information Systems 23, 67 Juniper Networks 96 JustSystems 98, 98 Kofax 45, 116, 117 Lawson 90, 91 Le Meridien Al Aqah Beach Resort and Hotel 131 Lego Group 28 Lehman Brothers 34 LinkedIn 48 Logica 92, 93 Lufthansa 94, 140 Mars 42 Meet The Boss 106 Mercedes IFC Mr & Mrs Smith 132 Netscape 48 New York Times 48 NewsGator 11 NHS 42 Nike 34

Nokia 144 Novell 9 OpTier 13, 23 Oracle 72, 75 Panasonic 144 PayPal 48 Philips 144 Puma 34 Royal Mail 42 Saatchi & Saatchi 118 sanofi-aventis 26 SAP Ventures 48 Schneider Electric 56, OBC Sequoia Capital 48 Smartphones 78, 79 Spring Partnerships 124 Steria 102, 103 Swissair 132 TaylorMade 34 The McGraw-Hill Companies 48 Toshiba 144 Transcend Executive Search 127 TrustCenter 58, 59 Unilever 132 Vmware 110 VoipSwitch 47 Wacom 18, 61 Warner Bros. 28 Wyless 78, 81 Xyzmo 24, 25

104 FEELING THE HEAT British Gas MD Kanat Emiroglu discusses how he is spearheading change to support companies through turbulent times

COVER STORY

Child’s

Play

Since 1932 Lego has entertained generations of children and was run as a tightly knit family firm. But when the company came close to collapse it took an outsider to save it from financial ruin. Diana Milne meets the company’s CEO and saviour Jørgen Vig Knudstorp.

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D

espite having been responsible for his company’s dramatic reversal of fortune aged just 34, Lego CEO Jørgen Vig Knudstorp is disarmingly modest. “I don’t need to brag,” he says. “I’m not the kind of CEO that boasts about how well we’ve done because I’ve learnt that it’s other people who do the majority of the work to get there anyway.” It’s not the kind of admission you’d expect from the head of one of Europe’s biggest toy makers. But then Knundstorp is not your typical CEO. He came to the role in 2004 with no previous CEO experience, having graduated with a PhD in business in 1998. At the time his appointment was greeted with scepticism by the press and Lego employees alike. Indeed, Knudstorp says that even he doubted his own credentials: “Six years after graduating I became CEO of one of the biggest companies in Denmark. Since I felt I was slightly underqualified for the job, I took a humble approach to the team, the organisation and the customers. I said to them ‘Look, I’m not going to pretend I have all the answers, so why don’t you help me out’. And that, in fact, has become a trademark of the way I run the business.”

By 2008 that low-key approach, combined with Knudstorp’s sharp business acumen, had more than made up for his lack of management experience and produced results, which soon silenced his critics.

Reversal of fortune

“My job was to look at how to stop the bleeding, how to stabilise sales and how to cut costs dramatically to deal with the new reality of selling 40 percent less than we did two years earlier”

At the time Knudstorp took up the role, Lego was in the midst of the biggest crisis in its history and close to complete collapse. The previous CEO, Kjeld Kirk Kristiansen, who is also the owner of the company, relinquished his post and took a gamble by employing a young, gifted business graduate in the hope that he would see a light at the end of the tunnel where others had failed. Describing the company he inherited, Knudstorp says: “In 2003 we pretty much lost 30 percent of our turnover in just one year. The decline continued in 2004 with another fall of 10 percent. So one year into the job, the company had lost 40 percent of its sales. And of course we were producing record high losses and cash flows were negative. My job was to look at how to stop the bleeding, how to stabilise sales and how to cut costs dramatically to deal with the new reality of selling 40 percent less than we did two years earlier. On top of that the US dollar had declined dramatically in value, which is a keyy currency ts weren’t for us. We had too much capacity, it was sitting in the wrong countries, our products sharp enough and the retailers were very unhappy.” Knudstorp set about creating a seven-year strategy for the company called Shared Vision, to restructure and stabilise the business, boost sales and reduce debt. “To describe what we did we use the slogan, ‘We changed everything but the brand’,” says Knudstorp. “We really revamped the business and the product portfolio, and we dramatically increased

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Lego’s profitability.” By 2008, Knudstorp’s efforts had paid off. Lego grew at 20 percent, and in the fi rst half of this year it had increased its sales by 23 percent over the previous year, achieving profit of €124 million.

Lego’s achievements are all the more impressive given the tough global economic conditions and the fact that the toy market is currently suffering heavy losses. Knudstorp believes that the fact that Lego’s own fi nancial crisis preceded the credit crunch meant that it was in a far better condition to weather the storm than many of its competitors: “I think we were extremely lucky to get our fi nancial crisis at a time when it was possible to go through restructuring. We restructured the debt and sold off assets asset such as businesses and properties. And of course at that time we sold [properties] at the top of the market. It would have been a lot ha harder to sell commercial properties today. So I think we were fortunate fo that we got that crisis and it sharpened our senses

“I think we missed out a bit on transistors and microchips and computers when that emerged. But we’re not going to miss out on digitalisation.

I’m committed to bringing this business into the 21st century”

of how to operate the business.” He goes on to say that the long-term o the world toy market means that Lego and its competitors decline of hi as hard by the downturn as companies in other industries: are not hit ma “The toy market over the last 10 years has been flat to declining by one perce And we’re talking about an IMF forecast for the world or two percent. economy this year to decline by 1.3 percent. In that sense we can say to the world economy, ‘Welcome to our world’, because we are used to operating in a declining industry.”

Sentimental value Where Lego differs from many of its competitors in a declining market however, is in the strength of its brand. The Lego Group has existed for 77 years, since Ole Kirk Kristiansen started his wooden toy business in 1932. Although the toys have evolved considerably – in particular recently to embrace robotics and computer technology – the iconic Lego bricks are still enjoyed by generations of children around the world. Th is continuity, in terms of Lego’s products and brand values, gives it an even greater advantage in times of economic uncertainty, says Knudstorp: “A brand like Lego is very iconic, but also nostalgic and well established and it’s something that the consumers understand. They also understand the play value – the number of play hours associated with the toy – is very high. And I think that in times of crisis we hark back to something we know has a lasting value.” Knudstorp’s original strategy of changing

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Happy days

everything about the company but the Lego brand itself reflects the fact that its traditional product lines have retained their popularity despite the introduction of many new product lines, including the Power Miners, Bionicle and Racers ranges. Indeed, during the fi rst half of this year it was the classic product lines, such as Lego City and Lego Star Wars, that remained the best-sellers, says Knudstorp. “These two product lines represent two very classic patterns of play,” he explains. “Lego City is all about the real world and your role in it. You can pretend to be a hero such as a policeman or a fireman and it’s a familiar environment where you create your own towns and so on. That is an evergreen of children‘s and especially boy’s, play. Star Wars is what I would describe as a modern day fairy tale. It is so iconic in the way it portrays the confl ict between good and evil. There’s an immense number of fantastic characters in it and Darth Vader in particular is a classic modern character.” He goes on to say, however, that the company is keen for its toys not to glorify violence or warfare: “The Lego of my child-

work, Being the CEO of Lego may be hard of joys the rp dsto Knu to g but accordin far er mak toy urite favo pe’s running Euro es: nsid dow outweigh the re you tell “Lego is one of those brands whe ly most eous ntan insta and do you t people wha t be so happy.’ of them say to me, ‘Wow you mus the brand and They smile when they hear about had with ’ve they es rienc expe they share the children. their with or hood child Lego in their told it’s be truth use beca me, for t And it’s grea hard plain just it’s es etim Som fun. not always ess addr to s issue of lot a are e work and ther happy to on a daily basis. But it makes me y’. And I luck so re you’ ‘wow say hear people think of ot cann I and am ally think yes I actu In this ng. havi of m drea ld wou I any other job proud of be can we job a t wan all we day and age ething we feel where we’re not manufac turing som ronmental impact bad about and that has a bad envi that the more or is making people ill. I truly feel d, because we we sell, the more we do for the worl y so that they teach children how to think creativel in life, that they all believe they have opportunities teach them how to can all invent something. And we tical fashion. So think in a very struc tured mathema I’m very happy in my job.”

hood was the one that appeared to be more naive and containing less violence and confl ict. Today we’re defi nitely trying to break some barriers in how far we’re willing to go in terms of the characters being evil and having weaponry. We still have a view that we don’t want to glorify warfare and we don’t make any war toys.”

Striking a balance between making its products relevant to the modern child and retaining the look, feel and simplicity of Lego’s traditional toys has been an important part of Lego’s business strategy, says Knudstorp. It has achieved great success in this area through its collaboration with Warner Bros. on the launch of the Lego Star Wars video games, which,

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says Knudstorp, are currently the best selling video games globally.

Th is foray into the digital world, was done with trepidation by Lego, according to Knudstorp, who says the company was concerned that its traditional product portfolio could be put at risk by the move: “I have to admit that we had our fears that the video games could cannibalise the physical play experience,” says Knudstorp.

In the event, however, the video games have boosted physical toy product sales and vice versa: “With boys of that age there’s a strong synergy between the gaming experience we offer and the physical play experienced. We have learned that just as children still want to read books and not just watch movies they still want to have that physical Lego Lego has featured in video games and even building experience that cannot be replaced has its own dedicated amusement parks, by digital play.” and now it is hitting the silver screen.

The Lego movie is being made by Warner Bros. and will be a mix of live action and animation. The script is being written by Dan and Kevin Hageman, who wrote the forthcoming Hotel Transylvania feature.

Lego joins the likes of Transformers and GI Joe as the latest toy to be the star of its own film. Other toys believed to be heading to the silver screen include He-Man and the Masters of the Universe, Monopoly, Candyland, Battleship, Stretch Armstrong, View-Master and Max Steel.

Growth strategy

As well as diversifying its product portfolio, a major cornerstone of Lego’s Shared Vision strategy has been to re-examine its core markets and consequently re-think the location of its production facilities. In terms of its global markets, although the North American and Central and Eastern European markets recorded the strongest growth in the fi rst half of 2008, it still experienced its strongest demand d from Continental Europe. The European markets are where it hopes to achieve stronger growth, including Southern Europe, the UK and Ireland. “We have invested a lot in strengthening our operation, our retailer relationships and our marketing in those markets and that seems to be paying off very strongly,” says Knudstorp. “Now I think it’s a matter of us catching up to a more natural share of these markets where we have, for various reasons, s,

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been underpenetrated in the last 10 to 15 years.” The US, however, is the place where Lego most hopes to grow its market share, and in the last three to four years, it has succeeded in doubling the size of its business there: “I think the big creature we have in our minds is the US market just because that is the world’s biggest toy market and Lego has a very strong brand in the US. We believe that from here onwards we will aim for a growth of at least seven to 10 percent a year.” With these strategies in mind Lego re-evaluated its manufacturing footprint four years ago and set up new production facilities in Mexico, the Czech Republic and Hungary, close to the markets it was targeting. To cut costs, last year it phased out an existing outsourcing agreement with the manufacturing fi rm Flextronics and decided to focus instead on internal production, at its Mexican and Hungarian facilities.

The sweeping changes enacted by Knudstorp are all the more impressive given the fact he came to Lego, an organisation that had been exclusively family-run for 75 years, as an outsider. The previous CEO was the grandson of Lego founder Ole Kirk Kristiansen and had been in place for 25 years. Luckily, says Knudstorp, he supported the changes that were necessary to ensure the Lego heritage could continue: “I was fortunate enough to have an extremely supportive and patient owner, which was quite amazing because he had been the CEO for 25 years before that and it was his business. A lot of people imagined it (the Shared Vision strategy) was a revolution against the way that he had been running the business. But the truth is it could not have happened without his very direct support. Th is was also the case in terms of long-term employees who know him and would not have followed my proposals unless they knew that he was supporting them. So in fact it contra has not been a case of contradiction and fighting each other. It’s been a matter of actually suppor supporting each other along the journey.”

But despite having successfully turned his company from an loss-ma outdated and loss-making business into a profitable global toy s maker, Knudstorp says this journey is by no means over. In a typical show of m modesty he says he is still some way off from com tackling the company’s two biggest challenges: globalisation and digit digitalisation: “If I’m a little bit blunt, I’d say we are a traditi traditional toy manufacturer with a strong base in Europe that’s really starting to drive its exports U That would hurt some feelings in the to the US. comp company but that’s the truth. I’m talking about how little we sell in Asia or South America and about expanding in the US. That seems a little late for a l of companies to start lot

Toy story Knudstorp describes how his childhood memories of playing with Lego helped to inspire his career: “As a child I had a big Lego collection. My dad was an engineer with Shell Oil and he was a very structured and systematic person and my mother was a kindergarten teacher who was very creative and emphasised all my creative skills. They both loved Lego; my father liked it because it suited the mindset of an engineer and involved constructing stuff in a very systematic fashion; my mother liked it because it offered the freedom of creative expression. This combination of systematics and creativity still inspires me today. I truly believe it’s the foundation of problem solving that on the one hand you have the hard skills of science and maths and logic but on the other hand you also have the soft skills of story telling, role playing, creativity and critical thinking.

I really think that is what Lego is all about.”

thinking about. And I’m talking about the fact that we are just starting to become a player in the digital space, or on the internet. Th is company was founded on wooden toys then moved to plastics after the Second World War. I think we missed out a bit on transistors and microchips and computers when that emerged. But we’re not going to miss out on digitalisation. I’m committed to bringing this business into the 21st century by globalising it and bringing in digital technologies.”

And judging by the high-profi le achievements of this low-key CEO so far, Lego’s future is in very safe hands.

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MANUFACTURING

FASTER,

STRONGER, HIGHER

Its iconic triumvirate of perfectly parallel stripes have been synonymous with sport for decades. But with profits tumbling in the year Adidas celebrates its 60th birthday, Chairman and CEO Herbert Hainer talks candidly about trimming the fat, beating archrival Nike into submission and why innovation is key to this sportswear giant’s future.

By Julian Rogers & Adam Burns

W

hen Barcelona FC’s playmaker Lionel Messi put his side two-nil up in this May’s UEFA Champions League final you could say the diminutive Argentinean tore up the celebration rulebook.

There was to be no acrobatic back flip, no belly-flop slide across the turf and no John Travoltaesque hip wiggling against the corner flag. Instead, in front of 72,000 fans packed inside Rome’s Stadio Olimpico, and millions watching around the world on TV, he removed one of his glossy blue boots and pressed it against his lips in an actions-speak-louder-than-words seal of approval. A few days earlier those very same F50i boots were personally presented by Herbert Hainer to Messi when he dropped by at Adidas HQ in Herzogenaurach, Germany. Whether the kiss by arguably the world’s finest player was impromptu or planned is irrelevant to Adidas because the boot’s sales shot through the roof after Barcelona’s victory. It was a marketing masterstroke.

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“It’s about being faster and not your size, otherwise

dinosaurs would be still alive and all the little animals dead.

It’s the fastest one who will win the race” the

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Adidas boss Herbert Hainer and Puma CEO Jochen Zeitz square up before a football match between employees of both companies, ending a 60-year feud between the two ďŹ rms.

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Hainer on heritage: “Since we acquired Reebok we repositioned it after identifying that one of the key pillars for this brand was the women’s business. Reebok has an extremely good reputation with the female consumer and was the company that founded step aerobics 20 years ago, which created a completely new way of fitness. So this is a heritage that Reebok still has in the mind of a lot of consumers. The first success that we already see with the new Reebok is the Number of women’s category. We have a new shoe, pairs of shoes EasyTone, which is the bestselling shoe in the Adidas produces industry at the moment. So, therefore, heritage every year can definitely be a very positive tool to guide you into the future, providing you use it right.”

200 million

Messi is the latest in a long list of sports superstars to don ‘the three stripes’ – stretching back to the early days when the company was founded by the late Adolf (Adi) Dassler (Das). The bedrock of Dassler’s business strategy more than half a century ago, was to engage with the athletes and pick their brains in order to manufacture and refine performance-enhancing and comfortable sportswear. It’s an uncomplicated ideology that has stood the test of time, according to Hainer. “Just a few months ago we re-launched the so-called Adi Dassler standards and we tried to educate everybody to go the way he did it,” Hainer reveals. “Adi Dassler spoke to the athletes when he brought in new and innovative products and tried to make improvements. We have to make the best products for the athletes and this is only possible if you are permanently in dialogue with the athletes, if you listen to them and work together.”

Hainer, who joined the company as a sales director back in 1987 before rising through the ranks to Chairman and CEO 14 years later, refrains from describing the Adi Dassler standards as a back-to-basics approach. Instead, he says it encapsulates that constant strive to manufacture better and more innovative products for today’s sportsmen and sportswomen. This is especially true in today’s competitive and fickle sports apparel market with trends evaporating just as quickly as they emerge. Adidas and market leader Nike still battle to see who is top dog, although the likes of Puma – Adidas’ domestic rival – and specialist sportswear and equipment manufacturers are snapping at their heels.

Ever since Hainer took control eight years ago he has refused to let the company rest on its laurels. The 55-year-old, who describes himself as aggressive in business and impatient to get things done, pushes Adidas, which produces 200 million pairs of shoes and 400 items of apparel a year, to perform like a lean, mean athlete. “In 2001 we had a great success story behind us and four or five good years after the stock market flotation but we had become a little bit too self-complacent, a bit too self-confident,” he recalls with a tinge of annoyance in his voice. “We were not aggressive anymore, the processes were not harmonised and our lack of innovation was shining through.” Hainer says his remit in the top job was to “revolutionise” the company and the Adidas brand.

Restructuring As part of this transformation he offloaded mountain sports company Salomon, although Hainer opted to hang on to the TaylorMade golf brand.

“Golf is a natural sport for Adidas,” Hainer explains. “We began 35 years ago when we made golf shoes for Bernhard Langer and for Sandy Lyle.” In 2005,

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US-based Reebok was aquired for €3.1 billion in order to strengthen the football championships and the Beijing Olympic Games. He says higher Adidas group and challenge Nike. Hainer also recognised that R&D was to be manufacturing costs and devaluation of currencies like the Russian rouble, the cornerstone of the company’s future success. Eight years ago R&D, which UK pound and Argentinean peso had an impact. Adidas also shelled out employed 30 staff, operated with a management tier between itself and the €100 million on restructuring measures. “Compared to the rest of the world board. So Hainer put measures in place to ensure they reported directly to the and compared to other industries, I think we are still doing very well.” head of marketing on the board. He also ploughed more money into the reAdidas holds meetings with employees every six months to update them search facility and doubled the team to 60. “This showed the importance we on developments, but during the downturn this has been stepped up to every gave to the R&D department within the organisation.” R&D was also dividquarter. Dialogue is paramount in this situation, Hainer discloses. “I want to ed into separate units – one facility in Germany and one in the US geared tokeep communication with the people going because everyday they hear negwards the lucrative American sports market. ative things in the news and then rumours start. If you don’t talk to people At his first press conference Hainer recalls how he placed a major then you never know what kind of rumours they have just heard and emphasis on innovation. He vowed to release one innovative prodyou cannot correct them if they are wrong.” uct every season – a completely new product and not just a In a similar fashion to how he shaved expenditure and change of colour. This pro-active approach to change and re-moulded the company in the first half of the decade, ambitious vision has made Adidas a different animal. “I Hainer says the crisis opened up opportunities to again definitely do believe that we are today much faster,” he antrim excess fat. “This crisis gives you a lot of chances Number of nounces, “much more proactive in how we cater to the to cut out the dead wood or cut out the fat that we Adidas group market, how we talk to our consumers, how we bring gathered over the last eight years. When you are peremployees at the products and concepts to market, as well as how fast we manently running from one success to the next and end of 2008 can react to certain trends. We are permanently bringing from one successful or record year to the next, you are new, innovative products to the market, and I think this is one gaining fat. You are not as aggressive anymore and you’re of the key success factors for us.” He also sees speed rather than not as strict anymore on cost controlling and process imthe size of a company being a game winner: “It’s about being faster and provement. So we took the opportunity to cut through, to change not your size, otherwise the dinosaurs would be still alive and all the little anthe way how we do business to a certain extent, to define new processes, to imals dead. It’s the fastest one who will win the race.” get faster, to get leaner and to get more efficient.”

Shortly following the cataclysmic collapse of investment bank Lehman Uphill battle Brothers last year Hainer says he instigated a policy dubbed ‘divest and invest’.

The dinosaurs eventually became extinct. In today’s marketplace it is On the one hand they had to slash costs, such as putting a freeze on hiring, but very much a case of survival of the fittest since the economic global meltcontinue to invest for the future, including the announcement of increased footdown and subsequent recession. In August, Adidas reported a massive 95 ball sponsorship and investment in company ambassadors. “We have to do the percent plunge in profits as consumer spending dried up. Sales grew in the hard and dirty work and to save costs and lose some people to make us leaner, Americas but shrunk in Europe and Asia. It was a headline-grabbing downbut on the other hand we take this money and we invest it into the future of the turn in fortunes for the sportswear titan but Hainer argues that this figure company.” Adidas has dabbled in a bit of shopping too, picking up two small needs to be put into context, especially in the year succeeding the European companies – Ashworth (golf apparel) and Textronics (chips and sensors). The

38,982

60 YEARS IN THE MAKING 1954 Germany’s football team battle Hungary with a competitive advantage. They are wearing Adidas soccer boots that for the first time feature removable studs

1960s ‘Fringe sports’ like athletics sees track and field stars donning ‘the three stripes

1970s Franz Beckenbauer lifts the World Cup in victory salute.

Germany had just beaten Holland 2-1 in the 1974 final

1949

1980s

Adidas is registered as a company, named after its founder: 'Adi' from Adolf and 'Das' from Dassler

After Adi Dassler's death, Adi's wife Käthe, his son Horst, and his daughters carry on the business

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latter will boost efforts to implement technology into products for runners and performance athletes. In these tough times Hainer, however, is quick to stress that Adidas won’t be cutting back on innovation and product development, especially with a lucrative football world cup in South Africa on the horizon.

Indeed, Hainer describes the world cup products in the pipeline as “fantastic” because “football is in our DNA.”

Perhaps anticipating the next question, he’s quick to dispel the notion that sports equipment can magically transform a Sunday morning footballer into a professional. It’s the same with golf. “A new golf club cannot make an amateur a professional, but it definitely can improve the game of a normal golf player from a handicap of 25 down to handicap 15, because he has the ability to play better with the club.” Adidas strives to make sport easier and more fun by introducing groundbreaking prodIdeas factory ucts, a case in point being a golf driver released The shift in emphasis toward the creative earlier this year – the R9 sporting an adjustable side has made a tangible difference to the Adidas ankle. Within a week of hitting the shelves it was products, even just on an aesthetic level, “It the highest selling driver on the marker. It’s a doesn’t help if the product is good but looks tersimilar story with the Reebok EasyTone running rible,” he says. Of course, new durable and lighter shoe with its in-built balance pods that create inmaterials are constantly improving products and, stability, much like the feeling of walking on a Business goals ultimately, the athlete’s performance. Take the sandy beach. EasyTone, which encourages tonWhen footballing heavyweights Germany humble football boot, for instance. Forty years ing in three areas of the wearer’s leg, has proved a and Spain locked horns in the final of ago it was a distinctly unattractive chunky black huge hit with people looking to work out.

Euro 2008 in Vienna, Austria, Herbert leather shoe with half a dozen studs protruding “Therefore, in my opinion, innovation is the key Heiner says he found himself in sporting from the sole. Today’s boots come in a wide array to success,” the boss acknowledges. nirvana. However, this overwhelming of colours, are fashioned from tough, lightweight R&D at Adidas adopts short-term and longfeeling of satisfaction wasn’t just because synthetic materials and don’t absorb water like a term vision simultaneously. One part is dedicathis beloved German side were within roll of kitchen towel, á la the previous generation ed to improving existing products or producing touching distance of being crowned of boot. It probably explains why Messi was so products for new seasons based on existing techEuropean champions. No, the pragmatic keen to publicly smooch with his F50i. “A boot nologies; the other is about starting from scratch businessman inside him was rejoicing used to weigh around 400 grams but today it’s with less time pressures to find that next big because the eyes of the world were focused 200 grams, so it’s 50 percent lighter and, of thing. Being able to steal a march on the likes of on 22 players decked out in Adidas course, if you don’t have to carry so much weight Nike with a groundbreaking trainer, sweatshirt or on your foot you can run faster or you can run football can prove invaluable in the tussle for sulonger,” says Hainer, a semi-professional footpremacy. For example, Hainer notes how his baller in his youth. “Today a football player runs 13 to 14 kilometres in a game company was the first to roll out the ‘intelligent’ trainer two years ago. The shoe but it was seven to eight kilometres 20 or 25 years ago. You can’t do it in 400could automatic adjust the cushioning by measuring the wearer’s weight and gram leather boot sucking in water. The new materials offer functionality, staanalysing the hardness of the ground. “Developments like that take longer,” he bility and cushioning.” remarks. “It’s a complicated process to put a microchip into a shoe, ensure it

1995

2000

The company floats on the Frankfurt and Paris Stock Exchange

The European Football Championships and swimmer Ian Thorpe’s three gold medals at the Sydney Olympic Games boost sales. The following year Herbert Heiner is appointed Chairman and CEO

1996 At the Olympic Games in Atlanta Adidas equips 6000 athletes from 33 countries. These competitors scoop 220 medals, including 70 golds. Apparel sales increase 50 percent

1997 Salomon Group with the brands Salomon, TaylorMade, Mavic and Bonfire is acquired

2005 Adidas snaps up US rival Reebok.

Hainer describes it as a “major strategic milestone”

2009 Lionel Messi shows off his boot after scoring in the UEFA Champions League final, sending F50i sales into orbit

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Q. With your products being manufactured in India and Indonesia there is a perception Adidas is putting profits before the wellbeing of the workers. What’s your reaction to this accusation?

Herbert Heiner. “We completely outsourced our production 15 years ago but this does not mean that we are losing responsibility for the Adidas group production process and for the people who are working in the production facilities. has Around 10 years ago we started to work in concept stores and works, and glue together different components like close cooperation with our suppliers to metal and polyurethane.” factory ensure that the people are treated well. We Whilst Adidas keeps a watchful eye on what the comoutlets have a social and environmental department petition is up to in terms new products, technologies and to take care of this, and we publish an annual sponsorships, the company’s priority is focused solely on its report that clearly gives targets and objectives of own work and the brand. “First and foremost, we look to ourselves, what we want to achieve in cooperation with our what our mission and where we want to be as a company in the future,” suppliers. This ensures no child or forced labour, fair wages, Hainer says. “Of course, we monitor our competitors quite closely, and this is sanitary installations and pregnant women are treated not only Nike; you have a lot of other competitors who are good in several infairly and it puts a restriction on how many hours they dividual categories, so you have good running brands, good tennis brands, work a week or per month. I do believe that we are one of good golf brands, and so on.” He adds: “If we have to adjust our strategy then the leaders in our industry, and I do believe that this is we do it, but on the whole we stay in the direction that we think is right for highly appreciated by the worker and by the consumer. I our company and for our brand.” go out at least once a year for a tour of between seven and Not all products, though, are hot sellers, he admits with a chuckle. The 10 days and visit the key suppliers in the Far East, talk to company has hundreds of staff dedicated to marketing so Hainer chooses to keep them, explain about new programmes, and ways we can his distance when judging whether a potential product will be a hit. “I’m far away improve. And I let our suppliers know as well what we are from looking at every product and saying, ‘this is right or this is wrong, and this expecting from them.” colour I do like or I don’t like this colour,’ because I’m not the target group. So most probably if I like it then it might be not too good for the market or the other way around. I give the responsibility to the experts and they can work in silence it’s his industry but because it keeps in touch with his employees. “I play sport and I keep a distance.” with our people, we play football and run together which gives you the feeling Despite his reticence to get involved with product development, he recogthat you are one of them and they can tell me what’s going on in the company.” nises the importance of being seen as an inspirational figure for his staff. It also Aside from getting sweaty in competitive football matches with his staff, means practising what you preach. “As a CEO you are always a role model, the pressing priority for this boss is to put the disappointing results of 2009 whether you like it or you dislike it, because people look to you and follow whatbehind him and steer Adidas back into positive territory. This he hopes to ever you do, good or bad.” Hainer offers up an example of this philosophy: “If as achieve “as fast as possible” by exploiting new markets. “There is still a lot of a CEO you talk permanently about sport and how people should be active but opportunity for us out there, be it individual categories or in certain regions you don’t do any sport, then they will see it and they will not believe you, and this of the world. India will be one of the next big emerging markets and I see plenapplies to whatever you do. There is a saying in Germany, ‘The fish always thinks ty of other growth potential for us in the years to come, which is what we are from the head,’ so your employees believe in what you make them do.” Perhaps trying to harvest.” In the mean time the race for sportswear dominance conunsurprisingly, Hainer is an advocate of team sports at Adidas – not just because tinues to rage.

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LOGISTICS

T R A L L I P FROM

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Efforts to modernise the UK’s Royal Mail Group have prompted crippling industrial action and political controversy. But for the man charged with making the changes, CIO Robin Dargue, the show must go on.

O POST

F

or a man at the helm of an organisation facing the biggest crisis in its history, Robin Dargue, CIO of Royal Mail Group, is remarkably upbeat. We meet as thousands of postal workers are mounting industrial action across the country to protest against modernisation plans. It’s familiar territory for Dargue and his team. In recent months Royal Mail has rarely been out of the newspaper headlines in the UK, with political controversy dogging efforts to modernise the service in the face of plummeting mail volumes and fierce competition from private operators. Dargue, however, cannot afford to lose his cool. Behind the scenes of the drama unfolding in public he and his team are tasked with delivering the technology to support a raft of cost savings and service improvements.

Describing why the modernisation is crucial to Royal Mail’s survival, he says: “We clearly operate in a market of falling mail volumes. We’re losing out to other forms of communications, be it email or text messaging. And we’re certainly operating in a market where there is competition. So what’s the transformation project all about? Well one is to get a cost base that is appropriate to falling mail volumes. Angle B is that we’re creating new products and services for our customers to replace falling revenue so that we are offering an edge against the competition.”

A 21st century challenge The transformation project covers supply chain visibility, mobile technology for front line staff and people systems and includes new products and innovations to improve customer relations, interoperability and the technical capabilities of physical products. The precariousness of Royal Mail’s situation means that it cannot afford to wait to replace its core IT infrastructure before new products and services can be put in place. Dargue describes therefore how it is delivering new core business processes using its legacy infrastructure while simultaneously replacing its core IT foundations to build the new set of products and to replace its entire e-business environment: “We’re keeping the ship afloat by delivering some cost savings and some new products now. That’s bought us time to replace those core foundations. Then we’ve got the right platforms and foundations to deliver the next set of products on.”

He admits the process is one of “orchestrated chaos”, particularly due to the need to speedily invest in the business following a delayed agreement with the government over funding for the modernisation project.

The delay means there is a tight time frame in which the project must be delivered: “It’s an issue in that everything has to be done at once versus if we’d

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got it [the funding] a year earlier. We could have phased it a bit more. It’s not an issue about the funding per se. It’s just that the projects got stuck on the docket and then magically, they all need doing at once. Well, that’s not really a world that holds much credence. You could call it orchestrated chaos. We’re trying to do in three to five years what most companies have had the luxury of 10 years to do.”

On the front line The challenge was made tougher by the fact, that historically, little money was available within Royal Mail to modernise services, meaning that when Dargue took on the role last year, having previously headed up IT for Diageo, he inherited a department that was operating with virtually no resources at all: “It wasn’t necessarily that investment in IT was low and everything else was high. There was no money in the corporation at all, so no investment anywhere. We had a phenomenally good IT function that was about ensuring the systems were stable and they operated everyday. And they did that in an environment where we had no money to invest. And I think they did a superlative job. They kept a €9.8 billion corporation going for next to nothing.” It was

ROYAL MAIL GROUP BRANDS

Royal Mail is a letters and packages business, covering the whole of the UK. Each working day it collects items directly from 113,000 post boxes, 14,300 Post Office branches and 87,000 businesses. There is a network of 70 mail centres, eight regional distribution centres and 3000 delivery offices. Royal Mail has a fleet of over 30,000 red vehicles and 33,000 bicycles.

a far cry from the global corporations Dargue had been accustomed to working for and a situation that meant the CIO had some tough decisions to make.

Across the board Royal Mail has made around 40,000 job cuts. Within the IT department, says Dargue, this meant refreshing the skills base available to carry out the modernisation project: “In terms of making these tough decisions it was in recognition of the fact that the world we were entering was different to the one we were in before. So we needed new skills around architecting, information security, business analysis, programme and project delivery. So was that a hard choice? Well it’s always a hard choice when people’s livelihoods are in the balance but the business direction was clear. We just had to make sure we had the new skills for the challenge.”

Luckily for Dargue, when it comes to making these changes and in securing the necessary resources to carry out the modernisation processes, he was backed up by the Royal Mail management, which he says place IT at the top of their agenda: “In this company IT sits on the Group Executive Board, the Letters Executive and the Post Office Executive board. It’s got the right seat at the table and it’s now got the right money in the plan.” Part of the reason for this is that IT has become core to Royal Mail realising its objective of

General Logistics Systems (GLS) is Royal Mail’s European parcels business and Parcelforce Worldwide is its UK partner.

Based at GLS head office in the Netherlands, it has 14,500 employees and handles over one million parcels a day, through its network of 667 depots, 29 central transhipment points, 16,000 delivery vehicles and 1700 long distance trucks. Its core operation is business-to-business parcel deliveries and it has 220,000 customers across Europe.

Parcelforce Worldwide is Royal Mail Group’s express parcels business.

It delivers around 150,000 parcels a day. In the last few years Parcelforce Worldwide has turned around its business and is now a key player in the competitive, unregulated, express parcels market. It has cut its losses from operations and introduced service improvements.

Post Office Ltd is a separate company within and part of the Royal Mail Group, which runs its 14,300 Post Office branches across the UK. It is the largest retail and financial services chain in the UK. The Post Office’s rural network relies on €170 million funding from the government but it continues to make a loss on its operations of around €2.2 million a week.

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HOW THE UK POSTAL SERVICE IS REGULATED introducing high tech services that compete with those of its competitors.

These include the rolling out of 27,000 PDAs to frontline staff which required it to build the UK’s largest wireless network to receive software downloads to the mobile devices. The company has also introduced Tracked Plus, which allows customers to track the progress of their deliveries online.

It has also branched out to extend its offers in marketing to small to medium enterprises and has launched mailshots online – a service which allows companies to design a direct marketing campaign online which is then sent out using address lists from the Royal Mail.

Cultural clash The introduction of these high-tech products and services as well as changes to working practices also mean a change in working culture at Royal Mail. The key to ensuring that the workforce embraces the changes the management is introducing is to stress the benefits it offers to them, says Dargue: “This is like change management in any company. There’s good ways of doing it and bad ways of doing it. With any change we have to make sure that we are clear about the benefits they bring to individuals. For instance, with the PDAs we’ve introduced two functions to help workers. One is that we’ve enabled the voice call facility so if you have a problem like an accident, you can use your PDA to call for help and raise the alarm. We’ve also put in satellite navigation functionalities. You’ve got to make it a win/win situation. Any successful change is usually routed on that premise.”

And Dargue has a very large workforce to win over. Royal Mail employs a massive 180,000 people across the UK, which constitutes around one percent of the whole UK workforce, making it the second largest employer in the country after the NHS. And he says one of the biggest challenges of intro-

T

he Postal Services Act 2000 established Postcomm, the Postal Services Commission, as the regulator of postal services providers in the UK. The Act requires Postcomm to ensure the provision of a universal postal service, at a uniform price, throughout the UK. Postcomm is also charged with promoting effective competition between postal operators where it is in the interest of customers. All companies or individuals that convey letters weighing less than 350 grams require a Licence from Postcomm. By December 2005 Licences had been granted to 15 companies, including Royal Mail Group.

Each licence is legally binding. Licensees are authorised to convey letters in the UK, subject to compliance with the conditions laid down in their licence. The conditions include the requirement to abide by postal services’ codes of practice, to provide information to Postcomm and to establish systems for handling complaints.

ducing new technology into a traditionally paper-based organisation is the fact that the workforce has such different technology skills levels: “There is a very large working population at Royal Mail but actually before we put PDAs out to the frontline staff, their interaction on a day-to-day basis with technology was very low. Within the organisation we have everything from the super users in departments like finance that are using complex technology, to the frontline staff using PDAs.”

Daunting prospect

Robin Dargue

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Given the scale of the challenge Dargue admits it’s not always easy to recruit staff to his department and that many are scared off by newspaper stories depicting a chaotic state of affairs at Royal Mail: “I’m very clear. I tell people how large the challenge is and how broken our foundations are. But I invite them to be part of the challenge so they can say they were there and they turned this company around. Some people are honest; they read the newspaper stories, whether it’s government, industrial action, or the network closure programme, and some of these things put people off. However, other people look at it and say they are attracted to the challenge and it’s people that are attracted to the challenge that we want to talk to.”

Dargue himself wasn’t put off by the challenge either, and left a lucrative position as CIO of the world’s biggest drinks company Diageo, a role he assumed aged just 36, to take up his position at Royal Mail. At the time, he said the fact that he was joining an organisation that had such large challenges, was actually an attraction: “I was attracted by the scale of the challenge. I also joined, very simply, because IT sits at the table here and is core to the strategy of the company.” And what keeps him going, he says, despite the organisation’s ongoing, high profile struggles, is a passionate belief in the heritage of this embattled institution and a determination that its legacy should continue for future generations: “I actually am motivated each and every day by the fact that the Royal Mail Group has been going for about 360 years and I don’t accept that we should fail to future generations. Every single day I’m doing my utmost to ensure we improve our revenue, our position, our products and our services. I see it as the duty of every single senior manager here to bequeath a better company to future generations.” n

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SOCIAL NETWORKING

The

missing

link What do Barack Obama, Sir Richard Branson and Bill Gates all have in common?

They are all members of the world’s fastest growing club, LinkedIn. Diana Milne meets European MD Kevin Eyres and finds out why a new member joins the networking website every second.

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W

hen the most powerful man on the planet joins your social network you know you’ve made it big. For the founders of LinkedIn, signing up President Barack Obama to their vast global membership was another chapter in a success story that has continued unbroken since the launch of the website in 2003. Even in the early days it quickly become clear that LinkedIn was destined for great things. The original five LinkedIn pioneers launched it from co-founder Reid Hoffman’s living room with 350 of their contacts. Within just one month it had 4500 members and by the end of the year 81,000 had signed up – half of which came from outside the US. Today a new member joins the website every second and it gains a million new members every two weeks. But it’s the pedigree of those members that is at the core of the website’s value as Kevin Eyres, LinkedIn’s European MD tells me at the company’s offices in London: “Typically the professionals on the site are affluent higher educated professionals whose average age is 40 and income is €80,000. Around 80 percent of them are university educated and they are the world’s decision makers.”

Kevin Eyres is focused on

Talent recruitment

However, while talent searching may have emerged as one of the most high profile LinkedIn activities during the recession, Eyres is keen to stress that it is by no means the site’s raison d’etre. Indeed he says that a closer examination of user behaviour reveals that recruitment “doesn’t even come close to being dominant”. In fact he says the biggest reason why people use LinkedIn is for knowledge gathering. Members of the site have access to a huge skills and knowledge base that they can call on to solve business dilemmas – a tool LinkedIn’s team regularly uses to help devise its own business strategy: “The biggest use of LinkedIn is really around how to get knowledge and information.

For instance we’re looking for knowledge and information about expanding into other countries. We’re trying to find some insight into how some of the different markets work. One of the ways we have found information is by posting some questions on the site or contacting some members of the site who are outside our immediate network that have expertise in a particular area. I have such a diverse network that I know I’ll find people who have the answers.”

A political animal The fact that LinkedIn provides instant access to an audience of the world’s top business people means that it has even become a political tool.

Eyres describes how both President Obama and the Prime Minister of

developing, leading and delivering the company’s strategy and growth initiatives in Europe. Prior to LinkedIn he was European Managing Director at SideStep, General Manager of AltaVista International, prior to the acquisition by Overture and a Director at Shopping.com. Eyres started his career as an engineer at Compaq Computers where he spent 10 years leading development teams. He holds a BS in Mathematics and Computer Science from the University of Texas in San Antonio and has six patents.

This elite membership, which includes Bill Gates and Sir Richard Branson, has made the site hugely attractive to job hunters and recruiters alike. Over 40 percent of Fortune 100 companies pay to use the site to recruit talent from amongst its members. This, says Eyres, is behind the rise in LinkedIn membership across Europe despite the recession. In countries experiencing some of the worst economic turbulence, activity has been greatest, with membership up 60 percent in Spain and 40 percent in the UK, since the start of the recession. “Our members are the movers and shakers of industry,” says Eyres. “There are a lot of companies that are looking for these types of people in order to help them navigate through times like this. Even in times when hiring is down from what it was in previous years, we see that people still need to hire the right people. And the more people that are looking for LinkedIn members to employ them, the more people are joining LinkedIn.”

Holland Jan Peter Balkenende have used the site to canvass public opinions on their reform proposals using the LinkedIn Answers tool which provides a forum for political candidates and campaigns to communicate with high level audiences: “The Prime Minister of Holland and Barack Obama are using it to engage with their audience. It’s amazing. Barack Obama is using it to ask people in the US about, for instance, healthcare reform, asking them what they think about the healthcare plan. It’s on the White House website with links to LinkedIn.” The use of LinkedIn to canvass popular option means that it is also emerging as a popular tool for research firms. Several of the world’s largest re-

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wouldn’t want to advertise to a mass audience. They advertise that to the types of individuals, based on company size and title, that they believe would have a higher propensity to buy these tickets. CXOs and people in the finance industry typically would be buying those fares so they can advertise to them directly on LinkedIn.” LinkedIn’s money making potential has attracted investment from the likes of Sequoia Capital, Bain Capital Ventures, Goldman Sachs, The McGraw-Hill Companies and SAP Ventures as well as a host of high profile angel investors, including Peter Thiel, co-founder of PayPal and Marc Andreessen, co-founder of Netscape. Describing the attraction of the company to investors, Eyres says: “Well I think it’s the one user every second statistic, the revenue lines and the fact that we are growing so much. It’s also that we have such a balanced business model that is not dependent on any one revenue stream like many other internet companies. We’ve been around a long time. We have a long history of success, not just from a membership standpoint but also from a commercial standpoint too.”

“People find great value in knowledge.

People in banking and finance need to make decisions pretty quickly across a broad set of subjects and they use LinkedIn to find the experts they need”

search companies have partnered with the site including Forrester Research, for which LinkedIn has been contracted to carry out the firm’s online Business Data Services surveys in 2009. Media content providers too are taking a slice of the LinkedIn pie with CNBC and the New York Times having signed agreements to provide online content to LinkedIn members.

The bottom line LinkedIn’s three main lines of revenue are premium subscriptions, corporate subscriptions and advertising. As it is a private company LinkedIn does not disclose its revenue but Eyres says advertising is growing at a rapid pace as companies come to understand the value of being able to reach their exact target audience – a feat rarely achieved in print advertising. Indeed he claims many companies are abandoning traditional print advertising routes for the more instant gratification that LinkedIn offers: “One of the reasons for that is the rich targeting you have on LinkedIn. The old saying in advertising is that everybody knows that 50 percent of advertising is wasted. The problem is you have no idea which 50 percent that is. With LinkedIn you can cut down that wastage and have a very targeted experience.” Giving the example of how this has worked for airlines, he says: “Air France and British Airways are two big advertisers that we have. They use the site to advertise their business class airfares, which you

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Competitive edge

LinkedIn may have been around a long time but social networking sites that have followed in its wake are snapping at its heels, particularly Facebook, which is seen as its potential competition in the recruitment sector.

Eyres does not believe however that LinkedIn currently faces any serious competition. “We definitely see ourselves as the leader. When you’re at 46 million and growing at one member a second, there’s a certain amount of scale that’s a real challenge to overtake. That said, we’re not sitting here saying that we don’t have anything to do now. We’re continually innovating. It would be really challenging for another company even to build all the features and functions that we have on the site.” He goes on to say however that LinkedIn’s edge is not its technology, but its members – an advantage that money can’t necessarily buy: “Features are not what really make the site in the end,” says Eyres. “It’s those 46 million members, 80 percent of which are university educated and it’s the fact that we have executives from every Fortune 100 company on LinkedIn.” Currently the vast majority of LinkedIn members work in technology or banking – with those sectors accounting for 30 percent of LinkedIn’s total European membership. The predominance of technology professionals says Eyres is a by-product of the fact that these people are generally early adopters of technology such as social networking sites. He goes on to say that the strength of the IT jobs market is also driving traffic to the site: “If we look at

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IT professionals, typically they are the first movers when it comes to technology. But also if you look at technology that’s where a lot of the jobs are as well and this cuts across every industry.” Meanwhile banking and finance professionals rely on the site as a valuable source of information to draw upon when making investment decisions: “People find great value in knowledge. People in banking and finance need to make decisions pretty quickly across a broad set of subjects and they use LinkedIn to find the experts they need with which to discuss, for instance, investment opportunities or if they are evaluating a new sector.” This thirst for knowledge is currently driving increasing numbers of professionals from the renewable energy sector to LinkedIn. In France alone there has been a 55 percent increase in members from the environment and renewable energy sector and Eyres believes this will be a huge growth area for the site in the future: “If you look at our fastest growing areas that’s where green energy comes into play. These people are looking to solve some really tough problems that are not local they are global. And how do you do that? By finding like minded people, wherever they are.”

The language of success While LinkedIn is very much a global online community, the company has been keen not to neglect non-English speaking professionals so has launched French, German and Spanish language platforms for the site – all of which have been immediate successes: French sign-ups to LinkedIn increased by 200 percent after the introduction of the platform in November last year and within two months of the Spanish launch 200,000 new members had signed up: “Language specific sites have been very successful for us,” says Eyres. “We see engagement levels increase after people switch to their local language. Communication is much more effective and natural for people in their native language.” These innovations are typical of LinkedIn’s innovative and adaptive approach to business; last year also saw the launch of the LinkedIn Intelligent Applications platform, which enables companies to develop professional applications for LinkedIn members. Applications now available to members including Amazon, Box.net, Google, Tripit and WordPress. It’s no surprise then, given LinkedIn’s forward thinking approach to business, to hear that it’s a great place to work. Describing the missionary zeal of the LinkedIn team, Eyres says: “All the people who come to LinkedIn are passionate about what they do whether it be sales, marketing, or product engineering or operations.

And we really do see that we are changing the way that people work. It’s a place where you dedicate a lot of your time and your effort and your thoughts because it’s a challenging environment. It’s a very collaborative culture with people who are genuinely dedicated to the overall mission of the company.” He goes on to say that the quality of the talent LinkedIn has attracted is testimony to this, with the likes of Google’s former Head of Operations Lloyd Taylor, former Google executive Dipchand Nishar and Patrick Crane, Yahoo’s VP of Marketing among its recent senior appointments: “If we’re able to attract high quality

professionals like that then they absolutely understand the potential of LinkedIn and they want to be part of that. It’s an unbelievable opportunity that people see.”

To put this opportunity into perspective, if LinkedIn’s numbers are correct then by the end of our 25-minute interview another 1500 members will have signed up to its network. It’s success on a scale that is difficult to grasp.

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GAMING SECURITY

PLACE YOUR BETS

NOW With the threats from hackers to high proďŹ le websites becoming ever-more prevalent, we catch up with Oliver Eckel, Head of Corporate Security at Austrian-based online betting site bwin, which processes 70,000 transactions a day.

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How do you strive to keep transactions safe and secure from hackers when just one security breach can have a serious effect on the business’ integrity, along with damage to reputation? And does being such a high-profile company increase your chances of being targeted?

Oliver Eckel. Online gaming is all about being high profi le. The brand and the reputation are very important in our industry. On the one hand our profi le perhaps increases the chances of being targeted, as the fi rst gaming company that comes to a hacker’s mind is probably bwin.

Then again, due to our size, we are in a position to invest more money and effort into securing our systems. bwin operates under a detailed, rigorous information security policy designed to protect the integrity and confidentiality of our fi nancial transactions. Security measures include, but are not limited to, the implementation of state of the art anti-virus protection on all computers, sophisticated fi rewalls to block unauthorised access to the bwin network, intrusion detection systems to spot suspicious behaviour and highly secure encryption systems to ensure that transmitted and stored information remains confidential.

In order to ensure the integrity of our systems, all changes are managed and need to be approved. Additionally, periodic audits of infrastructure, application and access rights are performed to ensure that systems are secure. For our source code audits, we use Fortify to make sure that potential vulnerabilities in the developed soft ware are identified and fi xed before deployment.

A few years ago many of the major betting companies, mostly in the UK, were bombarded by ongoing Denial of Service (DoS) attacks that crippled their websites. The hackers said they would stop the DoS threats in return for hefty ransoms. Was bwin affected by this and would you ever give into ransom demands like this?

OE. Occasionally, bwin is the target of DoS attacks. However, giving into ransom demands would mean that bwin is not able to set efficient countermeasures and doesn’t have the necessary controls in place, which is definitely not the case. As part of bwin’s risk management strategy, a layered defence strategy was adopted to mitigate the effects of service degradation pertaining to types of DoS attacks on applications, platforms and network service infrastructure. Dynamic monitoring allows automated spotting and analysing of anomalies, whereas in case of a DoS detection defensive measures are activated. Applications and infrastructure are regularly audited to detect systems prone to DoS attacks so that potential vulnerabilities can be fi xed before they can be exploited. Redundant systems and load balancers increase reliability and availability to act as a buffer in case of successful DoS on single machines.

What would you say are the biggest challenges that you face as Head of Corporate Security? Is following strict compliance regulations one of them?

OE. Assuring compliance is certainly one of the main challenges for me as Head of Corporate Security, as it includes more or less all other security-related challenges. As an international online gaming operator, bwin is subject to a wide range of laws, standards and regulations.

Therefore, compliance assurance is a major factor of our business continuity management. If we were to fail to comply with the requirements of our gaming licenses for example, we would be out of business in no time. Beside the regulatory requirements, we are also striving to comply with various industry and governance best practice standards and frameworks. Th is is extremely important for the development of our organisation. It helps us to raise the maturity of our processes and therefore improve the quality of our services, which gives us the edge

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over our competitors in an extremely dynamic market. On top of that, assuring compliance with several security standards, such as PCI DSS or ISO 27001, makes my life as Head of Corporate Security a whole lot easier, as I can rely on state-of-the-art security measures and processes being in place. So even the operational side and the daily security business is directly linked to our compliance efforts.

Sometimes the most serious security threat you face is from within.

How do you go about trying to prevent a rogue employee from stealing customer information or leaving bwin offices with confidential data possibly stored on a small memory stick?

OE. There is no doubt that the highest security risks for organisations can be internal ones, not external ones. Our strategy is to prevent data theft from happening in the fi rst place. We use state of the art access right audit tools and our back office application logs relevant events. Log fi les are collected and evaluated centrally by Corporate Security. Our dedicated Data Protection Officer ensures that access to data is kept to a need-to-know basis. Security awareness is constantly raised and everyone with access to sensitive data is informed about the consequences of a potential disclosure. With all these measures in place, we are confident that data theft at bwin is unlikely. In general, we feel that we are also handling the soft factor of data theft prevention well. So why are people tempted to steal data? Well, most of the time, they are unhappy with their job or their employer. At bwin, employees feel that each and every one is contributing to the big picture, which is nothing less than the

best online gaming platform in the world. We have lots of teambuilding events and there’s defi nitely a strong spirit within our organisation.

You have signed a deal with Fortify Software. How will it strengthen your security?

OE. We wanted to emphasise security awareness within the development department to make it a top priority. But we were aware that technology alone wouldn’t guarantee security. Other factors such as training and metrics were required, too. A concerted effort to introduce security procedures and technology at the earliest possible phase of development and throughout the lifecycle of the application helped us identify and fi x security vulnerabilities at the very beginning of the soft ware development lifecycle.

The integration of Fortify into the soft ware development process — especially in our nightly builds — helps to actively manage application security risk. As for PCI-DSS compliance, the automated scans and the reports generated by Fortify are crucial for passing the strict audits. Compliance, especially compliance with PCI-DSS, is a complex task and the more support you can get by deploying tools, the easier it gets. The most important benefit from deploying Fortify, however, is the general improvement of the development process with regard to security. Installing, deploying and dealing with Fortify’s results helps the company see application security in a new way. Development systematically weeds out vulnerabilities and executives receive detailed risk reports on a regular basis. Security is now a part of our corporate DNA like never before. Ultimately, bwin is able to deliver highly secure applications to our customers, which is critical in our business.

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EXECUTIVE INTERVIEW

Sign on the dotted line As fraudsters’ bogus emails continue to bombard our inboxes, we get the inside track on the use of email signature and encryption from Dr Artur Heil.

Why should a company implement email signature and encryption?

Artur Heil. Within the hyper-competitive marketplace of the global economy companies are challenged to keep pace with the market and strengthen the trust of their customers. Nowadays remote or mobile workforces are forced to use email communication for business-critical transactions like short-term submissions of proposals or approval processes. Only digital email signatures provide the necessary non-repudiation and tamper protection for those transactions. And no business wants to see details of a new product published prior to the product launch or sensitive customer data stolen by fraudsters.

Therefore, the encryption of confidential content is also mandated by best business practices or just common sense.

Are there any legal requirements to implement email signature and encryption?

AH. An increasing number of new guidelines and laws define the legal framework for secure processing, storing and archiving of business emails. An example is the EU Directive 95/46/EC on the protection of individuals with regard to the processing and free movement of personal data. So far only a few of them dictate the signing or encryption of emails, however some industries, such as utilities or pharmaceuticals, have already defined such requirements.

“Although you would think that today every user is well informed on how to recognise fraudulent emails, there are still a large number of cases of fraud using phishing emails” What have been the drivers for your customers to sign and encrypt their emails?

AH. Most of our customers are driven by the explicit demands of their customers. Although you would think that today every user is well informed on how to recognise fraudulent emails, there are still a large number of cases of fraud using phishing emails. The resulting damage for the companies concerned due to the loss of image or the loss of trust by their customers can hardly be expressed in numbers. The best reassurance for customers is a high-quality digital signature on emails. It confirms without a doubt that the email in fact comes from his bank, internet service provider or online service provider.

What are the critical success factors of an email security project?

AH. A high degree of user friendliness and low administrative and support overhead. These are at the top of the list of the criteria most often named by customers. It is a must that established business processes should not be hin-

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Dr Artur Heil is Director Marketing & Sales (EMEA) for TC TrustCenter GmbH. Heil has many years of management experience in sales and marketing at leading software companies, among them Symantec, AXENT Technologies, PassGo Technologies and Cybertrust. He has occupied his current role since 2007.

dered, for example with regard to rules for employee substitution during leave or when connecting mobile employees by using web mail.

Also the option to centrally implement a corporate-wide policy to ensure base-line protection for regular communication and to individually protect critical departments like research or development is of essential importance when selecting email security solutions.

What is the benefit of globally accepted certificates to an email-security solution?

AH. The benefit is increased user comfort and reliability. Email signatures and encryption can be achieved with any valid certificate. But with a self-issued certificate a recipient will be alienated by an alert telling him that the certificate used is not trusted. With a preconfigured root certificate in the email client, the validation of a globally trusted certificate is done transparently for the recipient and the certificate can be trusted without double-checking as it is issued following strict rules during the vetting process. So, if binding communication with external business partners is a priority, the use of externally recognised certificates is mandatory.

What is the differentiator of TC TrustCenter's approach to email signature and encryption?

AH. The TC Gateway solution provides the maximum level of automation and transparency for the user. The secure email gateway manages a company's entire email communication process centrally and automatically executes all necessary cryptographic processes in accordance with corporate policies.

The certificate rollout is carried out via an automatic interface already integrated as standard in many email gateways. Globally trusted certificates are issued on demand within minutes when a new user is registered. Our unique On-Demand PKI platform ensures rapid implementations and scalable pricing models whilst maintaining the highest security standards. n

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SECURITY

David Jevans discusses the challenges of fighting a global war on phishing and crimeware during the financial crisis.

Phish tales W

hen I founded the AntiPhishing Working Group in 2003, I thought that we would have eliminated phishing by mid-2004. How wrong I was.

The Anti-Phishing Working Group (APWG) was founded to bring together the diverse communities of banks, ISPs, e-commerce companies, security vendors and law enforcement agencies. Our core philosophy was to create a forum where these diverse players could talk frankly and honestly about the evolving phishing attack situation, without fear that these conversations would become public. Th is format proved to be immensely successful, and the APWG now has over 1500 member companies and government agencies.

In 2003, phishing attacks spread from attacks against eBay and PayPal customers to a wave of coordinated attacks against the customers of Australian fi nancial institutions. In the summer of 2003, these attacks were then aimed against customers of UK fi nancial institutions and in late 2003 US banking customers began to be targeted.

This global pattern indicated that cyber criminals were becoming just as organised as traditional crime gangs. They were testing new techniques in smaller markets like Australia, where users are easily targeted by their network address and because there are a smaller number of financial institutions. The model was then perfected and expanded in the UK, where there were still a small number of institutions, and an easily targeted customer base. The scam was then scaled up to the US market, particularly targeting customers of the top few banks.

It became clear that one particular group could not solve the phishing problem on their own. It would require cross-industry collaboration. Thus the APWG was formed.

As phishing scams became ever more sophisticated and professional, members of the APWG were able to discuss the evolving tactics and best practices for detecting these attacks, shutting down the phishing sites and tracking and reducing losses. In closed-door APWG meetings, members were able to discuss the indirect fi nancial losses from phishing attacks; for example, the costs of call centres receiving tens of thousands of phone calls from consum-

ers when a major attack was launched.

The APWG publishes monthly reports that track phishing statistics around the globe. These statistics allowed us to see patterns where some fi nancial institutions would be attacked with much more intensity than others. Eventually it became clear that one significant factor in the number of attacks that an institution faced was related to how easily criminals could transfer funds out of compromised customer accounts. We also began to see cross-channel fraud, where account numbers and PINs were used to create ‘white plastic’ ATM and debit cards.

Financial institutions started to realise that the phishing problem spanned all types of fraud, and was involved in ATM, debit card, cheque card, wire transfer, ACH and account opening fraud. More recently we have been seeing the telephone banking channel used as an attack vector, where phishers send out emails requesting customers to call a fake call centre, where the IVR system is used to collect account numbers and PINs from customers without them ever having to visit a spoofed bank website.

The cyber criminals fight back Th rough 2005 and 2006 the security community began to develop anti-phishing technologies and service offerings, such as outsourced takedown services, to get spoofed websites shut down in a timely fashion. The phishers responded by increasingly hosting their spoofed websites in foreign countries, making takedowns very time consuming, requiring foreign language skills and extended working hours to deal with sites hosted in varying time zones.

For every defensive measure that is put in place by the industry, the criminals react with a creative new approach to continue their fraudulent activities. For example, the security and web browser community began to track known phishing sites and share those web addresses as a block-list, which would allow browsers and email servers to prevent users from receiving known phishing emails or visiting known phishing sites. One of the prominent phishing gangs, known as the ‘Rock Phish Gang’, responded by using tens of thousands of sub-domains on their phishing sites, thus overwhelming the block-lists.

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Another example of escalation in the war against cyber fraud was the invention of fastflux technology by the leading phishing gangs.

Fast-flux is a DNS technique used by botnets to hide phishing and malware delivery sites behind an ever-changing network of compromised

A very disturbing trend over the last year has been the use of social networks to spread crimeware and phishing. There have been attacks against users of MySpace and LinkedIn that have infected tens of thousands, and in some instances up to a million users in a very

“We expect that the current global financial crisis will continue to give phishers new ways to create believable social engineering attacks” hosts acting as proxies. A sophisticated type of fast-flux is when multiple nodes in the fraud network register and de-register their addresses as part of the DNS record list for the DNS zone.

This makes taking down phishing and crimeware sites extremely difficult, as they are hosted on many machines with changing IP addresses.

The APWG and our members have been working with ICANN, the Internet Corporation for Assigned Names and Numbers, to create policies for rapid takedowns of fraudulent domain names that are being used to host phishing and fast-flux sites. This has been a multi-year effort, and there is still much work to do with policy and education among the registrar and registry communities.

short time frame. These attacks do not rely on traditional email, as they spread inside the social networks using their internal web-based messaging systems. Th is can make these attacks very difficult to track and profi le.

2009 and beyond We expect that the current global fi nancial crisis will continue to give phishers new ways to create believable social engineering attacks to steal account credentials and to spread crimeware. In the fourth quarter of 2008 there were numerous attacks against customers of major fi nancial institutions that were being acquired or were in the news as receiving government aid. In 2009 we can expect

an increase in money mule recruitment scams, where criminals recruit unemployed consumers to act as online funds transfer agents, or to reship goods that were purchased using stolen credit card numbers.

The rapid and continuous evolution and expansion of online fi nancial fraud through phishing, crimeware and social engineering is something that requires a coordinated global response from the fi nancial services industry, ISPs, security vendors, e-commerce merchants and law enforcement agencies. The APWG and our members have been working to expand our systems and tools for secure collaboration and data sharing. We have facilitated the sharing of phishing site URLs between members, and are expanding this to allow fi nancial institutions and security researchers to share information about fraudulent websites and IP addresses of known and suspected cyber criminals.

In these challenging fi nancial times, it is more important than ever for the fi nancial services industry, the security industry, ISPs and law enforcement to work together to share information and pool our resources to keep our customers safe, and to secure our assets.

Come and join us.

David Jevans is the Chairman of the Anti-Phishing Working Group. For more information, please visit www.antiphishing.org

CRIMEWARE ESCALATION

O

ver the last several years we have seen phishing augmented by the spread of malicious software that is designed to steal online account details. This malicious software that is designed for electronic crime has been dubbed ‘crimeware’. The crimeware wave seems to have started in Brazil in 2003, and has spread around the world. Crimeware variants are merged with remotely controlled malicious software to create networks of hundreds of thousands of compromised home computers (botnets) that are used by cyber criminals to launch phishing, crimeware and spam attacks.

The botnet explosion since 2006 has infected millions of personal computers around the world that are being used by criminals without the knowledge of the person who owns the computer.

Recent activity in the crimeware landscape is the evolution of targeted crimeware that is designed to get on to the computer of a targeted employee in a large corporation or government agency. Once that person’s computer is infected, the criminals can upgrade the crimeware to add new functionality to compromise other computers, steal

intellectual property, create backdoor access paths into the corporate network, or even to run customised software to generate transactions inside the company network. This represents the ultimate professionalism of the cyber crime industry, where crime gangs plot attacks for many months, and using highly sophisticated crimeware and targeted social engineering to get it into corporate networks. This is called ‘spear phishing’.

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IT SECURITY

Meet the gatekeeper With the potential for data leaks to inflict serious financial and reputational damage on organisations, BM seeks the advice of information security aficionado and Aviva’s CISO Paul Wood.

Information security is vital to almost every department within organisations today. What would you say are your biggest issues and challenges when it comes to protecting the business from security breaches?

Paul Wood. The issue today is around data loss more than anything else.

It is the thing that is in consumers’ minds as much as it is in the minds of organisations. The other issue aligned with this is the potential for fi nancial crime and the exploiting of personal data. The main challenge, however, is making sure that once something happens we are able to react to it appropriately, realistically and pragmatically. Often the issue becomes much worse if the incident response plan is not done in the proper and robust manner. It is about how we assess what that particular incident or breach was and how we risk assess what the impact became to the business. If it involved customer data then you have to assess the potential of that exposure for the customer. You need to see how you will limit that exposure, learn lessons from a particular mistake or error and how you will manage everyone’s expectation.

In the UK we have seen some pretty serious security breaches and confidential data going ‘missing’, even within government departments. From your experience what would you say are the common mistakes that organisations make when handling, storing and moving data?

PW. Understanding where data is at any one point in time is probably one of the biggest challenges organisations have. Also, getting the individuals inside businesses to understand the true value of information is a challenge in itself. So, a company may not adopt the appropriate security measures to reduce the potential for the risk of exposure of the data if it does become lost. This could mean not adopting sensible encryption measures, looking at how to stop or control data leaving systems or the area of mobile computing and how people use these devices. They may think it’s just a toy they have been given and don’t understand the powerful nature of what that particular device might contain.

In most organisations people are the biggest risk. In presentations I have given on security I talk about there being no patch for stupidity,

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which is about the ‘people risk.’ Often it is not deliberate but human error and mistakes or people trying to do the right thing but it goes wrong.

However, there is the potential of the disgruntled employee or there is the chance for someone who wants to steal corporate data because they want to take it with them to a new organisation. The risks are split about 80-20 percent. By this, I mean there is an 80 percent risk of theft internally and 20 percent externally. Lots of people talk about hackers and threats from the outside world but the risks are much greater internally for any organisation. Staff already have access to your systems, they understand your management processes and controls that you have in place and know how to work their way around them. The only thing you can do is to have good security education awareness, ensure people know that sensitive data theft and corruption of data – be it through planting malware or Trojans – is unacceptable. If you go back and look at the disgruntled ‘mal-intended’ events of the past you can nearly always predict that the event was a possible. The individual will have either exaggerated signs of bad behaviour or will have been disgruntled by the way they have been treated or will have been not happy with their pay review. But people then continue to let them have access to systems instead of realising this could be a problem child and there is a need to limit this individual’s access.

Paul Wood

“There is an 80 percent risk of theft internally and 20 percent externally. Lots of people talk about hackers and threats from the outside world but the risks are much greater internally for any organisation”

If you choose to outsource, again you struggle to define and protect the perimeter. What’s your advice in this area?

PW. I think the issue is about protecting the data and not the perimeter.

It doesn’t matter how the data is being processed and what mechanism is being used to access the data because it’s about ensuring that the measures you put in place to protect the data are correct. It doesn’t matter if it is a laptop or desktop or a portable device – it’s about making sure you have the appropriate level of encryption, controls around access and that you are regularly reviewing that the people using these devices have the right level of access. You also need to educate people about not sharing passwords and log in details but if you do discover this to be the case you need to deal with it effectively and promptly in line with your policies.

At Aviva we outsource a fair amount of our call centre and backoffice processes and a bit of IT development. We do very thorough due diligence over selecting the partner we are going to do business with because we have to make sure that the negotiations and discussions over security parameters are very clear. It’s important that they understand that this is a two-way undertaking and that we want them to operate as if they were part of our organisation and apply the same rules and processes. It’s a partnership approach to make sure we get to where we want to be so in reality it’s no different than the outsource company actually working inside Aviva.

How do you weigh up the risks versus the reward of introducing new technology for Aviva employees? For instance, a technology may allow for greater productivity from staff but is a risky proposition from a security standpoint.

PW. We look at a new technology, conduct a risk assessment to see where the weak points are and the counter-measures we can introduce, and arrive at a position where we are all comfortable.

That may mean that for a period of time we don’t get the full benefits of that productivity if we feel the risk is too high. Equally, it may mean that we live with it [the security concern] but we look to try and mitigate it as the new technology develops.

Mobile devices were a good example of this because in the early stages everybody wanted them but the levels of controls that you could position on those devices have only developed and grown over time. But we shouldn’t shy away from these things because technology enables business. What we have got to do is fi nd cost-effective and pragmatic ways of reducing the risk from using these new tools.

When it comes to investing in new security technologies, bosses can find it hard to quantify how IT security benefits the business. You spend money but you see nothing much in return because it is there to purely protect the business. How do you ‘persuade’ management

to invest in security?

PW. The days when people thought this was a ‘nice to have’ and we did it because it was the right thing to do have done. People understand that customers, clients and partners all expect there to be a level of security that they are going to have to work through and expend to make sure the data that people entrust to us is protected in a pragmatic and sensible way. What we have turned around is to make sure that security is built in at the beginning of a project and not retrospectively. Management also need to accept that security is part of a project’s lifecycle and it happens as a matter of course.

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ASK THE EXPERT

workflow and production. In addition, as the goal is to reach people across the world, proper access management has been addressed. All this resulted in a modern website or ‘portal’ allowing readers to browse news and the newspaper's archive and enabling online subscription.

“Systems that consist of wellestablished technologies are highly scalable and offer strong solutions for the online subscription”

The chosen solution is based on proven Open Source technologies like Hippo CMS and commercial off-the-shelf products such as Sun Java System Access Manager and their System Portal Server. Everett's successful ‘EVOLVE’ methodology is used to facilitate the interactive and iterative (‘agile’) development of the solution Francesco Chicchiriccò explains how L'Osservatore Romano, and supporting components. The software prodthe Holy See's Journal, will extend its reach to the entire world ucts of Hippo and Sun Microsystems were selectby introducing an internet version of its newspaper ed based on their fit with functional and non-functional requirements. Requirements in'Osservatore Romano has been the Furthermore, articles could not be searched nor cluded the need to structure, manage and archive Holy See's newspaper and broadcasting be designated as classified. a vast amount of content for historical importance, medium to the outside world since Everett’s Italian branch startgiven the fact that L’Osservatore 1861. Today it is published daily in the ed the contacts with L'Osservatore Romano is almost a century and a Italian language and weekly in English, French, Romano by conducting a workhalf old, as well as ensuring that reSpanish, Portuguese and German, with a monthshop together with the staff of the cent content will be easy to find and ly magazine in Polish. In India a publication of a internet office of the Pope, which accessible for a global readership.

Malayalam version began in July 2008, the first in was followed by a feasibility study.

But also the expressed needs for non-Latin characters.

From that, the development of the proven technology, ease of customiIt was the Pope himself, His Holiness internet version of L’Osservatore sation and compliancy to a set of Benedict XVI, who requested to further enhance Romano started. All the requirewell-established standards, techthe paper's reach by asking the L'Osservatore ments expressed by L’Osservatore nologies and Open Source projects.

Romano team to improve its world dimension.

Romano lead to new processes Piero Di Domenicantonio, This is particularly important for expressing the and systems, including processes Managing Layout Editor at Francesco Chicchiriccò is the Delivery Manager of true reality of the universal Church, through the that involve all members of the L’Osservatore Romano, stated: Everett Italia. Currently leading Everett’s CMSpossibilities offered today by its presence ‘online’. documentation team and support “From the collaboration with a related projects, for the The key challenge was to evolve from the current, the online subscription. Systems specialised partner as qualified as past eight years he had the chance to contribute to manually updated website to a real web 2.0 pubthat consist of well-established Everett comes the portal of many key Open Source projects and to work in lishing system and portal solution. With the curtechnologies are highly scalable L’Osservatore Romano: a strategic international rent system, everything was stuck in a typical ‘90s’ and offer strong solutions for the instrument for a newspaper with environments. Everett is located in the Netherlands, format: content authors had to know some online subscription. An enterprise an international reach, which is a the UK, Italy and India. Visit www.everett.nl for more HTML, to manage every single page's content, CMS was introduced, which is news service and, at the same information. appearance and correct linkage. There was no able to scale a huge number of time, a means of communion and workflow process in place, nor support from the documents and which caters to an dialogue among the Christians existing system with regards to publication rights. enterprise-class level of control on the document spread across every continent.”

A 21st century media transformation

L

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CITRIX_4August 06/10/2009 09:48 Page 70

EXECUTIVE INTERVIEW

Virtual reality With businesses looking to slash costs in these tough economic times, we hear from Brett Caine on how web conferencing solutions help people to work smarter and more efficiently.

Why is web conferencing becoming more popular?

Brett Caine. Web conferencing offers businesses an ideal way to keep in touch with employees, customers and prospects, quickly, easily, frequently and affordably. It’s especially attractive to businesses that want to avoid spiralling travel costs, while enhancing their productivity and competitiveness.

This is especially significant today as the economy is forcing many companies, especially smaller organisations, to rethink the economics of their business and how they can solve different problems and issues.

Travel costs and environmental impacts are forcing companies to take a new look at how to collaborate and provide a competitive position in a way that makes them stand out.

And this will continue to be important as we emerge from the recession.

solve so they can find the technology that’s right for them. For the majority of SMEs, simple, affordable online tools in the software-as-a-service (SaaS) model will enable them to innovate and increase their competitiveness. I encourage businesses – especially small businesses – to look for the ‘simpler is better’ approach. Ones that are the easiest to set up and use, that don’t require training and that offer a free trial, because this will make adoption much easier and they will realise the immediate economic and productivity advantages.

Can web conferencing replace face-to-face meetings?

BC. Arguably face-to-face contact can be vital in certain scenarios, but online meetings are increasingly being used for many business interactions. With online meetings, businesses can easily deliver sales presentations, conduct customer training sessions, collaborate on documents and streamline projects with remote teams. In fact, many businesses are finding that using online meetings to communicate with customers, prospects and employees is actually more productive. For example, in the UK, Devon County Council is making significant cost savings by using webinars to provide staff with training and professional development following budget cuts and an internal restructuring. The council has saved an estimated UK£100 per person for their 50-person staff in a six-week period by reducing travel, venue and refreshment costs.

Can web conferencing really save me money?

BC. There are several ways that web conferencing can deliver cost benefits back to your business. First, by cutting travel expenses by reducing the number of visits made to clients, suppliers or new business prospects. If you consider what the average cost of airline travel for business is and compare that to the cost of online collaboration services such as GoToMeeting (from €27 per month) for as many meetings as you like, and then factor the huge productivity benefits achieved by not having to travel, the savings are substantial. The more advanced web conferencing tools also enable VoIP, which doesn’t cost anything for participants, and it lets them join the meeting the instant they start the session, reducing time spent dialling telephone numbers and passcodes.

And there are infrastructure savings. With SaaS-based web conferencing services, there are no upfront investments for servers, software or IT management. Most services are offered on a subscription basis, with discounts for annual plans enabling businesses to pay as they go, which is a huge advantage. Be sure to look for flat-fee pricing that lets users hold as many meetings as they want, of any length, without any extra charges. This will help keep budgets in check. n

“Many businesses are finding that using online meetings to communicate with customers, prospects and employees is actually more productive”

How can I make web conferencing work for my business?

BC. I believe that businesses of any size, from individual professionals to large organisations, can benefit from web conferencing. Businesses should first identify their business objectives and the challenges they’re trying to

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Brett Caine joined Citrix Online in 2003. As President, he has inspired the company to adopt a strong customer-centric focus that penetrates all aspects of the business. His vision is to consistently deliver simpler, better ways to help people connect and collaborate online using the company’s expanding line of software-as-a-service solutions.

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DEFENCE& SECURITY

DEFENDING the REALM

With operations spanning five continents and a 105,000-strong global workforce, defence giant BAE Systems’ IT infrastructure must be robust enough to support a highly complex business. Diana Milne meets Chris Coupland, Director of the Corporate IT Office at BAE Systems, to find out how he gets the job done.

Can you give me an idea of the scope of BAE Systems’ work and what makes the organisation so complex?

Chris Coupland. We’re a global business with a €40 billion order book and a workforce of 105,000. We operate in over 100 countries and we differentiate ourselves from other companies in the defence security and aerospace industry by our home market strategy. We look and feel local in the markets that we operate in, those home markets being the UK, the US, Australia, Saudi Arabia, Sweden, South Africa and India. So you can see a fair geographic spread there, but with a large proportion of our people in the UK and in the US. We are quite an interesting and complex business delivering a full range of products and services for air, land and naval forces as well as advanced electronics, security and information technology solutions. We deal with a complex variety of systems and subsystems, as well as systems integrations and we’re a consulting business as well.

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You are in charge of internal IT at BAE Systems but how has the company also branched out into providing IT services to outside organisations with which BAE Systems has contracts?

CC. Interestingly over the last five to eight years, I suppose, IT has become a BAE Systems business in its own right. I represent internal IT which means that I support the business in its operations. But in those operations we have a lot of engineers and analysts working with IT staff that are running IT departments for federal agencies in the US. More broadly, we are very much moving from being a products to a services company. The business is complex and we’ll always have products and services, but for instance in the way we contract for our aircraft, we are moving from building and designing an aircraft and manufacturing it, to actually saying to the Ministry of Defence, ‘We will guarantee the availability of how many hours that machine will fly for and we will do everything for you, providing the machine, potentially training the pilots, doing all the logistics work and making sure that it is on the tarmac ready to fly’.

How are the IT projects you are working on changing as a result of the different products and services BAE Systems is now providing?

CC. I think there are basically two big things in particular that are changing IT. We’re doing a lot of work on autonomous systems. A much higher IT-type content is required when, for instance, you’re trying to fly an unmanned aircraft in Afghanistan from Florida or from the UK. And we’re not just doing that in the air; we’re doing that underwater and on land as well. The security market is also increasingly about cyber security, which is about protecting people from online threats. What we do is also affected by shifts the company is making towards strengthening its global business. So we’re trying to enable the business to be global and to partner, while protecting and securing the business.

How challenging is to keep up with the IT upgrades needed to support BAE Systems’ growing and continually evolving business – particularly as it is made up of so many different divisions?

CC. We are always upgrading our systems and keeping them reasonably current, both in terms of hardware and systems. There’s a lot of focus on how we share and interact with information because that’s the glue between the various different systems.

A business like ours has many different types of businesses, on very different scales – with many different types of demands. For instance major engineering projects require PLM and ERP systems. Different platforms are needed for instance for our shipbuilding business in the UK and our land business in South Africa. So our challenge is to make sure that we can take designed intellectual property that we’ve developed in South Africa, for example, on mine-protected vehicles, and ensure that we can incorporate that product in North America and in Australia.

That’s what we mean when we talk about leveraging our global capability.

What challenges does it pose that BAE Systems has such a global presence?

CC. Moving IT and manufacturing around the world means we have to deal with challenges such as national boundaries, national security, export control and multiple systems on different continents with different ways of dealing with information. We have to ask questions like: how do we protect the information? How do we protect the systems? How do we allow people to have access to the information? How Chris Coupland do we move it around in consistent formats? We also need to have the right support arrangements in place across the different time zones so people can work together effectively.

BAE Systems works in the defence arena with highly sensitive data.

How are you ensuring that the IT security systems are robust enough to protect this?

CC. We obviously deal with nationally secure data. We deal with people’s personal data – although perhaps not to the degree that credit card

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BAE Systems provides air, land and sea defence equipment

companies do. We deal with lots of our own intellectual property (IP) as well, and other people’s intellectual property that we need to protect, because we partner with people as well as compete and collaborate with them. Historically, IT departments have taken a very belt and braces approach towards protecting data. They’ve built the medieval walls and they’ve built the moats and the battlements and the turrets and then they’ve built bigger turrets and towers and thicker walls and so forth.

The persistent threat we have to deal with is people trying to hack into systems to steal intellectual property or to be malicious. There’s obviously all the stuff you would see on the internet that is being thrown at our firewalls everyday. We’re keeping abreast of those threats. In certain parts of the world or in certain businesses that we’ve acquired, we obviously need to bring them up to the BAE Systems operational standard.

We have a long history in the UK of running restricted networks, which are classified government networks that run to certain standards. We also deal with things like encryption of laptop hard drives, encryption of memory sticks, and control of who’s writing what onto and off the network. In terms of information management, we’re working to put in a whole new set of identity and digital rights management processes and systems that will further protect information.

The human element is often described as the most complex challenge to tackle when it comes to information security. Would you agree?

CC. Yes, that’s always a challenge, and we are having a big debate at the moment about social networking in the workplace. There are different rules across different bits of the business, depending on the security classifications of the networks we run in the US versus the UK but in the UK specifically we’ve been very locked-down. We don’t let people access certain websites and we block Facebook and webmail. Historically, the

reason we’ve done that is that those particular areas of the internet are full of malware and other threats. Now we’ve put in a lot more controls in those areas, and we think that now, with the IT solutions we’ve got, we’ve got a greater ability to monitor, understand and manage that threat.

So to the IT community we’re now saying, ‘While traditionally we’ve been very locked-down, we can now enable you to do a number of other things’. We feel more confident about being able to do that. The organisation has had to look at what the business value is of being on Facebook, and whether employees should be able to access it. And of course there’s a big debate about Generation Y and whether they’re going to come through the door and want to work for a company that doesn’t let them access Facebook.

BAE Systems has embraced online tools and electronic trading to improve the way it does business with its partners. How do you foresee BAE Systems’ internet use in the future?

CC. The world is moving, and I don’t think that the model now will be the same model for us five or 10 years down the line. We will still be operating private systems. We will be operating our own private cloud services, and even today we have an embryonic version of that private cloud. And, over time, we will almost certainly move to selectively using parts of the public cloud infrastructure. Through that we’ll get the scale and cost advantages that public networks are bringing people. This will give us the agility and speed to be able to do things in terms of tapping into that massive global infrastructure that’s outside my little IT shop for 105,000 people.

BAE Systems acquired the IT security firm Detica last year. How will this acquisition benefit the company?

CC. Acquiring Detica in September last year means we are able to accelerate the implementation of our strategy to develop a world-class security

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business across our home markets. Detica has the specific role of winning and developing business in the security market. The Detica acquisition is a good example of where we have potential to access new opportunities in one market, develop our offering through experience, and use that expertise to win new business in other markets. As I mentioned earlier, we are working on our information systems across the company and doing essentially a pretty rigorous self-assessment that is being externally referenced and benchmarked, and we are using Detica’s internal expertise to help us in that.

Can you describe the multi vendor outsourcing approach that BAE Systems has adopted?

CC. We are in the process of building more of a framework and a structure around a multi-vendor model with perhaps a bit more strategy and intent than we’ve had. Today, we are largely insourced in North America, Australia and Sweden and outsourced in the UK and Saudi Arabia. Clearly we need to co-ordinate between insourced and outsourced operations. We’ve been reasonably successful in doing that, but further governance will recognise more of that multi-vendor framework and put in some hardened rules and lines and clarify responsibility in a few areas. Ultimately, we’re now starting to think more in a differentiated way about the capability that we need in IT, and starting to think, ‘Well, this particular partner is better at that, and this particular partner is better at this’. Internally also we have this capability anyway, so we probably ought to be leveraging that and look at whether it’s a fair fight in the marketplace or whether we say, ‘Well that’s our IP, let’s use that’.

Ten years ago we were very heavily outsourced. Today we’ve outsourced about 45 percent of the whole business. While I don’t really see that dropping to less than 25 percent, I think we will be a bit more differentiated about the partners we’ll use.

Historically, we’ve had three big partners. Obviously Computer Science Corporation (CSC) is by far our biggest partner in terms of size of share, and indeed in terms of the number of years we have used them to supply our services, and that’s been a very successful and sustainable partnership. We’ve renewed that relationship on a number of occasions. In addition, Accenture and Capita provide us with some services in the UK as well, and in Saudi Arabia we have a growing partnership with International Systems Engineering (ISE).

What improvements have been made to the running of BAE Systems through the adoption of an ERP platform?

CC. In our business we’ve got people making improvements on major systems all the time across the world, so we’ve got a number of people improving ERP platforms. We’re working on improving the supply chain area in terms of supply chain, in terms of the repair loop supply chain. We’ve got new capabilities in those sorts of areas and we’ve always got upgrades going on ERP systems.

We just upgraded the main shared services fi nance system and platform last year, and we created a bit more back office common-

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Controversy BAE Systems is currently embroiled in what the BBC’s Business Editor Robert Peston has described as “the most explosive investigation into a British company that I have ever encountered”.

It centres around an investigation by the Serious Fraud Office into alleged bribery.

According to the BBC, this relates to contracts in countries including Tanzania, South Africa, Romania and the Czech Republic. BAE Systems has said it is fully co-operating with the inquiry.

A BAE spokesman told the BBC the firm was working with regulators to help bring the investigation to an end and that it was “providing access to people, information and premises whenever requested”.

Meanwhile, the company has announced plans to cut 1116 jobs and to close an aircraft factory in Cheshire in the UK at the end of 2012. This would lead to the loss of 630 jobs and a further 205 positions are set to be cut at the company’s Samlesbury site and 170 at its Warton facility in Lancashire.

Around 111 positions are set to go from its Farnborough plant with the company stating that it is conducting “a detailed review of its current and future business levels”.

About BAE Systems BAE Systems is a global defence, security and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, security, information technology solutions and customer support services. BAE Systems’ sales exceeded €23 billion in 2008.

ality there and moved towards more of a shared services model in the UK. Our North American land business has upgraded its Oracle system recently, to provide increased business intelligence around the electronic supply chain type interactions, and around supporting the repair loop.

seeing significant cuts in the areas of the business that we are committed to growing. We’re seeing we’ve got to justify why we’re spending the money but as long as the business is supporting it that’s fi ne, and we’ve still very much got a growth outlook.

Has the global economic downturn affected investment in BAE’s IT systems?

CC. It’s actually a great environment to be doing deals in and driving costs down and it’s very competitive out there in terms of vendors. So

You sound like a man who is very passionate about his job. Would you agree?

CC. I’m passionate about the job, because it’s a big organisation and you have to be passionate in a big organisation because it’s not all about command or control. It’s about being out there and being ahead of the game, having the ideas, persuading people that this is the way to go, and you don’t do that from being not passionate about the job. And it’s an exciting job and there are great people who work in the company. Coming to BAE Systems has been fantastic and there are brilliant people working there. The business has grown tremendously in the last eight years and it offers a great set of opportunities.

we are looking at costs. Have I personally torn up 15 different business plans this year and seen the IT budget go down by 40 percent or worse than that? No. Have I been working at looking at some cost savings ideas? Absolutely yes. But we haven’t had the sort of major challenge that says, ‘you’ve got to halve your IT cost base’. And I’m seeing that our investment in the areas you’ve talked about is largely sustained. We’re in our budgeting process for the next five years at the moment and I’m not

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HEAD TO HEAD

Staying in touch Effective voice and data communication is paramount for organisations today. We speak to two experts in this field to discover how to better utilise communications tools for the benefit of your business.

What is driving the communications market and how is technology playing its part in aiding companies and people to work smarter?

Beck Knut. All organisations are today completely dependent on effective voice and data communication services. We are used to communicating wherever we are and whenever we need to. Since we get used to more flexible and more efficient communication services all the time, we also expect immediate responses from our communication partners. We expect an answer there and then. Th is further drives the need for more effective communication services. New communication technologies are emerging. In addition to voice and mail services, ‘new’ types of communications like SMS and IM have proven fast and effective. Those services allow for communication by mobile devices wherever you are located geographically. UC (unified communications) will integrate communication services into one user interface and provide the users with the current status (presence) of their communication partners, and give the user a choice of the most appropriate communication service available. New technology, like Mobile Device Management (MDM), provides the company’s IT-administrator with functionality to quickly configure mobile devices and set them up with relevant applications for the workforce on the move. It is no longer necessary to visit your IT administrator’s office to set up your phone and download relevant applications. Everything happens OTA (over the air), wherever and whenever.

Rami Avidan. A key factor that is driving the need for effective data communications is the need to be able to take operational data that could be in a robot or a mobile electronic point-of-sale (EPOS) and ‘enable it’ to be accessible to other parts of the business. One of the large changes that we see is that companies are looking for more managed services from their suppliers on a ‘glocal’ level. Th is is the ability to be able to easily link their assets into their global network and achieve visibility and control through a platform that is easily integrated through Application Programming Interfaces (APIs) and to be able to securely manage it over the internet. It is clear that reducing the time to get information, to respond to market needs and to make decisions can all have a significant impact on a company’s business performance.

What are the common mistakes that businesses make when it comes to their communications and enterprise mobility?

RA. Our experience shows that many companies underestimated the cost and complexity of implementing global M2M Solutions. For example, the requirement to deal with multiple operators or develop, manage and support their own wireless infrastructure, receiving an invoice from each of these operators, a different support number for each operator and no visibility of their remote devices. Consumers and businesses are

“A key factor that is driving the need for effective data communications is the need to be able to take operational data that could be in a robot or a mobile electronic pointof-sale (EPOS) and ‘enable it’ to be accessible to other parts of the business” ever more keen to take advantage of the benefits of remote working and to monitor and control their devices and assets. The face of wireless communications is changing rapidly as the business benefits become clearer; it is becoming an open platform for a connected world. Companies are now looking to outsource the deployment and management of their network to companies such as Wyless. Outsourcing these activities is an ideal solution for companies to ensure the global wireless data network is deployed and managed as quickly and effectively as possible.

BK. Most companies have good strategies and policies on the IT area, but very often lack strategy and policy on the mobile device area. Mobile devices make up an increasingly larger share of the corporate IT platform.

Mobile devices are more computers than telephones, but are not handled

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as computers. This implies ineffective and unsafe operation of the company’s mobile fleet. Lack of standardisation and lack of device management (MDM) often leads to problems and challenges with mobile devices.

A lot of time is wasted for the user with troubleshooting his mobile device instead of using the time available to ordinary business activities. It is also

“New management tools for mobile devices, enables faster setup of mobile devices, quicker operation and maintenance of mobile devices and efficient handling of missed and stolen mobile devices” a waste of time for the IT administrator to carry out himself. If the company doesn’t have any defined security policy they are extremely vulnerable if their mobile devices are missed or stolen. Because of the use of mail and other applications, the mobile devices are very often fully loaded with information (even sensitive). Modern MDM services have remote lock and remote wipe (OTA) as standard functionality.

How can advanced voice and data communications help businesses to cut costs in these difficult times, as well as improve their green credentials?

BK. Advanced voice and data communication services make it possible to work when you want and from where you want. Th is implies that the employees save travel time and travel cost. At the same time, the transport demand is reduced which in turn leads to less pollution. More efficient IT-administration management tools make the need for manual IT resources less. The workforce also gets more efficient because you get IT help where you are when you need it. You also avoid having to spend time for transportation and shipping of equipment to be set up manually.

New management tools for mobile devices, enables faster setup of mobile devices, quicker operation and maintenance of mobile devices and efficient handling of missed and stolen mobile devices. Th is saves time and cost, and significantly reduces the need for transportation.

RA. The business driven strategy of Wyless as a global network enabler (GNE) is to bring managed services to the M2M market and demonstrate how this can dramatically improve ROI and total cost of ownership (TCO).

Wyless Managed Services takes the cost and complexity out of implementing our customers’ and partners’ critical business solutions across the globe. The ability to provide ‘plug-and-play’ applications enables greater deployment and faster ROI for them. There is no investment in administration, supporting and managing a global network infrastructure resulting in lower TCO. The Wyless Managed Services also enable our customers and partners to create new revenue streams and go ‘green’. Examples include remote diagnostics, so less visits to the remote devices, environmental monitoring in two well-known supermarket chains across the UK and improved driver behaviour resulting in reduced CO2 emissions and a 70 percent decrease in unnecessary driving manoeuvres.

Could you give an example of where your solutions and products aided a client?

RA. I would like to give two examples. ABB Robotics is a leader in power and automation technologies. Its objective was to expand and improve its product and service offerings, but its innovative ideas were constrained by the prospect of managing a global wireless network with little expertise. The industrial robots can be shipped anywhere in the world. Wyless provides the company with a worldwide wireless data network and an internet-based management platform to provide real-time control and visibility of its network and connections, all day, every day.

RSI Video Technologies, manufacturer of the world’s first wireless video alarm, wanted to bring its Videofied product to market ‘pre-enabled’ and network ready. It required a partner to work with so that it could provide a ‘plug-and-play’ product to its dealers Rami Avidan is co-founder of Wyless that can be quickly and easily deployed. and has been the CEO since September 2008.

Wyless enabled the company to rapidly His business driven build its dealer channel and provide castrategy is to bring managed services to pabilities for its dealers to be able to offer the M2M market and demonstrate how a variety of value-added services, giving this can dramatically it improved ROI and the opportunity to improve ROI and TCO to customers and create additional revenue streams. partners.

BK. Our solutions have helped many of our customers, including a municipalKnut Beck is Director ity in Norway (Municipality of Arendal). for International Operations at NorwayIn this case, home care personnel are based Smartphones.

Previously, he held equipped with smartphones, applications senior roles at Touch for visitor route, applications for data regMobility Telenor Consumer, Telenor istration at home visits, medical encycloTelecom Solutions, Telenor Multicom and pedia and so on. Our MDM services allow Telenor Datacom.

IT administrators to set up and configure the employees’ mobile devices, download the needed field applications, take remote control of devices if problems arise and perform any security function needed. All this is OTA from the head office while the users are on the road. Arendal Municipality has been a pioneer in this area, and has been very effective. It has saved a lot of time and costs, and has also reduced transportations. We have helped hundreds of other customers as well with the same tools, including Deloitte and FMC.

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UNIFIED COMMUNICATIONS

TOMORROW’S COMMUNICATIONS LANDSCAPE

Lavanya Palani Batcha of Frost & Sullivan paints a picture of the future of uniďŹ ed communications technology.

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he unified communications landscape is dynamic and continuously developing. Market participants such as vendors endeavour to grow their product and service offerings, depending on the current or anticipated state of the market. Pure hardware vendors are now looking to diversify into adding soft ware-based products into their portfolio, thereby bringing forth a more comprehensive unified communications solution. It is imperative that the enterprise end user understands, identifies and makes decisions pertaining to trends that could shape the enterprise communications scenario in the future.

Elaborated below are three significant developing trends to look out for in the coming years.

Service-Oriented Architecture: Today unified communications is widely understood to encapsulate voice, video, and data applications via a range of devices such as desktop PC, desk phone, mobile device and

the like. However, there is an increasing momentum towards enhanced service offerings such as Service Oriented Architecture (SOA), which can bring additional benefits to an enterprise that has already implemented unified communications. Solutions based on SOA, facilitated applications such as real-time identification/tracking embedded within the unified communications platform have promising potential in industry verticals such as hospitality, aviation, and healthcare amongst others. It is anticipated that as this avenue develops further in the future, there would be myriad enterprise-centric business processes that can be integrated via SOA and unified communications.

Interoperability: The world of unified communications involves a plethora of devices, applications, solutions and services, with the majority being built on closed, proprietary architectures that deny any interoperability between OEMs. Th is presents a challenge, especially in the case of an enterprise with multiple locations possessing proprietary

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Lavanya Palani Batcha is Senior Research Analyst- Information and Communication Technology Practice- South Asia and Middle East at Frost & Sullivan. For feedback or enquiries email: tanu.chopra@frost.com

even amongst traditional rivals. Vendors such as Microsoft and IBM have been major unified communications competitors: However, there have been announcements regarding these vendors working towards interoperability of their unified communications solutions. One significant and positive development towards achieving interoperability is the growing importance of Session Initiation Protocol (SIP) as a widely accepted standard for multimedia communications. Th is can help towards a semblance of interoperability, if devices and solutions are built based on the SIP standard. However, the industry is witnessing differences in terms of SIP implementation by vendors. Th is could pose even more problems with several third party solutions being available. To counter such a problem, vendors would need to develop highly specific interoperability solutions.

communications products from a host of OEMs at each of these sites.

The networking and unification of these divergent products in order to streamline communications within the enterprise can be a daunting and cumbersome task, not to mention the existing hindrance of proprietary products and solutions. Adding to the complexity, if the said enterprise were to look at adopting unified communications, they would be left with no further option other than to undertake a complete forklift operation. Th is would essentially involve discarding all legacy proprietary products thereby sinking significant initial capital investment on the equipment. Therefore, as greater numbers of enterprises display interest in the unified communications solution, the need for fundamental interoperability between products from different vendors is of the essence. Given the current prominence of collaborative environments in the unified communications arena, interoperability becomes especially relevant. Such a scenario has prompted several alliances and partnerships amongst unified communications market participants,

Hosted and managed unified communications services: The hosted and managed services model has been slowly gaining traction.

Enterprises have started to lay more emphasis vis-Ă -vis focusing on their core competencies and leaving the routine business processes to be handled by skilled third-party service providers. Services-based models also serve to reduce the capital expenditure required on hardware and equipment. Unified communications is no exception. Vendors and system integrators are looking at various business models that would enable them to deploy hosted or managed UC services such as IP telephony, conferencing and collaboration and so on. The Soft ware-as-a-Service (SaaS) model for unified communications has been quietly emerging into the forefront. Although the services-based model is suitable for all manner of enterprises, the most significant market could potentially be Small and Medium Enterprises (SMEs). Besides the cost savings involved, the SME customer can look forward to experiencing at least a partial implementation of unified communications within the enterprise. The infrastructure required for on-premise unified communications would entail having a sizeable number of skilled support and maintenance staff, which may not be feasible, especially for an SME. In the case of a servicebased model, the service provider saves the enterprise from the hassle of support and maintenance. An example of the SaaS-based model is that of the Cisco WebEx Connect platform that provides the capabilities for audio and video conferencing, presence integration and messaging. With additional support for document and task management, this platform serves as a collaborative unified communications tool.

In conclusion: Despite setbacks about the adoption of unified communications due to recent economic trends, the future looks promising with significant potential for this market to grow steadily. These key technological trends have the power to shape the market landscape and further augment it, by simplifying existing solutions and ensuring that the needs of enterprise end users are served. „

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EXECUTIVE INTERVIEW

MANAGING SUCCESS Philip Grannum, Managing Director of Enterprise at Cable&Wireless Worldwide discusses the burgeoning Managed Video Conferencing (MVC) market.

Demand for Managed Video Conferencing solutions has grown exponentially despite the economic downturn. Why is this?

Philip Grannum. In an economic downturn, more and more businesses are focused on cost reduction and this has become the primary objective for using this technology, over and above reducing carbon emissions. A large number of organisations have put severe restrictions on international travel – some companies are even clamping down on car journeys, train journeys and anything that involves an overnight stay.

MVC has enabled organisations to reduce travel, but still maintain the kind of face-to-face interaction that they can’t get from using standard teleconferencing. Next generation high definition video conferencing and telepresence is a technology shift that allows participants to experience the non-verbal communication, such as body language, which makes face-toface meetings so much more productive.

How has the technology evolved and what can purchasers of the solution now expect from it in terms of features and services?

PG. Simplicity, of features and functionality, is the key. Users want to be able to schedule a meeting as if they were making a call – simple and point-to-point. This easy-to-use approach is the only way that video will be adopted across the enterprise. Users want it to happen when they walk in the door and to have a proper, trouble free almost face-to-face experience when the meeting is taking place. The advent of high-definition video combined with a simple user experience has transformed video conferencing. The other major concern for companies is to ensure that investment in previous systems is not wasted and that there is interoperability between the old and new systems.

How do you expect the technology to develop in the future?

PG. I think the technology will hit a bit of a plateau. Telepresence solutions have revolutionised the video experience. Now I

think the focus will be in evolving the serthe solution runs across; the integration of the vice route and the expanded community. At solution with existing assets; the wide range the moment if you have video of equipment from multiple conferencing based on an IP vendors from telepresence network, you can work very efsuites to desktop solutions; fectively intra-company. But it is and our range of managed difficult to work with your wider service offerings. stakeholders. So this is where Finally our joint initiathe big shift going forward will tive with Regus, the world’s be. The networks will continue largest provider of flexible to be secure, but they will open workplace solutions, will out to trusted customers, supplifacilitate the implementaers, key investors and banking tion of market leading organisations so you can start high-definition video conPhilip Grannum became collaborating and working with ferencing suites at Regus’ Managing Director of those organisations, as simply premier global business Enterprise for Cable&Wireless Worldwide in November 2008. and effectively as with someone centres. This has enabled us In his previous role, Director of Product Management, he in your own organisation. to put in the most advanced What makes the Cable&Wireless MVC solution unique?

PG. It’s three fundamental areas.

was responsible for launching Cable&Wireless’ next generation network and Fixed Mobile Convergence. Grannum has over 13 years of experience within telecommunications, having previously worked at Energis and AT&T.

Firstly, it’s the user experience – getting the user up and running straight away in real time, as soon as they enter the room.

Secondly, it is the way that we approach the solution. It’s easy to focus on the equipment alone, but we recognise that there are key elements that need to work together for you to get the best experience – these are the network

high definition video conferencing solution across multiple geographies around the world. You can fi ll a room with people and have a virtual face-to-face meeting from New York to Moscow to Tokyo. The capital expenditure required to buy this latest technology is quite substantial, but we offer a pay-as-you-use solution that can be used across the globe. Costing as little as €228 an hour, our offering will totally revolutionise the way people adopt this technology.

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09:19

GOVERNMENT

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A diplomatic approach to IT

Government IT projects are notoriously huge in scale and complexity, not to mention budget-heavy. Julian Rogers travels to the UK Foreign & Commonwealth Office to find out how CIO Tony Mather is managing a particularly complex IT transition for this globally dispersed organisation.

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he Foreign & Commonwealth Office (FCO) has a network of 260 diplomatic posts, including embassies and High Commissions, scattered all over the world. These ‘little pieces of Britain’ represent the UK interests overseas and can be found anywhere from the ultra-modern metropolises of New York City and Tokyo to far-flung and dangerous outposts like Basra in southern Iraq and Afghanistan’s Helmand Province. Overseeing global IT support for the FCO’s 16,000 staff is the job of CIO Tony Mather. The FCO is a 200-year-old institution and Mather, a mechanical engineer by training, is its first ever CIO – a signal of intention by the powers that be that IT is an indispensable cog in today’s cooperations. “The role was created because technology was becoming critical in FCO achieving its goals,” explains Mather, who joined in 2007 from the industrial gases group BOC. “Also, there was a government drive to get professionals into certain areas and IT is one of these – people used to rotate around so you would have a generalist doing a specialist job.”

With this global IT responsibility comes a fair share of travel opportunities for Mather. Indeed, just prior to Business Management’s meeting with him at the FCO’s Westminster headquarters, he had jetted in from Delhi, India, although he is typically tight-lipped as a government chief on what his trip entailed, merely revealing that it was “very productive”. It transpires that Mather was there to assess better cross-departmental working, alongside replacing the overseas network next year. Despite his initial reticence, Mather waxes lyrical when quizzed about how the hugely complex Future Firecrest project is panning out. This multi-million pound plan involves replacing old hardwire and desktops along with dated back-office technology throughout the FCO’s posts. It’s hoped that Future Firecrest will revolutionise how FCO staff go about their business all over the world.

Apart from a physical systems upgrade, Mather envisions the move providing a catalyst for a change in working practices. “Future Firecrest will allow people to work in different ways and a mobility dimension that they have never had before. It will give people flexibility around where and how they

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The FCO’s London headquarters work, so it will help us from a diversity point of view, and it will also help us to better handle our information and make sure we use information to generate knowledge.” Mather suggests it is all about seeing the long-term benefits of the project. “I said to my boss that if at the end of the programme all we have done is replace technology, then I would see it as a big failure. We have to start realising the benefits of new ways of working, collaboration and gaining knowledge.” It will also help the FCO to leverage global teams – both virtual and multi-departmental – and collaborate outside of a physical location, which has proved a particularly tricky obstacle in the past.

As an extension of Future Firecrest, Mather orchestrated an experiment last year where three diplomatic posts went ‘off line’. Dubbed ‘Unclassified Embassy’, the test saw the posts cut free from the FCO network, allowing staff greater flexible working; the opportunity to work from home, use laptops away from their desks and access email on BlackBerrys. The flipside of this flexibility was being kept in the dark when it came to internal FCO news. “When they went off our system we gave them rules about how their work had to be truly unclassified so that they weren’t breaking any of the information assurance rules. We ran this for just over a year and learned some fantastic stuff – both the advantages as well as the disadvantages of being outside of the wire because it was good to hear about how people missed having information that is within the FCO or government community and not the public domain.” This radical idea may have raised eyebrows in

the corridors of Whitehall but Mather insists staff weren’t allowed to run amok when let off the leash. “It isn’t about being wild – there is a benefit from being on a secure and available platform but Unclassified Embassy was well received and sent out the message that we will try new things.”

Balancing the books A pleasant surprise, especially for UK tax payers in this era of belt-tightening, is the fact that Future Firecrest is on course to be ahead of schedule and within budget – an exception to the rule with cumbersome IT projects in the

“You are always under pressure in the public sector…in the private sector it is easy to hide the things that haven’t gone so well.”

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public sector. In 2006 when the project was rubber-stamped it was expected to cost UK£450 million. When Mather joined in 2007 a new timeline was set with the FCO’s technology partner HP, partly due to new security arrangements following Home Office guidelines. “We are currently aiming to bring the programme to conclusion around April or May next year, which is ahead of the August 2010 deadline that was originally set,” Mather explains. And there’s more reason for good cheer. “We have also taken about UK£30 mil-

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lion out of the overall spend base, so it’s ahead of schedule and we are trying to create value for money and reduce costs where we can.”

Value for money is key in these lean times but there is a perception that public sector projects fall under the full glare of the media spotlight.

Particularly when things go wrong and IT chiefs’ shortcomings or incorrect decisions will be open to scrutiny and ridicule. “You are always under pressure in the public sector,” Mather concedes, “I agree with this idea of more visibility because in the private sector it is easy to hide the things that haven’t gone so well. However, I don’t think it drives the wrong behaviour. I would rather make sure that my pressure is because I know what we need to do and that’s what drives the focus on delivering those things. It’s just one of those things you live with.”

The reason for the lion’s share of project overspends and delays is due to their size and complexity, as well as the large-scale nature of today’s public organisations.

“It’s a factor that private companies rarely have to contend with and people sometimes forget about the scale involved,” says Mather. “For instance, the Department for Work and Pensions (DWP) is a huge organisation and you would struggle to find many companies in the private sector that match it in terms of scale.” Mather also highlights that strict procurement policies hamper projects.

Naturally, the FCO needs to offer flexibility but protection of internal information – whether classified or not – will still be a top priority. For Mather, the most significant risk around information assurance is ensuring that information isn’t shared needlessly. “We need to make sure that we can safely share information so we have to educate people and make sure the processes are in the right place,” he suggests. “It’s not a bar that you set – it’s a journey that you go on in terms of the maturity and constantly increasing your corporate capability around information assurance.

Some of this is through process but a lot of it is through people and giving them the proper training.” And the larger and more scattered an organisation is, the greater the chance of leaks emerging in defences. And although the FCO is an organisation that understands data classification and has processes in place to protect classified information, Mather describes geographic dispersion as something that he “just has to live with”.

Making the switch At this point in our discussion Mather glances furtively towards his wristwatch. With a bulging inbox to plough through after his India trip, his PA pre-warned me his time is in short supply. Nevertheless, he continues to answer a question about making the leap from private companies to government-run organisations.

Before dipping his toe in the public sector Mather, who says he has always been interested in the impact of IT, as opposed to the technology in its own right, worked for established brands like AstraZeneca, Jaguar and Philips.

However, he says his arrival at FCO was a “real eye-opener” and adds that he could never have imagined exactly what the job would be like and the challenges ahead of him. “I don’t think I could have worked out what it was going to be like, but I spoke to a few people with the FCO beforehand to get a pulse on things. Even now I find that each time I make a trip to a post – be it an embassy or a High Commission – I find out the different things that FCO people are doing.” He also found his preconceptions that the private sector is where the talent lies quickly evaporated. “I always thought that if people were good they would be in the private sector because that is where the money is, but I have been pleasantly surprised by the amount of talent in the public sector at the moment. I am working with some fantastic people so the whole idea about there being no talent in the public sector is an absolute myth.”

16,000 FCO’s total workforce

A meeting of minds As well as being CIO of the FCO, Tony Mather also sits on the Chief Information Officer Council. Formed in 2005, the council brings together tech chiefs from a cross section of the public sector to discuss and address common issues. It also aims to utilise IT in order to transform government to deliver modern public services effectively and formulate ways to make cost savings across the public sector. Mather says: “We all leave our departmental agendas at the door and speak about cross departmental opportunities and discuss the long-term IT strategy for government. There are big savings to be made if this is done properly and some big opportunities so the council is about how we can achieve better value for the public. It is also about the impact we can make by raising the quality of the IT profession throughout government.”

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INDUSTRY INSIGHT

Survival – then what?

Organisations emerging from the global economic malaise need to gear up for growth, says Charlotte Darth.

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emember when you were too busy making money to look at your processes and deploy new technology? The current economy is very different and the focus now is on survival. A recession does not last forever; it is time to gear up for growth. It sounds radical, but this is perhaps the best time to consider process improvements and the deployment of new technology. Sales revenues are slowing, margins are getting squeezed, so your immediate reaction is to stop projects and postpone investments. But is this really the right thing to do or a knee jerk reaction? When does the smart money invest in the stock exchange?

Likewise, manufacturers and distributors should think about the opportunities that the current slowdown offers. There is no magic solution to driving costs down – you need to take tough decisions and invest in cost reduction to get a return.

Action plan Any investment you make needs to provide a good return. You need to identify improvement projects that can provide a rapid and significant payback. If you have the money in the bank it is easier, but whatever your situation you need to focus on improving efficiency and growing your business as the market recovers. One of the fundamental steps you need to take is to automate your processes to drive operational costs down.

This involves deploying best practice processes and supporting these with the right business application to improve efficiencies and cut costs.

You need a clear picture of exactly which processes and technology can deliver the most value and the largest cost saving to your business. Lawson offers a service that uses a unique tool, Opportunity Analyzer, to help you map, target and plan improvement projects. We can deliver a quantified and ranked list of opportunities so that you know exactly what economic effect each process improvement can bring.

So what happens when the economy picks up? Will you end up back knowing that you need

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of the orders and inventory in your supply chain, up-to-date financial information on costs and margins for decision-making and staff that could focus on managing exceptions as opposed to firefighting? A few small percentage improvements that reduce operational costs can quickly aggregate up to a major difference in bottom line performance, both in the short-term and as your business starts to grow again. Some companies that have deployed integrated enterprise resource planning systems report improvements such as operational costs 20 percent lower and working capital tied up in inventory down 25 percent.

The cost of doing nothing

“Any investment you make needs to provide a good return. You need to identify improvement projects that can provide a rapid and significant payback” to review business practices and invest in new technology to support your long-term growth aspirations? A leadership position can be lost through not investing – the cost of not doing something now may actually be far higher than the cost of investing now. Think how much more effective and efficient you might be in the future if you had a single view of your customers, a clear picture of demand, better visibility

It might seem that doing nothing is the low cost option, but can you afford it – and, how high is the true cost of doing nothing? Also, companies are under pressure to deliver positive results to shareholders expecting real value of their investment as well as some form of regular dividend or payment. Think what reducing your operational costs by 10 percent could mean for your bottom line and your ability to outgrow your competitors. According to Aberdeen Group, Lawson clients averaged a 22.9 percent performance improvement. Start by identifying pain points and non-value adding tasks that simply add time, cost and complexity. Evaluate and quantify the potential return improving your processes could make and compare with the cost of implementing the change. You may well find you cannot afford not to be investing in process improvements and new technology.

Charlotte Darth is the Marketing Director of Manufacturing & Distribution Industries at Lawson Software. Dearth has spent 15 years in the enterprise software industry in different sales and marketing management roles. Prior to joining Lawson in 2008, she headed marketing for Syncron International and had also worked for 10 years at SAP.

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logica Ed:4August

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ASK THE EXPERT

ECM can lower costs through automation and processes but how does this work with new forms of business partnerships and collaboration?

It’s clear that collaboration is becoming ever more important; at its core is the sharing of information sensibly. This could be via blogs, thorough sharing documents and unstructured information handled via collaborative tools, which saves travelling time and money.

“Closer ties will be forged with business partners and customers through inserting them in your company structure”

Putting ECM to work

Companies can save money by making their ECM more efficient from a technical viewpoint.

A case in point is that one of our customers has 250 different websites due to be consolidated into one website with one operating unit, which will result in a significant cost reduction and one satisfied customer. Another common problem is work and the internet makes this possible. We when companies find themselves with many difhave the classic example of internet banks where ferent applications in different countries or decustomers do almost all the work themselves. partments and the information is locked in like an What we see now and elsewhere is island. This can be case handling how social networks are growing systems for marketing, for human in significance and are strengthenresources or for product informaing companies’ brands. The more tion – but collaboration is impossicustomers interact; the more loyalble as different departments have ty increases. For example, networks different ECM systems. One comare being created where customers mon platform will pay dividends in help one another – by Twitter and such cases. Other ways of reducing Facebook or via Wikis. You can costs are through allowing the supeven allow customers to have blogs plier to provide infrastructure, softin the company’s name. We help ware and operation – known as companies to build up these types Software as a Service (SaaS) – and Fredrik Ring has worked as an advisor, analyst and of networks. via blended delivery, when the supproject manager in major We also feel that ECM can plier provides an offshore-organiECM-related IT projects since the early 1990s. He is help the financial sector, taking into sation with a lower price. currently in charge of ECM in the Logica Group which mind that the current financial criWhat are the long-term has 2000 consultants and a sis was partly triggered by unreguprospects of ECM? A first step is number of larger business partners within ECM. lated financial activity, ECM can creating structure and information help to restore faith in the industry order and that paves the way for through document handling that more collaboration, compliance, proves that regulations are being followed and automation, accessibility, greater efficiency and so which enables traceability of who took which decion. Also long term, I see a trend where closer ties sion, when and why. Furthermore, the financial will be forged with business partners and cussector has a lot to gain from ECM purely through tomers through inserting them in your company gaining greater efficiency. structure in extended digital enterprises.

At a time when many IT-related investments have cooled off because of the economic downturn, Enterprise Content Management (ECM) keeps getting hotter. Logica’s Fredrik Ring explains why.

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t the moment ECM is one of the fastest growing segments within Enterprise Applications in the company. The quantity of emails and documents is growing so rapidly that the information flow risks collapsing from a heart attack.

Far too much time is spent locating the right information. The information mountain has existed for a long time but the situation is now so critical that it is crucial for the business to rectify the situation. Another reason is companies’ requirements for greater efficiency. Fewer staff must achieve the same or better. Then we have the transfer of competence as older employees retire and the younger generation takes over.

Amongst other things, ECM is about greater automation and efficiency in processes where people handle unstructured information; in some branches a very large proportion of the issues can be handled automatically. It is also about tasks such as finding documents easily, traceability of documents, collaboration and enabling customers to help themselves – thereby reducing the company’s costs.

Customer activity There is a lot of talk about customers becoming more and more active in companies’

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Cost savings

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AVIATION

SKY-HIGH TEC With German national carrier Lufthansa on target for a mammoth technology overhaul, we hear from Dr Christoph Klingenberg, the new Head of Information Management and CIO of the airline’s passenger business.

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r Christoph Klingenberg has only been behind his new desk as Lufthansa’s Passenger Airline’s IT chief since April but his in-tray is already overf lowing. With his predecessor Christoph Ganswindt swapping Lufthansa for Deutsche Telekom, Klingenberg is busy getting to grips with overseeing a huge IT infrastructure migration project amid probably the toughest economic period ever seen for the airline industry.

Nevertheless, a buoyant Klingenberg has a clear vision of his role ahead. “The expectation is that I can strenghen the bridge between the various functions and the IT people,” he remarks calmly. “It is certainly too early to judge whether I have achieved this but it is certainly my aspiration.”

Prior to his latest appointment he was Luft hansa’s Senior Vice President of Direct Services for four years, responsible for the planning and operation of all Luft hansa domestic and European direct fl ights not routed through the company’s Frankfurt and Munich hubs.

Although he has a computer science background, he joins a growing list of business executives being handed top tech jobs across Europe. It seems that having a purely IT career is not always a golden ticket to the best CIO and CTO roles out there as organisations seek out business savvy individuals who can carry over their skills and experience to the world of technology. And with Klingenberg having worn various hats during his 13 years at Luft hansa, this no doubt furnishes him with a greater holistic overview of the airline’s operations.

Klingenberg also reveals that while it is certainly “tempting” to become a very much hands-on technology chief, he foresees the role being much more about steering the IT function in the right direction. “It’s about setting the IT strategy and setting the rules for an architecture so you know what the systems we employ will look like in five to 10 years time. It’s also about the path we take to get a more consistent computer and architecture landscape, as well as what governance rules we should establish to arrive at that plan.”

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H THINKING IT migration

users travelling with different status levels.” CITP will also enable the 21 full Star Alliance members to better respond to market conditions and change class usage or schedules quickly to improve yield.

Like many of the legacy carriers dominating the skies, Luft hansa’s IT systems, especially those that handle departure control and check-in functionalities, need to be switched in the long run. Indeed, some of its older systems are between 15 and 30 years old, which creates maintenance and upgrade problems amongst other challenges. Luft hansa was one of the fi rst Star Alliance partners to shift its inventory system to the CITP, which was a deliberate move according to Klingenberg.

“Instead of being a late follower of developments that we could not shape, we thought it would be a good idea to sha this development and partner with Amadeus shape in order to get a system that would suit our needs.

Lufthansa will We can exert a lot of influence to get our functions switch over its and processes into the new system, but of course ticketing system in this is much easier to get done if you are the fi rst company to migrate rather than the 25th.”

As well as CITP, Klingenberg is also busy with th self-service check in functionality, designed to the mak life easier for passengers, as well as improve effimake

The bulk of his work (as it was with his predecessor Ganswindt) is focused on the mammoth Common IT Platform Initiative (CITP) – a multi-million euro project powered by Amadeus to migrate Star Alliance partners’ loosely connected IT infrastructures to a common platform.

The goal of the CITP is to better serve customers, slash IT costs and boost the speed of launching new products to market. The switch over has been carved into three key parts, with the first achieved 18 months ago when the old inventory systems were migrated. Th is fi rst stage alone reduces Luft hansa’s IT-costs considerably. “The ticketing function will be s, “and moved over in November 2010,” Klingenberg explains, one or two years later we plan to migrate the whole of the departure control systems, such as check-in and flightt handling at the airport.”

For this IT chief the benefits have been clearly visible thus far: “It has already been a huge economic benefit to migrate the fi rst step,” says Klingenberg.

“The other steps will bring lots of new functions, such as being able to accommodate customers much faster at the airport or offer, for example, dovetailed me services to the different frequent flyer programme

2010

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ciencies and cut costs for the airline. In Frankfurt, manual check-in capacities have been reduced for economy class passengers as they can check in using the internet, their mobile phones or the kiosks at the airport, which has created “big value” for customers and the airline, according to Klingenberg. He adds: “The customer can be master of his own destiny and it creates value for us because we can free up resources at the airport reducing those manual check-in functions.” So how has the response been from customers? “Generally, it has been very positive,” he notes. “It has been an especially positive response from those who are checking in and reserving their seats using their internet-enabled phones whilst on the move.”

To keep Luft hansa operating smoothly the passenger airline wing of the group is powered by some 200 systems managed by 400 staff. Luft hansa opts not to do programming and coding in house; instead these functions are outsourced to the likes of IBM, Amadeus and Luft hansa Systems.

Haircutting The CITP transition and other new technology implementations coincide with a period where the airline industry is sustaining a severe battering from the turbulent economic conditions of the past two years. The recession and cuts in corporate travel, comDr Michae l Kling enbe rg’s C V bined with extremely volatile fuel prices have grounded some carriers and left the Age: 48 likes of British Airways with mounting losses and staff layoffs. Like any industry the airlines need to cut costs where Position: C IO of Lufthansa Pass enge r Airline s necessary, and Luft hansa is no different in that regard. “Our [IT] budget Prev ious roles: has had a haircut of 10 percent, which SVP of Non-hu b Se vices at Luft hansa, as we means we are mainly cutting external ll as Head of C or porat e Organisat ion expenses,” the CIO remarks. “All the and lat er SVP of C orporat e D evelopment and IT projects have to jump some tough Organisation. He was also the air line’s EVP for Gr economic hurdles, and the payback has oup Inf rast ructure and in charge to be within a couple of years but we of the ‘Operat ional Exce lle nce’ proje identified some projects that we could ct. Prior to Lu ft hansa, he wa s a consultant for M postpone without much harm to the cKinsey & C ompa ny. business. And we feel it is valuable to have the know how, especially when it comes to supporting all the big projEducation: Mat he matics at Ha ects we have here.” mburg, Princet on an d Bonn unive rsiti In these lean times where every es euro counts, IT can sometime feel the force of budget cuts as a prudent urse strings. Without technolCFO takes a tight hold of the company’s purse b crippled. l d “You “ ’ fi nd da ogy, however, the airline industry would be won’t manager in the airline business who tells you that IT is an unnecessary expense,” Klingenberg states. “Our CEO has been a huge promoter of the CITP, for example. He sees it as an enabler for consolidation.

“Every airline has its own IT system and they don’t really talk to each other. So problems can be overcome once we migrate a lot of airlines to the new Amadeus system. I would say it has been rather easy to convince top management to free the funds to support this project,” Klingenberg concludes.

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ASK THE EXPERT

Fixing the pain points Nick Mongston explains how an XML authoring system can realise significant cost and time savings for your organisation.

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traditional content management solution is where a company uses a desktop publishing tool and a fi ling system or basic database to create and manage their content. However, in my experience there are two main problem areas in managing content in this way. From an organisational perspective the biggest issue for enterprise customers is the lack of focus that they put on authored content from a reuse and localisation perspective. I think that very often organisations undervalue the contribution that good content creation and management processes can offer. Th is leads to problems in effectively messaging and delivering their company’s value proposition. From a more technical standpoint the inability to reuse content and access and reuse legacy data is often experienced due to a lack of appropriate tools.

In order to resolve these issues they can identify in the enterprise where there is value in the management of content, for example they can fi nd bottlenecks in their content creation process. Th is tends to be any area where

there is the creation of lots of similar documents – a good example of which would be proposal writing in the sales function or user guides in the technical documentation department. Another thing they can do is define the value adding activities for a business function and then look for ways to reduce the cost of non-value adding activities.

For example, the value adding activities for a sales person are identifying and converting opportunities, not in creating contracts and proposal documents. Companies should look to see how they can reduce the cost and time, and increase the accuracy of these ancillary processes. One way to do this is to use an XML-based content creation/management system.

To be clear, XML stands for Extensible Markup Language. The core concept of XML in an authoring environment is to author once and deploy many times, and to do this across a number of different output formats.

In an environment where you are creating a lot of similar documents that require minor changes, XML authoring allows you to make updates and changes without rewriting or copy and pasting any content that does not need changing. Th is makes the process faster and creates significantly less errors, while enabling you to ensure that all of your documents look exactly the way that you want them to. In addition to this it allows you to output to many different formats using the same content. For example, the same piece of content used for boiler plate information used in a sales proposal can also be used on your website or in your user guides, which leads to wellstructured content that is the way you want it to be, and that is created very efficiently and accurately.

The whole of enterprise content management is geared up to offer two major Nick Mongston benefits: time and cost savings. What I am suggesting will certainly further these goals, however there are other benefits which are not as obvious. If content only has to be created once then you can afford to operate rigorous quality control during that process and you can be sure that the quality of your content will always remain exceptional.

Also, you can drastically reduce the duplication of reviewing effort that we see so often in departments that have any kind of content creation function.

One of the greatest barriers to the implementation of XML authoring systems is the adoption of a new authoring tool with which casual authors may not be comfortable. Our tool addresses that barrier to entry by providing a graphical user interface that would be instantly familiar to anyone who has used one of the more traditional word processing software packages, and at the same time produces high quality structured content without the need for authors to understand the underlying programming language.

Nick Mongston brings over 20 years of business leadership experience to JustSystems. He has experience working in both North America and Europe. He held senior management positions at Gestetner, Olympia AEG, Bayer/Agfa, SoftQuad Software,and Polycom. He is currently operating as the Sales and Marketing Director for JustSystems EMEA, Ltd. www.justsystems.com

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BANKING

to deal with situations such as failing projects, crashing software, delays, not meeting budgets, all this sort of stuff. Our users always wonder why this is the case. We are very bad at explaining to them why our world is the way it is. So I thought that rather than explaining it all the time I would put the issues together in a book that everybody can understand, even those who are not IT guys.”

Roeltgen claims that it took him three months to put the book together and that he spent just one month compiling the material to put it together.

He drew inspiration from his own position as CIO of Luxembourg-based private banking firm Banque LBLux, which he says, like all companies, faces the problem that often the software it adopts is fraught with problems. This leads to frustration from IT users who cannot understand why it takes so long to install the new software. He says: “The main problem is that we are dealing with an industry, that is far from being mature. When we introduce new software we get something that is basically not working in most cases.

We have faulty software. We have providers who don’t have quality assurance processes in place. The software packages we use in banking are very big and include hundreds of millions of lines of code but also thousands of Have you ever wanted to know what really goes in the IT errors. It is not getting better over time. Not departments of Europe’s biggest banks? Well now you can find out at all. We don’t see the problems at the beginning of the process and so the expectations thanks to IT’s Hidden Face, a book dubbed the essential guide for every CIO. Business Management meets its author Claude Roeltgen. of the business are totally different to what we can actually keep as a promise.” He hopes IT’s Hidden Face will help to address this problem: “I have tried to build a bridge fter 22 years spent running the IT departments of some of between those two worlds. I cannot change our world but I can explain our Europe’s biggest banks Claude Roeltgen knows a thing or two world. I can make the business user aware of the difficulties we are fighting with.” about what goes on behind the scenes. Now he has put pen to Roeltgen says the CIOs of financial institutions face particularly big chalpaper and written a book designed to be the CIO’s bible – an lenges because of the constantly changing nature of the industry and the types overview of the key issues they face today including the pitfalls of failing to of applications and processes that are used to process financial transactions: bridge the gap between the business and the IT department. Roeltgen says IT’s “I think the difficulty is predicting where the banking industry will be in Hidden Face is written in a style that will appeal to professionals at all levels of 12 months from now. We don’t know what mergers there will be and what fia business particularly “if you are a business manager who needs to work sucnancial products we will continue to offer and which ones not. So trying to cessfully with IT or a professional who needs to be able to explain why someunderstand the whole industry is a real challenge.” thing can indeed be installed in 10 minutes but that success demands many One of Roeltgen’s key aims when writing the book was to use language more steps before or after that”. that could be understood by all parts of the business and to avoid overly techReality bites nical terms. However he says he believes that in general CIOs have improved Roeltgen admits that it was the many obstacles that he has faced in his job greatly in the way they communicate with the rest of the business: “I think we that inspired him to write the book. He says one of the biggest challenges is have the language problem maybe much less now than we did 10 years ago. the lack of understanding by other parts of the business of the task faced by We have people now in IT who talk the business language and who can disthe IT department. He hopes the book will help to break down some of those cuss issues with them in more or less open ways. So the times when we had communication barriers: “I’ve been a CIO now for 22 years and I’ve always had those nerd programmers explaining what a programme is are finished. But

IT UNCOVERED

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we are still very bad at explaining the framework of IT and explaining the difficulties that we face.” Roeltgen goes on to say that given the key role IT now plays in helping businesses to meet their business objectives, clear channels of communication between the CIO and the boardroom are crucial. This is particularly the case, as he has experienced, within the banking industry: “Without IT you cannot achieve any business goals today. But it depends a bit on what industry you are in. In the banking industry every topic that comes in is an IT topic because of the sheer mass of transactions you put through. In other industries it might be different but I don’t have that experience.”

Hard times Because of the big role that IT plays in running the business smoothly, the economic downturn has had a detrimental impact on some CIOs and their departments, says Roeltgen: “It definitely does have an impact because you have cost cutting exercises almost everywhere and the biggest cost block is normally IT and staff. IT departments tend to employ a lot of staff so they are touched two times really. It makes our life much more difficult.” He says this situation becomes particularly difficult when the company has a longterm contract with an IT software provider that it can no longer honour because its IT budget has been cut. “There are running contracts where costs are fixed so you cannot react very quickly on this. But the targets you have to reach are set in a very short time frame. And explaining to the business that it is not so easy to get out of a running contract to change to another system can be very difficult in some places.” He says he is currently facing the problem of slashed budgets at Banque LBLux, which has been hit by the economic downturn. The bank is a subsidiary of BayernLB and Helaba and previously it had

“The economic downturn has had a detrimental impact on some CIOs and their departments” performed IT services for the rest of the group. However, he says that because it is now reducing in size it is no longer in a position to act as an insourcer and now has to outsource the services it once provided.

“Our situation is changing in the sense that we were a big insourcer for the group. Our group is getting restructured very heavily which means that the services we offer for the group are reduced. We did services for a number of other entities in the group. But as everything was re-sized, downsized and changed, we basically lost our customers that we were servicing within the group. So we go from an insourcing strategy to an outsourcing strategy. This is a very painful process but also very challenging and a very different situation to the one we had before.”

It’s the type of situation that Roltgen hopes to prepare his readers for in his book. However he admits it is not always easy to practise what he preaches: “I think most people have read the book and sometimes they confront me when I don’t do what I wrote in the book. But at least I try. I know it’s very difficult to really have the perfect world. It’s a day to day challenge to follow what I think is the best way to do things.”

An extract from the first chapter of IT’s Hidden Face Again, a program has crashed. Again, the PC is frozen; not even the mouse moves. “What on earth did I do wrong?” you are asking yourself, slowly but surely becoming frustrated. The only correct answer to that question would be “Nothing,” but there is no one to tell you this. Computers should work in all circumstances, but they don’t, and this is almost never the user’s fault. The only way to avoid this situation would be to constantly have an IT expert available to you.

Information Technology (IT) is an impenetrable and ever-growing jungle for a layman. The computer systems that are used in the business need to be compared to a fragile ecosystem. The common man looks at an IT expert with a mix of respect and compassion.

Most people think the world of computers is treacherous. Everything is so complicated, inscrutable, and – for some people – even menacing. Since the computer has become a massive part of our daily life, renouncing it would be neither possible nor desirable, so taking a discerning look behind the scenes is worth it. It’s profitable to understand why this world is so imperfect.

A gap the size of the Grand Canyon exists between the computer user’s expectations and what an IT department can effectively do. Business computer users lack basic knowledge about the specifics of the IT world.

Electronics and computers are everywhere around us, but to talk about a high maturity grade of that industry is simply nonsense. Later in the book, I will describe the situation as “storm-and-stress” behaviour. A renowned colleague of mine goes even further and describes the situation as an “infantile stadium.” It is important to me to close the massive gap between the understanding of laymen and the expertise of IT professionals. It is obvious that IT experts need to master their own universe and understand the business in the company they work for. On the other hand, users should endeavor to understand the specifics of the IT world. That they don’t is one of the main reasons for the comprehension problems that we face.

Too often, we hear from our users in the business that a task should be done at the “push of a button.”

Many misunderstandings between IT experts and users are based on this misjudgment. The tendency of IT experts (who are of a rather calm nature) is to not talk a lot about their world. They are doing far too little (or none at all) marketing for their own sake. It is about time to change this.

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INDUSTRY INSIGHT

In financial services the race is on to do it fast and do it first

By Dr Richard Sykes

O

ne year on from the Lehman Brothers collapse, the financial Software testing has developed as a profession in its own right. services landscape has been significantly reshaped. Markets Qualifications have evolved to provide a sure foundation for practitioners, led remain unrelentingly competitive. And in the battle for competby the ISTQB (International Software Testing Qualifications Board). itive success, the prize goes to the business able to get to market Internationally recognised standards, such as BS79525, provide excellent faster than anyone else. How quickly can a new and process models. A growing diversity of specialist innovative business service be launched, scaled up tools is on offer, marked by a focus on fast and effecand brought to full profitability? tive reporting. The most important development has Gaining this early mover advantage by mobilbeen in the arena of test maturity models. The new ising IT resources to deliver a new and innovative TMMi model (www.tmmifoundation.org) is strucbusiness capability demands effective software tured to parallel the CMMi ‘5 levels of maturity’ that testing. Best contemporary testing practices lie at has done so much to bring the quality revolution into the heart of the professional creation and delivery the heart of software creation. of new software structures. Properly integrated into A winning partnership project management processes, they enable the Steria has always put effective testing at the heart project team to cut through any testing bottlenecks of its software project teams, with specialist resources to reduce software development lifecycle costs and based in its Indian operations. It has recently timescales. announced a new partnership with Experimentus, a One lesson stands out: effective risk manageAs Director, Services for Bloor Research, Dr Richard Sykes is an advisor in the strategic leader in contemporary testing best practice. ment is a critical differentiator. And first and foretransformation of technology and business “Steria recognises that financial services compamost, best contemporary software testing practices process sourcing, outsourcing and offshoring business models. Group VP IT of chemical major nies live or die by how quickly and cost effectively are about project risk management – ensuring that ICI in the 1990s, he is an elected member of the Board of Intellect, the UK business association of they can roll out innovative business capabilities with the new service will deliver the intended outcomes the IT, telecoms and electronics industries. tight risk management,” says Yvonne Spalding, when it goes live.

Managing Director, Steria Financial Services. “Our In addition testing maintains a focus on the partnership with Experimentus brings the best of contemporary software effectiveness of the project team preventing problems rather than detecting testing practices to the heart of our client operations as one key element of our them for a later fix, keeping the team away from resource-wasting detours. And commitment to their success.” it maintains a focus on the efficiency of the project team, ensuring that it works its resource highly productively – but only on work that is genuinely in the project value chain.

This leaves you confidently in control of all your resources at all times, focusing on achieving the desired objective, wasting nothing on unnecessary detours. Because, in the words of the great Peter Drucker, ‘there is nothing as useless as doing efficiently that which should not be done in the first place’.

The importance of testing

“Contemporary testing practice is integral to the work of today’s project teams, designed to help rather than hinder”

Contemporary testing practice is integral to the work of today’s project teams, designed to help rather than hinder. It will flex with the process and deliver even when there is fast moving business-required re-specification of objectives and it recognises the need for both speed and the agility demanded by a fast changing competitive landscape.

No longer the interfering back office audit or naysayer, world class testing practices are now positioned as the front-line trusted advisor, enabling ‘go live’ decisions to be made with true confidence.

This is affirmed by Geoff Thompson, Consultancy Director at Experimentus. “Testing is a vital component of the software development process – and contemporary testing best practice is about professional delivery of speed, agility and risk management to the sinews of that process.”

So take a fresh look at testing. It delivers effective risk management, business reassurance, speed to market and that much needed board confidence.

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ENERGY

Volatile market conditions have transformed the way European companies buy energy according to Kanat Emiroglu, the recently appointed Managing Director of British Gas Business. He tells Business Management how he is spearheading change to support companies through turbulent times.

In your previous role you were Director of the SME division at British Gas Business. Was this good preparation for the role of Managing Director?

Kanat Emiroglu. SME is a big part of British Gas Business; it’s two thirds of the customers and it’s more than half of the revenue and the profits.

So in terms of business dynamics I was very familiar with the business and its strategic, operational issues. But on the other side it’s a little bit different when the buck stops with you. There’s more senior management interaction and maybe a little bit more political awareness is needed. So there’s quite a few new things coming to the agenda.

How will you be working with business customers to help them increase their energy efficiency?

KE. We have six vision statements. The most important one is that we provide complete energy solutions. And what we mean by that is an underlying belief that five or 10 years from now nobody in the business world is going to buy energy only as a commodity because it’s such a volatile expensive commodity that influences businesses’ competitive advantage

in their own markets. It’s going to have to be managed. And we know from our own data that companies that use energy solutions and actually think about energy efficiency over time can reduce their energy bills by 30 percent, through some behavioural changes and some small investment. We can give plenty of advice on energy saving stuff such as how to use their heater, their freezer, their lighting, what to do about peak time etc. But advice is cheap. So what else can they do? Well there are a lot of new technologies in the energy solutions area that allow companies to track and monitor their energy usage. If companies get smarter they can, if they have multiple sites across the country, learn which sites are the most energy efficient and compare that to the worst ones.

How have volatile energy prices and government regulations affected companies?

KE. For almost a generation since the mid 1970s energy has been relatively flat priced, in general low priced, and a not so volatile commodity. Th is was partly because the UK was surrounded by energy sources in terms of oil and gas. The North Sea fi nds helped them and the market here was

Feeling the

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relatively stable and that’s why a lot of companies didn’t spend time on this issue as a cost item. Either that cost was predictable or it was small.

But that has changed. Since 2004 we have been an importing country. On gas we depend on quite far away places and so the price is highly volatile.

You can pick two gas prices in the UK that are 10 times different on a daily basis. So companies need to manage their Kamat Emiroglu energy much better. The second aspect affecting companies is regulation. Both governments and the public have become much more aware of what the use of excessive energy does to our climate and to our energy security. There’s a plethora of regulations, trading schemes and penalties or incentives that businesses need to be aware of. If they operate in a vacuum and just ignore the energy area, especially if they are energy intensive, they could be hurt.

A recent survey by British Gas found that 54 percent of companies admit to delaying paying energy bills because of the economic downturn. How big a problem is this?

KE. Th is is a big problem in the industry. The problem is we’re writing off a huge amount of money that is not paid to us as a debt charge in our accounts. We’re trying to reduce that because for us that’s money taken out of our existing customers so issue number one is that it’s costly. Issue number two is that people who do pay their bills pay them a bit later. So in addition to the recession we have a credit crunch which means that liquidity is lower and that causes us to use more capital. We will eventually get that money but we do need to use more capital and the amount we use in today’s markets is charged at higher rates. So that is a problem. What are we doing about it? We have introduced something called SAVE (Small business Advice and Value Expertise) because we thought that instead of robotically collecting debt from SMEs we would listen to them and understand what cash flow problems they are facing and develop whatever we can to alleviate those problems to fi nd win/win solutions. Th is also involves giving advice on energy consumption reduction and giving out energy saver packs to inspire them to use less energy. There’s an online assessment tool called Energy Savings Report, which goes into the specifics of that business and makes specific recommendations in that case. We give legal advice and access to lawyers for SMEs that are not aware of some of their rights. There is a government initiative called Prompt Payment Initiative which helps SMEs get paid by their own suppliers. Finally we write payment plans. So instead of insisting that somebody pays 100 percent of the money on day zero, we try to spread it over time for businesses with reasonable credit ratings, so that we don’t have to squeeze them too much.

How much money is British Gas Business losing through non-payment of energy bills?

KE. Th is would be competitive information so I can’t give you the number but it’s quite high. It’s high enough to be one of the top three things in my management team’s agenda throughout the year. That is always in

the top three. It’s especially the case for SMEs and less of an issue in the corporate world where credit ratings are more followed and bills are paid much quicker. In the SME space we see quite a lot of write-offs.

How does the service you provide to large corporate companies compare to that provided to SME customers?

KE. If you measure by sites, we have 900,000 SMEs and 150,000 corporate sites. Each SME has an average 1.2 sites. Corporates have roughly 10 to 15 sites. Some of them have 10,000 sites with us. Some have only two or three so it’s quite a wide portfolio and we serve them quite differently as a result. If you are a residential customer who calls British Gas you get put through to a call centre where a random customer service agent will answer the call. In the SME sector you have an account manager so when you call it will be your account manager you deal with. He picks up the call 50 percent of the time otherwise it’s one of his nine team colleagues. In the corporate world you go up one level again and you are served by hubs. These are not just groups of customer service agents in a team but also other multi-disciplinary agents sitting with the customer service agents. So there’s a debt expert, a billing expert, a technology expert and an energy solutions expert, sitting at the same table. The object being that we want to get to 100 percent fi rst time resolution for corporate clients.

In the SME world we’re talking to a business owner, an entrepreneur.

“Last year, which was an especially volatile year for energy, the wholesale curve went up or down on average by four percent every week. A weekly price change is much higher than our margins so you have to get pricing absolutely right” They have much less time, they value their time more in terms of euros per hour, they ask professional questions and we need to train our people up to that standard. In the corporate world you are usually talking to a buyer whose job it is to buy energy so again it goes up by one notch.

How competitive is the UK energy market currently and how challenging is it to retain customers in this environment?

KE. In the corporate world you have to bid for customers almost every year now. There used to be two or three-year deals but because of the capital allocation and difficult trading environment around energy, most companies are now offering just one-year deals and we have reduced our

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terms also on average from two years to probably around 1.6. So every year there’s a bidding for that. It’s quite competitive. And in the SME market also, prices for business energy changes every day depending on what the market curve does. Last year, which was an especially volatile year for energy, the wholesale curve went up or down on average by four percent every week. A weekly price change is much higher than our margins so you have to get pricing absolutely right. And the competition is to the last percentage point. It’s also important for companies to know when to buy the energy. So if you were buying it, for instance, in the summer of 2008, when the prices had reached peak levels and you signed a two or three-year contract then you would be using energy at a quite expensive time. It’s almost unfortunate to have bought at that peak.

What are the biggest challenges you will be tackling in the year ahead?

KE. It is a challenge to deal with the volatility and the debt in this environment. But I wouldn’t call it unmanageable. I think the challenge for me is more to continue to grow our business, British Gas Business is a very successful part of Centrica our parent company. It has the highest employer engagement results and it has grown its customer satisfaction

every year for the last four years. It has grown its revenues and its profits and the number of sites. British Gas Business has also made successful acquisitions and integrated them. One thing that I personally want to crack is achieving excellence in serving multi-sites. We have already achieved better customer satisfaction in multi-sites and we’re getting even more specialised in other areas and getting the right technologies.

How do you serve companies with multi-sites currently?

KE. Imagine yourself as the buyer of energy in a company like Boots or McDonald’s. We come to you and we say we are going to install smart meters in your 5000 sites across the UK. And that will also include submeters that measure different parts of your store using different parts of energy. Th ree months on we can show you charts on which of your 5000 sites use energy the most efficiently. Secondly, we can show you some insights about how you do heating, freezing or lighting in energy use versus competitors in your industry and if there are any insights coming from that. Th irdly, we can show you peak versus base usage and that can really influence the way you use energy. And fourthly, we can talk about clusters you have where you could produce your own energy such as micro CHP systems. Our aim to become a 21st century energy seller.”

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EXECUTIVE INTERVIEW

IN BUSINESS, GREEN IS GOOD Environmental compliance and risk management has become a hot issue for businesses of all shapes and sizes. We speak to IHS’ Chris Methven to find out why.

What has driven the need for companies to have correct environmental procedures, dedicated compliance and risk solutions in place?

Chris Methven. Environmental impact is a growing concern when considering corporate performance and corporate risk. While consumers and investors increasingly expect organisations to demonstrate environmental responsibility, there are strict regulatory requirements and compelling operational issues at stake. In addition, the regulatory regimes in place are evolving at a rate never seen before, and perhaps the greatest challenge that seems to be facing IHS customers is staying one step ahead from a compliance perspective.

Organisations tend to have multiple business units and departments. Why is it important to ensure that your compliance covers all geographic and business units in one unified report?

CM. Compliance with environmental legislation is a requirement that reaches across all industries.

The anticipated evolution of regulatory and reporting requirements means many companies are proactively addressing environmental reform in an effort to stay one step ahead of impending and potentially costly legislation.

Technology solutions are often seen as a way to enable repeatable, reliable, and efficient processes to meet a growing number of environmental management demands.

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Can you give examples of how your products and services have helped organisations with their environmental reporting over the last few months?

CM. IHS offers a single source of critical information and insight to support an organisation’s key decisions related to climate change. IHS climate change resources help with key decisions from strategic planning to project implementation. The result is a comprehensive approach for developing and executing carbon strategy, and confidence that it reflects the fullest possible understanding of a company’s emissions portfolio and the evolving climate change landscape.

This helps ensure the transition from managing climate change as a risk to driving opportunity and value creation.

IHS has the most comprehensive climate change solutions in the market. Some of the areas in which we assist our clients include: helping our clients to understand the impact of emerging policies on energy systems and their business; framing investment and abatement project choices, such as clean energy and energy efficiency; creating centralised enterprise systems for greenhouse gas (GHG) emissions; providing systems to exploit cap-and-trade positions such as EU-ETS; implementing flexible systems to handle changing/multiple GHG protocols; advancing sustainability reporting to support more quantitative information; and forecasting Co2 emissions and carbon

What are the main environmental compliance and risk challenges that organisations are looking to manage today?

CM. Stakeholders are demanding that our annual sustainability reports are more quantitative and less qualitative. Environmental data volume increases annually and is becoming difficult to report on.

Developing environmental regulations brings the risk of increasing costs, especially to those prices. corporations with the most sigIn addition to our extensive nificant environmental impact. insight and advisory expertise in Substantial fluctuations in certain the area of climate change, IHS is commodity prices due to scarcity the market leader in the provior other restrictions also present a sion of environmental manageserious risk to organisations with ment information systems.

Chris Methven joined IHS in September 2008 as a heavy reliance on natural reFrom environmental reporting Environment Director EMEA. sources. Environmental departand compliance to financial He is responsible for the European Environmental ments are becoming visible to tracking and risk analysis of Business Development at IHS. Prior to joining IHS, he internal customers such as finance emissions allowance portfolios, spent four years with ABeam and risk due to market-based IHS’ solutions give you total Consulting. mechanisms for emissions manmanagement of your environagement. Consumer awareness and mental programme and emisconcern regarding environmental issues is also rissions. IHS customers span all major industry ing. Investors are now interested in greater environverticals and all geographies; we partner with mental performance and transparency, with socially our customers to assist in achieving operational responsible rating agencies, and socially responsible excellence and rising to the challenge of maxinvestment indexes now having an impact on both imising environmental performance across the consumer and investor decision-making. enterprise.

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RETAIL

King

of the

jungle

By Ben Thompson

Amazon’s CTO Werner Vogels is focused on transforming the internet behemoth into the world’s most customer-centric organisation – and is using innovation to help him get there.

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T

he Amazon rainforest contains the largest collection of living plant and animal species on the planet – and like its jungle namesake, the world’s largest e-commerce platform holds a similar wealth of weird and wonderful specimens just waiting to be discovered. As well as everyday items such as clothing, music and consumer electronics, the internet explorer can also unearth a huge range of rarer treasures. Want to reduce your carbon footprint? How about a 400W self-assembly wind turbine to help get you started. Looking for that unusual gift? Check out the original Andy Warhol screenprints in the ‘Everything Else’ department. Fancy getting married?

Try the 10x18 wooden wedding chapel, complete with front porch and steeple (sorry, bride not included). Shopping has never been this easy.

Yet while some may still think of Amazon as simply an online retailer, the reality is very different.

From its bookseller origins, the company has grown to become one of the world’s biggest technology organisations, a platform that attracted over 615 million visitors last year and on which more than one million active retail partners do business worldwide. An increasing number of diverse businesses are built on the Amazon.com platform – including the online operations for Target, Lacoste, Marks & Spencer and Timex Corporation – and the company’s relentless focus on innovation helps Amazon maintain its status as a high-tech pioneer. From new hardware development to the definition of new business models, from building ultra-reliable storage services to a massively scalable computing cloud, from pervasive monitoring and performance control to revolutionary efficient software architectures, Amazon is recognised as being on the bleeding edge of technology development.

“We have three different businesses,” explains the company’s CTO Werner Vogels. “One is the retail business, and that’s the one that people are most familiar with. Then there’s the seller business, which consists of three major streams – the seller-only Amazon website, the enterprise services business where companies launch e-commerce operations on top of our platform, and services such as Fulfillment by Amazon that enable businesses to take advantage of one of the most advanced fulfillment networks in the world. And then there’s the developer business. For all of those, we take the same approach: we want to be the world’s most customer-centric company.”

For Vogels, this means focusing on continuous interaction with the customer-base – generating what he calls a ‘feedback loop’ – to ensure that the services Amazon provides are the right fit for its customers. “We have a process that we call ‘working from the customer backwards’ to develop new technologies, where we start with what the customer needs and then work backwards from that point to make sure that the technology we implement really does what we want it to from a customer standpoint,” he explains.

Plotting a path Take Amazon’s popular and much-copied product review system, for example. The site had reviews from the outset, and the idea of letting the market decide what’s hot and what’s not has played a key role in helping to make the company such a trusted seller – even non-customers admit to checking out the user reviews before eventually buying elsewhere. But as other retailers jumped on the user review bandwagon, Vogels and his team decided to take the concept a stage further. By adding a simple button asking ‘Was this review helpful to you?’, Amazon prioritised the most relevant reviews – those that had helped customers make a decision over whether or not to buy a particular product, both positive and negative – and provided a simple way for customers themselves to regulate the quality of the reviews. A recent article in Business Insider suggests the move has had significant business benefits. In 2008, Amazon brought in €13 billion, of which 70 percent came from media products such as books, movies and music – products that also make the best use of the reviews feature. The study suggests that promoting the most helpful reviews has increased sales in these categories by 20 percent (one out of every five customers decides to complete the purchase because of the strength of the reviews) – adding a projected €19 billion to Amazon’s top line.

It is often said that the best innovations are the ones that seem so obvious. And while Vogels is at pains to stress that such developments don’t just happen without a considerable degree of effort, he does concede that all Amazon’s technology improvements start from a very uncomplicated concept.

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“I think you can have brilliant ideas, but taking them from the idea phase to the stage where they really mean something for your customers is much more challenging

than I anticipated”

“You have to find ways in which your customers can be more efficient at what they want to do,” he explains. “We have a number of high-level goals around how quickly customers can find items, how easily they can browse, how they can check out and how they can purchase things, and making that as efficient as possible for our customers is key for us.”

If you focus on the customer, continues Vogel, you take the long-term view. “You’re not looking at the next quarterly success; you’re looking at how you can make sure that Amazon is the world’s most customer-centric company over the long-term, and how you can innovate on behalf of the customer to make sure that the things you do really matter. In this sense, everything from reviews to web services can be thought of as supporting tools for doing the right thing for the customer. In terms of technology, it means seeing whether we can take a more cost-effective approach or have better scalability and better reliability, or whether we can help our customers make sure they make the right purchasing decisions.”

Of course, efficiency is one measurement of success, but there is also a more intangible quality that must be achieved for such a platform to be loved by its user-base: ultimately, it must also provide an enjoyable experience.

“Customers are very vocal with what they appreciate and what they don’t,” he continues. “So while our customer service is known for being excellent, customers also have the power and the tools to actually give feedback directly to the technology teams. In terms of innovation, we make sure that all these small experiments that are going on all the time with new technologies, with new customer-facing functionality, can be continuously measured.”

Measuring value Amazon has taken a number of steps to ensure any improvements to the platform add real, measurable customer value, and has built a large infrastructure to ensure it can monitor and assess the impact of changes to the site.

For instance, all Vogel’s teams have been given the instruction to innovate continuously on behalf of the customer, constantly looking at where improvements can be made. What makes a particular service a best seller? Is it better information, better presentation or different sources? “Our goal for customers is that they can find what they are looking for as fast as possible, in the most efficient way, in the minimum number of steps,” he explains.

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Werner Vogels

Vogels maintains that this is only possible via constant monitoring of the customer experience. Consider the following example. A customer wishes to download a movie to watch on the long Paris to New York flight, and sends Amazon an email with a question about its video-on-demand service. Not only does the service team answer within the hour, they also include a link to indicate whether the answer solves the question or not. Choosing ‘yes’ takes the customer to a ‘Thanks for your feedback’ message, which not coincidently puts them back onto the Amazon site and contains a further link to provide additional feedback.

If you respond ‘no’ to the original question, you are taken to a similar page to rephrase the question. This simple feedback mechanism provides a number of important benefits. First, it demonstrates Amazon actually cares whether the user’s problem is resolved satisfactorily; it allows the customer to easily submit another question if not satisfactorily resolved; it allows you to quantify the performance of the service department; it identifies areas where better answers are needed; and finally it helps identify tricky problems that can be corrected.

Such attention to the minutiae of customer service interactions helps the company refine its offerings and continuously improve. And while conceding that the management team makes most of the long-term big technology bets, Vogels insists that many of the ideas actually come up through the organisation. “Amazon is very flat in terms of its organisational structure and we have a tremendous focus on innovation, so we’ve got all sorts of paths in which key information and ideas can travel to those who actually make the decisions,” he says. “I think most of the technologies as you see them in Amazon – whether it is reviews, whether it is Listmania, whether it is Gold Box – have come out of the grassroots.”

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Such a meritocratic hierarchy, where the best ideas rise to the top, is essential to the company’s reputation as an innovator. Encouraging ideas that add value is a philosophy that is nurtured right through the company culture, from the C-suite down to the recruitment of new hires, as Vogel elaborates. “In terms of our personnel, we look for a very particular individual: they need to be able to think in the way that the customer thinks,” he says. “It’s very important to have a culture where everybody understands what the core values of the company are. New starters are often surprised at how important focusing on the customer is to us and how good Amazon is at doing that. So having a core value throughout the company that everybody signs up to is essential.”

The importance of teamwork

neers and programme managers to build something that really works. But there are also legal implications, there’s an impact on tax, there’s impact on PR, on marketing – all of those functions make up a team, and you can only build and deliver a product to your customers as a team.”

It is a challenge Vogels relishes. “I think you can have brilliant ideas, but taking them from the idea phase to the stage where they really mean something for your customers is much more challenging than I anticipated when I was still in academia,” he continues. “I did some startup work alongside my academic work, but even so the path going from idea to actual implementation is a long journey, and when you have to operate at the scale of Amazon that’s a whole different story again. Suddenly, issues like reliability, performance, availability and cost-effectiveness play a major role in all of the decisions you make along the way.”

And in contrast to Google, which famously encourages developers to spend 20 percent of their time on individual projects outside their day-to-day responsibilities, the team ethos rules at Amazon. The motivation comes out of the idea that the things that you do have a direct impact on the customer. “Doing things that matter to people is tremendously motivating, and so most of our engineers and programme managers – and indeed everyone else that is working on our products – find remarkable reward in making sure that our customers have a better experience.

We often have meetings where we start off with a ‘customer voice’ – a success story, even sometimes a negative story, of a customer’s experience of buying on Amazon – and use those stories to drive our services to become better.”

Once again, it all comes back to the customer. “We don’t just want to be the most customer-centric company on the web; we want to be the most customer-centric company on the planet, period,” concludes Vogels.

“I think that if you look 10 years from now, you’ll see that many of the innovations Amazon has implemented have had a tremendous impact on how customer-centricity is viewed.” n

“10 years from now, you’ll see that many Amazon innovations implemented have had a tremendous impact”

The other essential trait that Amazon tries to instill in all staff is the ability to collaborate effectively – something that is particularly important in the technology function, which by its nature involves small teams focused on specific projects. “Our development teams talk to each other all the time,” says Vogels. “Even though we work in very small teams, Amazon itself is a very large technology operation and it is essential that everyone co-operates and collaborates all the time.”

According to Vogels, teamwork is key to delivering fully rounded ideas that really work for the customer – whether that customer is internal or external. Coming from a background in academia (prior to joining Amazon in 2004, he spent a decade as a research scientist in the Computer Science Department at Cornell University looking at scalable reliable enterprise systems), Vogels admits to being energised by the way business organisations approach the issue of R&D. “In academia there’s a real focus on individual achievement,” he says. “Although there is some collaboration among faculty and there are student teams working together, the work is still rather individual, as is the reward structure. In industry, however, building real technology is a multi-disciplinary activity. First of all, you need good engi-

Amazon.com FAST FACTS FOUNDED: 1994 HEADQUARTERS: Seattle, Washington AREA SERVED: Worldwide CEO/CHAIRMAN: Jeffrey Bezos REVENUE: €13.1 billion OPERATING INCOME: €576 million NET INCOME: €441 million EMPLOYEES: 20,500 WEBSITE: Amazon.com

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ASK THE EXPERT

An automatic decision Thomas S. Senger guides us through the advantages and pitfalls of implementing process automation technology.

B

efore making any decision to purchase a modern business process automation technology, customers should consider a number of key questions in order to avoid problems, which often lead to the unnecessary failure of projects. Even the most advanced technology can deliver disappointing results if its investment isn’t based on clearly defined goals, doesn’t fit into a company’s given infrastructure or fails to sustain employee commitment. From a technical perspective, the management should consider the following factors: Deployability: is the new system easy to deploy, even to remote locations?

Does the new hardware and software follow industry standards to easily integrate into an existing system? Is the system flexible with regards to operational platforms, and can it run on hardware and operating systems already familiar to the IT staff? If desired, can a development or test system be implemented to allow procedural validation prior to full implementation? In a geographically distributed system, is central administration available?

Scalability: can the new system be easily scaled to meet business demands? When expanding a business, a scalable system that can meet future business needs is essential.

The new system should easily allow one to expand hardware as well as any licensing requirements that impact production.

Thomas S. Senger, SVP of Applications Software Sales EMEA at Kofax, oversees all customer-facing sales and services functions in alignment with the company's newly-introduced hybrid go-to-market model, which supports both direct customer engagements and indirect sales through the channel and with alliances partners. He manages a team of 150 sales and service employees.

Compatibility and stability: is the system compatible with existing infrastructure and industry standards? It’s important to consider, that any nonstandard components would require additional IT resources for operation or maintenance. The potential capture system should adhere to industry standards to maximise reliability, ensure security and simplify integration. If you are looking to expand or improve existing business processes, any new infrastructure must be resilient so as to ensure high availability for business users.

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‘Customisability’: can the new system be customised to meet specialised or changing business requirements? Business requirements are not static. Though a potential new system may offer a large variety of customisation aids, often individual requirements demand for a level of customisation beyond this offer. In this case, the new capture solution should comprise an extensive set of programming interfaces.

Maintainability: is maintenance easy to perform using existing IT staff knowledge? It is not enough to deploy a compatible, stable, and scalable system. Any new solution must also be easy to maintain. The new solution should allow one to easily implement updates and upgrades while keeping the system at a high level of availability with easy troubleshooting and data backup options.

Security and user account management: can IT staff members easily perform system security and control user accounts? Once deployed, system access control and user account management become important. Maintaining user accessibility and security must be simple and should follow standards.

By following industry standards, IT staff

can use known procedures to manage user accounts. Centralised user management should be considered.

Affordability: is the new system affordable and can it provide a good return on investment? IT managers should look at implementation costs with regard to the benefits provided to the business.

Often, elements such as excellent customer service, reduction in labour costs with regard to content capture and management, and IT staff effectiveness in dealing with industry standard systems must be considered.

The human factor: remember to consider the human factor amongst these technical points.

Without a full commitment (right from the start at the design stage) from the employees who have to deal with the new system on a daily basis, the investment will fail. Besides spending on the technology itself, thought should be given to spending on training and education in order to unfold the full potential of the new solution.

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MEDIA

Saatchi & Saatchi has consistently dominated the world advertising scene and has the power to transform ordinary brands into global success stories. Diana Milne catches up with its CEO for EMEA, Simon Francis, and asks how to get ahead in advertising.

LOYALTY BEYOND REASON

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H

e may not be a household name but Simon Francis is the brain behind some of Europe’s best-known advertising campaigns – from Pampers and Toyota to Guinness and T-Mobile. As Saatchi & Saatchi’s CEO for EMEA he has the power to make or break a brand and to create what he de-

scribes as “lovemarks” – products which attract “loyalty beyond reason” from their customers.

His fi rm has dominated the global advertising industry since the 1970s and currently employs 6000 people across the world, with 150 offices in 86 countries worldwide. In the past five years alone it has won 3500 awards for creative work, most recently scooping six Lions at the Cannes International Advertising Festival 2009 for its T-Mobile ‘Dance’ advertisement.

The T-Mobile campaign featured real life footage of 350 people breaking into a spontaneous dance routine at London’s Liverpool Street station among the rush hour crowds. The footage was later shown across online, direct and retail channels, as well as through a specially created YouTube channel. It encompasses, says Francis, what advertising in 2009 is all about and reflects the dramatic technological changes that are shaping the industry. It is no longer enough to target a captive audience on prime time television. The fragmentation of the media landscape and the vast array of media choices available mean advertisers must try harder than ever to engage with consumers on all fronts through digital, television and print but, most importantly, through word of mouth. “Technology has completely transformed the industry,” says Francis. “It’s very challenging to go to market with push messaging right now because the audiences’ choices of media are so fragmented. Maybe 15 to 20 years ago, 34 percent of the UK population would be watching Coronation Street.

You could reach 34 percent of the population in a 30-second advertising slot and talk to people of all social typologies. Now the average rating is much lower for all TV programmes because there are so many different channels and shows.”

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Falling revenue The decline in print and television advertising in the past decade has been well documented. According to the latest figures by the Advertisingg Association, newspaper advertising fell by 12 percent last year U alone and TV advertising dropped by five percent. in the UK Mean Meanwhile, internet advertising rose by 17.3 percent. Given

The hit

the figures, does Francis believe there is still a future these

ile b o M T atured

fe advert ncers 350 da

fo traditional media in Europe? “We would say our for p primary media now is people. They do the marketing work for us. The traditional media are still amazingly good conversation starters. And if you look at our case h histories they make full use of traditional media to start a socal networking conversation. But that is now carried on through social media, such as blogs, Twitter and Facebook If you have an idea that is so compelling, arresting and book.

enjoyable then people will come to your idea and propagate it.”

The pressure for Francis and his team to come up with these compelling ideas is growing in the face of harsh economic conditions and their clients’ ever shrinking advertising budgets. “We’ve seen, on average, advertising budgets shift 10 to 20 percent south depending on which market you are in and how the client is placed,” says Francis. “Clearly some market leaders are more resilient and have carried on and maintained their expenditure. Some of the middle-ranked and smaller players have found it more challenging and they are the ones that have been the most impacted.” He goes on to say that advertising markets that have suffered the biggest impacts are in the UK, Spain, Italy and parts of Russia.

While he maintains that shrinking budgets have not stifled creativity, he says that economic conditions are setting the tone of today’s advertising campaigns, with a move away from extolling the virtues of excessive spending and an emphasis on what consumers are really looking for: “Hope, joy and optimism.” Francis adds: “Creativity isn’t something that is budget related. But there’s a different style emerging and clearly wanton expenditure is not in. It’s not appropriate and many people won’t be advertising in that way. But many people are looking for optimism, for hope and for humanity, and these seem to be becoming recurrent themes.” He goes on to say that with recessionary conditions, it is the products that can offer that “emotional connection” with the consumer which will beat the competition, even products that are offered at a lower price with the same functionality. “In an age where there’s not much money around and times are tough, people will, of course, look to compare and contrast brands and services. Those brands and services that can offer an emotional reward, beyond just the functionality of the A selection of Saatchi & Saatchi campaigns

products, are the ones that get loyalty beyond reason. The brands that can offer hope, joy and an emotional connection to the consumer are the ones that will prosper when all the other brands will suffer.”

Creating lovemarks Saatchi & Saatchi’s belief that customers’ buying choices are made on the basis of emotion, not rational thought, drives its creative processes. It aims to make every brand in its portfolio a ‘lovemark’ and, when creating a new campaign, it embarks on a complex process of analysis to establish the emotional connection the product has with consumers.

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“We do extensive research on our client’s business where we look at how

based on how well a product or service performs for them but also for

respected they are and how loved they are. We plot them on a map versus

the world at large. The advice we’d offer our clients is to align their in-

the competition and then we work out a plan to either increase the level

ternal impact on the world to what the consumer wants and to build that

of respect towards the brand or increase the amount of love it engenders

into our ‘lovemarks’ thinking.”

among consumers. Then we put together a plan accordingly. For many

He cites the example of how this strategy was used to create a cam-

brands it’s about the emotional side of things rather than the functional

paign for Pampers, which he regards as one of Europe’s most successful

side of things. It’s a very scientific plan constructed to build ‘lovemarks’

‘lovemarks’. “At Pampers we put in place a programme where every time

over a period of time.”

somebody bought a pack of Pampers one euro went towards a vaccine

Increasingly, says Francis, companies must prove their moral cre-

that would save a child’s life. It was an extraordinary programme we put

dentials in order to establish an emotional connection with an increas-

in place with UNICEF and it’s a great example of how a brand can change

ingly socially conscious consumer – with sustainability and corporate

the world and offer mothers an emotional reward whilst at the same time

social responsibility becoming key differentiators between brands. With

driving the business forward.”

this in mind, last year the company acquired the environmental sustainability agency Act Now run by Adam Werbach, one of the founder members of Greenpeace and the youngest ever member of the US-based environmental organisation, the Sierra Club. “‘Lovemarks’ are all about standing for something,” says Francis.

“We’re incredibly proud of all our campaigns and hate them all in equal measure”

“And increasingly many consumers will make choices and decisions

Great minds It is the job of Saatchi & Saatchi’s 2500 strong European creative team to come up with the ideas that will build emotional connections between brands and consumers – a process which Francis says relies for its success on the team being “incredibly brutal creatively”, an approach characterised by the company’s catchphrase for the process; ‘Let’s kill some puppies’. “It’s a crude phrase but it’s true. You fall in love with your ideas and you don’t want any harm to come to them but to get ideas such as the T-Mobile campaigns, you have to be utterly brutal and use consumer testing and gut instinct to make your choices,” he explains.

Describing the process he says: “We have these huge tribes where we have creatives from all over the world work for two intense days where we fi ll rooms and rooms with ideas which we will whittle down to 10 or 15. Then through consumer research we whittle them down to one or two. We do some development work before one comes out at the end of the process.

But first we have to kill some puppies.”

Despite having won countless awards for his teams’ creative work, Francis says he is by nature never fully satisfied by the outcome of a campaign. “We’re incredibly proud of all our campaigns and hate them all in equal measure.” Th is uncompromising, perfectionist approach extends to Saatchi & Saatchi’s working culture, which Francis admits is not for the faint-hearted, with anybody not deemed to embody the agency’s values quickly weeded out. “It’s a tough place to be if you want to cruise.

It’s a very tough place if you are not creative or you won’t put yourself at the service of an idea. For every single individual we have a peak performance appraisal system. We are quite brutal with people that don’t match our spirit.” That spirit is built on Saatchi & Saatchi’s twin pillars of philosophy: ‘Nothing is impossible’ and ‘One Team, One Dream’. Francis says the strong emphasis on good teamwork is the real key to Saatchi & Saatchi’s success in the cut-throat competitive advertising world: “In many agencies people don’t work together and egos get in the way,” he says. “Profit and loss accounts get in the way, and reporting lines get in the way. Saatchi is unlike anywhere else I’ve worked before, where we have one team, one dream.”

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LEADERSHIP

Life after a merger Stephen Archer of Spring Partnerships exposes the harsh reality behind high profile mergers. ergers are dominating the business headlines today, with Cadbury, Opel/Vauxhall and T-Mobile all involved in high profile M&A activity. But, while such announcements may prompt a flurry of activity by shareholders, the failure rate of such mergers is high – despite the detailed work that goes in to preparing such deals. In this article I shall dispel the myths behind mergers and explain the reasons why most of them fail:

M Synergies

So often the synergies between companies are based on technical know-how, complementary products or market access. This may be sound in theory, but the execution of such synergies often fail because this requires extra efforts from all employees in both companies.

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Meanwhile most employees feel they were giving 100 percent already and so it requires a major challenge for the companies to attain these increased efforts. Above all, to gain synergies, as with most gains for M&As there needs to be change. But, change is difficult, particularly in large companies and change integration for full synergistic gain can only happen by creating the framework in which people can happily and practically work. Even in these modern times, business leaders think that change and synergies can be forced through and often will say publicly “we will push this through”. Therein lays the admission that there is a barrier to overcome.

Back office savings There only needs to be one HR, finance, IT, manufacturing, and marketing function in any newly merged company. Reports on the Orange merger predict €600 million in back office savings. This number is not trivial and behind this will be vast amounts of disruption. Look what happened when NTL bought Virgin or when Barclays bought Woolwich – there was chaos and immense customer frustrations as the service levels fell during the merging of functions. That said, the back office savings are usually the most reliable source of upside in an M&A.

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Strategy and growth models Two businesses coming together will often have completely different strategies and growth models. These are the fundamentals of a business, often unseen from the outside, though usually detectable. M&As often demand some alignment of companies’ strategies. This assumes that one or maybe both were flawed in the first place. The result is either a new one or the imposition of one party strategy on the other. This usually leads to some level of failure. One only has to look at GE and its ‘blueprint’ for acquisitions to see how the ‘one size fits all’ approach to business strategy leads to failures. Each business, market and customer franchise is unique in some way – no matter how small that may be. The risk is that this could get overlooked though ignorance or arrogance.

Brand management Brands are often ignored by the M&A planners because they fail to fully understand what elements make up brands and their equity. The same should not be true of the boards but none the less, how often have we seen situations in M&As where very strong brands are swept aside by the name of the new owner? This can have disastrous consequences, destroying the value and alienating customers. All brands should be respected and invested in where they have current and future value.

Customer focus

“Two businesses coming together will often have completely different strategies and growth models.

These are the fundamentals of a business, often unseen from the outside, though usually detectable”

Customers are too often forgotten in the M&A frenzy.

Boards do not stop and say, “What will the customers think if we shift distribution and adopt common pricing models”? The customer is the lifeblood of the business along with its cash. However, many M&As still take place with the arrogance to ignore the customer.

well with strong corporate champions. Culture is a great enabler but it can be the hidden destroyer of a merger.

Management competence Is the competence in both organisations to equal measure? If not then how will balance be achieved? Does the acquiring company really understand its new acquisition? Too often the acquirer parachutes in its own team and fails to grasp the idiosyncrasies of the acquired company. If a new, single board is to run the new combined company then so often this board cannot manage the complexities of the new, larger organisation.

Simple management weakness is a common trap.

Leadership Orange has outstanding, proven leadership. All too often leadership is tested beyond its abilities when it comes to handling a bigger commercial enterprise with integration challenges. This is one area that is more vital than most. For shareholders the true motivation of leadership is critical. This must be fully understood.

The chaos theory Company culture When P&G acquired Gillette in 2005 the cultures were quite different. P&G understood this and eventually absorbed Gillette into its own culture. This is so often the way and can work well. But clashing cultures can be the undoing of the deal unless a proper culture adoption, harmonisation or a change programme is put in place. This needs to be managed 126 www.bme.eu.com

In the end, some deals take place for reasons involving too much hubris and vanity and not enough analysis of the business case. They may also take place out of desperation; the desperation to grow, add products, satisfy the cravings of shareholders or because of unbridled ambition. No deal should be analysed to death, but no deal should be done except in a mood of reality and sanity.

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EXECUTIVE INTERVIEW

Travelling in style Despite businesses being buffeted in this period of economic turbulence, Dave Jackson says corporate air travel can reach new heights.

Can businesses justify VIP/corporate aircraft in today’s economic climate?

Dave Jackson. This is not really a new question, but is a question that organisations should be asking themselves all the time. Today’s global recession has raised the profile of the question again, as many companies lay off employees in a bid to restore their trading position. In this environment, any sign of a frivolous or unjustified expense is being examined, and amongst those are the corporate aircraft.

We believe the case for efficient use of point to point or shuttle travel remains as strong as ever and more so as some regional operators cut back on their routes, forcing certain clients back to a less efficient hub-and-spoke travel pattern.

In the current economic climate, rapid communication with employees, clients and other interested parties is best done face to face and this can be done efficiently and cost effectively with a corporate aircraft, especially in a multi-site/multi-location environment. Having said that, there are expensive and less expensive ways to get from A to B to C and back to A.

“No one wants to own up to being the guy responsible for the €25 million corporate aircraft sitting on the balance sheet and doing five hours a month flying” New corporate aircraft are not a necessity; used aircraft or used and refurbished aircraft offer great value. Travel within regions, such as Europe, US and the Middle East can also be achieved very cost effectively in high specification refurbished aircraft coming from the regional airline sector, such as the BAE 146, CRJ and of course the Dornier 328. These aircraft have been built specifically for heavy duty regional use and are well supported and reliable, with a ready stream of qualified pilots and mechanics.

An ex-regional aircraft with full size cabin and a beautifully refurbished bespoke interior can be far more cost effective than a glamorous ‘pocket rocket’. Given crowded airspace and tight airport slot positions, speed is not always an advantage, certainly not for one-hour to two-hour flight sectors. In summary, there is still very much a place for the corporate aircraft and it can fully justify its existence and future use.

What is the future for long haul, such as intercontinental corporate jets?

DJ. This is not an area we at 328 Support Services are heavily involved in; however, I can offer a personal view. Beyond the need for head of state or government delegations with particular security needs, it is hard to see how today’s full service Business Class and First Class service offering; from the major airlines, can be beaten on a cost per kilometre/mile basis.

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The major airlines continue to support all of the most important intercontinental destinations and airlines such as Lufthansa and Emirates continue to develop that network. I believe international long haul on a major airline, perhaps complemented by a local corporate jet network such as NetJets, is probably a more cost effective solution, certainly in the case of organisations with multiple travel requirements but perhaps only one or two aircraft. Within a region, corporate aircraft can be repositioned much more quickly and cheaply; dead legs are less costly and on occasion could be dovetailed with scheduled airlines or a ‘by the hour’ provider.

Will fractional ownership replace ‘by the hour’ usage models as the way forward?

DJ. We believe both have a place and certain advantages, dependent on specific circumstances. As I said earlier, all forms of spend, especially if it might be classified as ostentatious will be clamped down upon. No one wants to own up to being the guy responsible for the €25 million corporate aircraft sitting on the balance sheet and doing five hours a month flying. However, there are some great value propositions available now, and again there is a case for the corporate aircraft, either shared amongst geographically co-located businesses or individuals.

The fractional model works especially if supplemented by ad hoc charter. The ‘by the hour’ model exemplified by the likes of NetJets avoids the balance sheet challenge, and for low-time users is probably still the best way forward. The answer to both points is somewhat based on what you are comparing to. If you have a low cost, well-specified or refurbished ex-regional jet it could be that over a reasonable lifetime it is cheaper to own or part-own than rent. n

Dave Jackson, Chief Executive Officer at 328 Support Services GmbH, has over 25 years’ experience in the aviation industry since graduating with BA (Hons) in Marketing (Engineering) in 1984. His background has been in sales and marketing and general management, with a strong emphasis on business improvement and turnaround within global multi-division/multi-site environments, with companies such as Lucas Aerospace, Aviall Inc., and Hunting PLC.

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HOSPITALITY

P illowtalk

Mr and Mrs Smith is the guide every boutique hotel wants to be a part of. Managing Director and co-founder James Lohan tells Diana Milne about its unique appeal.

F

rom its cryptic name to its unconventional team of inspectors, Mr and Mrs Smith has truly broken the mould when it comes to hotel guides. Managing Director James Lohan founded the company with one target market in mind – young professional couples with plenty of disposable income to spend on luxury hotel breaks. And despite having targeted such a niche audience, the company has expanded far beyond the former party organiser’s expectations, and now offers a three tiered membership service with 75,000 subscribers, which includes a 24-hour travel booking service. It’s a great achievement for a company that was started by Lohan and his wife, Marketing Director Tamara Heber-Percy, with the sole aim of fi nding romantic places where couples like them could spend the weekend: “We had no idea it would get this big,” he admits. “It was one of those lovely hobby businesses that crept up on us and had this huge initial success.”

Small is beautiful Despite having grown on a global scale the company has stuck to its original business plan of only featuring in individual boutique and luxury properties – all of which have been reviewed anonymously by A couples after spending the weekend there. “A re lot of our properties are owner-run so we’re looking for that real passion that’s behind thee hotel rather than the corporate giant behind d it,” says Lohan. “We’re looking for hotels where the attention to detail is second to none and where there are some surprises that you wouldn’t get in other hotels. Ultimately it all culminates in the experience you get as a couple.” To ensure the hotels in its collection meet these specifications Mr and Mrs Smith handpicks its inspectors to ensure their tastes match the company’s

brand values. It’s a far cry, says Lohan, from the traditional image of hotel inspectors: “We use what we call our taste makers. We shied away for professional inspectors with huge manuals and tick boxes on how the napkins should be folded or how big the diameter on my egg yolk needs to be. Because those are the things that, frankly, don’t matter at all as far as we’re concerned. We send people away who may already have touched us in some way. We may have drunk in their bar or eaten in their restaurant. These taste makers are people who already affect our every day lives.” Lohan goes on to say that the company has even enlisted the help of celebrities to review hotels, including Stella McCartney and Dita Von Teese. Unfortunately, he says, since the business has expanded he only rarely gets the chance to review properties himself. “We’re also known a bit now so we have to keep the anonymity up,” he adds.

One of the most labour intensive parts of his job currently is fi ltering through the many requests from hotels asking to be reviewed for the guides. “We get about 400 hotels approaching us at the moment and it’s a nightmare to go through that. We have a huge queue. We’re pretty up to date. We We’re re not at the cutting ed edge of every single boutique hotel that opens up but we’re not far behind.”

New horizons Th is high demand, he says, is partly due to the fact that Mr and Mrs Smith – though initially based in the UK and Europe – has now expanded its horizons and opened offices in the US, Australia and Asia Pacific. The US, U says Lohan, is a particularly hard nut n to crack: “It’s blooming difficult but b we’re doing ok. We are getting some traction tr there and it’s growing soft ly, soft so ly. There is a lot to be learnt about the US. US It’s a big, big place. When starting

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FAMILY FORTUNES James Lohan set up Mr and Mrs Smith with his wife Tamara Heber-Percy, the brains behind the company’s website and online activity. “It’s great, we sit at very opposite ends of the office now which is quite big so we lead very different work lives then we come home together in the evenings” says Lohan. “She’s very much in charge of the website side of things and I’m very much on the marketing and branding side. So it works very well and we complement each other in terms of our skill sets.”

Lohan’s background was in events organising and he formed the London-based party organising company Atomic before founding the restaurant and member’s club The White House. Heber-Percy graduated with a degree in languages from Oxford and worked as a marketing consultant for brands such as Ericsson, Honda, Unilever, and Swissair. In 2002 she left the corporate world to set up Mr and Mrs Smith and her own introductions agency, The County Register.

something in the UK if you can get London interested then the message will fi lter out to the rest of the country. In the US you have to try to get everyone interested or you have to take one city at a time, which is the strategy that we adopted.” The biggest challenge about the US market is its sheer size, he says: “The thing about America is that it’s almost like several different countries in one. They all have different habits in the way they take their travel and in terms of their budgets, their wants and how far they will go geographically. It’s a completely different animal but we’re chipping away at it.” They have adopted a similar strategy in Australia, with an Australia and New Zealand focused guide coming out soon, and Southeast Asia where it hopes to launch a new office this year.

Once those markets have been targeted he says the company plans to tackle the Middle East and India.

It’s an ambitious plan in an economic downturn that has dealt a harsh blow to o the global hospitality sector. r.

While he admits his staff are re having to work harder than an ever to secure sales, Lohan says ys his company is doing “really lly well” despite the recession, on, having experienced 50 percent ent growth since last year. “I will say people are having to work a bit harder because some of the hotels otels are suffering but we’ve got such a varied collection and we’ree not just about five-star hotels. Wee have an ever growing boutique B&B &B coll lection and we also represent great pubs and restaurants with rooms.”

He goes on to say that he doesn’t believe the Mr and Mrs Smith customers are prepared to give up their luxury travel treats, despite having to make other fi nancial sacrifices. “People are looking for deals. But they are not willing to give up their travel. I wouldn’t want to be in the new kitchens or cars business. But I think travel is the last thing to go.” Nevertheless the company is diversifying its offering and branching out into more budget friendly options, such as self-catering properties. Th is, says Lohan is also due to the fact that the profi le of its customers is changing to include couples with children: “The average age of our customers is 35.5 and about 55 percent are female. It’s the sort of cliché cash rich, time poor urbanites, city dwellers trying to escape. But we are having a few Mr and Mrs Smith plus ones now. So we’ve actually started up a stylish self-catering section as well which is a big new trend.” But, he explains, as with everything Mr and Mrs Smith does, this is self-catering with a difference: “People are very willing to go for self-catering but they are not willing to sacrifice style and go to some chintzy, old fashioned place. We have people who bring in their own chefs and DJs, for example.” It’s all a far cry from what the average holidaymaker would expect to get from their travel agent. But then nothing about Mr and Mrs Smith could be described as average.

A GROWING CONCERN The first Mr and Mrs Smith hotel guide was launched in 2003 by Spy Publishing. The online booking service was introduced in 2005 and in 2006 the company set up an in-house reservations team. It has since developed a full three tier membership programme which includes a travel and lifestyle concierge service, and has 75,000 members.

Its latest projects include launching the Smith brand in the US, opening an office in Australia and launching a 24-hour telephone booking service for luxury travel worldwide.

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HEAD TO HEAD

The personal touch Despite the proliferation of electronic communication tools, nothing quite compares to a face-to-face meeting at a conference. To discover more, we sit down with two hotel managers specialising in conferencing facilities.

These are extremely tough economic times for organisations. What beneďŹ ts can businesses get from arranging conferences at hotels and sending staff to events, even at a time when budgets are tight?

Nicole Spitz. It is especially when times are tough that companies need to

focus on improving staff performance. The benefits of organising conferences in luxury venues are numerous. First, efficiency. The various services offered in a luxury establishment go beyond pampering, aiming to enable optimum efficiency for the participants, whether it be through flexibility and adaptability to last minute changes in organisation due to unforeseen changes in clients’ needs, or through the services offered through our concierge. Our entire staff is at the service of our clients so that they can calmly focus on the objectives of the conference being organised. Another benefit is stimulation. A change in environment has proven to be a strong stimulus to concentration and creativity. And of course, messages that need to be communicated to staff, even the hardest, become acceptable in special places and targets can also be linked to the possibility of returning to such venues as a motivational tool.

Patrizia di Patrizio. Even in these challenging times, companies need to com-

municate, incentivise and educate their clients, partners and employees in inspirational surroundings. However, with reduced budgets, they need to work more closely with their hotel partners to find creative and cost-effective solu-

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tions. Feedback from our customers has been that they continue to want to hold events, meetings, incentives and product launches in luxury hotels; however, they are looking for added value, support, creativity, flexible pricing and ROI to help meet revenue and budget targets. Luxury and quality continue to be very important for all events; for example creating the right impression to potential customers for a product launch is key. It can be short-sighted and a false economy to step down a category when booking an event if it is spoilt by poor service on the day, disappointing surroundings and increased stress due to lack of support in the run-up to the event.

Apart from the recession, what are the other challenges that the hotel industry faces when encouraging organisations to arrange conferences?

PdP. I think that the environment is obviously an issue that will continue to

grow and whilst hotels should do all they can to be as cost-effective as they can in their consumption of energy, the challenge is to do so without compromising the luxury experience that guests are paying for. Time out of the office is something that we would like to keep to a minimum. Our 12 city centre properties are all located in the very heart of their respective cities and are easily accessible from Europe by air and rail, making travelling as efficient as possible. Technology is constantly evolving and there is no doubt that video and web conferencing are becoming increasingly efficient and possibly reducing

Made in French Riviera WWW.NEGRESCO.FR

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the number of meetings required. However, leading conference and incentive agencies and corporates agree that technology will not replace face-to-face contact and relationship building. Staying ahead of the competition is obviously key, making sure that we maintain the highest levels of customer service whilst continuing to be innovative with our product offering. Gone are the days where people used to book meetings and events years and months in

our ability to add value to our core product offering in response to our clients’ budgets and demands.

NS. The legendary name of Le Negresco is a powerful marketing tool in itself, which our sales and marketing team uses in their various actions on the international scene, consolidated by a strong presence in various press supports all over the world. Le Negresco’s strategy is above all in its offering, which is unique. Its history, its in“In today’s market, technology is in constant estimable art collection, and the aura that is to be evolution, and companies are continuously found in this hotel make it an unforgettable venue integrating new advancements. Hotels need for any event. Each of our nine meetings rooms to follow the trends and adapt where the has its own ambience, and is decorated corredemand becomes increasingly important” sponding to a different period in history, which allows our clients to choose according to their taste Nicole Spitz is the General Manager as well as to their needs. In addition to the unique of Le Negresco. décor, we have the good fortune to have an excellent chef, Jean Denis Rieubland, who was awarded advance. Today, we are experiencing much shorter lead times for business, one of the Best Crafstmen in France in 2007, and who is not only in charge of which obviously impacts on hotel resources. This situation has obviously been our Michelin star restaurant Le Chantecler, but also our banqueting menus. exacerbated by the recession.

NS. The most important challenge is to offer to these organisations an appro-

What does the future hold for hotel conferencing and how will the market evolve?

NS. I hope that the future holds an increase in hotel conferencing as it is cer-

priate response to their operational and technological needs; moreover, to antainly beneficial for companies, staff and of course the hotel industry. Le ticipate them. Indeed, even if luxury hotels are luxurious and extremely Negresco itself is evolving in its structure and has planned an important rencomfortable, they must respond to the technological needs of today, they have ovation project to improve the solutions offered to the companies’ needs. to make it possible to use ‘the three technologies’ solutions, with easier access for videoconferences, and other Wi-Fi solutions. All-inclusive “Our clients are looking for increased levels of value, economical solutions help to facilitate the management of these support, creativity and flexible pricing to help meet ROI conferences and above all, a lot of ‘listening’ is always important. targets. We are working extremely closely with meeting In today’s market technology is in constant evolution, and companies are continuously integrating new advancements. Hotels planners to develop innovative and cost-effective solutions need to follow the trends and adapt where the demand becomes that demonstrate excellent ROI” increasingly important.

Patrizia di Patrizio is Director of UK Sales for The Rocco Forte Collection Could you explain how you market your hotel to attract international business and how you distinguish yourself from the competition?

PdP. Outstanding customer service and design are the two things that set The

Rocco Forte Collection apart from the competition. Service is at the very heart of the brand, providing the highest levels of bespoke customer service, meeting the individual needs of our guests and going that extra mile. Each of our 13 properties has been designed to reflect its location. Sir Rocco Forte’s sister, Olga Polizzi, who oversees design for The Rocco Forte Collection, ensures that local art, accessories and furniture are used, which give the hotels a real sense of place.

For example, the bedrooms in one of our recently opened hotels, The Augustine in Prague, reflect the hotel’s monastic past and are decorated with a range of accessories inspired by 1930s Czech cubism.

At the moment, our clients are looking for increased levels of value, support, creativity and flexible pricing to help meet ROI targets. In response to this, we are working extremely closely with meeting planners and agents to develop innovative and cost effective solutions that demonstrate excellent ROI for their meetings, events and incentives whilst retaining high levels of product and service. The success of many of our partnerships can be attributed to

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These works, both architectural and technical, will complete the hotel’s offering to better respond to our customers’ changing needs; in order to continue to represent excellence for all our guests. As we are still in the midst of finalising all the details about this exciting project, I won’t elaborate on this quite yet, but do keep an eye open for upcoming press releases.

PdP. I think the future will see the boundaries pushed even further with luxury meetings and event planners looking for something different for their clients. More unusual destinations will appear on the map as new flight routes open up. Planners will look for hotels that inspire people with their unique surroundings and activities will need to be even more adventurous and adrenalin-fuelled. Our new golf and spa resort, Verdura in south west Sicily, is set to be a hot destination for meetings and events in 2010. The surrounding area lends itself perfectly to a whole host of exciting activities, including watersports, cultural and historical site visits, and vineyard and gastronomy tours.

The conference centre is housed in a split-level, stand-alone building with views of the surrounding olive groves and coastline.

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IN THE BACK

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Rio de Janeiro Time: -3hrs GMT | Currency: Real | Language: Portuguese | Population: 6 million n

And on the eighth day God created Rio, or so the saying goes. This magical place ce is ed peaks packed with contrasts: sandy beaches and a bustling city centre, jungle-covered and a vibrant nightlife, rich and poor… Business Management takes you on a guided uided tour.

Rio de Janeiro carnival celebrations

Christ the Redeemer Statue

About Rio de Janeiro, which translates as River of the January, is known simply by Brazilians as Cidade Marvelosa (Marvellous City). It is also the second largest in Brazil and the whole of South America. Famed for its laid back lifestyle, Rio is a unique city with so much to discover and explore. With Rio being situated in the southern hemisphere, summer runs from November through to February, culminating in the atmosphere-soaked carnival when the locals (Cariocas) don extravagant feathered costumes and party the night away aboard spectacular floats.

Rio has recently secured a sporting coup – it will be host city for the 2016 Olympic Games.

TOURIST TIPS • This is a place where the wealthy rub shoulders with the impoverished so crime is a problem.

Never venture into a favela (shanty town) unless it’s with an organised tour and stay off Copacabana beach after dark. Take precautions with your valuables at all times.

• Try to learn some key Portuguese phrases. Not many people speak English but a little bit of effort to learn the basics will go a long way when conversing with the locals.

• Rio has the world’s largest urban forest in the world, Tijuca, so make sure you get out and explore the city’s greenery.

to the major hotels and stops at the beaches. Alternatively, take a regular bus or hop in a taxi, both of which provide a cheap way of seeing the city during your stay. With a taxi, make sure the meter is switched on and reset from the previous fare.

The city also has two subway lines comprising of 42 kilometres of track and 32 stations. However, it only goes as far as Copacabana, which is not particularly convenient if you are staying in the touristy parts of Ipanema and Leblon.

Relax Getting around If arriving by air you will usually land at the international airport 20 kilometres north of the city. An hourly shuttle bus ferries passengers

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Cariocas like to get down to the beach to play volleyball or just pose in skimpy swimwear at every available opportunity. Copacabana is home to the world famous four-kilometre

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IN THE BACK CITY GUIDE

Copacabana Palace

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stretch of sand but Ipanema beach, just around the corner, is just as popular. It’s a great place to order a coconut drink or Brazil’s famous cocktail, caipirinha, and people watch. If you have a he head for heights then for around €100 you can soar like a bird over the city by taking a tandem hang-gliding ? fl ight. A video camera attached to the hang-glider capDid you know 0 0 tures your bird-like descent to a quiet beach west of 10 s The city ha g in the ccity. Something you don’t always associate Rio us ho favelas, of h with is a picturesque lake but Lagoa Rodrigo de Freift fi a around n io tas sits si behind Ipanema beach – perfect for chilling ill m x Rio’s si on out on a hot day. For those who like a flutter, Rio also ti la popu has its o own racecourse in Leblon. Check on which days race meet meetings take place when you arrive.

Copacabana Palace With its classic white façade, this is perhaps the most famous hotel in the whole of Brazil. Sitting proudly slap ap bang on Copacabana beach, this stunning 1920s hotel has had its fair share of notable guests, including the Rolling Stones t iin 2006 just prior to their performance on the beach in front of 1.3 million fans. Apart from the usual facilities, this hotel features a large outdoor pool, tennis court, health club, fitness facility, and spa and sauna.

Rates: From €280 a night.

La Suite Located in Joatinga, this cliff-side retreat is a boutique hotel boasts just seven stylish rooms. Its secluded and intimate nature, together with a stunning setting, makes this a real gem in Rio. As well as an infinity pool and fully loaded iPods for guests, there is a helipad and private beach within walking distance. For €190 an ‘insiders’ tour’ of Rio will show you the sights and sounds you won’t necessarily unearth in your guidebook. Be warned though, credit cards are not accepted but pets are welcome.

Rates: From €300 a night.

See Perhaps Rio’s most iconic attraction is the giant statue of Christ, known as Christ the Redeemer atop Corcovada mountain. The ascent to the summit is by train, although views of the sprawling city can be spoilt by cloud cover and bad weather so plan ahead. Another spectacular view can be had from the cable cars that whisk you to the top of Pão de Açúcar or Sugarloaf Mountain as it is more commonly known. Brazilian’s love their football and the historic and colossal Maracana stadium is a great experience, especially on match days. Tickets are fairly easy to acquire – ask at your hotel for details. In February every year the razzamatazz of the world famous carnival comes to town. Be warned though, accommodation often needs to be booked months in advance. It’s a similar predicament for New Year’s Eve.

Eat Casa da Feijoada The meal feijoada, a meat stew, is the national dish of Brazil and this small and cosy restaurant is the best place in the city to experience it. Traditionally served on a Sunday, the restaurant place serves up feijoada seven days a week.

Feijoada, the national dish of Brazil

Madame Butterfly This Asian/Pacific eatery is a must for Japanese food lovers, and was elected best in its category by gourmet specialists. A highlight of the menu are the fish with shimeji mushrooms in ginger and sake sauce, as well as a variety sushi and rolls with unusual shapes.

Leblon Beach is a great spot to relax

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The high life This issue we bring you the lowdown on the best first class air travel facilities on offer.

THE KNOWLEDGE

Lufthansa For those who working flights, Lufthansa’s First Class cabins are ideal. The two metre long flat beds are equipped with a lap top connection and personal monitor as well as plenty of storage space. Each First Class seat also has a socket that fits most plugs without a monitor. Wine lovers can enjoy an extensive selection from Lufthansa’s Vinothek Discoveries menu and onboard long haul flights from Germany, Japan, India, China and Singapore, chefs create meals on request for passengers.

<<< British Airways British Airways’ First Class cabins have been designed with country house hotel luxury in mind. Passengers are provided with hand made spa products by the British chemist and perfumer Harris and flat beds are decked out in Egyptian cotton bed linen and velvet cushions.

The menu has been created by some of the world’s finest chefs and a bistro selection is also available. There are over 200 in-flight entertainment channels on offer, including an extensive movie library.

>>> Emirates Airline With seven course meals served on bone china tableware on tables laid with fine linen and flowers, Emirates First Class passengers soon forget they are on board a plane.

An advanced hand-held controller allows passengers to personalise every aspect of their experience and those in the A380 can enjoy the comfort of a fully flat bed complete with massage facilities.

When First Class passengers land, Emirates’ fleet of complimentary chauffeur-driven cars are on hand to take them to their next destination.

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>>> Air France If you crave privacy on board your flight then fly with Air France’s First Class service La Premiere. The cabins comprise of only four to eight seats and recent renovations have added 50 percent more personal space for passengers.

Each passenger has a 10.4-inch interactive video screen and an auto massage feature on their bed. The seats transform into two -metre long beds and passengers are provided with pillows and duvets.

<<< Lufthansa For those who need to work on a flight, Lufthansa’s First Class cabins are ideal. The two-metre long flat beds are equipped with a laptop connection and personal monitor as well as plenty of storage space. Each First Class seat also has a socket that fits most plugs. Wine lovers can enjoy an extensive selection from Lufthansa’s Vinothek Discoveries menu and on long haul flights from Germany, Japan, India, China and Singapore, chefs create meals on request for passengers.

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IN THE BACK

IN REVIEW

142

On the shelf Business Management trawls through the latest book releases and discovers advice on perfecting speeches, how a furniture maker became a global phenomenon and why an island nation’s economy collapsed 12 months ago.

Why Iceland? How one of the World’s Smallest Countries Became the Meltdown’s Biggest Casualty, by Ásgeir Jónsson Even 12 months on from the breakdown of Iceland’s economy, the scale of this tiny nation’s downfall is still hard to comprehend. This is a country with a population of just 300,000 that up until the 1980s was heavily reliant upon the cod fishing industry. However, by the end of the century, it had transformed itself into a major player in world fi nance, building an international banking empire worth 12 times its GDP. As Chief Economist at Kaupthing Bank, the largest Icelandic bank before the collapse, Ásgeir Jónsson examines the country’s implosion in painstaking detail: where it all went wrong, and the pivotal role the UK played.

BM says: A well-written and in-depth account of the chain of events leading to Iceland’s collapse from an expert behind the scenes in Iceland.

Real Leaders Don’t Do Powerpoint How to Speak So People Listen, by Christopher Witt with Dale Fetherling Let’s face it, most of us wish we could deliver intelligent and compelling speeches. Some business leaders are naturally gifted speakers but others need a helping hand with getting their message across to the media, shareholders and the public. Th is new book by executive coach Christopher Witt, who has almost three decades of professional speaking experience, explains how real leaders speak to make a difference, to promote a vision, and to change the way people think, feel and act. Witt guides the reader through different speaking scenarios, offers advice on how to prepare and lists the dos and don’ts when delivering an all-important speech.

BM says: A really eye-opening book that offers genuine tips and advice on how to engage with an audience and, crucially, get their full attention.

Great Ikea!

A Brand for All the People, by Elen Lewis Swedish furniture maker and brand phenomenon Ikea has changed the way we furnish homes – and even made Swedish meatballs an essential part of the shopping experience. Lewis explains where those strange furnishing names come from, why Ikea executives never stay at the Marriott, why the furniture didn’t initially prove a hit in the US and whether there is a secret route through the store for those wishing to skip the kitchen and bathroom displays. She also reveals that some one million customers visit a store every day, 28 million Billy bookcases have been sold since 1978 and that the average age of an Ikea customer is 42. These are just a snippet of the detailed facts this book offers on everything you ever needed to know about Ikea.

BM says: Copious amounts of effort and research have gone into Lewis’ book, which provides a fascinating and amusing insight into the story behind Ikea’s dominance.

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Oil & Gas

Business Management

Collaboration between Government and multinationals to ensure the energy supply is developing on two fronts. O&G is the definitive publication for stakeholders and service companies to read about the regional projects, technologies and strategies affecting their group.

Available for: MENA, US, Russia

What business processes work? What are the proven, successful strategies for taking advantage of domestic and international markets?

Business Management is about real, daily management challenges. It is a targeted blend of leadership and learning for key decision makers in government and private enterprise.

Available for: US, Middle East, Russia

Find out more: www.ngoilgasmena.com

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6/10/09 09:23:45

IN THE BACK OBJECTS OF DESIRE

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Technology for today’s executive We cast our eye over the latest gadgets on the market. <<< Toshiba NB200-10Z It feels as if we are drowning in netbooks in the run up to Christmas, such is the avalanche of dinky machines hitting the market from a whole host of manufacturers. These fi rms have quickly cottoned on to the fact that most people only need the basics from a portable machine, although it has to be said that today’s netbooks are pushing into the realm of the fully-fledged laptop. Toshiba’s latest effort ships with a good 10.1-inch screen, 1GB of RAM and an impressive 160GB hard drive. It has a great battery life of nine hours and aesthetically, the NB200 at €350 looks the business although its faux metal keys feel a tad cheap.

Desirability rating: aaa

>>> Nokia N86 In the world of mobile phones 12 months can feel like an eternity. What was a coveted piece of tech-fi lled gadgetry can soon look and feel prehistoric compared to newly released products. Not one to hesitate with a product update, Nokia’s very good N85 mobile phone has been replaced by the N86. Th is is the Finnish company’s flagship camera phone, boasting a tasty 8MP camera. Although images are not perfect, this 149-gram handset takes the best photos seen on a phone to date. And its super-sharp 2.6-inch OLED display is excellent for reviewing shots.

Desirability rating: aaa <<< Panasonic HDC-TM10 With most mobile phones now boasting the ability to shoot video everyone, it seems, is fi lming even the most mundane of incidents and uploading their amateur footage to the internet. However, if you are after vastly superior pictures and sound then you need a full HD camera. Once the preserve of professional fi lm makers, HD-quality home movies are now available to the masses. Japanese electronics firm Panasonic has upped the ante with the HDC-TM10 – the world’s lightest AVCHD camcorder at a feather-light 227 grams and priced around €400. It sports 8GB of built-in flash memory but if you slot in a 32GB SDHC card it can boost capacity to eight hours of HD footage. This diminutive device houses a flip-out 2.7-inch LCD screen and offers an impressive 16x optical zoom.

The HDC-TM10 is compact, light and produces superb images for budding Steven Spielbergs.

Desirability rating: aaaa >>> Philips 21:9 LCD TV A few years ago we began dumping our old 4:3 ratio TVs for 16:9 widescreen models with high defi nition capabilities. Now comes a widescreen LCD TV from Philips with a 21:9 aspect ratio, which matches the movie format used by directors and means no letterbox black bars at the top and bottom of the screen. At 56 inches in diameter it may sound very large but in reality it isn’t because of its ultra widescreen frame. It also boasts Ambilight Spectra 3 and Perfect Pixel HD Engine to maximise the cinematic feeling. While this TV is perfect for high defi nition movies, watching anything incompatible with this new screen format produces black bars at the sides. Overall however it’s superb as a cinema screen albeit with a heft y price tag of €5000.

Desirability rating: aaaaa

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