BMEU 16 by GDS International

THE EURO

HANGOVER

www.bme.eu.com â&#x20AC;˘ Q1 2011

After overdoing it on the bailout front last year, can the eurozone recover in 2011?

Making the social net work

The future of the CIO

Work hard, play hard

Stefan Gross-Selbeck, XING

Neil Dyke, General Electric

Bob Eckert, Mattel

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Probably the best... Kenneth Egelund Schmidt, Carlsberg

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FROM THE EDITOR 5

Where next for the euro? Can the single currency survive the latest market turmoil?

he headlines in the global press on the eve of the World Economic Forum in Davos said everything you need to know about what was likely to be the most hotly debated topic at the talks. “Crucial Months for the Euro,” warned the European Voice. “Big Risks Seen for Europe’s Fiscal Stability,” said the New York Times. “No More Monopoly Money for Europe,” demanded the Wall Street Journal. And most damning of all, from the UK’s Telegraph newspaper: “The Single Currency is Finished.” There’s no denying that the eurozone currently faces its toughest test to date. Greece will be paying nearly 10 percent of its GDP in interest by 2015. Portugal’s 10-year borrowing costs are close to an unsustainable seven percent and would be even higher were it not for market manipulation by the European Central Bank. Spain is sitting on 700,000 unsold homes, 20 percent unemployment and a 33 percent deterioration in competitiveness against Germany – Europe’s industrial benchmark – since the euro was formed. And Ireland is still reeling from its pre-Christmas bust and subsequent bailout. Worse-still, the ﬁnancial pressures are exposing further tensions in the trading bloc, with calls by the EU Commission for additional aid being met with barely concealed coolness from Europe’s stronger economies. Over 62 percent of Germans now oppose further rescue packages for EU also-rans, fearful over the prospect of a domino effect where bailout follows bailout. Many now see the eurozone as effectively operating at two speeds, with Germany leading the pack of stronger countries and the weaker nations failing to keep up. The biggest concern remains what will happen in Spain, which has been called “too big to fail and too big to save”.

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The one bright spot on the horizon remains the continued recovery and relative strength of the private sector. Despite the market turmoil and economic uncertainty, Europe’s businesses are in good ﬁnancial health with most executives optimistic about prospects for 2011. “CEOs have emerged from the bunker mentality of surviving the recession,” says Dennis Nally, Chairman of PricewaterhouseCoopers, in our Davos report on page 18. “They now see renewed opportunity for growth, even in the near-term, and are determined to take advantage of better global economic conditions and increased customer demands.” Nonetheless, even the private sector is spooked by the turmoil in the eurozone. Three-quarters of CEOs questioned for a recent PwC survey cited uncertain or volatile economic growth as a potential threat to their business, up from 66 percent last year. And nearly a third of CEOs said they were “extremely concerned” about economic prospects. Will the European Central Bank continue to bail out troubled eurozone countries? It’s the question on everyone’s lips. And as such, companies across the continent are waiting with bated breath to discover the outcome of the Davos discussions.

“The full economic effect of issuing bailouts will depend on whether the bailed out economies – Ireland and Greece before it – perform or don’t perform, because a bailout isn’t charity. It’s money lent at an interest rate that is fully expected to be repaid” Bernard McAlinden, NCB Stockbrokers, page 36

Ben Thompson Managing Editor

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CONTENTS 7

Boom, bust, bailout

Lucy Douglas takes a look at Ireland’s ﬁscal woes and asks what tamed the Celtic Tiger? And who will be next to crumble in the euro disaster zone?

Making the social net work Hamburg-based Stefan GrossSelbeck, CEO of social software platform XING, discusses the challenges in taking on the big boys of the social networking world

42 Toy Story Why Mattel CEO Bob Eckert is rebranding the toy giant as a “people development machine” – and how a focus on getting the company culture right is helping him get there

48 The future of the CIO

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General Electric’s Neil Dyke explains how the trend towards outsourced IT solutions could make the IT department obsolete

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CONTENTS 9

GOLD SPONSOR

60 Is the office really necessary In the era of smartphones and tablets, are we seeing the death of the workplace?

64 An integrated approach to piloting unified communications Siemens’ Andrew Cheel shares his experiences of what makes a uniﬁed communications pilot successful

66 Out in the open In tough times, businesses are looking for the next big thing. Lucy Douglas takes a look at the businesses utilising the innovative wisdom of the masses

76 Driving change Standard Life’s Chris Torkington reveals how business change is ensuring better integration and implementation of IT solutions to improve innovation capability

80 The future of trade credit While it has come a long way in a relatively short time frame, what does the future hold for trade credit, asks Andreas Tesch

84 Understanding your risk zone BT’s Ray Stanton turns the spotlight on why it’s so critical to understand a company’s risk and how to manage this

94 Know your enemy With Mark Logsdon, Head of Information Risk Management for Barclays

100 The next generation process automation tool Martin Bérubé explains why a better process automation tool is vital for businesses today

102 Getting value from 21st century analytics in financial services

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TIBCO Spotﬁre’s Brian Perfect asks, will game-like experiences become the norm in future business software?

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CONTENTS 11

EX ECUTIVE INTERVIEWS 90 Matias Palm Navita Systems 98 Martin Bérubé agileDSS 118 Rob Smitten PFIKS 132 Ian Collis Harris Corporation

DETAILS

136

INDUSTRY INSIGHTS 88 Tom Bolger Methodware 108 Mark Scanlon Vision Solutions 120 Thomas Senger Kofax 126 Pradip Kumar Jawale CoreBiz

ASK THE EXPERTS 58 Stanislas Corporeau Alcatel-Lucent 74 Michael Lang Panasonic 92 Richard Pike Wolters Kluwer

136 Faster, fitter, better

140 Agenda

Ben Thompson speaks to the toughest businessman in the world, the CEO of Ironman

Your guide to the best events this quarter

142 Reviews 104 Has hype hurt the cloud?

138 36 hours in Rome

It’s a hot topic, an industry buzzword and a cause for constant confusion. So Business Management asks, has hype hurt or helped the cloud?

Business Management’s guide to the ancient capital of the world

We review the latest books and gadgets

110 Hops to IT Carlsberg’s CIO Kenneth Egelund Schmidt explains his thoughts on video conferencing technology, IT leadership and creating transparency in business

116 Delivering on personalisation Why content management holds great potential

122 Service with a smile Managing 25,000 staff from 198 hotels across seven brands in 30 countries is no mean feat. Just ask Ben Bengougam

128 Signs of the times The Retail Advertising and Marketing Association’s Mike Gatti reveals how digital signage is going to revolutionise retail

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CIO Europe Summit 2011 24 – 26 May 2011 The Ritz-Carlton Berlin, Germany The CIO EU Summit is a three-day critical information gathering of the most influential and important executives from across all sectors. The CIO EU Summit is an opportunity to debate, benchmark and learn from other industry leaders.

A Controlled, Professional and Focused Environment

Legal Information 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 ©2011 BMEU.

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

Chairman/Publisher Spencer Green CEO Oliver Smart Finance Director Jamie Cantillon

To find out more, call (+44) 02920 729 432

Content Director Kelly Grant Design Director James West Managing Editor Ben Thompson Editor Lucy Douglas Contributors Ian Clover, Lorna Davies, Nicholas Pryke, Sharon Stephenson Print Director Andrew Hobson Associate Designers Dan Clayton, Élise Gilbert, Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson Online Editor Jana Grune Project Director Andrew Bahadoor Project Manager Amarinder Bajwa Sales Executives Adam Baker, Christian Szabuta, Joseph Gregory Production Director Lauren Heal Production Coordinators Renata Okrajni, Aimee Whitehead VP North America Jason Green Operations Director Ben Kelly IT Director Karen Boparoy Marketing Director John Funnell

Subscription Enquiries: +44 117 9214000, www.bme.eu.com General Enquiries: info@gdsinternational.com (Please put the magazine name in the subject line) Letters to the Editor: letters@gdspublishing.com

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

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UPFRONT

THE READY MADE

CEO

The number of directors being tapped for the CEO role has more than doubled in the past year. Why?

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he past year has seen a significant jump in the number of Fortune 1000 directors becoming CEOs of the companies on whose board they serve: nine directors stepped in as permanent CEOs from the period of July 1 2009 to the present, compared to only four directors tapped as chief during the year prior. Three additional directors have been named interim CEO this year, bringing the total number of directors-turned-CEO for the past year to 12. Why has this happened? “As companies experience a period of serious disruption, many boards looking to replace the CEO are increasingly turning to one of their own,” says John Wood, Vice Chairman and Global Managing Partner of Heidrick & Struggles’ Chief Executive Officer and Board practice. “Boards are being confronted with market-driven disruptions and are showing a willingness to make a change if a lower risk solution is readily available.” Key to selecting a director as the new CEO, says Wood, is the board’s belief that the person has the right skills, is available and can commit to the role. Boards also have faith that the new CEO understands their views on what needs to change. “Grappling with pressure from all sides – business downturn, regulatory crackdown and shareholder dissatisfaction – boards are finding that a current director brings valuable assets to the CEO job.” So what are boards looking for in their CEOs today that a board member can offer? Number one, says Wood, is the ability to step in quickly. “At companies that do not have an adequate and immediate succession plan in place, a change in leadership may require a lengthy search,” he explains. “Alternatively, boards may feel they cannot afford to wait for an internal candidate with no CEO experience to get up to speed. By tapping a board member for the job – who is often a former CEO him or herself – boards are able to move very quickly and achieve immediate results.” Familiarity with the company is also a bonus. An obvious attraction in choosing a current director is his or her familiarity with the company, its business and its culture. This also helps accelerate the transition time from old to new CEO, while alignment with the ideals of the board also ensures a smooth transition. “In picking one of their own, boards are far more likely to have someone in place who is already aligned with their thinking – the disconnect between the CEO and board is minimised,” says Wood. “Having a director who is ready to step in may even accelerate the board’s decision to change the CEO.” Finally, there is the risk reduction aspect: choosing a current director as CEO is a highly pragmatic decision by the board, a practical solution to an atypical set of

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However, while the ongoing disruptive business environment will give some legs to this trend, the fact is that there is no substitution for having a healthy pipeline of leadership talent within the organisation. “This option cannot replace a good internal succession plan,” concludes Wood. “Best practice still demands that companies create a leadership plan that develops talent and a solid ‘bench’ of successor candidates.”

THE BRIEF

circumstances. “Directors are a known quantity, and often appear to be a less risky option than an external candidate or even the internal CEOs-in-waiting,” indicates Wood. It’s a trend that is certainly beginning to affect director recruitment, according to Heidrick & Struggles’ research. “We are often finding, in our director recruiting assignments, that boards are considering putting a candidate in the CEO succession path, and when evaluating new board candidates, the one who could be a potential successor can absolutely tip the balance,” says Wood. “No board wants to recruit a director who’s angling for the CEO job, but some nominating committees are, in a quiet way, building the ability to step up as CEO into their selection criteria.” In fact, boards often find that the director they want to step into the CEO position is more than willing, says Wood. “In many cases, the director is a retired CEO himself, and now has the time to do the job. Many are eager to get back into the game and return to the top seat.” Wood believes it’s also appealing to potential candidates to know that they already have the support of the board. Getting board buy-in is a major hurdle that many prospective CEOs feel they must overcome before they take the job – but in such situations, this problem is not really an issue. “Their fellow directors are people they have spent years with, discussing and debating issues,” he says. “Directors-turned-CEOs have an understanding of the personalities on the board and the key influencers, and know they are going into a job that will be easier to handle because of this.” It’s not all plain sailing, however. Alongside these advantages is another level of pressure for the new CEO – to not let their fellow board members down. “Given that they will have been working together as directors for some time, and presumably have been in alignment, there is a heightened expectation about performance and delivering what the board wants,” says Wood. So will this become the best way for companies to find their next CEO? Wood certainly believes tapping a fellow director to be CEO is part of a broader trend in boards becoming more engaged in the CEO succession process. Many have internalised this as a key responsibility, and are seeing the idea of turning to one of their own as the most practical solution – a good arrow in their quiver of CEO succession options. “Some may wonder whether going inside the board is cronyism, but it’s really not,” he argues. “Having management and the board agree on strategy is vital to an organisation’s ability to move rapidly and with certainty in difficult times, and the board pick is an effective, strategic way to achieve this. It is, in many ways, a good risk management tool for the board.”

Directors-turnedCEOs Who made the switch in 2009-2010? CEO: Daniel Akerson Company: General Motors Tenure as Director: 1.1 years CEO: Fred Chang Company: Newegg

Akerson Elliott

Tenure as Director: 9.6 years CEO: Alan Bennett Company: H&R Block Tenure as Director: 1.8 years CEO: Douglas Tough Company: IFF Tenure as Director: 1.4 years CEO: William McCracken Company: CA Technologies Tenure as Director: 5 years McCracken CEO: Michael Carpenter Company: Ally Financial (GMAC) Tenure as Director: 0.5 years CEO: J. Raymond Elliott Company: Boston Scientiﬁc Tenure as Director: 1.9 years CEO: Jay Johnson Company: General Dynamics Tenure as Director: 6.2 years

Carpenter

Bennett Johnson

CEO: Patti Hart Company: IGT Tenure as Director: 2.8 years CEO: David Dyer Company: Chico’s FAS Tenure as Director: 1.8 years Source: Heidrick & Struggles’ Global CEO and Board Practice

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INTERNATIONAL NEWS 16

USA Larry Page will take over from Eric Schmidt as Google’s CEO in April. The firm announced in January that Schmidt would be stepping into the role of Executive Chairman, allowing Page to reclaim the position he gave up some 10 years ago. The news came as Google announced net profits for Q4 2010 of US$2.54 billion, with revenues of US$8.44 billion. Schmidt said in a blog post, “In my clear opinion, Larry is ready to lead and I’m excited about working with both him and Sergey Brin for a long time to come.” Page and Brin founded the internet giant in 1998, with Schmidt becoming CEO in 2001 amid investors’ concerns over Page’s relative lack of experience. The change in management will take effect on 4 April and mark part of the firm’s plan to streamline decision making and create clearer lines of responsibility and accountability.

UK Emerging markets are proving big buyers of one of Scotland’s ﬁnest exports, scotch whiskey. Exports of the beverage are heading for record sales, boosted by strong demand from China, Russia, India and Brazil. Deputy Prime Minister Nick Clegg announced that global exports had risen by 12 percent in the ﬁrst 10 months of 2010, and that shipments had reached a value of UK£2.8 billion, on a visit to a distillery in Keith, Scotland. Whiskey sales represent a quarter of Britain’s food and drink exports.

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Cote d’Ivoire One of the world’s leading producers of cocoa, the Cote D’Ivoire has placed an export ban on the product. The African nation’s president has imposed the month-long ban in order to prevent revenues from reaching his rival. As a result, cocoa prices have jumped for the highest in 30 years. President Alassane Outtara, who won the country’s general election in November, imposed the ban on January 23rd, which was met with confusion from market dealers as it is his rival Laurent Gbagbo that controls cocoa exports. US giant Cargill buys around 15 percent of the country’s whole cocoa crop. The ﬁrm said in a statement, “We are working with others in the industry and with authorities to clarify and resolve the situation as quickly as possible.”

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Qatar The small Gulf state of Qatar won the bid to host the 2022 FIFA World Cup Finals, seeing off competition from the likes of Australia and the USA. In order to prepare the country for the tournament, the Qatari Tourism Authority announced that it intended to invest some US$20 billion in development project until 2013. Analysts have called for the nation’s tourism capacity to reach 90,000 hotel rooms by the time of the tournament, predominantly in the three- and four-star sector. In addition to an expanded accommodation capacity there are also plans underway for a massive boost in infrastructure in the country, including a metro system in capital Doha, a rail system and a causeway bridge linking Qatar with island neighbour Bahrain.

China As China prepares for Lunar New Year celebrations the country’s retail sector gets ready for its peak shopping period. Strong economic growth and rising incomes are expected to boost Chinese retailers, although as the yuan continues to gather strength, many shoppers are expected to travel to Hong Kong, Tokyo and Seoul to spend their cash. China’s economy expanded 9.8 percent in Q4 2010, up from 9.6 percent in Q3, despite expectations of a slow down. Inﬂation rates hit a 28 month high of 5.1 percent in November; however, analysts predict that despite this retail sales will remain strong. Retail sales rose by 18.4 percent in 2010.

Sudan A national referendum has declared that South Sudan will become independent of the Northern part of the country. According to official figures some 99 percent of the South’s population voted for the split in the referendum. The split was promised in the 2005 peace deal designed to end the North-South civil war. The South – an oil producing region – expects the decision to stand once the vote count is finalised in February. President Omar al-Bashir has said previously he would accept the vote of the people of the country. His National Congress Party has as yet declined to comment on the vote. The civil war in Sudan was the longest running war in Africa, and fuelled by a number of disputes, including oil.

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NEWS IN BRIEF 18

CEOs preparing for a brighter future wo years on from the depths of recession, CEO confidence in future growth has returned to nearly pre-crisis levels, according to PricewaterhouseCooper’s 14th Annual Global CEO Survey results, released in Davos in January. In the worldwide poll of 1201 CEOs, 48 percent said they were “very confident” of growth in the next 12 months. That’s a major shift from the 31 percent last year who were “very confident” and approaches the 50 percent reached in 2008 before the onset of the economic crisis. CEOs in Western Europe were the least confident, although German CEOs were an exception to this with nearly 80 percent of CEOs “very confident”. Some 39 percent of CEOs across the world said they considered China the most important country for future growth, with 21 percent citing the US. Regionally, 90 percent of CEOs said they expect their operations to grow in Asia in the next 12 months, with 84 percent citing Latin America and 75 percent citing Africa as markets for growth in 2011. Eastern Europe was determined by 70 percent of the CEOs as a strong market for growth. But just a third of respondents said the country in which they are based offers high growth potential. Strategically, the best opportunities for growth in the next 12 months will come from the development of new products and services and from increasing share in existing markets – both cited by 29 percent of CEOs – and by penetration of new markets, cited by 17 percent. Mergers and acquisitions and joint ventures and alliances trailed as growth strategies. “CEOs have emerged from the bunker mentality of surviving the recession. They now see renewed opportunity for growth, even in the

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near term,” says Dennis M. Nally, Chairman of PricewaterhouseCoopers International. “The post-recession global economy is recovering on two-tiers. Emerging economies are growing at rates that far surpass the developed nations. Companies that understand and capitalise on the diverging growth patterns of the developed and emerging economies will be the winners in the years ahead.” The positive momentum in CEO confidence was reflected in hiring plans; more than half (51 percent) of CEOs worldwide said they expected to add jobs in the next 12 months, up from 39 percent in the last survey. Significantly, just 16 percent of CEOs said they expected to cut their workforce in the coming year, down from 25 percent last year. The impact of the recession on strategy was also evident in the survey results; 84 percent of CEOs said they had changed their company’s strategy in the past two years, and about a third said the change was fundamental. Strategic changes were driven primarily by economic uncertainty, customer requirements and the post-recession dynamics in their industry. While the number of CEOs planning to cut costs in the next 12 months is down – 64 percent compared to 70 percent last year – nearly 75 percent of CEOs cited uncertain or volatile economic growth as a potential threat to their business, up from 66 percent last year, and nearly a third of CEOs said they were “extremely concerned” about economic prospects. More than 60 percent of CEOs agreed that public spending cuts or tax increases would slow their country’s economic growth, and 53 percent said their company’s taxes would rise because of government reaction to increasing public debt. Just over a third of CEOs said that their company was making strategic changes because of public spending cuts or tax increases either at home or abroad.

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Access the future

Despite ﬁnishing 2010 as the world’s leading carmaker – narrowly beating GM to the number one spot – Toyota was forced to recall 1.7 million cars globally in January amidst yet more concerns over safety. Once a byword for reliability, Toyota has now recalled about 12 million cars in the past 18 months, including 14 separate recalls last year.

A sniper stands on the roof of the Congress Centre on the eve of the World Economic Forum annual meeting in Davos. Swiss security chiefs mobilised around 5000 soldiers to secure the area surrounding the tiny alpine village as the world’s top political and economic leaders gathered to discuss global economic policy.

Whistleblower Rudolf Elmer personally handed WikiLeaks two CDs reportedly containing the names of 2000 bank clients who may have been evading taxes. The Swiss banker, who worked for eight years in the Cayman Islands, said he wanted the world to know the truth about money concealed in offshore accounts.

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NEWS IN BRIEF

ccess, the mid-market consulting, software and solutions provider, is launching the first in a line of cloud computing solutions to complement its existing range of on-premise finance, supply chain, CRM and HR software. The firm will release its Software-as-a-Service (SaaS) document management solution in April 2011, followed swiftly by a HR offering. “The mid-market is an agile, fast paced environment,” says Chris Bayne, Managing Director for Access. “We’ve long offered solutions that give mid-sized enterprises a competitive edge. Access has been developing .NET based applications since 2005 and has a number of established products that provide access to its on-premise portfolio through the internet and smartphones. The next evolution of the Access product strategy will provide more choice to customers through selected SaaS applications, which can operate independently or in conjunction with on-premise solutions, offering greater flexibility in how customers’ business systems are delivered. “We’re particularly focusing on business processes that lend themselves to a cloud environment, based on our research and feedback from customers,” Bayne continues. “We believe solutions for document management and HR are an ideal starting point. Our offering will be fully scalable to meet the demands of modern businesses.” The cloud-based document management application will integrate with Access’ existing financial software, Access Dimensions, but will also be available as a standalone solution. It will operate under a pay-as-you-go SaaS model, providing customers with an elastic solution and easy-in, easy-out contract terms. Access will be offering a multi-tenanted solution, providing any combination of single or multiple use of an application or server. This removes the need to have software installed on in-house servers, and avoids the overheads of investing and maintaining the system’s infrastructure and upgrades.

For more information on Access and its software portfolio please contact Matt Newman on 0845 345 3300, or visit www. theaccessgroup.com.

28/01/2011 14:36

UPFRONT

MARKET WATCH

138

The time for 3D is here and now According to new research, 15 percent of new ﬁlms will have a 3D version by 2015, while the availability of 3D games will be driven by the next generation of consoles.

he market for 3D in television and video games has made significant progress and is proving to be extremely profitable. 2010 has proved the year of 3D, as eight out of the top 20 highest revenue making films at the box office had a 3D version compared to only three films in 2009. According to a new report from PricewaterhouseCoopers entitled 3D Here And Now: A Goose That Lays A Golden Egg, this trend will continue and by 2015 over 15 percent of all films will be produced in 3D. Phil Stokes, Head of Media and Entertainment at PwC, believes that after a tough year the 3D industry could finally be poised for big growth. “A year ago the industry was grappling with some fairly major issues,” he says. “But 12 months on, a number of these have been resolved including, on the technical side, the definition of a 3D BluRay standard and progress on HDMI1.4. Meanwhile, Avatar’s recordbreaking success has raised consumer awareness of 3D and created an appetite in consumers for 3D entertainment.” Nevertheless, for the 3D industry to continue to grow, there are still some challenges to overcome. “While 3D films generate considerable revenues for the cinema operators, the cost of converting from

UPFRONT BMEU6 20

traditional prints to digital projection is still a major and, in some cases, prohibitively large expense,” says Stokes. He believes that the clear mutual benefits for film studios and cinema operators will lead to the evolution of a number of innovative and practical cost-sharing partnerships in order to support a wide-scale digital roll-out. And while the market for 3D televisions is less developed than that of the film industry and the affordability of TV sets is a major factor impacting the growth of the sector, prices are beginning to fall and that – together with the greater availability of attractive 3D content – is helping to grow the market. The wearing of 3D glasses to watch programmes is also an issue with many consumers but with major sporting events such as the Olympics and football World Cup driving the adoption of 3D technology further into the living room, as viewers unable to attend the events in person willingly pay for the best quality experience at home, Stokes feels that mass-market acceptance will continue to grow. Many market sources also feel that there is a natural fit between videogames and 3D as more players start to demand immersive game play. But at the moment, given that 3D reduces both the resolution

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E-crime overtaking real crime

MARKET WATCH

and the frame rate, there’s reluctance – both from the industry and in apparent consumer demand – to increase the production of 3D video games. As such, the mass-market potential of 3D entertainment remains unclear. However, PwC believes there is potential across all delivery channels. “The opportunities and possibilities for 3D continue to generate great excitement within the industry, with many companies predicting increased revenues from 3D,” concludes David Lanceﬁeld, Media and Entertainment Partner at PwC. “But, in their attempts to make money and adopt 3D universally, the industry must ensure that they continue to deliver high quality content. If the quality drops, so does consumers’ enthusiasm for 3D and their willingness to pay a premium for the experience.”

3D films PwC anticipate that by 2015, 15 percent of new films will have a 3D version. The major Hollywood studios are predicting that 25 percent of their films will have a 3D version but the smaller studios will struggle. The production of 3D films in Europe, China, India and Japan will also increase. There is also expected to be 100 percent adoption of digital distribution among the multiplex and large urban theatres in the medium term.

3D television The current offerings of 3D TV will increase as prices for TV sets continues to fall, and PwC expects TV promotional campaigns around major sporting events such as the London 2012 Olympics to be in 3D.

3D videogames Some consoles can already be upgraded and used to play 3D games. But the real increase in the availability of 3D games will be seen when the next-generation of consoles is available.

E-crime overtaking real crime Risk management consulting ﬁrm Kroll has reported that for the ﬁrst time since 2007, when the company began its annual survey on crime, electronic fraud surpassed physical scams as the most common form of fraud in the world.

3D PC 3D internet content will develop but its adoption is expected to remain limited to the early-adopter segment. There are 3D-ready laptops already available but the price premium they command limits their market attractiveness.

3D mobile phones There are still problems with interoperability between the different standards (i.e. a 3D picture captured on one model cannot be displayed on a 3D model from a different manufacturer). But the ﬁrst 3D auto-stereoscopic mobile phones are already available in Japan and will be introduced in Europe and the US shortly. The introduction of 3D portable phone game consoles (such as Nintendo 3DS), scheduled for release in February 2011, will boost 3D mobile penetration further.

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Companies reporting indicated frauds in the previous 12 months 2010

2009

Information theft, loss or attack

27.3%

18%

Theft of physical assets of stock

27.2%

28%

Management conﬂict of interest

19%

20%

Vendor, supplier or procurement fraud

15%

12%

Internal ﬁnancial fraud or theft

13%

14%

Financial mismanagement

13%

12%

Regulatory or compliance breach

12%

17%

Corruption and bribery

10%

12%

IP theft, piracy or counterfeiting

10%

Money laundering

28/01/2011 14:36

NEWS IN BRIEF

Face-time preferred, say execs

major new survey of UK business people conducted by Virgin Trains reports that almost 70 percent of execs who travel for business believe that it is easier to make decisions, solve problems, gauge reactions and ultimately trust someone if they have met them in person. The effectiveness of face-to-face meetings is further underlined by the fact that almost half of the respondents admit to multitasking during conference calls, one-in-three send other emails and 25 percent drift off into a daydream and lose focus. However, despite the value of meeting someone in person and the report revealing the fact that 66 percent of respondents would like to go to more meetings, almost a third conﬁrmed that since the recession kicked in the number of meetings they attend has decreased. This is due not only to the impact of travel budgets being slashed and greater use of technology, but also because they are seeing fewer pitching opportunities. Those who have seen their meetings increase (17 percent) stated it is because their current clients are now demanding more and that they themselves are under more pressure to retain contracts. The results support a view long maintained by industry experts: when it comes to business communication, there is no substitute for the personal touch. “Research into remote leadership and communication has focused on two types of trust within teams,” suggests business psychologist Stuart Duff. “Cognitive trust, or whether or not we believe a person to be factually correct, grows through sharing information. This is important in creating clarity and direction for employees. On the other hand, emotional trust, or whether we believe in someone and want to work with them, grows through sharing values, personal understanding and support. Email and teleconference calls are ﬁne for growing cognitive trust; emotional trust is rarely, if ever, developed through technology.” Duff believes this is because we rely on many non-verbal cues when making judgments about others. “Most psychologists estimate that we interpret around 65 percent of a message’s meaning from tone of voice, facial expression and body language – things that are often lost

through over reliance on technology, even if supported with video,” he says. “Without these important face-to-face cues, team members can become vulnerable to misunderstandings, over-interpreting negative communication tones and unwittingly creating a cycle of mistrust.” He adds that the most successful leaders recognise the importance of face-to-face contact in building trust and commitment from their colleagues, and have strategies to ensure face time with their colleagues, particularly early on in the relationship. So if face-time is so important, why don’t we do more of it? For one thing, many companies have concerns over the amount of ‘dead time’ face-to-face meetings create. For instance, a third of survey respondents said that they spent between 11 and 20-plus hours every quarter driving to meetings – generating a total of 12,000 hours of dead time in the last year in driving time alone. It suggests that the ability to effectively manage your time is just as critical to success on the road as your actual communication skills. “We analysed the personality and skills of successful mobile workers. We thought we would see highly ﬂexible, reactive individuals, dashing from one part of the country to another. Instead, we saw a high level of conscientious behaviours, such as personal organisation and planning,” says Duff. “With this was an increasing trend of managers avoiding the roads to use public transport, including the rail network. Many highlighted that train journeys create important time and space where they can rest, plan ahead and catch up on often neglected tasks such as administration and calls.” Jim Rowe, Senior Communications Manager at Virgin Trains, believes the survey has provided valuable insight into the key skills required for effective business communication – and the behaviours needed to successfully put those skills to good use. “The results of our survey clearly demonstrate the value attached to a face-to-face meeting,” he says. “Whilst technological advances mean that it is now easier than ever before to be contactable 24/7, it is reassuring to know that people still need to meet people in order to develop and nurture relationships.”

88% of those who travel by train say they work whilst travelling Conference calls and email chains are the next best options if face-to-face isn’t a viable option 35% are prevented from going to more meetings because they view travel time as dead-time 11% travel to business meetings by car to take advantage of the mileage expenses

UPFRONT BMEU6 22

28/01/2011 14:36

WHAT DO I

know? With Saatchi & Saatchi CEO Kevin Roberts.

UPFRONT BMEU6 23

FIVE MINUTE EXECUTIVE

s beﬁts one of the most successful marketing executives of the modern age, Kevin Roberts, CEO of global advertising giant Saatchi & Saatchi, is a big believer in the grand gesture. “Theatre is something that I think people respond to,” he says. “If you’re going to make an impact you have to entertain them and inspire them.” He should know: as CEO of Pepsi Cola Canada, Roberts once famously machine-gunned a Coke

Machine at a black-tie dinner event attended by Canadian premier Brian Mulroney as a publicity stunt, and took a fully grown lion into an analyst presentation when COO of Lion Nathan in order to “get name recognition” for the newly merged company. “You have to give people a great experience,” he says with a grin. “You can’t take them for granted. People like to go to the theatre, they like mysteries. After that lion stunt, we got a lot of photographs and exposure the next day that we wouldn’t normally have got just because of a crazy piece of theatre.” Chief executive at Saatchi & Saatchi since 1997, Roberts has led the firm to unprecedented financial success – primarily through a focus on balancing creativity and innovation with organisational needs. The key, he explains, is inspiring people. “You can’t lead the creative people that work here because you can’t get eagles to fly in formation. You have to inspire them and motivate them. The old-fashioned model of followers and leaders won’t work here because creative people are driven by the moment, by the mood, by the impulse. They’re intuitive people. So it’s really about inspiring them to be the best they can be.” It’s a policy that puts the emphasis squarely on self-empowerment – something reflected by the firm’s notoriously brief HR directive. “Our people policy is one sentence. It says, ‘Use your best judgment at all times.’ That’s our HR manual.” Indeed, such an approach informs Roberts’ whole business outlook. “This idea that you have three stakeholders in business – your customers, your shareholders and your people – is nonsense,” he continues. “You have your people. If you inspire your people to be the best they can be, they sell more product. If they sell better, customers are happy. And if your customers are happy, they buy more and your shareholders are happy. It starts and ends with inspiring people.” And he’s not just talking about Saatchi & Saatchi employees. His overriding mission is to promote what he calls ‘lovemarks’ – the next generation of brands that inspire complete devotion in their followers. “Most brands now have parity, right? I mean most beers taste good. Most dandruff shampoos get rid of dandruff. Any MP3 player will work. But are you going to buy any of those other brands or are you going to buy an iPod?” Your decision, he explains, comes back down to our inherent love of theatre. “Lovemarks are built on sensuality and they’re full of mystery. They all have stories to them. The whole Apple thing is just a story. What’s the story of Samsung or the story of Phillips? You don’t care. But the story of Steve Jobs and Apple has great drama. It’s a soap opera. You couldn’t write it. And you’re emotionally connected to that lovemark.” Ultimately, it’s about forming binding ties between brands and consumers – so that even when your relationship hits a rocky patch, they will still come back to you. “Love’s the deepest emotion of all,” concludes Roberts. “But you have to earn love every day. You can’t just sit on it.”

28/01/2011 14:36

Why your toilet paper is shrinking When times are tough, companies don’t want to raise prices. Instead the things we take for granted get a little smaller. new competition or the rising cost of raw materials: cutting quantity while maintaining price. Yet it may not be obvious that your ice cream or OJ containers have shrunk. Manufacturers must note new specs on packaging, but the changes don’t have to be advertised (ever seen a Now Smaller! label?). Here’s a look at one of the most recent examples.

INFOGRAPHIC

verything shrinks in a recession: GDP, investment portfolios, even the products on store shelves. Consumer goods companies know that customers won’t go for price increases during a downturn. Instead they often use a different tactic to offset things such as

24 $1200

$1000

SCOTT 1000 Toilet Tissue

$800

$600 2008

1995 Size of toilet paper sheet is 11.4 by 11.4 centimetres when Kimberly-Clark acquires Scott Paper

UPFRONT BMEU6 24

1999 In July, sheet size trimmed to 11.4 by 10.4 centimetres. Kimberly-Clark makes ‘softness enchancement’

2009

2006 Size drops to 11.4 by 9.3 centimetres in July, another ‘softness enhancement’ and pattern are added

2010

2010 Size reduced in August to 10.4 by 9.3 centimetres. Change includes a 10 percent ‘strength product enhancement’

28/01/2011 14:36

Shipping costs Smaller packages allow more units to ﬁt on a truck, making transportation more efﬁcent.

Scott 1000’s

new sheet si ze reduced the height of a four-pack fr om

22 to 20cm

There goes the neighbourhood These products all shrank in 2010; as with Scott, it wasn’t the ﬁrst downsizing for most. Some said innovation was behind the cuts.

Cottonelle Double Roll

Angel Soft Double Roll

Kimberly-Clark February 2010

Georgia-Pacific April 2010

10.6 centimetres wide

11.9

10.1

12-17% 260 308

sheets

352

300 sheets

sheets

Charmin Ultra Soft Big Roll Procter & Gamble July 2010 10.8 centimetres wide

increase in nt o f the amou t can co t produc t S uck ﬁt on a tr

Quilted Northern Soft and Strong Double Roll Georgia-Pacific September 2010 11.4 10.1

Georgia-Paciﬁ c estimates that

, with fewer truck s, its fuel use will dr op by

1305.9 litres a year

176 200

sheets

286 sheets Credit: money.cnn.com

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242 sheets

DIESEL

28/01/2011 14:36

Top 10: strategic technologies for 2011 Gartner has released its top 10 strategic technologies for 2011, which include:

Cloud computing Existing along a spectrum from open public to closed private, Gartner predicts that the next three years will see the delivery of a range of cloud service approaches falling between these two extremes. Vendors will offer packaged private cloud implementations that deliver public cloud service technologies. Gartner expects large enterprises to have a dynamic sourcing team in place by 2012 that is responsible for ongoing cloud sourcing decisions and management.

TOP 10

Mobile applications and media tablets Gartner estimates that by the end of 2010, 1.2 billion people will carry handsets capable of rich, mobile commerce providing an ideal environment for the convergence of mobility and the web.

Video Over the next three years, Gartner believes that video will become a commonplace content type and interaction model for most users, and that by 2013, more than 25 percent of the content that workers see in a day will be dominated by pictures, video or audio.

Social analytics Social network analysis involves collecting data from multiple sources, identifying relationships and evaluating the impact, quality or effectiveness of a relationship.

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Social communications and collaboration Gartner predicts that by 2016, social technologies will be integrated with most business applications. Companies should bring together their social CRM, internal communications and collaboration, and public social site initiative into a coordinated strategy.

Next generation analytics It is becoming possible to run simulations or models to predict the future outcome, rather than to simply provide backward-looking data about past interactions, and to do these predictions in real-time to support each individual business action.

Context-aware computing Gartner predicts that by 2013, more than half of Fortune 500 companies will have context-aware computing initiatives and by 2016, one-third of worldwide mobile consumer marketing will be context-awarenessbased.

Storage class memory Gartner sees huge use of ﬂash memory in consumer devices, entertainment equipment and other embedded IT systems. It also offers a new layer of the storage hierarchy in servers and client computers that has key advantages – space, heat, performance and ruggedness among them.

Ubiquitous computing As computers proliferate and as everyday objects are given the ability to communicate with RFID tags and their successors, networks will approach and surpass the scale that can be managed in traditional centralised ways. This leads to the important trend of imbuing computing systems into operational technology, whether done as calming technology or explicitly managed and integrated with IT.

Fabric-based infrastructure and computers In its basic form, a fabric-based computer comprises a separate processor, memory, I/O and ofﬂoad modules (GPU, NPU, etc.) that are connected to a switched interconnect and, importantly, the software required to conﬁgure and manage the resulting system(s).

Source: zawya.com

28/01/2011 14:36

SOURCESENSE AD.indd 1

18/01/2011 10:40

INSIDE the CEO brain Brain scans could reveal who makes a good CEO, a team of scientists led by a British businessman has revealed. Sir John Madejski has undergone a series of scans at the University of Reading to try to work out if science can be applied to the study of leadership. A group of neurologists, psychologists and management at the UK university are collaborating for the study to examine the brains of chief executives and leaders in other ﬁelds such as military or voluntary organisations.

CEO STORY

Inside the scanner Sir John Madejski, an entrepreneur who owns a string of businesses and a football club, completed a series of tests, pressing a keypad to measure his brain activity. The results of this test and a number of others will be aggregated to try to draw out some lessons, the BBC reported. Madejski hopes to persuade other business tycoons to undergo similar tests.

Earlier this year scientists claimed brain scans could also help people choose their career paths. Researchers used an MRI scanner to study the brains of 40 volunteers seeking career guidance. They then compared the results to the participant’s ability to do different tasks. The results, from the University of California, showed that the amount of grey matter – parts of the brain used for storing information – showed how good the volunteer was at different tasks. Using technology to examine what makes a good leader is nothing new, with organisations for many decades using psychometric testing to help choose candidates for senior positions, and to try to ﬁnd out what makes a good leader. But psychometrics is a controversial science as some critics suggest it makes claims that cannot be substantiated.

Psychometric testing Psychometric testing is used by more than two thirds of medium-to-large employers on prospective graduates. However, at least 5% of graduates have admitted to cheating, with another 17% saying they would cheat if they knew how to get away with it. (Source: PRWeb UK)

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28/01/2011 14:36

Loyalty counts 15 of the 100 CEOs in Chief Executive magazine’s CEO Conference Index joined their companies directly after graduating from college. • An additional 35 started their professional careers at the company they currently lead. • Not one CEO on the list has been with more than ﬁve companies in the span of their career. • 31% have been with only one other company, 12% with two other companies, and 13% with three or more.

Wise head The average age of a CEO in 2009 was 52.9, nearly two years older than the average 51.0 years of age, which has held steady over the last decade. In the UK, the incoming CEO class has an average age of 48.6 years, a report by Booz & Co found. Mark Zuckerburg, the creator of Facebook, is the world’s youngest billionaire at 26. The average age of CEOs who founded high-tech ﬁrms between 1995 and 2005 was 39, research by the Kauffman Foundation has shown. A report in USA Today said that S&P 500 companies run by the youngest CEOs have been outperforming those run by the oldest. Boards tend to hire CEOs whose age is similar to theirs, a US report in the Journal of Management and Governance demonstrates.

Heads up Out of the Fortune 500, the average CEO is just under 6ft tall.

Virgo-ing hardwork Virgo is the most common zodiac sign among billionaires, at 12%. (Source: Forbes in 2006)

It’s a man’s world In Germany, women in Europe’s largest economy earn on average 23.2 percent less than men at CEO level.

UPFRONT BMEU6 29

28/01/2011 14:36

EXECUTIVE PROFILE 30

Stepping up

he Chief Executive Officer of Santander UK, Antonio Horta-Osorio, is set to take over as CEO of its larger rival Lloyds Banking Group in March. It’s already gone down well with Lloyds shares rising almost four percent on the announcement alone. As head of its nearest rival, Horta-Osorio is perfectly qualified for the new role. Santander has 14 percent of the UK mortgage market and 10 percent of deposits. Having bought Alliance & Leicester and Bradford & Bingley’s high street networks, Santander now has 1327 branches and 25 million customers. It’s clear then, that Horta-Osorio knows a thing or two about running a big retail bank in the UK market. The UK’s Telegraph newspaper claims that what really sets him apart is how he dealt with Santander’s financial crisis. After taking over as chief executive in 2006, he pulled Abbey off the mortgage market. He later explained that this was because the mortgages being sold were effectively selling at a loss. He focused on costs and continued to absorb its new UK subsidiary, which had been bought in 2004. His caution paid off when, in 2009, Santander was able to purchase Alliance & Leicester at a cut-price and bought the branches and deposit book of Bradford & Bingley when it was nationalised. The two deals transformed the organisation and profits continued to grow throughout the crisis. The 46-year-old has been Chief Executive at Santander UK since 2006, but started his career at Citibank Portugal where he was Head of Capital Markets. He then worked for Goldman Sachs in New York and London before joining Groupo Santander as CEO of Banco Santander de Negocios Portugal in 1993. For Horta-Osorio the new role at Lloyds was apparently impossible to turn down and he is looking forward to the challenge of taking it to the next level. And it will certainly be a challenge. The UK government is not likely to begin reducing its shareholding for at least a year. Lloyds also faces the regulatory difficulties regarding being ordered to reduce in size. Living up to and delivering share price growth on a UK£20 billion investment won’t be easy, but then this is a man who lists “swimming with sharks” as one of his hobbies, so we’re betting he’s up to the job.

Portuguese banker Antonio Horta-Osorio is set to take over at Lloyds Banking Group as its next chief executive. So just what does he have in store for Britain’s biggest retail lender?

UPFRONT BMEU6 30

28/01/2011 14:36

Itellium mobilises the retail world

he retail trade is currently searching avidly for ways and means of exploiting the full value of the smartphone when it comes to business-to-customer relationships. Solutions bridging the gap between mobile and fixed-location retailing are especially in demand. If you want to know how retailers can use mobile apps and mobile payment technologies to tap into the revenue potential of the world of mobile shopping, just ask Itellium Services (www.itellium.com). The IT service provider uses innovative apps to turn the iPhone into an all-singing-all-dancing purchase advisory tool and shopping machine. Itellium does this, for example, using barcode technology to help retailers give their customers additional information on specific items, details of which can be scanned into smartphones and identified. Hook it all up to a central ordering system, and the customer can buy the goods straight away on his or her mobile phone.

When it comes to mobile loyalty programmes, eCouponing and location-based services, Itellium also has the right technology to make retail processes faster, simpler and more cost-effective. Among mobile innovations, a great reception is currently being given to the company’s ItelliPay barcode-based mobile payment platform. This 100 percent software-based payment technology makes mobile shopping a breeze without the need to transition between systems. Itellium has also been working on systems allowing retailers to use iPads to keep track of all stock changes and order amendments within their systems. This extra transparency means processes can be improved in all areas of materials management. The company will be showing how these and other technologies work in practice at a Mobile Commerce Showcase to be held at the NG Retail Summit 2011 in Geneva (5th to 7th April). Visitors will also have the opportunity to discover the company’s process and integration capability, not least in the “SAP for Retail” arena.

UPFRONT BMEU6 31

A rare collection of more than 35,000 miniature toys and train models is expected to fetch up to UK£30 million when it goes under the hammer in a private sale conducted by auction house Sotheby’s later this month. Known as the Jerni Collection, the enormous set is owned by Jerry Greene and is on display at the auctioneer’s New York headquarters, where it is taking up an entire floor. The items, which date from the 1850s to the 1940s, have been described as the most important collection of European and US toys and trains ever put up for auction. The Jerni Collection will be sold as one lot, and while the minimum price next month is being set at UK£6 million the final figure is expected to be much higher. Incredibly, what is on view represents only 20 percent of the tens of thousands of objects included in the collection. Pictured is the Jerni Train Station, which is toymaker Marklin’s largest and most elaborate single station produced before the Second World War. It is the only known example with double doors in the centre portion of the station, and dates from 1904.

Markets bullish on bullion The price of gold rose for the 10th consecutive year in 2010, reaching US$1405.50 per ounce by the end of December on the London PM fix – a 29 percent increase from last year’s levels. According to the World Gold Council, last year’s price performance was driven by developments in key gold markets. China saw increased investment activity, driven in part by innovative new gold investment vehicles offering improved access to the gold market, while jewellery consumption recorded a rebound in India, the world’s largest gold market. Globally, investors remained concerned about uncertainty in the macro-economic environment and turned to gold to hedge against weakness in the US dollar and rising inflation in many economies. “A combination of global macro-economic conditions and favourable supply and demand fundamentals continued to drive gold’s strong price performance in 2010,” explains Juan Carlos Artigas, Investment Research Manager at the World Gold Council. “Investors also continued to buy gold, a foundation asset that bears no default risk, in part to express an increasing sensitivity to the possibility of a tail-risk event involving sovereign debt as well as ongoing concerns over systemic risk. Gold’s relatively low volatility and lack of correlation to many assets has made it an ideal candidate for portfolio diversification and risk management strategies.” However, Artigas believes the gold story in 2010 is also about growth in demand and not just economic concerns. “It is significant that consumers increased their gold jewellery spending during the first nine months of last year, despite the rising price of gold,” he says. “Strong investment activity and a normalisation of gold demand in technological applications during the same period further supported gold’s stellar appreciation.”

NEWS IN BRIEF

“Itellium has the right technology to make retail processes faster, simpler and more cost-effective”

Going, going, gone

28/01/2011 14:36

Execs return to job market in 2011

T Putting management in the right mood

NEWS IN BRIEF

he vast majority of shoppers say they like hearing in-store music while they shop, according to a study by the leading in-store media specialist, Mood Media Corporation. Almost three quarters (74 percent) of consumers aged 18 to 44 say they like hearing in-store music while they shop, while almost two thirds (64 percent) say they would browse for longer if they enjoyed the atmosphere in a store. The online survey by YouGov on behalf of Mood Media Corporation will be of particular interest to store management interested in increasing customer footfall. Vanessa Walmsley, SVP of Corporate Marketing for Mood Media Corporation, said: “The message is clear for retailers looking for ways to keep shoppers in-store for longer: instead of using the wrong type of audio tracks or no audio at all, managers can tailor their in-store music to the tastes of their particular customer demographic. If customers actually like the tracks played in stores, they will stay longer and the chances of making a sale increases.” Shoppers were also asked to rank the following important factors in creating a comfortable in-store atmosphere: music; visuals, such as screens or TVs; or in-store fragrances or ‘scents’. Over two-ﬁfths of 18-44 year-olds (42 percent) stated audio was most important, but those aged over 44 opted for in-store ‘scents’ (50 percent). Mood Media Corporation’s consultancy division works with retailers to increase customer footfall by using cutting-edge audio, visual or scent solutions – or integrating all three ‘sensorial’ media solutions – to raise customer awareness of their brand. Its audio solutions can range from customised playlists from its library of 1.8 million rights-included tracks, through to visual solutions such as touch-screens and video walls.

UPFRONT BMEU6 32

he 2011 Executive Outlook Report, released last month by career management service BlueSteps, shows that just over 50 percent of global senior executives have a positive attitude about the job market in 2011, and 60 percent are positive about the business climate in general. While cautiously optimistic about the New Year, of those respondents who are currently employed, 79 percent reported that they plan to look for new career opportunities in 2011. With executive mobility high in 2011, competition is also at a peak: 77 percent reported increased competition for seniorlevel executive positions compared with ﬁve years ago, up from 56 percent in a similar survey carried out in 2009. Not only has competition increased, it has also changed, with 59 percent reporting that they are now competing with younger executives. Meanwhile 13 percent said they felt new competition from returning expats. An increased level of competition for executives reinforces the need to be proactive in managing your career, making it essential that executives know how to stand out from the crowd to attract the attention of recruiters and hiring organisations. Peter Felix, President of the Association of Executive Search Consultants and BlueSteps, believes the results show career progression is back on the executive radar after two years of hunkering down. “With the economy rebounding and worldwide senior executive hiring on the rise, it is not surprising that executives now feel more comfortable in investigating new opportunities,” he says. “However, increased competition means that executives must be particularly savvy about developing their personal brand, nurturing a vibrant network and focusing on a well thought out career transition plan.”

28/01/2011 14:36

COMPANY INDEX Q1 2011

VoIP in Europe One of the world’s leading providers of VoIP products, services and developers solutions, Media5 Corporation, has embarked on an aggressive growth strategy and expects to more than double its revenues in Europe within the next three years, despite the economic downturn.

o support the company’s growth in the Europe, Middle East and Africa (EMEA) region, the company has recently expanded its sales force worldwide, doubling the number of sales representatives, distributors and resellers. In addition, its core product line of Mediatrix VoIP gateways continues to be widely deployed by telecommunications carriers, service providers, network equipment manufacturers and enterprises throughout Europe. Leveraging years of experience in VOIP, Media5 has also introduced several new product lines for the European market including: • Mediatrix iPBX: A fully-featured IP-PBX and VoIP gateway providing SIP trunk terminations for a remote service provider and offering telephony interfaces for fax, modems and analogue phones in the SMB segment. • Mediatrix LP Series: VoIP access devices offering long-loop and lightning protection for more demanding telephony conditions. • Mediatrix Boss: Secure and survivable multi-function devices combining VoIP IAD, gateway, survivability, IP router, SIP aware NAT/firewall, VPN functionality, and QoS control. • Media5 fone: A suite of SIP-based mobile VoIP (mVoIP) and unified communications softclient applications enabling endusers to make VoIP calls using their smartphone with any WLAN and packet data (3G, 4G) available networks. “We are being very strategic with our global expansion efforts,” stated Philippe Babin, General Manager of Media5 Corporation. “We have worked diligently to develop the proper strategy, infrastructure and sales/support team to ensure success on a global scale. We are confident that VoIP will continue to be a significant catalyst for a change in the way that service providers, enterprises and consumers use communications.” VoIP is challenging established technologies with the introduction of products and services that meet the needs of modern, technology savvy businesses. Consequently, service providers in Europe are aggressively looking for ways to offer VoIP to consumers and migrate toward unified communications.

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Access agileDSS Alcatel-Lucent Allied Irish Banks Amazon Apple Atradius Barclays BT Carlsberg Catalyst Resources Cisco CM Pros CoreBiz Technology Solutions Dell Firefox Ford General Electric General Electric Google Guardian Life Insurance Harris Corporation Hilton Worldwide Hotel Astoria HP IDEO Itellium Kofax Legg Mason Mattel Media 5 Methodware Microsoft Mood Media Navita Systems NCB Stockbrokers Nokia Oracle Panasonic Pepsi PFIKS Porsche Design Studio Proctor & Gamble RBS North America Retail Advertising and Marketing Association Salesforce.com SAP Siemens Sourcesense Standard Life TD Bank Tibco Spotﬁre Vision Solutions Wolters Kluwer ARC Logics Xing

13, 19 98, 99, 100 2, 6, 58 36 48 68 IFC, 80, 82 94 84 110 63 60 116 126, 127 48 68 68 48 68 116 60 132, 133 122 134 48 68 31, 47 120 104 52 33, 73 88, 89 48 32, 130 90, 91 36 68 48 74, 75, IBC 68 118, 119 68 68 104 128 48 48 64, 65, OBC 27 76 104 102, 103 108, 109 92, 93 42

28/01/2011 14:36

MICROSOFT AD2.indd 1

11/10/2010 11:05

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11/10/2010 11:05

COVER STORY

CoverSTory_IrelandBailout.indd 36

28/01/2011 13:39

COVER STORY 37

BOOM BAILOUT In order to stop it defaulting on its massive ﬁscal deﬁcit, November saw the EU issue Ireland with an €85 billion bailout package, just months after the €110 billion package was sent to Greece. Business Management asks, what tamed the Celtic Tiger? And who’s next to fall? By Lucy Douglas.

ith its desolate landscape of unfi nished building projects, wide-scale unemployment, boarded shop windows and mammoth debt, a cursory glance at Ireland today harks back to the poverty stricken days of the 1980s. At one time a booming powerhouse of the European economy, today the Celtic Tiger has an unemployment rate higher than Greece (averaging around 13 percent for 2010 and steadily rising month by month), a government budget deficit worth 32 percent of the nation’s total GDP and in November was forced to accept a bailout deal of €85 billion from the European Union and International Monetary Fund. Like the mid 1980s, large numbers of Ireland’s young workforce are seeking to emigrate to nations such as Australia, New Zealand and the UK to pursue more promising job opportunities; house prices have sunk to as little as 50 percent of their worth during the boom years; and there are some 30,000 unfi nished homes across the country. But rewind 15 years, and Ireland was surging towards the height of its boom. Spurred by a competitive exchange rate following the recession of the 1980s, Ireland was an attractive investment environment for multinational corporations, due to its young and educated workforce

CoverSTory_IrelandBailout.indd 37

28/01/2011 15:16

COVER STORY

and a 12.5 percent corporate tax rate. In 1990, 50 percent of the population was under 25. The late 80s and early 90s saw major American corporations such as Intel, Microsoft and Dell move into the country, ready to capitalise on the imminent technological revolution, bringing with them jobs for Ireland’s ambitious, young workforce and creating a demand for housing and business construction. Th is was the start of the Celtic Tiger. It was also, according to analysts, a prelude to Ireland’s downfall some 20 years later. “Ireland had a very good 1990s and came into the 2000s with very good momentum for very sound fundamental reasons,” says Bernard McAlinden, an analyst with NCB Stockbrokers. “Credit became extremely available. Forces of globalisation made credit very cheap, particularly from 2000 on, and the most vulnerable economies were the ones that really had momentum going into it.” Indeed, Ireland’s economic growth rates during the latter years of the 20th century were impressive to say the least. Suddenly the tiny Emerald Isle that had for many years struggled for sovereignty from its neighbour and imperial ruler had a globally competitive economy and was reporting record growth rates. The country’s GDP grew from US$25 billion to US$267 billion in the 20 years up to 2008, at an average annual growth rate of between five and 10 percent. The workforce that had migrated away from the country when times were hard returned to take advantage of the opportunities Ireland now had to offer; unemployment rates, which had reached 17.3 percent in 1985, sunk to 3.8 percent in 2001. “In the 1990s we started with high unemployment and we ran through that and brought unemployment right down. We had a great capacity in the economy to absorb very strong growth, and we also had the return of a lot of Irish people that had emigrated, which fed the economy and kept it non-inflationary,” says McAlinden. But at the turn of the millennium, even with the second strongest economy in Europe, the cracks were beginning to appear in Ireland’s armour. “When we went into the euro we got the extra boost from the low interest rates. Now, markets and managers of economies made a massive mistake in not seeing that the ability of Ireland to raise credit on German type interest rate terms just revved up a growth situation that was already becoming less sustainable.” Alongside record levels of growth, Ireland, like America, the UK and so many other European states, was indulging in a credit binge. A largely unregulated fi nancial sector, consisting predominantly of private banks rather than investment banks or hedge funds, was issuing hundreds of thousands of euros in loans each day. The Sunday Business Post reported that a fi nancier named Niall McFadden had received a loan worth €6.3 million off a personal guarantee from a bank without a face-to-face meeting. In 2006, 33 percent of fi rst time buyers were granted mortgages with no down payment. Though productivity slowed in the early part of the 21st century – GDP growth slowed to less than seven percent for the fi rst time since 1995 – credit was still being pushed into industries, particularly the housing market. According to the Central Bank of Ireland, the av-

CoverSTory_IrelandBailout.indd 38

Ireland In 2006,

33 % of ﬁrst time buyers were granted mortgages with no down payment

erage Irish family owes €132,000 to the banks, significantly higher than the amount owed by the average Greek family, or by any family in the Baltic region. “Not only was it not realised that we had too much momentum to be participating in this global credit binge, or that we had no safe way around the big house bubble, but when the new accession countries were coming into the EU we made the decision to allow unrestrained access into Ireland,” says McAlinden. “Only a few economies made that decision. For example, the French and German economies restricted that because they didn’t like the implications on their labour markets for wage rates and such, whereas Ireland went the flexible route like the UK and left it unrestricted. But to be honest, for a small economy already booming to have that sort of an influx sent a very false signal that this boom would go on forever. The housing boom went even further because we had further demographic pressure on housing demand.”

Crash Ireland’s rapid growth in the years up to 2007 was reaching its pinnacle. GDP growth had already slowed and house prices were approaching an unsustainable high. In addition, speculative development from the construction industry was beginning to lead to a housing market that was surplus to requirements. Then in 2007 came the American sub-prime mortgage crisis that led to the recession still being felt across Europe today, signalling that the global credit binge had gone too far. “The banking system seized up around the world,” explains McAlinden. “With the benefit of hindsight, Ireland was an exaggerated form of that problem and that dawned on us all over the following few years.” Indeed, hindsight is the operative word. Alongside America’s sub-prime mortgage crisis, 2007 marked a turning point in the Irish economy; the real estate market

Spain’s national

unemployment is 20 %, the highest in Europe

“It was not realised that we had too much momentum to be participating in this global credit binge, or that we had no safe way around the big house bubble.”

28/01/2011 13:39

COVER STORY 39

fi nally began to contract and with it the country’s fi nancial institutions were sent into disarray. Then, in 2008, the Lehman Brothers’ collapse accelerated the already plummeting economy. But rather than encouraging the Irish, and many other European financial sectors to take stock of their escalated spending, the crash across the Atlantic gave Ireland’s banks a culprit to point the fi nger of blame at. The Anglo Irish Bank’s owner Sean FitzPatrick told the public on record that, “The cause of our problems are global, so I can’t say sorry with any degree of sincerity and decency, but I can say thank you.” But regardless, McAlinden suggests that nothing could have been done at this point. The damage was already done for Ireland, and it had been done on Irish soil. “Most of the problem was sunk and it was already unavoidably created by then. It’s amazing but the excesses really only set in around 2003 and only ran till 2006, but a lot of damage was done in that period. When it dawns on you in 2007, you can’t say that something has

The Irish austerity budget Following the bailout, Brien Cowen and his government were forced to issue the toughest budget in the Republic of Ireland’s history, with massive cuts to welfare and increased taxes in order to reduce the nation’s gaping deﬁcit. The four-year budget outlined by the government to reduce the nation’s gaping deﬁcit includes:

D Increase in petrol prices by four cents a litre and diesel by two. D Increase in VAT to 22 percent in 2013, then up to 23 percent in 2014 D Increase in PRSI (national insurance) D A cut in air travel tax D A cut in child beneﬁt by €10 and a cut in the minimum wages by €1. D Abolition of stamp duty relief and implementation of ﬂat rate of one

percent on properties worth less than €1 million and two percent on those worth more D Implementing a ﬂat higher education charge of €2000 per student to replace the Student Services charge

CoverSTory_IrelandBailout.indd 39

gone wrong here. You can’t change what’s been borrowed.” With the property market and banking system already in tatters, Ireland had to face up to another problem contributing to the escalating financial problems. Government spending was way over its income. Ireland’s budget deficit at the end of 2008 was €12.7 billion, growing to €24.6 billion at the end of 2009. Most recent data has indicated that the preliminary deficit for 2010 reached €18.8 billion, or around 12 percent of national GDP. Including the €45 billion in aid issued to three major fi nancial institutions – as required under European accounting rules – that figure stands at a massive 32 percent of the GDP. “The interesting thing is the EU rules,” says McAlinden. “The government actually ran surpluses for most of that period and wasn’t breaking any EU rules in terms of the deficit as a percentage of the GDP, and it was also well within the maximum borrowing as a percentage of GDP under EU rules. So there were no overt signals there that we were heading into trouble.” Indeed, as government spending escalated in the years up to 2007, so too was did the nation’s GDP. Government tax income feeding off the property boom and VAT continued to grow unsustainably, and when the bottom fell out of these markets as the recession set in, the government continued to spend at the same rate, paying out to a fi nancially crippling public sector. In addition, the threat of default of lenders such as the Anglo-Irish Bank, which would have had a devastating effect on the already foundering economy, left the government no choice but to issue massive bailout packages, further widening the fiscal hole. “Without the bailout Ireland would have come to a halt over night, Iceland style. An immediate, sudden halt,” says McAlinden. Indeed, that was a result the European Union sought desperately to avoid by reaching the decision to issue Ireland with a bailout package in order to prevent it defaulting on its debts. UK Chancellor George Osbourne told MPs it was in Britain’s interest to join the rescue package. In November the EU and International Monetary fund fi nalised an €85 billion bailout fund package, and Prime Minister Cowen responded by outlining a severely stringent new budget that aims to reduce the deficit to just three percent of the GDP by the end of 2014. “Without the bailout that would have been a four-day plan,” McAlinden jokes. “The bailout allows us a slow exit from the situation rather than enforcing the immediate exit on us.” But it wasn’t all good news for Ireland’s public. “The bailout also gets the Irish tax-payer deeper into the problems of the banking sector,” McAlinden explains. “One of its features has been that the senior debt holders in the banks aren’t being asked to share the burden here so the Irish tax-payer is all the more participating in the banks losses.” Indeed, the bailout was met with uproar from the public; protestors rallied waving placards declaring sentiments such as “Bring back the punt”, “There is a better way” and “Eire not for sale”. The budget brought some 100,000 people to march in protest against the cuts. On top of this it was reported in December that despite the cuts the bailed-

28/01/2011 13:39

COVER STORY

out Allied Irish Banks would be paying out a total of €40 million in bonuses to its staff. McAlinden remains pragmatic when considering the bailout however, preferring to look at the bigger picture. “If you consider it a good thing that an economy is allowed time to work its way out of its problem with its fi scal banking system, the bailout certainly gives [Ireland] that time. If you are more of the Austrian school of economics that says everything that has to happen should and it’s better to happen quickly and liquidate the problem quickly, then the bailout is bad news because it allows [Ireland] to just spend beyond or means for another four years, plus it drags the taxpayer towards further exposure to the banks.”

Ireland’s GDP grew from US$25 billion to US$267 billion in the 20 years up to 2008

Rocky road ahead

Deﬁcit for 2010 reached a massive 32 percent of the GDP

CoverSTory_IrelandBailout.indd 40

But as Ireland attempts to get its fi nances back on track, staring down the barrel of its four-year austerity plan, worries are still mounting in Europe. While the EU and IMF conferred over the value of Ireland’s bailout package, European officials expressed concerns over the future of the euro zone. The safety net €750 billion fund, established for situations such as the crisis in Ireland, was suddenly in doubt amid fears that Portugal and Spain could require a similar bailout, with the latter reportedly standing to require some €420 billion. But McAlinden explains that the full effects of issuing bailouts has yet to be felt. “It depends on whether the bailed out economies – Ireland and Greece before it – perform or don’t perform, because a bailout isn’t charity. It’s money lent, at an interest rate that is fully expected to be repaid.” According to McAlinden, much of the fi nancial crises in Ireland, in Greece, Portugal and Spain were the results of a mistake made with the launch of the euro. “Credit was misjudged by the markets, and by those of us who lent and borrowed that credit in the post-euro environment. In other words, country risk was forgotten about. It was implicitly assumed that if there’s no currency risk with the euro then country risk is the same everywhere, and we had a real awakening there that you’ve simply got to be watching the fi nances in the private and public sectors of every country to assess country risk, even in the common currency zone.” He points out that defaulting on debts could result in peripheral economies such as Ireland having to reconsider membership of the euro. “It all depends on the degree to which these economies stick with the undertaking of austerity. I think if they do, the same mistake that was made won’t be made again. It was a big collective error between markets and borrowers and the euro might be all the stronger for it because the fl aws will have been dealt with.” Still, despite having the benefit of hindsight and the ability to learn from mistakes, the euro continues to hold problems for Ireland. While positive that the bailout packages have provided economies with the appropriate opportunity to get themselves back on track, McAlinden is wary that the fi scal adjustments made to accommodate such bailouts will not allow those economies enough

“The excesses really only set in around 2003 and only ran till 2006, but a lot of damage was done in that period. You can’t change what’s been borrowed.”

28/01/2011 13:39

COVER STORY 41

There are some 700,000 unsold new homes across Spain

room for growth. “I think implicitly the resolve is there in these economies to work through these problems,” he says. “The problem is the residual of this euro zone membership that denies us the stimulus to achieve growth. Traditionally the currency collapses and slowly but surely with a lag, the economy gets a growth stimulus again at some point. That’s not there when we stay in the euro. “Now getting out of the euro would have even bigger problems. We simply have to deflate internally fast enough to get growth back.” Indeed, the tough times ahead are unavoidable for the Irish people, just as they have been for the Greek public feeling the pinch of extreme austerity measures, and as they look set to for Spain and Portugal, both looking increasingly likely to require help from the EU and IMF. The smaller of the two, Portugal is inviting the most speculation as to its need for fi nancial aid from Europe. It’s unemployment sunk to 10.9 percent by the end of 2010; public debt was 82 percent of GDP for 2010 (to compare, Ireland’s was 100 percent). Though the nation’s fi scal deficit shrunk in 2010 to 7.3 percent of the GDP

Greece: six months on The first Eurozone country to receive a bailout from the EU and IMF, Greece announced that its central government budget deficit had contracted by more than a third in 2010, thanks to a rigorous set of spending cuts. Data released by the Finance Ministry at the beginning of January indicated that the deficit was now at €19.6 billion, marking a 36.5 percent reduction. The government plan set when the bailout package was secured in May outlined intentions to reduce the deficit by 33.5 percent in 2010. But the success of the Greek government in exceeding expectations regarding deficit reduction has come at a huge cost to the nation’s workers. The austerity measures imposed led to a GDP contracting by an estimated 4.2 percent. Public sector workers are seeing around a 15 percent cut in wages; public transport workers have had pay reduced by 10 percent. Retirement age has been increased and pensions have been frozen. The 2011 austerity budget seeks to further reduce spending and increase taxes in order to cut the deficit to around 7.4 percent of the GDP, from 9.4 percent in 2010. Lower VAT rates have increased to 13 percent from 11 percent, and to 6.5 percent from 5.5 percent. The health ministry has indicated plans to implement spending cuts worth €840 million during 2011. The GDP is forecast to contract again in 2011, this time by three percent. Unemployment is expected to reach 14.6 percent 2011, up from 12.1 percent in 2010 and a record high for the nation.

CoverSTory_IrelandBailout.indd 41

from 9.4 percent in 2009, state sector spending rose by 3.7 percent, and most improvement came from tax hikes. But it is Spain – Europe’s fi ft h largest economy and the fourth largest in the euro zone – is posing a much greater concern for European officials. Such a significant economy in the euro zone, Spain would require a bailout package of some €420 billion in order to save it from default, analysts suggest. In order to secure a bailout package from the EU and IMF, the European Financial Stability Facility – the fund established to fi nance such procedures – would need to almost double in size. Its current lending capacity stands at around €225 billion, despite having a headline value of €440 billion. Spain’s need for a bailout package similar to Ireland’s is a tentative issue. Although a bailout would mean a significant financial burden on the EU’s leading economies – much more so than the packages issued to Greece and Ireland and potentially Portugal – the fiscal hole is expanding and its banks are insolvent. Fiscal deficit in 2009 stood at 11.2 percent, falling to 9.3 in 2010 and predicted to sink again to six percent in 2011. Like Ireland, Spain’s problems stem from a speculative property boom; there are now some 700,000 unsold new homes across the country, more than 20 times the number in Ireland. The nation is currently dealing with national unemployment in the region of 20 percent, the highest in Europe and twice the continent’s average; for under 25 year-olds that figure is over 40 percent. Spain’s emerging generation of workers are facing up to the fact that they are likely to be worse off than their parents’ generation. An austerity budget published in Q3 2010 outlined measures the government intended to take in order help reduce the deficit. Civil servants endured a five percent pay cut in 2010; overall spending was reduced to €122 billion, a 7.7 percent reduction and taxes were raised for those with a personal income over €120,000. “Spain would be the difference between sideshows like Ireland and Greece and economies that are too small to matter,” McAlinden says. “They certainly wouldn’t for long interfere with what’s happening significantly in the world. But once you get to Spain you’re talking about an economy that’s at a critical point, and likely to be a significant problem for Europe. Maybe it’s not a tipping factor for the world, in terms of upsetting equity markets, upward movements or ongoing economic recovery, but in Europe it’s a serious problem to be dealt with.” One thing is for sure, 2011 is going to leave many people across the euro zone, and across Ireland, Spain, Portugal and Greece in particular, nursing their wounds. The so-called austerity budgets that have popped up across the continent, promising to reduce national deficits, will mean stifl ing tax hikes and cuts to public spending. Record unemployment levels combined with shattered property markets look set to make times tough for the emerging generation of workers. There may be light at the end of a long tunnel, but for now Europe’s squeezed middle must continue to weather the fi nancial storm.

28/01/2011 13:40

Xing.indd 42

28/01/2011 14:58

THE BIG INTERVIEW 43

MAKING THE SOCIAL NET WORK Hamburg-based Stefan GrossSelbeck, CEO of social software platform XING, discusses the challenges involved in taking on the big boys of the social networking world.

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THE BIG INTERVIEW

was a big year for social networking firms. YouTube celebrated its fi ft h birthday and hit over two billion site views per day. Facebook was crowned the most popular destination on the web, receiving more hits than internet goliath Google. There was the release of a Hollywood blockbuster to really cement the position of social media in the collective cultural consciousness. And most importantly, social media businesses fi nally worked out a way to make money from the Web 2.0 revolution. While market leader LinkedIn garnered most of the headlines and the lion’s share of the users, its European rival in the business networking space, XING.com, passed the 10 million registered user mark last year and announced record revenues in the process. On the back of one of its most successful periods of member growth, the publicly listed company, which was founded back in 2003, announced the best operating results in its history, posting record operating profits of €4.46 million in the third quarter and smashing earnings predictions. The network boosted revenue with e-recruiting and advertising on the site, as well as making improvements to its premium membership service (which makes up an estimated eight percent of its users). It opened new offices to serve an expanding international customer base. And it also announced a major new product initiative featuring a revamped design along with a host of enhancements to the user navigation and brand new features such as the ‘mobile handshake’. It’s been a whirlwind 12 months. And while in terms of market share, the Hamburg-based company still has some way to go – for the sake of comparison, Europe’s Viadeo claims to have signed up 30 million business professionals to date, while US-based LinkedIn boasts more than 75 million members – the company, led by its charismatic CEO Stefan Gross-Selbeck, has big plans for the coming year. Business Management caught up with him to find out the what, why, how and where – and got some interesting answers.

2010

Tell us about XING. How does it differ from LinkedIn or Facebook? Stefan Gross-Selbeck. XING is very different from Facebook in the sense that it’s a social network for business professionals, so we’re providing a context for professionals where they can manage their relationships but also broaden their networks and their relationships and, on that basis, make progress in their jobs and further their careers. So XING provides a network that is very much focused on not only managing your existing network but building a network and getting in touch with the people you don’t know yet that you haven’t met before. We’re offering some very interesting tools – for example, our event tool where people organise and promote events. When I say events, I mean offl ine events like conferences, dinners or networking events, and there are 150,000 of those being organised globally by our community every year. So what does XING’s key functionality enable the user to do?

Xing.indd 44

In September 2010, XING passed the 10 million member mark, 4.2 million of which were German-speaking countries. How positive was that growth for the company?

SGS. It was obviously an important milestone to pass that number and we continue to grow at a very nice pace. We think of ourselves as a multi-local community as opposed to a crossnational community. What I mean is that most of the people who use XING want to network locally. Generally speaking, the vast majority of people have their friends, colleagues and people they network with within their vicinity, in their city and certainly within their country. And that’s what we focus on. So the people in Turkey, for example, they do most of their networking within Turkey, and those in Italy network mostly in Italy. So it’s really a multi-local network.

SGS. It enables you to manage your online reputation, first of all, so if you set up a profi le on XING you get an online digital business card. This way, if anyone Googles you, what comes up first is your XING profile. That’s the one space on the web where you completely control the way you want to be seen by others, so that’s an important feature, of course. The next important feature is anything to do with an address book. If you have a network of people on XING, they will update their address book or their personal data all the time, so you always stay informed about people changing their jobs or having new contact data. Last, but not least, we offer a number of very important search functionalities, which enable users to very specifically look for people that may be interesting to them based on the things they offer, their experiences, projects they have done in the past, things that bring people together, and enable them to build a relationship and build business on that basis. Germany aside, which countries would you say were success stories for XING? SGS. We have number one positions in the Germanspeaking countries, so that’s Germany but also Austria and Switzerland, and we also have the number one position in Turkey and in Spain. We’re the leading business network in both of those markets. We currently translate our site into 16 languages, so you can actually use the site pretty much across the globe. In terms of business potential, I believe we have significant potential for growth even in our existing markets. For example, in the German-speaking region, the overall penetration of business social networking is only half of what

translate our site into 16 languages, so you can actually use the site pretty much across the globe”

28/01/2011 14:58

THE BIG INTERVIEW 45

it already is in some of the Anglo-Saxon countries, so I do believe we can easily double our member base there.

BUSINESS NETWORKING: THE CONTENDERS

What do you think has been the secret of this company’s success to date? What have you done that so many others haven’t been able to?

XING Website: xing.com Headquarters: Hamburg, Germany Founded: August 1, 2003 XING is the leading European network for business contacts. Far more than a directory of business contacts, XING makes your professional network an active part of your life, enabling members to discover professional people, opportunities and privileges through its unique discovery capability and advanced contact management tools.

LINKEDIN Website: linkedin.com Headquarters: Mountain View, California, United States Founded: May 1, 2003 With more than 75 million users representing 150 industries around the world, LinkedIn is a fast-growing professional networking site that allows members to create business contacts, search for jobs and find potential clients. Individuals have the ability to create their own professional profile and also view the profiles of their own contacts.

VIADEO Website: viadeo.com Headquarters: Paris, France Founded: June, 2004 Viadeo is a European online professional networking site with 30 million members. It is billed as a reference tool for those who want to increase their business opportunities by discovering new clients, partners, staff and suppliers; enhance their visibility and their online reputation; and manage and develop their network of professional contacts.

Xing.indd 45

SGS. I think we have a product that is unique in the sense that it drives very high activity of our users. We have the highest activity of any professional network in the world and that, I think, is because we provide people with real business value. They are using our site not for fun or for recreational purposes but for professional purposes. And that’s really our mission, to provide value to these people. The extent to which we’re able to do that, they continue to use our site, and that’s what makes us successful. That has led to a very high percentage of people actually paying a fee for using the site. One in five in our core market is paying a fee. Our basic functionality is free, but if you want to use the full functionality of the site, you have to pay a monthly fee, between €4-6 per month. And more people are paying for that than any network in the world.

Why do you think the penetration isn’t so high in German-speaking markets? SGS. If you look at all online business models, it always takes a while for them to move, typically from the US, and then into Europe, starting in the UK, and then from there over to the continent. There’s always this typical time lag of anything up to 24 months. It’s actually quite normal. So are there any other parts of the world that are currently on your radar? SGS. We have so much potential in our existing continental European markets so that’s our focus right now. We don’t have any specific expansion plans at this point. So would you say that business has outperformed expectations? SGS. We’re ambitious people, we set our expectations high, but we’re currently growing at a rate which is fi ne, and the stock price has been rising recently, so I guess we have been doing pretty well.

28/01/2011 15:06

THE BIG INTERVIEW

Since taking over as CEO of XING two years ago, what are the key challenges that you’ve faced? What did you do to manage those challenges and, in retrospect, what would you do differently? SGS. The key thing is to always try to understand your customer needs, your users’ needs, and what it is that really makes a difference for them. We have a large team of people, mostly based in Hamburg, spending day and night working with users to understand their needs and trying to figure out what makes a difference to them. But, to be honest, it’s impossible to get it right every time. What you need is a very agile development process where you can iterate and work on the basis of trial and error, and that’s what we do. Making mistakes as you do that is part of the process. So, of course, you’re always looking back and, in hindsight, you’re always more intelligent and you think you could have foreseen some of the mistakes that happened along the way, but I think it’s natural that these mistakes are being made. We’ve talked about Facebook and LinkedIn, but what about Viadeo? How do you compete with this professional social network, which boasts around 30 million users worldwide? SGS. I think it’s about giving your users tools that they fi nd valuable, so they spend time on your site, particularly in those markets where we are stronger than any of our competitors. Our users tell us that they fi nd the usability of our site better than our competitors. XING recently launched a product offensive in Germany, a new design user navigation, mobile handshake and the company’s ﬁrst-ever TV campaign. Why did you go ahead with this campaign? Did things need shaking up? Did you want to be more competitive? SGS. In our core markets we are a strong number one overall, as I mentioned earlier, but we only have half the penetration that networks achieve in other markets. We felt it would be important to break new ground, so we campaigned to tell our message to even more people, and we’re pleased with the early results. We were able to increase awareness by 10 percent, which is a pretty good number. You do television mainly to drive awareness and make your brand better known among your target groups but, of course, you always want to convey a specific message. Our message for this campaign was that a business network like ours can make you more successful at your job and at what you’re trying to achieve in your life. XING also recently launched new iPhone and BlackBerry apps. What do these apps offer users, and what has been the feedback? SGS. Any business can be mobile these days, so it’s very important for us to offer the basic network and functionality in a mobile version via an iPhone app, a BlackBerry app, and even an Android app. But we also offer specific functionality that is only accessible to our mobile users, and I think I’ve already mentioned the so-called ‘digital

Xing.indd 46

handshake’, which is a very fast and efficient way to connect with someone you meet on the road. All you need is two people with a smartphone and they can easily identify each other and connect to each other on XING. We launched the apps in September, and so far they’ve been quite widely used and are getting great feedback. It’s very unique because there are other similar attempts to do that, but those are using different technology, they’re based on Bluetooth technology. Ours is using only the browser which means it’s much easier to use and it’s usable across systems, so whichever smartphone you’re using, you can use our digital handshake. What do you think is the to growing key number of XING members in the coming years? SGS. I think the key to growing the business is to be close to your customers and drive innovation to solve the problems they have in their everyday lives. We have a user lab in our office where, almost every day, we have groups of users coming in and we present them part of our site or prototypes we’re trying to build, and we collect feedback from them, try to understand their needs and try to solve their problems. We’re not the only ones that do this, but I think we’re doing this in a particularly sort of intense and effective way. And obviously that feedback then goes into the products or the services that we’re offering.

markets we are a strong number one overall, as I mentioned earlier, but we only have half the penetration that networks achieve in other markets”

Will the proliferation of smartphones and tablet computers become even more important to you when you hit 20 or 30 million members? What’s the future for XING? SGS. I absolutely believe that the rise of the mobile internet is very clear, and we have an increasing share of our traffic happening on smartphones, so much so that we’re working on bringing more and more functionality to our applications.

28/01/2011 14:59

INTELLIUM AD.indd 1

18/01/2011 10:37

BUSINESS TECHNOLOGY

THE FUTURE OF THE

NEIL DYKE ED P48-51.indd 48

28/01/2011 15:05

BUSINESS TECHNOLOGY 49

Is the IT department headed for the scrapheap? It’s a controversial idea, but one that could become a distinct possibility given the trend towards outsourced IT solutions and the rise of a new generation of tech-savvy business leaders, says GE’s Neil Dyke.

I “I don’t know whether IT would even need to exist as a separate function – particularly if you take the concept of the cloud to its logical extent”

90% of CIOs see people as the most important part of the value equation

NEIL DYKE ED P48-51.indd 49

don’t generally go in for scaremongering, but when someone as knowledgeable on the subject as Neil Dyke, Group CIO for EMEA at General Electric, starts to question the long-term future of the corporate IT function, then perhaps it’s time to sit up and take notice. “In my lifetime I’m sure that every enterprise is going to have an IT function,” he says in our meeting at the recent CIO Summit held at Dubai’s Meydan Hotel. “But maybe in the next generation that will change.” It’s a bold claim. But given the increasingly strategic nature of technology decisions and the ubiquitous role of IT in the day-to-day running of businesses both large and small, Dyke believes that the traditional divides between IT and business are becoming ever more blurred. “We talk a lot about the need to have IT people who really understand the business, but shouldn’t it be the other way around?” he asks. “Shouldn’t we have business people who really understand IT? Perhaps it’s time to shift the emphasis and give the people who have to live with the consequences of their decisions in terms of technology choices greater accountFactoid ability. The typical IT project manager just shows up, delivers the project, moves on to the next one and doesn’t have to live with the consequences, whereas the actual users of the technology do.” After all, he points out, people are much more IT-savvy now. “IT used to be a specialisation, but today everybody understands it – my five-year-old probably knows more about IT now than I did when I was 20 years old,” he suggests. “People just understand IT better. They understand what they expect technology to do for them. They often don’t even see it as IT. When you’re running your Gmail account at home, do you think of that as an IT solution or is that just your e-mail? I think most people would just think of it as their e-mail, and they don’t need an IT guy to help them with their e-mail. Similarly, I buy stuff from Amazon but I don’t think of that in terms of using an IT solution; it’s just my online shopping experience.” It’s a scenario that’s only going to be accelerated by the new generation of IT-familiar employees coming up through the corporate ranks – the so-called digital natives, for whom technology is just part of everyday life. “IT is so integral to everything we do nowadays,” says Dyke. “Take our business, for example. A lot of what we sell now is software. We sell rotating machinery and we also sell soft ware to monitor that. We sell diagnostics capabilities in the form of soft ware. But that soft ware is no longer developed by the IT department. We are maybe used on a consultative

basis because we have deep skill sets in those areas, but the responsibility for developing soft ware to sell to customers is not done by the internal IT department, it’s done by the business unit itself or by third-party developers. And I guess that’s my point: do we need a separate IT function? Because even when information technology is being used to develop and deliver customer value and drive revenue for the enterprise, it’s not the IT department that’s developing it. “We are still too often looked at as a back office commodity service provider that just provides people with PCs and Blackberries,” he continues. “And fighting those perceptions is really difficult.” As such, Dyke is working hard to instigate a change in the way his department is viewed – and a large part of that is about changing the mindset of the IT department itself. “We have a senior business leader running the IT department now, and not only do business-focused CIOs have the right mindset, they also have the ear of other senior business leaders because that’s where their shared history is,” he explains. “Hopefully it’s a different approach to IT. It’s thinking about the employee and how to empower them rather than just putting in a series of controls.” Nowhere is this more apparent than in the area around security and governance. “Every IT department in the world has IT security policies and approvals that they have to implement,” says Dyke. “But when you actually put yourself in the employee’s shoes and think about what that means to them in terms of doing their day-to-day job, they’re just a hindrance. So we’ve got a very fresh set of eyes in terms of how we look at those types of things at the employee level.” In terms of aligning with the business, Dyke believes that GE has taken a slightly different approach. “Rather than having IT develop a strategy and aligning it with the business, we’ve developed the IT strategy with senior business leaders in the room helping us define the structure. It’s not an IT strategy anymore; it’s a business strategy in which IT is very prominent. It’s a very different approach to how we’ve done things in the past. And I think it’s going to give us a place at the table where we’ve struggled in the past.” Indeed, Dyke is in the vanguard of progressive CIOs who feel that there is no longer any such thing as an IT project, just business projects with a strong IT component. “I don’t know where that leaves the IT function,” he admits. “Whether we still need an IT function or whether every business function will have an IT component within it, with people who have a core IT skill set. Going forward, I don’t know whether IT would even need to exist as a

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BUSINESS TECHNOLOGY

separate function – particularly if you take the concept of the cloud to its logical extent, where you don’t need onpremise IT because somebody else is doing it. Maybe the IT function of the future will be located within the large service providers, and within the enterprise you will have relationship managers and business folks that understand how to use systems, and that will suffice. People talk about the future of IT, but I think it’s just crystal ball gazing: why would you need a separate IT department? Today, everything is a business project.” So how should CIOs and IT departments respond to the possibility of their own extinction? Dyke, as ever, has some practical advice. “I think we just need to be pragmatic,” he says. “I think once you get to a certain level within the organisation, you need to be a business leader rather than a function specialist anyway, and I would hope that a good CIO would have transferable skills relevant to any other function.” However, Dyke does not for one moment believe that IT as a profession will disappear; rather it will move from inside the enterprise to outside partners and suppliers. “I think in future if you want to be an IT guy then maybe you’ll be working at an HP, a Dell or a Microsoft ,” he says.

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“Those guys are here to stay, but maybe their long-term future lies as infrastructure or soft ware-as-a-service providers. Just look at the huge numbers of fi rms moving to Salesforce.com. All of the IT folks that used to focus on CRM-type applications at those fi rms are no longer part of the business. They’re now at Salesforce.com. And if MySAP and Oracle On-Demand and those sort of applications start taking off, will people with the specialist skills for ERP implementation or architecture development remain within the enterprise or will they be at SAP and Oracle?” Dyke uses the example of deploying and running payroll systems as a comparison. “That used to be an IT specialisation, but most businesses today outsource their payroll,” he says. “There are big providers running those services where you pay a cost per payslip, and that’s how you provide your payroll. And I see IT gradually moving to an infrastructure/soft ware-as-a-service model, call it cloud if you like, to take advantage of the cost savings. The enterprise doesn’t have scale anymore, and you can get better price points using services. That doesn’t mean that IT is going away; if anything it is becoming more pervasive. It’s just where it is moving.”

65% of CIOs feel IT can assist in driving business innovation

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The search for value Outsourcers are set to feel the squeeze as CIOs go hunting for value, says KPMG.

utsourcing vendors can expect to come under increased pressure from their clients after recent research signalled the intent of chief information officers worldwide to squeeze more value from their outsourcing arrangements. According to the report, From Cost to Value, published by KPMG International, the renewed outsourcing focus is symptomatic of CIOs’ wish to place getting value from their IT as a top priority. The report suggests that the new post credit crisis CIO agenda is dominated by securing value for money, but that it also wants to focus on using IT to help transform the business in terms of innovation and productivity. “Whenever you hear of organisations wanting to focus on value, it’s tempting to immediately think of cost cutting,” comments Bryan Cruickshank, a partner with KPMG Advisory. “However, our survey suggests a dual focus amongst today’s CIOs. Understandably, they are pursuing value by reviewing outsourcing arrangements and retaining a firm focus on cost optimisation, for example. At the same time though, they are demonstrating their willingness to move the CIO role from its typically operational home into something more transformational. With that in mind, the days when IT was seen merely as a way of improving efficiency seem behind us. These days, CIOs expect IT to contribute directly to realising the business strategy and to have a central role in management.” The transformational shift is evidenced by the fact that 65 percent of respondents felt that IT could assist in enabling and driving business innovation while a similar number felt it could assist with increased productivity. Over half also saw IT’s potential for enabling competitive advantage and improving external customer satisfaction. “These are not the responses of CIOs who still see IT’s predominant role as an operational cost centre,” suggests Cruickshank. “Accordingly, the survey shows that the bulk of CIOs expect to be judged by how they create business rather than by how they control costs.” Not all CIOs are making this move from an operational mindset to a transformational mindset at the same pace, however. The KPMG research suggests that CIOs in the financial sector see themselves as remaining heavily involved in operational matters, with a focus on risk and compliance issues; something which may in part be attributable to a credit crisis hangover. By contrast, their counterparts in the manufacturing sectors claim to be focusing more on ways to innovate and transform their business with the help of IT.

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Not that this means that financial sector CIOs do not have transformational ambitions or that other CIOs have consigned their risk and compliance requirements to the past. Rather, it simply suggests that both groups have differing priorities at this point in time. In fact, argues Cruickshank, striking a balance between operational and transformational priorities is all part of a new reality whereby risk and compliance objectives are fused with commercial and business objectives. In turn, this is leading to a fundamental change in the way in which businesses approach the twin challenges of innovation and transformation within their organisation. If there is one area in which all CIOs are seemingly in agreement it is around the issue of people. Recognising that IT value is not just about technology, almost 90 percent of respondents cited people as the most important component of the value equation. Applications and processes ranked second and third with 75 and 69 percent respectively, well ahead of hardware with just 21 percent. As Cruickshank explains, this high response rate may be driven by the knowledge of what can happen with the wrong people in place. “Successful IT value creation needs to integrate and align the organisation’s technology, people and processes,” he says. “One of the major potential pitfalls is the inability of many organisations to find suitably skilled people to take this forward. Often, precious time to create value is lost as organisations embark on ambitious projects with the wrong people at the helm. CEOs and CIOs need to ensure that sufficient importance is attached to this aspect during project initiation.”

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CEO STORY

Some interesting news from the corner ofﬁce: Mattel is not a toymaker. Or at least, it’s not just a toymaker; it’s a “people development” company. Here, CEO Bob Eckert explains why encouraging people to enjoy themselves actually takes a lot of hard work – and why the approach paid dividends during the ﬁrm’s recall crisis and recent downturn in the economy.

ome companies make products, others offer services; many do both. Nearly all claim to be about people. But not all demonstrate the same level of commitment to employees as toy giant Mattel. As befits a company dedicated to coming up with new ways of having fun, Mattel and its enthusiastic (and hugely likeable) CEO Robert ‘Bob’ Eckert sees staff members’ enjoyment of work as integral to the health and long-term success of the fi rm. “We create magic,” he says at our fi rst meeting, eyes twinkling. “The people who work at Mattel see that every day, they know that’s what they’re here to do. We work at fun. It’s a great place to work.” It’s a message that Eckert and his leadership team are keen to promote. And sat in the lobby of Mattel company headquarters on a large corporate campus in El Segundo, just south of LAX airport, I’m certainly struck by an overwhelming sense of corporate benevolence. Behind the reception desk straight ahead is a large backdrop of children at play bearing the tagline, “The world’s premier toy brands, today and tomorrow”, and the toymaker is clearly – and understandably – proud of its heritage: it has a huge portfolio of some of the world’s best-loved and longest-running toy brands, including Hot Wheels, which celebrated its 40th anniversary in 2008; Barbie, who turned 50 last year; and the octogenarian, pre-school favourite Fisher-Price, founded in 1930. Generations of kids have grown up with these brands, and Mattel is conscious of the legacy. But the toys themselves only tell a fraction of the company’s story. To my right the Mattel federal credit union welcomes in a constant stream of employees looking for all kinds of financial assistance; in a room off to my left a seminar on alleviating back pain at work is taking place in the company’s new digital training centre. A TV-screen overhead exhorts staff to “create a healthy lifestyle, build a better fi nancial future and enhance their work/life balance” like some benign Big Brother. And posters dotted around the open, airy space provide recognition of the company’s recent awards – with Fortune’s 100 Best Companies To Work For, Ethisphere’s Most Ethical Companies and CRO Magazine’s 100 Best Corporate Citizens prominent amongst them. If anyone’s in any doubt as to where its priorities lie, the fi rm’s charismatic leader dispels them instantly. “People like to be around happy people,” Eckert insists in his office up on the 15th floor. “We spend so much time and energy at work, you really need to enjoy it; if you don’t like your job, go get another. It’s just a waste of a lifetime otherwise. The people that work here really get that. They understand that we’re at the intersection of what is unique and innovative and new. They understand the importance of toys to a child’s development in learning and socialisation. And they all want to be a part of that. We create 8000 ideas a year for toys, and this doesn’t happen on a computer. It doesn’t happen in a system. Somebody comes up with these ideas. Somebody develops the ideas, engineers the ideas, gets them manufactured, gets them shipped to the right place in the world before Christmas and works with the retailer to get them sold. So we are truly a people-oriented organisation, and recognising that is key to our culture.”

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With a strong focus on core brands, customer satisfaction and employee welfare, it’s not hard to see why Mattel is the number one toymaker in the world. But it wasn’t always that way. 10 YEARS IS A LONG TIME AT THE TOP for today’s chief executive. Indeed, according to recent research from Booz & Company on CEO succession rates, in the past decade alone boards have shaved nearly two years off the average CEO’s tenure, from 8.1 years to 6.3 years. “New CEOs have fewer years in the role than their predecessors,” suggests Richard Rawlinson, Vice President at the management consultancy giant. “They need to balance clarity and boldness with a realistic understanding of what is possible in their organisations.” Eckert, who celebrated a decade at the helm of the toymaker last year, has done this better than most. He arrived in May 2000 to discover a company reeling from an ill-judged acquisition of children’s soft ware firm The Learning Company the previous year and rife with internal discord. The US$3.6 billion deal was supposed to give Mattel a leadership position in the market for online education, adding popular titles such as Reader Rabbit, Where In the World Is Carmen Sandiego? and Pokemon to its portfolio; but the hoped-for synergies failed to materialise and led to management confl icts, rivers of red ink and a plunging stock price – not to mention a round of corporate blood-letting, including the resignation of CEO Jill Barad. Eckert is the first to admit that it was something of a baptism of fire. “We made that acquisition at the peak of the dotcom boom, and when that market imploded, unfortunately The Learning Company imploded with it,” he says. “The business was haemorrhaging cash. My predecessor had exited. A lot of the management had left . And while the culture at a deeper level was very positive, very warm, very friendly, very supportive and very nurturing, at the very top of the company the culture had gotten a little dysfunctional. The company was in tough shape, but I saw it as a real challenge.”

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THE BIG INTERVIEW 53

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He claims he was inspired to take on the role during a conversation with a Mattel director who, in response to Eckert’s question about what the company culture was like, told him it could be whatever he wanted it to be if he was in charge. As a result, Eckert’s fi rst move – right after cutting his losses with The Learning Co. in a pennies-on-the-dollar sale – was to try to change the culture for the better. “Being able to influence and change a culture as opposed to being a product of or influenced by a culture was really appealing to me,” he says – a process that he believes begins at the top. He’s certainly not your average CEO; he wears a name badge, eats in the company cafeteria most days and rides in the elevators with the rest of the staff. He fl ies American Airlines, eschewing the traditional trappings of the corner office and the luxury lifestyle. “There was a time when the senior executives at Mattel weren’t like that,” he explains. “They were very distant, very removed from the people that actually do the work here, they were isolated. I’ve tried to be more open. That’s just my natural personality.”

We are truly a pe ople-oriente d organisation, and re cognising the is ke y to our culture

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In addition to instilling that C-level visibility and accessibility, the company has also made some significant investments in people development, leadership development and functional training to let employees know that they are valued. “We want to make sure people know that for whatever time they’re going to spend here, we’re going to invest in them,” says Eckert. “They’re going to learn. And if they decide to leave Mattel, they’re going to be better prepared, a better person, a better leader and a better manager than they were when they came here. Letting people know that we value them and are investing in them has paid tremendous dividends for us.” It’s all part of his plan to make Mattel a truly 21st century business – one that embraces greater communication, collaboration and partnership as a means to achieving its goals. It’s most apparent in the rapport the company has with its employees, but it’s also there in the relationships it has built with suppliers, manufacturers and retailers. Increasingly, companies are being forced to look outside of their own corporate boundaries in order to deliver the best results for customers and shareholders alike, and Mattel is no exception. “A business can no longer be isolated in its own little space,” asserts Eckert. “It really started with our retail customers, who were increasingly open, more demanding and more willing to partner with vendors regarding how to build their business. We saw the benefits of that, and have embraced a similar approach here at Mattel. We are more collaborative. We are more open. We take advantage of our scale. It’s good for business and we get better ideas when we’re more open.”

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One such example is the series of strategic alliances the company has built with its retail partners. “We are sitting down and talking about where the toy business is today and where it can go in the future, and the strategies we can jointly deploy to achieve that end state in a few years. If we have a common view of the future and a common strategy, then decisions around pricing, assortment, marketing, etc. take on a different perspective. So we are constantly engaged with retailers in this business. It is so fast-paced. It is so seasonal. It is so product-oriented. None of us is smart enough to do this by ourselves, so we work collaboratively with our customers to fi nd out what’s important to them and how toys fit into their strategy, and that makes the partnership that much more productive.” And such a strong focus on communication was to prove invaluable as the company faced up to the biggest challenge in its history. BOB ECKERT IS NOT A SUPERSTITIOUS MAN, but even so he is the first to acknowledge that Friday 13th has taken on a heightened sense of significance for Mattel. In the fi rst instance, it was on this date in December 1998 that the firm struck the ill-fated Learning Co. deal that very nearly sunk the company; in the second, it was on Friday 13th July 2007 that Eckert received the news that was to turn his world upside-down and catapult Mattel onto the front pages of newspapers around the world for all the wrong reasons. “I was sitting in my office right here when our Worldwide EVP of Operations and the Senior Vice President of Product Integrity walked in and said, ‘We think we have a problem’,” remembers Eckert. “And in my experience, when the head of quality walks into your office and says there’s something wrong, the antenna goes up straight away.” The news was bad: an internal probe had discovered a Chinese manufacturer had used a non-approved paint pigment on a range of the company’s toys – including characters popular with young children such as Sesame Street’s Big Bird and Elmo, and Nickelodeon’s Dora the Explorer – violating Mattel’s own stringent in-house safety standards. What do you do when faced with such a problem? For Eckert, the answer was simple. “The first thing we had to work on was fi nding out the scope of the problem,” he says. “How big is it? Where is it? How many toys are involved? What caused it? How long has it been going on for? We had a lot of homework to do but fortunately we had a lot of professionals on the ground who started digging right away.” What they found was frightening: around 1.5 million Chinese-made toys worldwide could contain excess lead levels in their paint. In the worst cases, the lead in paint was found to be significantly over the US federal limit. On August 2nd, the company recalled the toys, including 967,000 in the US. Then came the hammer blow. Just two weeks after the initial recall, Mattel took the decision to recall an additional 18 million toys worldwide, this time over concerns about high-lead levels and the use of small, strong magnets that could be dangerous to children if two or more were to become loose and ingested. A third recall of a further half-million toys followed in September. Such a public relations disaster would have floored most companies, but the Mattel machine quickly sprang into action. In fact, the firm is now widely praised for the way it responded to a potentially crippling crisis. “It took us some time to adequately defi ne the scope of the problem,” he admits. “It wasn’t like day one we understood it. However, we knew we had a problem with what ended up being 83 products recalled on August 2nd. Even then we increased our testing, looking for more, and by August 14th we had our second recall. We

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When Eckert joined the company, business outside the US represented just 29 percent of Mattel’s overall sales; last year it was 46 percent. Here he reveals why expanding internationally is a key part of its focus.

ur publicly stated goal is 50 percent, but our president of international knows the day we achieve 50 percent his new goal is 60 percent. When I joined the company, I benchmarked the really well-run global consumer goods companies – Unilever, Proctor & Gamble, Coca-Cola, Kraft Foods – and typically about half of their business was done outside of the US. It seemed to me that at 29 percent we were underdeveloped – and as it turns out, about half of the global toy business is done outside of the US, so there’s a lot of growth potential there. Economies are growing. Middle classes are growing. Populations are growing in many parts of the world. So virtually all of the growth in this company is coming from outside the US. Today, the global toy industry is about US$50 billion. We’re the largest toy company in the world at US$5 billion, yet we still only do 10 percent of the world’s toy business. But in a place like China, which is a huge and quickly developing market, the entire toy business is maybe US$1-2 billion today, and of that the branded toy business where we want to be is only between US$100-300 million. That’s the whole market, and we only have a small share of that market. So we’ve got to develop the toy business. The economy helps. People investing more in their children and wanting to see their children have a better future helps. But we’ve got to create the toys that appeal to that market, and then promote toy brands and our brands speciﬁcally. So it’s a challenge from a marketing standpoint, but not unlike the challenge our predecessors faced when they developed the toy market in the 1950s in the US. I got an e-mail last week from one of our directors on a business trip to China and she said, “Bob, I just went into a mass merchandiser here in Shanghai and the toy department is really small, it’s at the very back of the store and it looks like they could use some help in how they display toys”. That’s not atypical. We’re used to walking into stores here in the West where the toy section is a big, beautiful department with lots of brands; it’s very colourful and exciting and entertaining and a fun place to shop. But if you go to a mass merchandiser in China today, toys are probably category number 83 out of the 100 categories they have in the store, and we’ve got a lot of work to do to help them realise that if you put enough energy into it you can make toys number 60 in a hurry, and then someday if all goes well it can be like a Walmart in the West where, during the holiday season, toys is one of the two or three most important departments in the store. But we’ve got a lot of work to do to help retailers understand that, and it’s going to take a lot of time to develop those markets.

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CEO STORY

tend to have two or three small recalls a year in the toy business, but when you have two big recalls two weeks apart you’re suddenly talking a whole different level of crisis.” In response, the company essentially shut down its supply chain in its two busiest shipping months, August and September, in order to contain the impact. The other thing that Eckert says was key was seeking advice. Drawing on a previous crisis management case study – that of Johnson & Johnson’s handling of the Tylenol recall in the 1980s – he called a retired J&J director to ask for help. “He told me that there’s two things that are important,” recalls Eckert. “Number one, the CEO needs to be seen as active; whether you like it or not you need to be visible. People need to see somebody and they need to see you, not a subordinate. And number two, you need to make sure people understood this isn’t about money. You need to tell them, ‘I don’t care what it takes. We will fi x this and we will spend whatever we need to spend. Today I’m not the capitalist concerned about profits. I’m the person concerned about your kids and I will do whatever it takes fi nancially, culturally, personally to make sure you don’t have to worry about your kids anymore.’ That was great advice.” And Eckert took it, putting himself at the forefront of the media effort and taking direct responsibility for rectifying any issues and addressing consumer, retailer and regulator concerns head on. He won customer kudos for his open communication style and plaudits both inside and outside the business community for his clear-headed handling of a difficult situation. And he won the respect of his employees for his honesty and transparency. It’s a lesson a number of other high-profi le executives currently mired in their own problems – BP and Toyota, to name but two – would do well to follow. Typically, however, he’s reluctant to take the applause, pre-

ferring instead to share the credit with his 27,000-strong team. “It was a big challenge for the company as a whole, but the people of Mattel delivered unbelievably during some really demanding, taxing, trying times,” he says. It’s typical of a man who claims to be a big believer in the Boy Scout motto ‘be prepared’ to take nothing for granted. “We didn’t practice a recall related to lead paint but when that issue appeared we did have a plan in place regarding who does what when, and how we engage,” he says. “The other thing is that we’re a global company and around the world, someone is always available 24 hours a day, seven days a week. So twice every day, seven days a week, we had phone conferences – one at 7am Pacific time and the other 4pm Pacific time (the perfect transition between either Europe and Asia and the US) – to coordinate what had been happening on a given continent, what needed to happen in the next 12-hour period and what the impact of that was globally. We had 30 or 40 people on the line all over the globe at different levels in the organistion, so we were pretty current all the time. There weren’t many surprises.” THEY SAY WHATEVER DOESN’T KILL YOU only makes you stronger – and Eckert certainly feels the experience, whilst hardly beneficial in the short-term, has actually helped forge a stronger bond between Mattel and its employees, between the management team and the people on the front line. More importantly, it has also enhanced the levels of trust between the company and its customers. He feels such mutual trust has been invaluable during the recent downturn, where tightening belts and pulling together has been paramount. “We all hunkered down,” he says. “We were tough on the cost side of our business. We were tough on expenses and spending. We had layoffs. We had no

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Set up by Ruth and Elliot Handler, initially in a Southern California garage workshop

The ﬁrst Barbie doll is released

The Hot Wheels toy car range is launched and Barbie gets her ﬁrst AfricanAmerican friend, Christie

Mattel Children’s Foundation is established to provide support for children’s charities

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promotions, no salary increases. And we didn’t make so many toys. Our vendors had to deal with that, and we didn’t sell too many toys to our retail customers who in turn didn’t want to buy too many toys. It was a tough year all round. But somehow we got through it together.” Fast forward to 2011, and Eckert believes the fi rm is in much better shape to capitalise on any potential upturn in the economy. “The company did better than I expected in 2009,” he maintains. “It was a tough year for our employees but they really stepped up and delivered. Our sales were down in 2009 by about eight or nine percent. Revenues were down. But our profits were up over 30 percent. Our cash flow was also very strong. It was the best performing year I saw among Mattel’s employees and the most challenging year we’ve had. So if we maintain that discipline and focus, we’ll have a really good 2010/2011. That’s where all the investment we made in people really paid off.” Allied to this optimism is the fact that a number of big entertainment properties are set to drive sales this year and next for the toy giant. Mattel has a strong relationship with firms such as Disney, Warner Brothers, Nickelodeon and the Cartoon Network, which Eckert says provide it with great intellectual property. “Right now Toy Story 3 is incredibly popular,” he enthuses. “It is a fabulous movie. It’s just a really warm story and toys are obviously at the centre of that and we’re fortunate to make a lot of the toys that support the Toy Story franchise. Our number one priority is to do the best job we can for the intellectual property that comes out of television and movie studios.” Mattel is also set to follow in the footsteps of its great rival, Hasbro, and begin developing stories around its own brands. “There has been a new genre in fi lmmaking that starts with the toy and turns it into an entertainment property,” says Eckert, “and we’ll participate in that. We’ll probably do some things with brands like Masters of the Universe, which at one point was bigger than Barbie. We’re also looking at other properties that have been away for a while – for instance, we had a property called Major Matt Mason that was about our fascination with life on the moon, and it turns out that it was one of Tom Hanks’ favourite toys and he wants

to make a movie out of that. I don’t think that turning toy properties into movies is going to be around forever, but as long as people in the entertainment business are interested in that then we’ll participate.” Certainly the future looks bright for the toy giant. According to investment bank Caris & Company, key sales drivers in 2011 will be the launch of Cars 2, Warner Brothers’ Green Lantern and a possible Monster High liveaction musical movie from Universal. Key 2012 drivers will be the release of Batman 3, Ghost Busters, a Barbie movie and Tom Hanks’ Major Matt Mason treatment. As with Cars, the studios are also planning follow-on entertainment to support Toy Story and Green Lantern as ‘evergreens’. But while bullish on his company’s prospects over the next few years, Eckert maintains that the results will only come if he and his team remain focused on developing the right culture. “Mattel is fi rst and foremost a people development machine,” he concludes. “We’re helping kids develop, and while we’re helping kids develop we’re helping ourselves. And hopefully, that will continue long after I’m gone.”

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2009

Acquisition of Hong-Kong based ARCO Industries and beginning of joint venture with Japanese toy company Bandai

Merger with Fisher-Price

Donates US$4 million in toys, clothes and books to victims of Hurricane Katrina

Celebrates Barbie’s 50th Anniversary. Richard Dickson from Mattel, Fashion Designer Karl Lagerfeld and Sarah Colette attend the Barbie 50th Anniversary in Paris, France

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ASK THE EXPERT

Collaborative conversations Extend uniﬁed communications over time and channels to optimise the performance of your business-centred community, says Stanislas Corporeau.

hift ing market dynamics and a tough economy worldwide are altering the way companies do business. With companies chasing ever fewer consumer dollars, tremendous competition has ensued. Companies are watching their bottom lines and seeking new strategies and tools that will help them do more with less. Along with a focus on ‘top line’ growth there is a push for cost containment while also exploring new paths to productivity as a means for boosting profit margins. The challenge is determining how to keep costs low without negatively impacting customer service, sales and innovation. Success in this business environment requires a commitment to optimal employee and operational efficiency across the enterprise. Most companies have already made investments in effective business processes and tools and have probably reached a point where they have maximised their cost effectiveness. For example, telephony and unified communications (UC) solutions – as well as CRM, ERP and similar tools – are already quite sophisticated and will continue to grant cost savings (directly or indirectly), thus any latency that remains in these areas is likely only due to the human factor. Companies also need to break down communication silos and optimise cross-functional efforts, and align investments in new technologies and service delivery with business objectives to help achieve organisational efficiency. Management must ensure that employees understand the overall strategic directives of the company, and where and how they can contribute value. As a key concept in value-based management practices, this depends on a dynamic relationship between the business and employees, and an assurance that employees remain engaged, focused and committed. The challenge, therefore, lies in ensuring better connectivity between all individuals and fostering an environment that supports innovation through employee engagement across organisations, business units and companies, and this is where a new generation of communications applications can help.

Employee engagement Human capital is essential to enterprise performance and the bottom line. For example, when job satisfaction ratings are low and attrition rates are high, the detrimental impact on the business becomes undeniable. Employees who are not fully engaged with the enterprise generally

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have low performance and output, which can affect the end-customer. When employees are truly engaged, however, they become a vital resource that helps to enable business growth and profitability. They are also more likely to offer innovative solutions to customers, provide better customer service, and reduce operational costs by improving overall efficiency. While human resources strategies are key to improving long-term employee engagement, the quality of collaborative working relationships is just as important. To that extent, IT managers can contribute to worker engagement by ensuring better connectivity and reducing latency in interpersonal communications. Employing efficient IT tools will reduce employee frustration and make their contribution to the overall enterprise performance more constructive.

Shifting priorities CEOs are shift ing priorities to focus on new ways of distinguishing themselves from their competition through

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ASK THE EXPERT 59

“Successful organisations will surpass their competition by building a business-centred community where collaborative conversations become the new paradigm of enterprise communications”

innovation. To this end, reducing costs and growing the top line will contribute to revenue growth, while improving employees’ engagement with customers and the company as a whole will become a critical key performance indicator. For this strategy to be successful, companies must eliminate communication silos, improve cross-functional efforts and go beyond traditional communication connectivity tools and promote engagement through collaborative conversations. Companies that can transform employee relationships and connections into enriched conversations spanning the whole enterprise via a variety of applications (including voice, instant messaging, video and collaboration) will empower employees, optimise the company’s performance and gain a competitive edge.

Collaborative conversations The advantage of collaborative conversations is that they span an organisation’s front and back office so that the whole company engages with a customer as one unit. Collaboration across boundaries can help give employees a 360-degree view on any topic, providing them with the knowledge and confidence to resolve customer issues and enabling them to provide a more consistent customer experience. Alcatel-Lucent believes that successful organisations will surpass their competition by building a businesscentred community where collaborative conversations that extend over time and channels become the new paradigm of enterprise communications. Collaborative conversations are multi-party conversations that span the entire organisation and reach beyond the traditional boundaries of an enterprise to connect core competencies and tie together employees, partners, customers, and other relevant expertise from the community; enable seamless multi-channel communications allowing, for example, a conversation to start on IM, escalate to a web conference (app sharing) session, and then add video and audio; occur on any device, across any network – public or private; and provide a rich context such as extended presence information, historical data and location base.

Context awareness

Stanislas Corporeau is Alcatel-Lucent’s Product Marketing Director. In charge of marketing new communication applications, such as smart deskphones and the next generation platform for enterprises, he was previously Marketing Manager of Alcatel-Lucent Contact Centre Solutions and a Services business developer for large accounts.

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True collaboration relies on contextual communications – threading the business context and valuable data across interactions/devices/networks to the integrated business value chain of employees, peers, partners and the community at large – in order to leverage the power of conversations. Context awareness will help connect the workforce, and allow employees to select the most relevant resources to participate in a conversation based on the business need. In essence, collaborative conversations combine unified communications and collaboration (UCC) with the richness of context-aware computing. Companies that seek to employ context awareness to collaborative conversations need not make extensive additional investments. Instead, they need to integrate their existing collaborative applications with UCC tools that

ensure that real-time communications are enabled everywhere, and always-on.

Communication-enabled business processes A communication-enabled business process (CEBP) is intended to optimise business processes by reducing the human latency that exists within a process flow. CEBP leverages unified communications capabilities/ services – such as reminders, alerts, notifications, escalations, etc. – by embedding them into the business process flow to eliminate response latency. CEBP can be applied horizontally across various lines of business and different industries. The result is a more efficient, more automated closed-loop, which creates measurable business value. Benefits arise by enabling collaborative conversations within a CEBP application. For example, deploying contextual presence in an existing business application is advantageous for individuals who rely extensively on this application to perform their job functions. Presence indicates whether an enterprise user is available on the network, and gives employees real-time access to subject matter experts, back/branch office workers and field sales. By transforming knowledge workers across the enterprise into on-demand experts, organisations are able to more effectively meet the challenges of increasing productivity, improving the customer experience, and contributing to the enterprise’s bottom line. Productivity and satisfaction increase as frontline employees gain expanded access to information and support – and overall enterprise effectiveness improves as formerly disjointed processes operate according to a well-coordinated flow. The bottom line is that optimising employee performance and engagement will help companies realise a competitive advantage as productivity is improved, customers’ needs are proactively met and, ultimately, revenues are increased. Therefore, it’s imperative to gain visibility and control over all aspects of employee engagement throughout your business and across all channels and locations, and to tie infrastructure and communications applications together to deliver a context-aware communication experience to all employees. Continuous and contextual conversations foster the innovation and customer loyalty needed to drive business success. Effective collaborative communication strategies reduce costs and improve customer loyalty – offering the long-term benefit of increased revenues from loyal customers, as well as reduced customer churn. Collaborative communications integrate all interactions into a single knowledge flow – empowering employees with the right tools and information to collaborate in real-time to achieve innovative solutions to customer problems, process bottlenecks, or new product development. Collaborative conversations also empower management to ensure business continuity, appropriately allocate resources and align employee and corporate goals with business processes to increase employee satisfaction and boost revenue.

28/01/2011 14:31

ENTERPRISE MOBILITY

According to a global study by Cisco, 60 percent of workers believe being in the office is no longer needed to be productive. Is this the death of the workplace as we know it, asks Ben Thompson.

IS THE OFFICE REALLY NECESSARY?

he times, sang Bob Dylan, they are a-changin’. And while Dylan may argue that his words were addressing much greater societal concerns, there’s no denying that both businesses and individuals currently face one of the greatest periods of socio-economic reorganisation in a generation as the how and the where of our working lives shifts to a new model: that of the dispersed workforce. Signs of the shift are everywhere. Demand to work anywhere, anytime is stronger than ever before, while the rise of mobile solutions has meant that an increasing number of employees expect IT to allow access to corporate information with any device – personal or company-issued – and thus further enable remote working. Consumer hardware such as smartphones, tablets and netbooks have become common currency within the enterprise, while communication tools such as Skype and social media channels like Facebook and LinkedIn have rapidly advanced the cause of the mobile worker. Indeed, just last month, Cisco announced the results of an international workplace study that discovered three out of every five workers around the world feel they do not need to be in the office anymore to be productive. In fact, their desire to be mobile and flexible in accessing corporate information is so strong that the same percentage of workers would choose jobs that were lower paid but had leniency in accessing information outside of the office over higher salaried jobs that lacked flexibility.

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“The desire among employees to be more mobile and flexible in their work lifestyles is extremely strong throughout the world – as strong as salary”

The report provides real-life insight into how the expectations, demands and behaviour of the global workforce are influencing the way information is accessed, as well as how business communications are changing. “It is clear from the research fi ndings that the desire among employees to be more mobile and flexible in their work lifestyles is extremely strong throughout the world – as strong as salary,” says Marie Hattar, Vice President of Borderless Networks at Cisco. “It is also evident that organisations need to embrace a borderless IT infrastructure to capture competitive advantage and increase employee satisfaction.”

Sign of the times The study, which involved surveys of 2600 workers and IT professionals in 13 different countries, revealed that three of every five employees believed it was unnecessary to be in the office to be productive. Th is was especially the case in Asia and Latin America. More than nine out of 10 employees in India (93 percent) said they did not need to be in the office to be productive, and it was a sentiment prevalent in China (81 percent) and Brazil (76 percent) as well. Indeed, two out of every three employees surveyed expect IT to allow them to use any device to access corporate networks, applications and information anywhere at anytime, and they expect the types of devices to continue diversifying. In the future, employees expect their choice of network-connected endpoints to broaden to non-tradi-

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tional work devices like televisions and navigation screens in cars as well. For employees who can access corporate networks, applications and information outside of the office, about half of the respondents (45 percent) admitted working between two to three extra hours a day, and a quarter were putting in four hours or more. However, extra hours do not translate to always-on, on-demand employees. They simply want the flexibility to manage their work-life balance throughout their waking hours. Employees also feel strongly that having the flexibility to work anywhere would dictate their company loyalty, choice of jobs and morale. For example, two out of every three employees worldwide said they would rather take a job with less pay and more flexibility in device usage, access to social media and mobility than a higher-paying job without such flexibility. Somewhat surprisingly, this percentage remained high even in countries such as Spain (78 percent) that have experienced significant economic woes over the past couple of years. Dave Evans, Futurist and Chief Technologist for Cisco’s Internet Business Solutions Group, feels that the fi ndings reflect the fact that remote and mobile workforces are now considered business-as-usual for most firms. “Employee mobility is a fact of life, and the business advantages are clear across many industries,” he says. “While this report does identify real challenges for businesses, it also spotlights an opportunity for IT to enhance its relationship with employees and its role as an adviser and educator.”

Meeting employee needs However, not everyone is rushing to embrace the mobile revolution. Indeed, there must be some doubt as to whether businesses can meet employee needs in regards to flexible working, given that almost half of the IT respondents in the Cisco survey said they are not prepared – from either a policy or technology standpoint – to support a more borderless, mobile workforce. Not surprisingly, security is the top concern. And although many of the IT respondents felt security, budget and staff expertise were the biggest barriers to enabling a more distributed workforce, employees often felt that the IT department itself was the main obstacle. Th is perception among employees was extremely prevalent in India, where more than half (58 percent) felt IT was the barrier to a more flexible work style. “The companies that figure out how to unleash user know-how and consumer technologies while managing the risks will win this high stakes game,” suggests RSA Chief Operating Officer Tom Heiser. “Th is is the moment for information security teams to step up and be the most valuable players.” Recent employee behaviour indicates that education and corporate policies – not least around the areas of security and risk management – are equally as important as the technology itself. According to the Cisco survey, one in five employees globally said they have noticed strangers looking at their computer screens in public, while an additional 19 percent admitted that they never think to check their

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SHOULD COMPANIES ALLOW REMOTE WORKER ACCESS? Christopher Burgess is a senior security advisor to the chief security ofﬁcer of Cisco.

ow many times have you been approached by your employees asking for permission to work from home instead of coming into the office? Your immediate reaction probably includes head nodding, quickly followed by questions surrounding the resourcing that is required to make this desire a reality. My experience has shown that highly visible and transparent discussions lead to greater understanding, engagement and buy-in with the ultimate decision – to allow or not. In addition, these discussions lead the individual employee to the appropriate expectation of services; if remote worker capability will be enabled, the individual will be well-positioned to understand the need to comply with a bevy of new processes and procedures. Rarely do individual users understand the resourcing nuances that are required of an IT department to protect company assets; the employee’s perspective is often times based on the experiences of others or personal experiences external to the company. Universally, and I count myself in the universe, they know what they want and they wanted it yesterday. Implementation of the remote worker solution may require the use of a laptop or smartphone, or both. In order to appropriately explore and resource correctly, the IT department must know and understand not only what type of devices are touching their networks, but also where and how these devices are engaging the networks. The technological data transfer solutions and attendant infrastructure for use with company email, intraorganisation collaboration, external interaction, and various third-party applications that keep the business running, all have to be evaluated separately and as configured. For the transmission equation, virtual private network interconnectivity ensures data is appropriately secured when in motion. With the realisation that devices do sometimes go missing, due to either theft or carelessness, an encryption capability should be in place to protect the data on the device as well as any storage media. IT departments might make the assumption that employees understand the security threats of working remotely, whereas employees might think the IT departments just don’t get it. Both are half-right. IT and information security (Infosec) departments must ask themselves, “Have we made the investment in education and awareness with respect to security concerns?” If not, then no assumption should be made that the employee is well-read with respect to how to operate securely in a remote work environment. The employee who is educated and aware of the security issues unique to remote working environments is the first and last line of defence protecting the company’s interests. The value of security and awareness programmes, specific to the remote worker environment, can absolutely serve as the instrument which quiets the cacophony of complainants making the assumption that those charged with implementing and protecting the infrastructure just don’t get it.

28/01/2011 15:10

ENTERPRISE MOBILITY

DO YOU FEEL YOU NEED TO BE PHYSICALLY IN THE OFFICE TO WORK EFFICIENTLY?

YES Less than 40 40-50 More than 50

The rise of the mobile worker As the results of the Cisco survey show, a growing number of mobile employees feel the ofﬁce is irrelevant to their ability to work efﬁciently.

surroundings. Even worse, 17 percent of employees admitted leaving devices unattended in public, while almost three out of every five employees globally admitted that they have allowed non-employees to use their corporate devices unsupervised. Certainly, as workforces become more distributed the potential for data loss increases. A staggering one in four IT respondents said a quarter of the devices issued to employees in the past 12 months have already been lost or stolen. And as workforces become increasingly mobile, security and risk management concerns inevitably grow. The findings indicate the real need for better corporate policies, enduser education and stronger, trusted relationships between employees and IT departments. How well IT brokers these relationships will impact a company’s growth, productivity, competitive advantage, as well as its risk management. “Simply put, this report serves as a call-to-action for IT organisations,” says Evans. “Work is not a place anymore. It’s a lifestyle, and the IT profession’s role is only going to get more strategic as it tries to help businesses stay agile and increase productivity.” One firm embracing mobility is US fi rm Guardian Life Insurance. “We have an initiative called ‘any device anywhere’, in which the concept is that we can enable our business and our IT folks to be able to do their work wherever they choose to be using whatever device they are most comfortable with,” says Richard Scott, the company’s CTO. “Essentially, we’re changing the paradigm around having to have a thick client device for everything. Of course, there

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“Work is not a place anymore. It’s a lifestyle, and the IT profession’s role is only going to get more strategic as it tries to help businesses stay agile and increase productivity”

are still going to be cases where we need those, but we’re starting to move towards virtualisation of the desktop to change the way people use the office, and also so we can have more mobile users, greater flexibility, better disaster recovery, alternative worksite strategies and business continuation. It really is about ultimate flexibility for people to get the work done where and when they need to.” Indeed, Scott’s fi rm is one of a growing legion of companies facing up to a new business paradigm – that of the office-less worker. And how businesses respond to that paradigm will be key to their success over the long-term.

28/01/2011 14:59

CATALYST AD.indd 1

18/01/2011 10:36

PROJECT FOCUS

An integrated approach to piloting uniﬁed communications Andrew Cheel shares his experiences of what makes a unified communications pilot successful.

ver the last 18 months I have been actively working with Siemens Enterprise Communication customers to advise and design a detailed unified communications (UC) pilot to suit their specific requirements and to ensure they achieve a balanced and measured outcome across the organisation. It is often assumed that UC should be rolled out by the IT team alone, when in fact UC integration has to be led from the whole organisation to ensure that maximum benefits are achieved – something we have been helping organisations manage effectively. It’s my experience that once a UC pilot has been sanctioned, the project, in its entirety, is handed over to the internal IT department to be executed as it is primarily a technical deployment. Th is makes sense to a certain extent as UC can have challenging technical parts, which involve integrating UC into an existing infrastructure. However, there is also a user change management element, which is even more critical to the overall success of the pilot. Understanding and addressing both elements is essential to a successful UC pilot. From our experience, if IT is given all the responsibility for delivering a UC pilot, the project can quickly descend into a technical puzzle with the user element on hold until the live date – in every case I have witnessed, this approach is too late. In order to achieve a successful UC pilot, you must assign the user change management element to a different department/group, who can work in parallel with the technical stream to bring the two elements together at the point of go live.

Establishing a successful UC pilot In a recent case, I was brought in to assist with a UC pilot in a local authority. The planning process had commenced and a few challenges had emerged that needed addressing. On discussing these challenges with the project lead we identified that at least 78 percent of the pilot UC users came from the IT department or associated support groups, demonstrating that it was very much an IT-driven project. Very few of the pilot users came from the business groups that were the intended targets of the productivity enhancing toolset and no change management work had been started to integrate UC. We quickly set about changing this and within days had introduced a full change management programme for the pilot and reduced the IT contingent down to five percent, with the remaining 95 percent made up of the business groups intended to benefit from the UC roll-out.

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Andrew Cheel is the Programme Architect for the UC Ambassador programme at Siemens Enterprise Communications. Having worked with an evolving uniﬁed communications toolset over the last ﬁve years he has a wealth of practical experience on how to motivate users to embrace new technology to change their working habits.

The next stage was to design a pilot checklist that got the user to test the technology out in the field and align it with their job function and requirements. Each element was scored using a simple but effective weighting metric and a success benchmark score set. To help the process run smoothly we divided the pilot into three phases, each phase lasting two weeks. The original plan was to allocate three months per phase, but we found that users often confi ned everything to the last two weeks, so it is best to give them just two weeks in the fi rst place. After eight weeks the local authority had completed the UC pilot and it was deemed an outstanding success. ninety seven percent of delegates who took part in the pilot completed the feedback on time and their insight into how the new toolset worked in the field and how it could benefit them in their daily duties helped to prioritise the larger deployment plan. Th is local authority now has 85 percent of its user population working in a UC-enabled way and the real business benefits are already starting to be realised in areas of flexible working and user contactability. What we have learnt from this experience is that organisations and IT departments that are embarking on a UC pilot or thinking about it in the future need to consider assigning the user change management responsibilities to a different group outside of IT to ensure benefits are maximised. Th is group can focus on who should be included in the pilot, what needs to be included/tested and how it should be measured in terms of business efficiencies and not just technical excellence.

28/01/2011 15:00

SIEMENS AD.indd 1

18/01/2011 10:40

OPEN INNOVATION

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OUT IN THE OPEN Whether it’s game-changing technologies, revolutionary marketing strategies or the latest must-have product, companies are always looking for the next big thing. But where is the innovation coming from? And can businesses today effectively utilise the wisdom of the crowd? By Lucy Douglas

Scenario one A global soft drinks company decided to pull its multimillion dollar advertising slot in one of the most watched sporting events in the country. Though the sponsorship deal had been held for 23 years by the company, it withdrew funding and instead turned a US$20 million budget towards a philanthropic, social media inspired marketing strategy. In January the company launched an online network where users – from individuals to large-scale organisations – could post ideas for a community-based or charitable project and the budget required for the venture. Over the course of a month users of the network can vote for the project that they would most like to see through. The project with the most votes by the prescribed deadline is awarded the budget required in order to bring the project into being. To date the network has received more votes than those cast in the last US Presidential election.

Scenario two One of the world’s leading utility providers has decided to place a significant investment in an ongoing project to increase the amount of environmental initiatives and greenfocused research. The project has up to this year cost the company some US$5 billion in

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OPEN INNOVATION

research and development expenses and generated returns of around US$70 billion. The company announced plans to push US$10 billion into the project over the next five years, in order to develop technologies such as compact fluorescent lighting, smart appliances, battery technology and wind turbine manufacturing. As part of the initiative the company outlined a challenge for businesses, entrepreneurs or individuals to take up as they saw fit, to create breakthrough ideas for a cleaner and more energy efficient power grid and to increase the adoption of smart grid technology. Ideas and strategies selected by a panel of judges are then offered the opportunity to develop a commercially viable service or product with partners from the company, benefiting from investments, an evaluation of the business strategy with experienced corporate teams, and partnership opportunities with the company to scale the business and a develop a go-to-market strategy.

Scenario three An international consumer products company opened its innovation process up to its customers with an internet portal, on which it lists the new products that it is looking to develop, to add to its expanding portfolio. Users can submit a solution to any number of the product briefs, or alternatively can submit an idea for a new marketing strategy or design or packaging, that may benefit the company long-term. Once an idea is submitted to the company, a representative assigned to the relevant area will review it, paying particular focus to the technological aspect of the proposal. If the idea is suitable, the company then looks to collaborate with the innovator to bring the product or marketing idea into the business. Payments for innovations are determined for each individual situation, but have been claimed to be in the range of US$10,000 to US$100,000. So far this portal has generated more than 1000 collaborations between the company and external innovators. The same company uses a separate internet portal to generate innovative proposals for new business models that would take a small business and scale it to serve the mass market. Services or products that serve an emerging consumer market can seek to partner with the company, in order to generate over US$100 million in sales. These two initiatives have helped this company to remain in Businessweek’s top 25 Most Innovative Companies for the last four years.

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The Pepsi Refresh Project received more votes than the last Presidential Election

hough taken from three very different fi rms, each offering three very different services, the above scenarios all have one thing in common: the use of open innovation. In a recent TED lecture entitled ‘Where good ideas come from’, Steven Johnson, author of the book of the same name, explains that while we may like to think that innovations occur in one single moment of enlightenment, in reality ideas are more likely “cobbled together from whatever parts happen to be nearby; we take ideas from other people, from people we learn from, from people we run into in the [proverbial] coffee shop and we stitch them together and create something new. This is where innovation comes from.” Johnson’s theory that “chance favours the connected mind”, while undoubtedly insightful, is based on the simplest corporate logic: that two heads are better than one. And indeed, there’s few who would dispute that theory. With more executives placing development of new product, service or strategy as the number one priority for a company looking to regain its competitive advantage in the wake of the fi nancial downturn, maximising the chances of creativity is paramount. “If you have an innovation budget

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or a Chief Innovation Officer,” explains Judy Estrin, author of the book Closing the Innovation Gap and CEO of JLABS, “such that people in the company think that’s where the innovation is done, then it works against innovation, because innovation needs to be throughout the culture of the entire company for it to thrive.” According to Businessweek’s fi ndings for the 2010 50 Most Innovative Companies in the spring, the preceding 12 months had seen a “resurgence of innovation”, a fact attributable to the economic recovery. “Scarcity breeds innovation,” says Tom Hulme, Design Director with global design company IDEO and pioneer of the firm’s open innovation network, OpenIDEO. “The reason entrepreneurs are effective is they’re forced to learn quickly and bootstrap their businesses; ironically, larger companies are being forced to do that at the moment as well.” Indeed, whether experiencing tough times or not, evolving the business can only be a positive step, and as Stein suggests, opening the opportunity up to as many people as possible can only improve the environment for innovation to flourish. “You get more opportunities when you combine internal and external resources,” highlights Stefan Lindegaard, author and serial blogger on innovation in business. “Open innovation gives you more diversity, more opportunity and a faster speed to market.” So why has it taken until now for the open innovation envelope to arrive at the table? First, as with so many industry buzz words, the term has a certain ambiguity that makes executives recoil. Once a term used for the act of outsourcing the development of a particular project, open innovation in the internet powered generation is much more complex. “I’m enjoying watching it evolve as an emergent idea,” Hulme says. “Whereas in the past I think open innovation was categorised by ideas coming from the outside, I’m more excited now about applying open strategies to all aspects of the innovation process.”

OpenIDEO Th is theory has been the basis for the OpenIDEO network, an internet-based forum on which people can post their ideas to solve selected challenges. Hulme explains that the project was born out of experience rience in the innovation process highlighting the need for a more diverse range of minds in order to have the best possible sible outcome. “I was inspired by what happened in the last st Industrial Revolution,” he says. “There was a real spike ke in innovation as a result of people coming together in cities ties like never before, involving diverse people in conversations sations – and logic would tell me that technology, the internet, would give us an opportunity to have a similar spike in innovation, but for whatever reason I don’t thinkk it’s been realised as much as it might. So we decided to start art looking at how we might design a platform to enable creative eative people to come together to solve complex problems.” The set-up of the network is straightraightforward; challenges are posted, usually ually sponsored by an external organisation on (at the moment a featured challenge ge

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The world’s #1 innovator…

n engineer of a major technology company stopped at a bar in California on his way home from work one night, to celebrate his birthday. After a few drinks he decided it was time to move on, unfortunately leaving behind him a prototype of an upcoming model of his company’s iconic cell phone. The device was picked up by an unsuspecting patron, who dutifully attempted to return it to the company; however he had little success as the customer services representatives he spoke to thought his claim so unlikely that they disregarded it. After some weeks the device was picked up by a popular technology blog, at a cost of some US$5000, which published a video and a post unveiling the new product. Unsurprisingly, the news was rife across social media outlets and fast became the blog’s most read story since it began. And for Apple, the world’s most innovative company and notoriously over-protective of its intellectual property, it’s unlikely to be forgotten in a hurry. Producing some of the most original, exciting and popular products on the market, the technology giant is not short on innovation. But it all takes place behind closed doors. The primary reason that this incident drew so much attention is that the unveiling of an Apple product is almost as signiﬁcant as the product itself. With such audacious taglines as “This changes everything. Again.” or “A magical revolutionary product at an unbelievable price”, the desirability of Apple’s products stems largely from the mystery in which they are shrouded until they are revealed to the world. “Apple is renowned for being closed,” says Tom Hulme. “I think that’s naïve. There are certain aspects of their business model that are very open. They chose to be open to allow people to develop apps for their platform, for the iPhone, iPad and the iPod. That’s open behaviour. They decide to solicit new applications from their creative community.” Indeed, the development of apps is proving big business for the 2010 entrepreneur. Over 10 billion downloads had been recorded from the Apple Store alone as of January of this year, generating an average of 70 percent of the sale price for the developer. Through Apple’s App Store, developers have made more than US$3 billion in revenues, and an estimated 43,200 developers work on apps for the Apple system today. But beyond application development just how much does the technology giant support innovations from outside the boundaries of the business? Well, Apple does have an ‘Unsolicited Idea Submission Policy’, for anyone hoping to plant the seed se of inspiration with the world’s most innovative innovativ company. The policy clearly states that Apple does not accept or consider unsolicited ide ideas on any aspect of the business from externa external individuals or parties. Just in case an idea is submitted in spite of this claim, Apple has a list of conditions of submission, should an any products or marketing strategies happen to seem s similar to any ideas submitted. These conditions cond include giving up all intellectual property rights rig of the idea to Apple without any compens compensation, that Apple may redistribute tthe submitted idea in any way it chooses ch and that Apple is under no obligation to keep any subm submission conﬁdential.

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OPEN INNOVATION

is to improve the way that kids in America eat, sponsored by British chef Jamie Oliver), and the connected members of the network can post inspirations for solving the problem, strategies for implementing the inspiration into the real world, and evaluating the ideas that have arisen from the opportunity. As well as benefiting the organisations setting the challenge and OpenIDEO itself, the network allows users to improve their profi les with their participation. “Those parts of the process are the different ways that people can contribute,” explains Hulme, “and they become part of what we call your design quotient, so we built a system that automatically feeds back to you your performance on the site, based on the quantity and also the quality of your inspiration, so that you get recognition.”

Procter & Gamble’s Connect + Develop initiative has generated 1000 business innovations for the company

Not invented here The OpenIDEO network is undoubtedly effective as a source for generating innovation for the philanthropic project. Hulme explains that his firm made the conscious decision to only host challenges for social good, first because “everyone’s motivations when they participate in challenges for social good are much clearer.” The second reason he says, is that it enables users of the network to enjoy the openness

of the platform. “To give you an example, if we are coming up with solutions for a school in India, we’re absolutely happy if schools in Africa look at the site and steal the ideas. That’s a great result for us because it increases impact.” Indeed, this open innovation model is ideal for this sector; it works for IDEO and it’s working very well for Pepsi (see Scenario One). And it works well for businesses looking to expand on their social responsibility initiatives, such as General Electric (see Scenario Two). But in the world of corporate consumerism, it does not address the most pressing concern of many executives looking to expand their innovation strategy: intellectual property. However, according to Hulme the principles of open innovation can easily be applied to the corporate world. “It’s easy for people to think in a binary way,” he explains. “People think, ‘We have to have everything open or everything closed.’ But actually the truth, and the most successful corporate positioning, lies in between on that spectrum.” The fear of opening the doors on the research and development team for the whole world to see remains the biggest obstacle to utilising the wisdom of the crowd. But for Hulme,

The closed innovator? Even organisations who hide their intellectual property until it is ready to be released value the innovation input of each member of the organisation, as MD of Porsche Design Studio Roland Heiler explains. In your capacity at Porsche Design Studio, what do you feel is the most effective path to innovation? Roland Heiler. Innovation is done by people and can only be executed successfully if the culture within a company not only allows for it but asks for it to happen. One of the 10 commandments describing our Design Philosophy is “Innovation”. Whether you call them experts or creative people, every one of our designers is curious, well informed about the latest technologies and trends and all of them are trained to think out of the box. Do you use third party contributors to innovate with, or do you innovate only from within the design team at Porsche? Why do you follow this strategy? RH. It is probably more a necessity than a strategy, but in almost every project we work closely with engineers and strategists of our partners who again are experts in their own ﬁeld and can convey their in-depth knowledge to us. Our strength is to connect the dots in a new and different way. This way we have been practicing certain aspects of open innovation for a long time.

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Lindegaard and other advocates of open innovation practice, it is no longer as simple as choosing one path or another. “Open innovation should be viewed as a mindset or a philosophy rather than a toolbox,” says Lindegaard. “The internal work must still be highly appreciated, but if a fi rm has a ‘not invented here’ culture then they need to break it down.” He goes on to explain that the cocktail of external and internal innovation resources can often make the process a complex one. “But,” he says, “if you can handle this complexity then the broader number of opportunities – which should also lead to better opportunities – outweighs the way we used to innovate.” Indeed, the thought that a new product or technology idea comes from outside the company leads many executives to believe that they would risk losing their competitive advantage. According to Hulme, however, this is no longer the case. “There’s an interesting idea that if you open up the process and give people visibility to it, superficially, people think that you actually lower the barrier to someone copying your idea. In this day and age this matters less and less, and the simple reason is that it’s a legacy approach to think that that we don’t know what diff erent

businesses are bringing out in terms of their product stream or strategy. Everything can be copied incredibly quickly now. The value of businesses is in creating clever systems, and so opening up parts of the innovation process so that people have visibility to strategies is actually a good thing, although it’s painful for many people.” Still, as liberal as business ethics may have become, that ‘not invented here culture’ remains a pressing issue. According to Mitchell Baker of Firefox, it stems from a fear of the competition. “The not invented here syndrome is very important,” she says. “There’s a fi rst reaction of being excited by something new and interesting, and maybe you’re scared about it competitively as well, but at least you recognise when something’s exciting.” For fi rms that are not prepared to, or simply are unable to, take the risk of compromising their intellectual property, the argument against taking a crowd-based innovation strategy is solid. Would the iPad have been as desirable if it had been designed by a computer science student and submitted on an internet network for new ideas?

What are the main challenges presented by innovating openly? RH. It depends on your product. In some cases sharing project content by crowd-sourcing means higher innovation speed but it can also mean disclosing content with a competitive edge. In the current climate there has been a lot of pressure on ROI and measuring value in a tangible way. What are your most valuable metrics as an innovation expert? RH. The most convincing argument is a positive experience. If a paradigm shift through design in a certain product category leads to 10 times the expected sales at a considerably higher price, this is very convincing. However, innovation remains a battle with every new project and predicting its commercial success before a product goes into the market is always a gamble. Obviously the Porsche Design brand is very established and therefore there must be a lot of pressure to ensure that new products are congruent with the brand signature and what Porsche Design stands for. With this in mind, how do you manage innovation for new products?

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“Open innovation should be viewed as a mindset or a philosophy rather than a toolbox” Sefen Lindegaard

RH. The answer lies in our people and their dedication to the Porsche Design philosophy and the desire to innovate. Coming up with new solutions is part of how they understand their job. According to Businessweek there has been a “resurgence of innovation” in the last 12 – 18 months. Would you say this is true for your organisation? RH. For Porsche Design, I cannot think of the necessity to revive the process of innovation because for us it was always alive. As far as the general trend is concerned, I can only speculate that the urge to innovate is driven by the desire to come out of a crisis situation as the world economy was facing in 2008 and 2009. We are working on very exciting products with international partners and customers. But our innovation process is not that open, to give it all away just yet. However, one should be curious about what we will be presenting within the next few months.

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OPEN INNOVATION

Maybe not, but that is one extreme. Procter & Gamble on the other hand has made a strong name for itself as an innovation powerhouse through the use of its Connect + Develop portal (see Scenario Th ree). Ford’s consumer community has offered the opportunity to post ideas and respond to discussions on the various features of Ford cars. Nokia is collaborating with research specialists at leading institutions to develop its forthcoming portfolio. I could continue.

“You get more opportunities when you combine internal and external resources. Open innovation gives you more diversity, more opportunity and a faster speed to market” Sefen Lindegaard “I think some people would say they look at open innovation to reduce costs but I don’t agree with that argument,” says Hulme. “I just think it’s a different approach, and I think it should actually be taken on merit versus the alternatives.” To highlight an example, Hulme cites the opportunity cost of open innovation, pointing out that in the current fi nancial climate cash has significantly less value that it did before the downturn, when assets left untouched could earn real interest. “It doesn’t exist now. The alternative uses of cash are less exciting. Also, the cost of making noise in the marketplace has gone down dramatically. Companies for the first time are able to celebrate their new products and services in a way they wouldn’t have been able to afford in the past.”

General Electric’s Ecomagination initiative has generated returns of US$70 billion

novation capacity at Firefox. “You don’t have the tools that you have with employees,” she says. “You don’t have salary, you don’t have health benefits, you don’t have a whole bunch of other things and so they need to believe in what’s happening and to feel a sense of ownership. There’s nothing worse than for people to think that they have a say in what happens and then learn they don’t.” In fact, whether operating in the corporate or nonprofit sector, fully engaging the workforce and consumers with the open innovation strategy is ultimately the most effective way to innovate. “We are moving from innovation that is based on transactions to innovation that is based on relationships,” says Lindegaard. “As this happens, it is important to note that trust is established fi rst and foremost between people and then perhaps between organisations. The key to acquire trust is to deliver on your promises. If you say you will do something, do it and if you say you will create specific results, do it. Open innovation is a paradigm shift and it will be how companies innovate in the future.” ■ Interviews with Judy Estrin and Mitchell Baker were carried out by Business Management’s sister channel, Meet the Boss TV.

The engaged innovator The greatest benefit of open innovation is also the greatest challenge to overcome in order to utilise it effectively. Including as many diverse opinions as possible in the conversation logically will lead to the best results, but in order for this to happen the workforce needs to be on board with the open innovation strategy. According to Lindegaard, organisations and corporations need to educate the workforce on the need for open innovation, beginning at the executive level. “[We should] make the organisation buy into open innovation,” he explains, “and make them understand how they can contribute in the short, mid and long-term.” Indeed, the success of the Pepsi Refresh project, General Electric’s Ecomagination and Hulme’s own OpenIDEO is attributable to their success in engaging the consumers with the projects through the philanthropic model. Mitchell Baker explains that her organisation utilises the time of volunteers in an in-

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18/01/2011 10:48

ASK THE EXPERT

How big is insider fraud? Insider fraud is present in all organisations, including major retailers on the high street. Accept it or prevent it, says Panasonic’s Michael Lang.

or the last 10 years, major security studies have highlighted clearly that insiders represent the biggest threat facing organisations. The PricewaterhouseCoopers’ Information Security Breaches Survey 2010 reported that almost half of large companies in the UK (49 percent) suffered theft or fraud involving computers. According to Verizon’s 2010 Data Breach Investigations Report insiders were involved in 48 percent of all breaches – up from 26 percent the previous year. A recent report from KPMG found that the frequency of ‘malicious insider’ incidents had increased from four percent in 2007 to 21 percent in 2010. The economic downturn may be partly responsible for the heightened insider threat, or it could be that companies are becoming more successful in identifying the constantly evolving attack methods used by organised criminals. One sector where the threat at least remains relatively static is in traditional retail on the high street. However, this is also a sector that is in for a tough time, certainly in the first half of 2011. Shrinkage within the retail sector runs to billions of euros every year against an economic backdrop of reduced consumer spend and ever increasing pressure on margins through reduced sales and increasing costs. A recent survey of European retail losses conducted by the Centre for Retail Research found that staff shrinkage in the UK is the highest in Europe, accounting for 36.8 percent of retail losses. The European average is 29.8 percent of retail losses caused by employees’ dishonesty. In retail, as in other sectors, insider fraud is big business. Employee theft includes theft of cash, theft of receipts (used later for returns by accomplices), void transactions (pocketing the cash after a customer has paid), overcharging, short-changing, false discounting, coupon and voucher abuse, false refunds and returns, exchanging counterfeit goods for genuine items, and under-ringing.

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Around a quarter of retailers successfully manage shrinkage, or reduce it, even when it is otherwise increasing universally. Strong funding of loss prevention programmes with an innovative approach – including the early adoption of new technologies – are significant contributing factors in tackling the problem, along with screening of employees and staff education and training. It is not always easy to predict the tactics that will be used by dishonest individuals. Applying technology that can analyse behaviour at the point of sale and alert retailers to fraudulent activities as they are occurring can enhance the effectiveness of loss prevention programmes. Monitoring, managing and educating staff via EPOS devices diminishes opportunities for theft – especially when the employees know that such fraud prevention measurements have been put into place. The latest generation of retail activity management solutions, such as VigilancePro Retail, link activity on EPOS devices with CCTV (such as those provided by Panasonic), enabling synchronised playback of the till screen and associated camera footage. An irrefutable audit trail of activity at all payment points is created that can be analysed in real-time or over time to identify unusual trading patterns. A solution that is able to analyse all EPOS till activity linked not only to the value and content of transactions but also contexts in terms of time, and time taken, has additional benefits. One of these benefits is not related to loss prevention put instead provides a retailer with the ability to optimise business performance, customer experience and employee rewards. The intelligence provided from these solutions can provide an insight into staff productivity and performance – reporting on metrics such as average time to serve and average sales value – highlighting exceptional performance or identifying individual training needs. With consumer spending expected to drop this year, reduced revenue will increase the pressure on crime prevention and detection staff to achieve more with fewer resources. Sophisticated technology such as VigilancePro Retail, which leverages existing investments in physical security systems such as CCTV and EAS (electronic article surveillance), is one way in which Profit Protection teams can achieve more with less. Reducing shrinkage and improving productivity deliver a double impact directly to the bottom line. Panasonic can support organisations in combating insider fraud through innovative systems solutions such as the implementation and deployment of VigilancePro Retail.

Michael Lang is General Manager, System Integration at Panasonic Systems Networks Europe. With over 90 years of innovation, Panasonic offers customised, scalable solutions that are reliable, ﬂexible and affordable.

28/01/2011 13:58

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18/01/2011 10:39

IT SECURITY

Driving

change

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It’s all change at Standard Life. Group Information and Operations Director for the insurance ﬁrm, Christian Torkington, reveals how he is working to improve processes to ensure better integration and implementation of IT solutions across the board and improve innovation capability at the organisation.

hen Christian Torkington joined Edinburgh-based insurer Standard Life from rival RSA in March 2009, little did he know how busy he would be. In a newly created role as Group Information and Operations Director, his focus is on developing and implementing technology strategy, along with the processes that underpin the day-to-day operations of the firm. It became clear that he immediately needed to assess the current systems before he could make any improvements to them. “When I started I wanted to ensure that nothing was broken and perform some triage on the operations and technology,” says Torkington. “In that particular space, I have been looking at the control framework alongside plenty of best practice and controls. It was key that we looked at how the management information that we’re using to run our IT service delivery organisation was running well.” A part of this was looking at the cost data around these key functions. “I wanted to test costs against my knowledge and make sure that we’re operating at the right cost,” says Torkington. A lot of time was spent looking at project execution and taking actions to make sure that what was actually happening was as closely aligned to what Torkington would perceive as good practice as possible. He goes on to explains that getting out and about and seeing projects happen has allowed him to get an overall feel of exactly what is happening. “Meeting with people and getting into the data centre, getting out into the operation environments and down to the project rooms and seeing first-hand what’s happening, how things are working and listening to what people are seeing. I’ve been trying to perform a broad assessment of what the data says, what the people say, what it looks and feels like, particularly from the front line spectre.” Torkington claims that his former roles have played a huge part in his ability and management style in this brand new role. Indeed, if you look at his former roles, they’ve all been in the same space. As Chief Operating Officer at RSA he was charged with running sales, service, business change and IT and previously covered the same

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IT SECURITY

areas at Scottish Widows. Earlier in his career Torkington worked as a management consultant in programme and change management. “I’ve really been drawing on reference points from just about every point in my career,” he says. “And whether that’s looking back to my change management theory and applying that to Standard Life and using that as a framework to help me think about what we need to do here, or looking at the work I did with Barclays to develop digital propositions and online banking and how that might be relevant to us today. Of course I’m focused much more on the directive rather than customer service. We’re looking at what we’re doing here and how well we’re doing it, what customers seem to think about it and how effectively it runs.” By understanding where Standard Life is in terms of systems and direction it is possible for Torkington to drive the organisation forward and transform it into an efficient fi rm. His understanding of exactly where the company is means he won’t lose the good things that are

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“We’re looking at what we’re doing here and how well we’re doing it, what customers seem to think about it and how effectively it runs”

already in place and will realise where the changes need to take place. That said, Torkington is clear that he wants to execute change for the better. “In our preliminary results announcement this year, you’d see us talking about investing a lot in 2011, so we need to maximise our capacity to deliver change and, of course, we also need to make sure that what’s delivered is done so well and efficiently.” Torkington is spending a lot of time developing the overall operating model and enterprise architectures in order to get a much clearer view of the enterprise he’s trying to drive. With that template to make the best decisions it ensures that the investment portfolio is optimised. “We’ve got strong processes for control framework,” he says, “and that’s one of the things I’m trying to make sure we preserve and carry through into the future, but we also need to fit it to a different organisational structure and a different governance model.” Torkington has specifically been looking at project execution and has a programme looking at all sorts of different aspects of how we deliver projects from the basic operating model, governance, structure, processes, methods and tools, collecting data, estimating, release management and testing. “We’re working through all these aspects of the lifecycle to make sure we’re building a highly mature, capable and efficient set of processes, people and technology to deliver our biggest imperative. We’re aiming to have a period of investing in business, developing our distribution platforms, developing our propositions and we need the capacity to put that work through.” With all these changes afoot, surely Torkington is facing a lot of challenges? He replies that the one off capacity is probably the most testing challenge for the firm. “Clearly like any IT organisation we’d be geared up for a businessas-usual level of change. In terms of increasing our execution capability we need to manage that carefully and in a considered manner, which is exactly what we’re trying to do. “We’re not going to solve that problem by throwing monies at it. It’s about looking at all aspects of the pipeline, looking at where the bottlenecks are, looking at whether our tools and processes are sufficiently robust to support that big a capacity and making sure we’re moving that forward on a broad front. Th is is the biggest challenge for us without a doubt: it’s literally increasing our project capacity in a structured and measured way. We continue to deliver well, but we have to focus on additional delivery capacity.” Spend is obviously a key issue, particularly with regards to the current climate, which remains unstable. “In my experience, the best way to ensure you aren’t spending too much or too little, is to look at the business case spend,” says Torkington. Indeed, it makes sense to look at the clear business benefits and to outline the benefits when making an investment into any project, including IT. “I’m not a fan of monolithic, huge IT projects with great big bills attached to them and no clear benefit. So we very much drive our spend on a project and programme

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basis by looking at the investment case, what it’s bringing to the organisation, what the benefits are and whether that balances with cost. “All of our projects go through that rigorous appraisal and approval process and that triggers our spend. What we then try to do of course, is to overlay the enterprise architecture operating model on that to make sure we’re executing this project in the right way and not just delivering, for example, a new proposition or a development in such a way that it’s moving us forward against our architectural agenda.” Looking at the key are areas of risk and compliance, Torkington goes on to explain that Standard Life is no different to other large financial services organisations. He says that both risk and compliance are key to the entire company as a physical and operational issue. Torkington says that the company is investing in a wide range of programmes and initiatives to keep as up-to-date as possible across the piece. “The thing that strikes me about security is that you have to continuously manage it. It’s not the sort of area you can invest in and arrive at a steady state and then stand back from,” says Torkington. “There are always issues over whether it’s penetration testing and making sure digital capabilities are secure, whether it’s looking at data we have to share with other parties and our responsibility to make sure they’re handling that in a secure way. Even simple practices of looking at where the data is in our organisation, where the controls are, who has access and how we manage that, are important in keeping defences up.” Torkington believes that managing risk and compliance is an ongoing job. To tackle this he has recently restructured to pull together all the aspects of security, IT and continuity into one group under new leadership. “We’re really bearing down on that and trying to look at it in the whole,” he says, before going on to mention that he is investing in a range of programmes around strengthening access control, improving data retention content management capability as well as looking at proving online security. “It’s a rolling programme and an important part of our portfolio,” he adds. Moving on, Torkington explains that risk will never be entirely eliminated from the industry. “Risk is always present. And to be honest, risk is the fundamental basis of business. You only make money out of risk – there’s no money in risk-free activities,” says Torkington. “It’s about understanding your risk and having a clear appetite for different types of risk and driving the business to perform within those appetites.” Torkington goes on to say that compliance is part of the picture for him, saying that it is undoubtedly useful to have a compliance view of the world. “Compliance drives the data about how well we’re functioning within our risk appetites, but risk management is the fundamental management responsibility. It’s not something you can simply hand off to compliance and expect them to control, it’s something you have to be smart about and actively manage in your day-to-day job.

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Risk and compliance are key to standard life

Compliance drives the data about how well the company is functioning

“All compliance should do is sit there as a backstop to literally check and make sure that we’re doing what we’re supposed to do and what we said we’re going to do, but it’s primarily a management responsibility to manage that risk.” Looking forward, Torkington explains that he has several priorities over the next 18 months or so. He wants to ensure that the enterprise architecture is fully embedded into the fi rm and that there are stronger links between the enterprise architecture and the project solution architecture. “We’re confident that part of the machine’s working well,” he says, “and that we’re delivering a well organised model that builds towards our enterprise architecture. We’re also confident that we are strengthening our scalability and that we’re on top of managing our efficiency as we grow the business going forward and deliver our key strategic initiatives. ‘We’ve got a lot of change in the pipeline so we’re working hard on that and getting these things done to the time, quality and budget are really important. By restructuring the team we’ll be continuing our journey by developing and strengthening that talent and ensuring that we’re building a high performing organisation that’s clearly focused on what we need to and developing innovations.

Transformational IT The importance of transformational change in business has long been recognised, but it is only recently that IT has been at the forefront of transformational change. CIOs are therefore positioned to play an integral role in corporate plans as enterprises look at strategies to emerge from the recent recession. Gartner has identiﬁed that the key to playing this key role is knowing how to accomplish transformational change that fulﬁls the strategy of your fellow C-suite executives while keeping the business running. Gartner’s Top 10 Questions You Need to Ask When You Are in the Midst of a Strategic Change sets 10 guidelines and action items to give CIOs and other IT leaders the tools they need to lead the transformation of their enterprise. The 10 questions are broken down into three sets: contextual, implementation and organisational. Jorge Lopez, Vice President and distinguished analyst at Gartner, said in a prepared statement: “When organisations have to navigate a business transformation, the IT organisation is usually in the middle of it in some way, either as a key enabler or key constraint. CIOs rarely have a leadership position in a change of this scale, and they need to prepare more vigorously to ensure that IT does its job to advance strategic change”. http://www.cioinsight.com/c/a/Latest-News/Gartner-CIO-as-BusinessTransformation-Leader-180951/2/

28/01/2011 14:32

PROJECT FOCUS

The future of trade credit While it has come a long way in a relatively short time frame, what does the future hold for trade credit? Andreas Tesch shares some of the ﬁndings from the recent Atradius white paper The future of trade credit

t’s often the case that you don’t really notice or appreciate something until it’s gone. Among the many issues created by the global downturn – and arguably a contributing factor – was the abrupt and widespread reduction of credit available to businesses and consumers, which had the effect of stifl ing trade and starving companies of cash. Suddenly the issues surrounding trade credit – extended payment terms, default and insolvency, and credit insurance itself – rocketed to the top of everyone’s business agenda. And the importance of trade credit as an aid to effective commerce was regarded in a new light. But enough of recent history, what of the future? Will trade credit still retain its position at the core of trade, whether domestic, cross border or global? What shape will it take and what developments are likely to influence its evolution? While these may sound like fairly simple and straightforward questions, the close inter-relationship between trade credit, business competitiveness, growth and fi nancial stability means that the answers are often complex and will vary between sectors and, as always, will be subject to differing opinions. Nevertheless, our Future of trade credit white paper provided some interesting information on trends, attitudes and the relationships between buyers and suppliers. It is clear that the economic crisis has changed the dynamics of trade credit, with suppliers adopting a more aggressive stance on credit terms and enforcing payment when it becomes due. The white paper also found that, in some instances, suppliers chose to withdraw credit facilities from their customers completely, instead insisting on upfront payment to reduce their exposure to the risk of non-payment and improve their cash flow. Conversely, powerful buyers used their strength to demand longer credit terms from suppliers, which not only enabled them to hold on to their cash for longer, but also placed additional pressure on the supply chain as the payment delays would very likely be passed up the line. Conscious of the increased risk to credit sales during the downturn, businesses also became much more focused on credit control and collections activity, using either their in-house teams, professional external providers, or a combination of both, to ensure bills were paid on time and cash flow was maintained. Even though the global economy is showing signs of recovery, it’s inevitable that this tighten-

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ing of credit control will be a consistent feature of trade credit procedures and business life well beyond 2011. While a concentration on good credit management practice is commendable, if the more extreme aspects of tighter credit conditions identified in our white paper continue, such as an insistence on advance payments by suppliers or unreasonable demands for increased credit periods by buyers, then the trust, confidence and good faith that have traditionally been at the heart of trade credit are likely to be damaged, as will the longer term supplier/ customer relationships. Even so, across Europe and many of the other countries surveyed as part of the white paper, most businesses see trade credit extending further over the next 12 months and beyond to allow customers more time to pay – especially as there is likely to be less access to fi nancial support in the form of loans and overdrafts. Alongside this, there is a strongly held belief that the increase in the use of trade credit will also help maintain trust with loyal customers and assist in the regeneration of beleaguered markets. While this may not accord wholly with experience of recent times, it suggests that businesses clearly recognise the strengths and values of trade credit as part of the process of gradually improving commerce, both domestically and internationally. With trade credit comes trade credit insurance: the ability to protect your business from the fi nancial risks inherent in such trade. For those unfamiliar with trade credit insurance, I’ll provide a very brief overview to put it into context. When a business sells goods on credit, the expectation is that the invoice will be paid on the due date. If it’s paid late, then this is in breach of the terms and conditions on which the goods were supplied. Trade credit insurance protects your business by enabling you to claim against your policy, usually up to 90-95 percent of the value of the goods supplied, if payment is not made for a range of reasons, including the buyer’s insolvency, protracted default, unstable economic environments or even political interference in completion of the contract. Naturally, as many contributors to our white paper have given clear indications that trade credit is likely to increase in the very near future, the need for trade credit insurance will also follow this upward trend, to protect increased credit sales. Essential to the research for the white paper, and

“Trade credit is such a crucial part of the business landscape that it reflects the prevailing environment”

Andreas Tesch is Director Global, Oceania and New Markets at Atradius. He is a leading global authority on trade credit insurance. Beginning his career in management consulting, he joined Atradius in 2001 in Corporate Development, subsequently becoming Director of Risk Services for Central and Eastern Europe (2004-2006).

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to achieve a clear and balanced perspective to promote debate, the opinions of a number of key business organisations were sought, providing a qualitative view to augment the more statistical data. One of these organisations was the Berne Union, the association for export and credit worldwide, whose members provided almost US$1.4 trillion of insurance capacity last year. They reported that during the economic downturn the demand for credit insurance in many countries showed a steep rise – in one instance an eightfold increase in applications. These experiences were echoed by the International Credit Insurance & Surety Association (ICISA), although they were also keen to point out that credit insurers should help businesses understand the relationship between trading environment risk, the cost of capital and insurance premiums. One of the measures introduced during the recession – and one that is now adopted as a common practice and is likely to remain so for the future – is the insistence on much more up-to-date fi nancial information to enable banks, credit insurers and fi nancial institutions to make more robust decisions. Pre-credit crisis, annual returns and fi led accounts were sufficient to gauge credit risk, as the international trading environment was generally relatively stable with little fluctuation. But the sudden and continuing change experienced across all markets and business sectors means

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that annual figures are rarely an accurate representation of a company’s current health, wealth or prospects. Consequently, companies have begun to provide regularly updated management accounts, which enable them to demonstrate their strengths and current fi nancial performance and gain access to finance, trade credit and insurance. Th is change in itself has already had a significant impact on the future of trade credit, enabling credit insurers to be much more confident about the risk environment as it applies to individual businesses and to provide credit insurance cover where, without this up-to-date information, it might not have been available. So, taking all these points into consideration, what conclusions can be drawn about the future of trade credit? Trade credit is such a crucial part of the business landscape that it reflects the prevailing environment. As a result, it can possibly be said to be going through three key phases – contraction, control and confidence. The initial contraction of credit availability and trade credit provision led to the introduction of increased control over payment terms, risk management, fi nancial information, collections and a range of other measures. Now, as a result of these measures, trade credit is entering a new period of confidence, where it is once again ‘oiling the wheels of business’, but in a trading environment where its role and strengths are probably better understood and its importance has never been greater.

28/01/2011 14:57

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18/01/2011 10:35

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18/01/2011 10:35

SECURITY

UNDERSTANDING YOUR RISK ZONE BT’s Ray Stanton turns the spotlight on why it’s so critical to understand a company’s risk – and how to manage this.

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ay Stanton has one piece of advice to those planning a career in the security sector: “If you’re looking for a quiet life, don’t go into security. The challenges are immense and they change every day. Worse, lapses can be expensive, so you’d better be ready to answer some tough questions if anything should go wrong.” Career advice dispensed with, the Executive Global Head of BT’s Business Continuity, Security and Governance Capability Unit, settles into his central London office with its sweeping views of St Paul’s Cathedral, and warms to the theme of organisational security. “Organisations are under threat as much from their own people and processes as they are from external fraudsters, hackers and thieves,” says Stanton. “Even simple mistakes can have damaging consequences – wiping out valuable data, for example. If your processes aren’t right, you could be failing to meet legal or regulatory requirements in a way that could prove very expensive indeed. Okay, so that’s nothing new, people will say. And that’s correct, but now the consequences and impacts are more severe.” For a company as large as BT, such security lapses can translate into an erosion of customer confidence and reputational damage, he warns. “For BT, customer brand and confidence is critical. And when I say customer I mean everyone from the person who takes our telephone services to those who have broadband and TV services, as well as our enterprise customers. The key to maintaining and enhancing this confidence is to manage company risk postures effectively.” To do this, says Stanton, you need to look at your business top to bottom and from every angle. “You need to put the right measures in place and not just pay them lip service. Th is means beginning with a strategy that is aligned to the current business plan and objectives because this is an imperative to success. From this hangs your framework for building sustainable, repeatable projects that flex and grow with your business – being able to manage whatever and whenever something is thrown at it.” That means when something goes wrong, the organisation has the fundamental processes and constructs in place to deal with it. “The critical thing is that if something goes wrong in the process, you can learn from it. You become a learning organisation able to say, ‘It went wrong. Okay we’re not happy it went wrong, but let’s learn from it and make sure that it doesn’t happen again’.” Stanton likens BT’s approach to the philosophy of South African professional golfer Gary Player. “He liked to say to journalists: ‘Aren’t I lucky? Well it’s strange, because the harder I try and the harder I train, the luckier I get’. That’s exactly the approach that we have to things. Even though I’m no golfer, as others will attest!” When it comes to the proliferation of mobile workforces and staff keen to work remotely using laptops, smartphones and the tablet devices that are increasingly flooding the market, Stanton says the threat of data loss becomes even greater – but it’s our individual approaches that set us apart.

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“It’s an interesting dichotomy because what you’re trying to do in a recession is keep the costs down, which means enabling your staff – but at the same time ensuring that you protect the organisation. The key is to manage the information and data loss by dividing it into business as usual, high impact business and managed impact risks. Th is allows us to manage our risk and our investments, particularly for staff working remotely.” But knowing a company’s risk zones is not as straightforward as letting people work from home. “It’s about giving them the tools to do this and then managing those tools so that you can manage issues such as data loss. So we might have people who will, for some reason, need to use Macs, which aren’t part of our standard environment, so to manage these they are run in a virtualised environment, which gives staff access to the standard platform environment. We also make use of tools like Instant Messenger with external organisations, by making use of tools such as content checking, keyword searches and so on. It’s a layered approach but it’s all about enabling the business and managing the risk, which doesn’t disable the users but gives them access to all the things they need to do their job but also stay within that acceptable risk zone. I think that’s really important because if you turn around and say, ‘Well you can’t do that guys’, you become the ‘Ministry of No’ and one of the key things I’ve said is, ‘let’s not say no, let’s say let’s fi nd a different way – don’t say no’.” Indeed, continues Stanton, if you become the Ministry of No because you don’t really understand your risk zone and what’s acceptable, then users will just fi nd a different way to do it and therefore, ultimately, increase the risk profi le of the organisation. “The question is who’s at fault? The security people will say the users. Why? Because we said no! And the users say it’s IT, because they said no and don’t understand our business need. I’d argue its both parties because clearly both have failed to come to a compromise and that leaves everyone at risk. “You have to give them the right tools – should they, for example, have email encryption? Should they have periodic briefi ngs? Who is responsible for that? So again, it’s how you introduce the sympathetic processes and culture to your people.” Stanton barely stops to draw breath before verbally puncturing his next topic – information loss that results from human error rather than malicious intent. “Some poor bloke, or woman, makes a human error, for example, on a system that might not necessarily be a security problem, but can take down the customer service. It’s happened to us, it’s happened to everyone – let’s be honest about this. So what you have to do is try to ensure that the culture or training is correct for those individuals and to create the conditions for them to succeed. If you’re pushing them all the time, there’s going to be a chance that they’ll make a mistake, isn’t there?” It is, he says, all about creating a culture of education and awareness and continuous improvement. “It’s about educating to the right level for the right information, educating as part of the DNA of the organisation. It’s educating

“The key to maintaining and enhancing confidence is to manage company risk postures effectively”

28/01/2011 15:00

SECURITY

SOCIAL NETWORKS AND SECURITY IN THE NEXT GENERATION

“This whole concept challenges the way we work,’ says Stanton. “We have the ability, for people to connect, for example, via instant messenger within different organisations. However, at BT we’ve put some controls around it which bring it within our acceptable risk boundaries, so you can’t ﬁle share and you can’t do video sharing. The younger generation wants access to those tool sets because that’s how they live their lives – it’s called ‘Declarative Living’. “The way they communicate with their friends and social groups is online by telling everyone: ‘I’m going to be at a certain place at a certain time. I’ll let you know by Twitter or Facebook,’ or whatever it might be. You have to give them the tools to be able to

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do that. So if you’re asking them to work smarter or work longer, and you ask them to do X, Y or Z, and you’re measuring them by output, then this enables them to be able to deliver what the company needs as well as sustain their social networks and lives. Its a win-win situation – one thing is for sure, everyones is getting older and we’re all the next older generation – so live with and embrace it! “And that is increasingly applying across the age spectrum, which means making the tools available for everyone to use – look at the age spectrums of people in the work place now? From the 16-year-old to the 65 and 70-year-olds – from the ‘Veterans’ to ‘Generation Y’. We must adapt for all.”

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for the consistency of what they’re doing in their roles and if something happens it’s learning from that and understanding the situation that it happened within – it may not have been the individual’s fault because the conditions to succeed were not there. The company has inadvertently put these people in a set-up-to-fail situation, which makes the error as much the company’s fault as it is the individual’s.” Stanton says his role is to identify such risks in business situations. “My job is to help the company, corporation, public sector entity, whatever it is, to understand the risk, to identify the risk and articulate it. The business doesn’t always understand, which means they can’t make an informed decision. What you’ve got to do is take an objective view and say, “Guess what? Here is what’s within your risk profi le, here are what the potential impacts and the potential benefits could be’. That’s how you bring it back. You can’t always make a clear connection to return on investment, but you can make it clear what the impact could be. “The next step is to help the organisation realise that it needs to invest in its systems and backup systems by putting in place processes and procedures, because without those, there is a potential risk to the company. Then it’s over to them to make an informed decision.” It’s an argument that underscores the fact that risk and security professionals really need to understand the business they’re in. “My role is to be the interface between the business and the security organisation, explain and the risk that the business runs. In the organisation, I am the translator from top to bottom and conversely I translate all the security and risk for the business. That’s why it’s important to truly understand what the business does. How many security and risk professionals can, for example, truly turn around and

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say, “I understand the corporate fi nances of the organisation intrems of quarterly and year end accounts’? How many of them study these accounts to understand what is driving the culture of their organisation? Or how many understand the impact of what they do – as in, if we don’t invest that X into a security system, Y will happen?” When it comes to business continuity management, Stanton says that BT has rolled out several changes since the terrorist attacks of 9/11 and 7/7. “What we did was look at our business continuity strategies to make sure that we were doing the right things. We used benchmark surveys and studies from the Business Continuity Institute, reviewed our programmes with them and the standards they set. We also used the British Standard for Business Continuity Management, which provides a good code of practice specification. Th is focuses on lifecycles, how you deal with things and how you ensure you look at things like strategies. So it’s pretty much about five key areas: IT, connectivity, processes, physical and people.” One key deliverable to come out of this is a system called ICE that is aimed at getting contact to employees in critical situations. “We have staff registered so that if anything happens, we are able to connect with those people specifically. It’s just a simple change to fi nd out where individuals are in the company and how best to track them in times of critical importance. So those major events of the last few years have driven us to recheck our strategy, test it and make sure that it’s right and appropriate. The critical thing about our business continuity disaster recovery plans is how we manage them. They don’t just get established and then left alone. They are constantly being managed and that’s the critical aspect of business continuity and disaster recovery.”

60% of organisations have suffered losses as a result of a Web 2.0 security incident

These losses collectively total more than US$1.1bn

31/01/2011 08:52

INDUSTRY INSIGHT

Risky business Methodware’s Tom Bolger speaks to Business Management about implementing an effective risk management strategy.

icture the following within an organisation. A risk manager is on the phone with a branch manager. The reason for the call? The branch’s quarterly risk assessment update is overdue. Again. The branch manager says all the right things and promises to complete the update quickly. After the conversation, both people have very different thoughts. The risk manager is thinking, “Why do I have to call these managers every quarter? They’re not taking this seriously.” The branch manager is thinking, “Why won’t these people leave me alone to do my job? Didn’t we just do this?” Is this a common scenario in your organisation? Chances are no matter how strong your risk management programme is, improvements can be made to the process and the interdepartmental relationships. Every business wants a successful risk management programme, but not everyone has found the same level of success. Talk of removing silos and embedding governance, risk and compliance processes within the business lines is great, but making it a reality forces companies to face a major challenge – the relationship between the risk, audit and compliance professionals and the other business unit leaders and staff. Too often, the risk team believes that the field isn’t taking them seriously, and the field views the risk team as an annoyance at best or an impediment at worst. How do you bridge that gap and develop the right levels of communication and trust? Organisations that have developed successful risk management programmes share two common strategies: the creation of a strong risk-aware corporate culture and the relation of GRC issues to everyday business. The cultural change has been discussed in many other forums, but it is still important to ensure the buy-in is both top-down and bottom-up. Executives need to lead by example, and business units need to realise that GRC activities are a key part of their daily activity, not a nuisance to be set aside or hurried through. The second strategy tends to be overlooked, in that many risk professionals view GRC issues in and of themselves, rather than in the context of the organisation’s larger goals. On one level, this is understandable – a constantly evolving, relatively new discipline requires narrow focus to become established. However, this narrow view has the unwanted effect of making the risk team appear to be aligned differently from the rest of the business. You need to bridge this gap. The benefit arises not only from ensuring that everyone is on the same page, but also by instilling a belief across the organisation that when circumstances

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change teams are capable of adjusting to ensure continued understanding. There are several ways to ensure that the GRC teams are translating risk concepts to get a better response from the business units. It can be very easy to focus risk management efforts solely on risk prevention or avoiding past mistakes – the trick is to learn those lessons and apply them to the present and the future. Ensuring that individual business units understand their levels of risk tolerance will allow decisions to be made about pursuing opportunities that can help attain specific objectives. Using an assessment tool that clearly and easily aligns processes with the organisation’s objectives is a must. The GRC team can also help by quantifying not just the exposure but also the upside associated with a risk activity. Showing a business unit that there is limited or no upside to a risk helps the risk manager make a far more compelling case about changing behaviours or assigning resources to mitigate a risk. Conversely, if the risk manager can quantify opportunities, GRC functions will gain broader acceptance as a fundamental part of each business unit. Either way, better information will be produced, analysed and acted on more efficiently. Both sides will understand that they are working toward the same goal – the success of the company.

Tom Bolger is the Vice President of Global Marketing for Methodware, which provides risk, compliance, audit and investigations software to more than 1900 clients. His experience in ﬁnancial services and operational risk management over 15 years helps shape Methodware’s product and market strategies.

28/01/2011 13:40

18 years of proven global risk experience. 1900 GRC software clients in 80 countries. And now, a revolutionary new way to manage risk.

ERA Kairos from Methodware gives you complete ownership of your GRC functions. All you need is a browser and a goal. ERA Kairos presents your risk data and workflows your way, and lets you change as your business changes. Don’t just look at the downside of risk – with the eﬃciencies created by ERA Kairos, you’ll have more time to study the upside, and take the right risks.

Turning risks into opportunities – methodware.com

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18/01/2011 10:38

EXECUTIVE INTERVIEW

Risk after the recession Navita Systems’ Matias Palm takes about the risk management landscape for businesses today.

How has the economic climate affected the need for a comprehensive risk management strategy? Matias Palm. In the aftermath of the fi nancial crisis, two confl icting forces have affected investments in risk management. First of all, the fi nancial crisis was a wake-up call for both the fi nancial industry and the regulators. Th is naturally results in an increased appetite for risk management strategy, as well as more firm regulations from the different market regulators. On the other hand, the fi nancial crisis has led to a decrease in capital available for investments. Hence, many of the companies that most dearly would need to improve risk management do not have enough cash to actually do it properly. As strange as it may seem, there is still a tendency for trading organisations to cross their fi ngers and hope for the best. How has technology developed the risk management landscape in recent years? MP. Improvements to both hardware and soft ware have positively impacted risk management. Processing speed has been gradually improved thanks to hardware development. More importantly, the continuous development of standard soft ware infrastructure has made it significantly easier to execute risk simulations in massively parallel computing environments, bringing the simulation time down to a near real-time level. However, the biggest improvements are thanks to the never ending perfection of the mathematical risk models. Significant effort is continuously put into this, both in academia and in corporate research, but much of this still remains to be standardised into soft ware. What are the key considerations and challenges facing businesses that are looking to invest in a risk management system? MP. The key considerations vary a bit depending on the type of organisation that is making the investment. Some risk management soft ware is designed primarily for the fi nancial industry, with value-at-risk as the most common fundamental risk metric. Other risk management soft ware is designed with different physical commodity trading in mind, with particular focus on properly measuring the risk in non-liquid assets, and typically with cash-flow-at-risk/ profit-at-risk/earnings-at-risk as the main risk metric. The risk management challenge is to be able to produce a good enough representation of the risk within a reasonable time frame. Risk management is all about modelling the reality, and the challenge is to create a model, which

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is close enough to the reality for all assets in the portfolio. Th is means simulation, which means time lag to get the results. Th is also means that the scenario models have to be consistent with the particular market; the risk model for an asset-centric energy company is fundamentally very different from that of a fi nancial trading house. What developments do you envisage for the future of enterprise risk management? MP. Full enterprise risk management is the Holy Grail of risk management. The prospect of fully quantifying all aspects of risk for an enterprise, and to have one single source for decision support about appropriate risk mitigation, is a vision that every Chief Risk Officer has. Historically, the reality has been very far from this, with several silo risk systems and large parts of the risk not covered at all. Partially this is due to the complexity in properly modelling the reality, but it is also due to lack of cross-asset knowledge among risk system designers. In practice, most risk solutions are either good at traditional fi nancial industry, or good at properly modelling one or a few commodities markets. I envisage that the future will bring significantly more consolidation between risk solutions from different asset classes, for example covering both the traditional fi nancial industry and physical commodities based on best practice in both areas. I also envisage that risk solutions to a larger degree will cover multiple risk buckets and properly aggregate market risk and credit risk. Other risk buckets, such as operational risk and regulatory risk, will most likely remain on the scorecard level for the foreseeable future, since it is virtually impossible to fully quantify these risks.

Mattias Palm is EVP, Head of Market and Sales, and part of Navita’s Executive Management Team. He joined Navita in 2002, and has since been based in Navita’s Stockholm ofﬁce. Prior to joining Navita, Palm served as senior consultant in various top-tier consultancies. In this role, he primarily worked as a business consultant and solution architect of commodity trading solutions for organisations across Europe, Asia and North America. He holds an MSc. in Electrical Engineering and Computer Science from the Royal Institute of Technology in Stockholm.

28/01/2011 13:40

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18/01/2011 10:39

ASK THE EXPERT

Better, clearer governance The beneﬁts of enterprise risk and governance solutions within organisations, argues Richarcd Pike, are all about context and proof.

he recent fi nancial crisis is generally seen as a failure of risk management. Th is has sent shocks through the risk management world, both internally and in how we are perceived by the general populace. Many of the mathematical models and management tools are being reviewed and retested. In general, the mathematical models themselves are not seen as being a root cause; however, the way in which they are used and the gaps between them have been found seriously wanting. Enterprise risk and governance solutions (ER&G) are the only manner in which the two-pronged problem of ensuring that the context in which risk numbers are calculated and used, and raising the trust in risk by providing proof of the veracity of the numbers, is achieved. In fact, these should be the key goals of any enterprise risk and governance implementation project.

Model governance It is now clear that many risk models make assumptions about the quality of their data inputs that may not hold water. It is therefore vital that all of these assumptions are challenged and controls are put in place to ensure that the data conforms to the model’s requirements. An ER&G system can ensure that these controls and assumptions are tested and can provide model results that include a ‘level of confidence’ based upon the quality of the control environment. A second area of concern is that the assumptions underlying many models have not been clearly understood by those relying on the results. In order to mitigate this risk it is important that the assumptions are constantly revisited and scenarios in which these variables are stressed are regularly reviewed. ER&G systems are the only place that full scenarios can be run to test these assumptions in a systematic, repeatable and auditable fashion. A fi nal concern about risk model governance surrounds the output results and how they are used. In many cases it was found that results were ignored or just not followed up. ER&G systems can defi ne what happens upon a risk exceeding its limit and can report on the status of the associated action.

Gaps and relationships A key failure of institutions’ risk frameworks has been a lack of understanding of the causal relationships between different risk types. It is now understood that many risks are interrelated and models that do not take this into account are fatally flawed. Increasingly we see

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that control failures, risk events, policies, risk models and management issues are all part of a ‘fluid network’ of risk that changes as the business changes. Each node in this network must be understood in the context of the other nodes surrounding it. For example, when reviewing a credit loss it is important to know whether any controls were breached, if there have been similar losses in the past, was the credit issued within the banks’ policy, did the loss breach any assumptions in the risk model, was it due to a market risk loss on the underlying security, etc. ER&G systems can enable risk managers to start mapping these relationships so that they can be understood even if they cannot yet be accurately modelled.

Proof Due to the crisis of confidence in risk management caused by the fi nancial meltdown, all of the above actions must be taken in such a manner that they are open to scrutiny by any interested parties. As is demonstrated by plans for new regulations such as Solvency II and Basel III, regulators, investors and senior management are all now very interested in risk management processes and approaches and will no longer allow ‘black box’ techniques that cannot be inspected and reviewed. There needs to be a clear audit trail of all the parts of a risk framework, be they calculation models or manual processes. Only by implementing an enterprise risk and governance solution can you ensure that your risk processes and calculations are open to scrutiny and peer review.

Richard Pike, Wolters Kluwer ARC Logics, has more than 15 years’ experience in risk management and has analysed, designed and managed the development of core risk management systems for large international ﬁnancial institutions. He was recently chosen as one of the 50 most inﬂuential people in operational risk by Operational Risk & Compliance magazine.

28/01/2011 15:00

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26/01/2011 15:13

DATA MANAGEMENT

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Know your enemy Barclays’ Head of Information Risk Management Mark Logsdon is on the frontline in the bank’s ﬁght against internal and external threats to its all-important data. It’s a war Barclays is winning, but Logsdon says he won’t allow complacency to catch the bank off guard – “not even for a millisecond”.

Any information loss at a bank can escalate into a serious incident and a loss of customer conﬁdence. Do the myriad threats to data make you slightly paranoid or keep you awake at night? Mark Logsdon. I’m always a reasonable sleeper so the threats don’t keep me awake. However, we need to be on our toes collectively and understand the risks that are out there and ensure we’ve got sufficient controls to manage the risks accordingly. We’ve got a great team that help us do that and this helps me sleep a little easier, although one is never complacent, not for even a millisecond. We continue to monitor the threats so that we hopefully don’t get caught out. There is a whole response team here who are able to instantly respond to an incident. They are constantly monitoring systems and events as we speak and use some sophisticated programs around fraud detection and prevention. As the bank’s Head of Information Risk Management, what are the main challenges you face at Barclays when tackling the issue of information security? ML. Dear old Willie Sutton (prolific American bank robber) was once asked why he robbed all the banks that he did and his response was ‘Because that’s where all the money is, stupid’. I think that’s still the case today. We are naturally a target because we’ve got money that people are going to seek to steal. That said, we’ve still got a lot of people’s personal data and it’s important to us that having been entrusted with that data by our clients, that we protect it in a manner entirely appropriate to make sure that it’s not lost. The traditional electronic scams like phishing and now social engineering have been around for a while just the same as con men, fraudsters and tricksters have been. What I call old fashioned crime is still committed today but people are more tempted to do it electronically. And there is still the problem of disgruntled insiders, although instances of that are rare.

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DATA MANAGEMENT

One important thing is to ensure that we do have secure technologies and that we have great processes around them because if there’s a weakness in the process it can circumvent all that great technology and the controls. We also spend an awful lot of time making sure that people are aware of the risks that we potentially face, and that they know how to respond and deal with them, should they either suspect or spot something. So we have a huge awareness campaign in place that helps them to understand the risks and what they should do accordingly. When you mention threats to people’s personal bank information, people may think of external attacks from ‘hackers’ but data loss is more likely to come from within. How do you protect against these risks? ML. The particular risk of data loss has always been with us; it’s not a new risk. If one thinks about it, letters have always gone missing in the post. The fi le in your fi ling cabinet – we’ve always lost them. And there has always been the risk of the fax machine where someone inadvertently punches in a wrong digit and the document gets sent to the wrong number. So there has always been that case for a genuine mistake or a momentary lapse of concentration and I don’t think it is any different today. The difference now is that there is more chance to lose date quicker; one can keep an awful lot information on a memory stick as opposed to in a fi le. How do you combat it? ML. We have some good technologies that help us to control things and make sure that in cases where colleagues have got access to some sensitive data they can’t just simply plug a USB stick in and download it all from their laptop or desktop. It comes back to awareness of the issues. Mistakes will always happen and there always will be that momentary lapse of concentration. We all have them. We didn’t mean to send an email, but, unfortunately, we did. With those colleagues around particular sensitive areas of the bank, those with privileged access, there are further controls to ensure what they’re doing is appropriate, that monitoring tools are there and that they’re backed up with good HR-type policies. It’s about good technologies, good processes and good people management. I don’t think there’s anything new in that. I think that the danger is that there’s just a focus on one of those things. And the other risk is that people don’t join the three things up, and they happen a little bit in isolation and are not joined up to manage the risk appropriately. Our job here is to ensure that with information risk management we look at all kinds of information in whatever form it resides, be it in people, hard copy or electronic and that we try and join all these things up. “And there is no patch for stupidity”, as the saying goes within IT security circles. ML. That is an old quote from [ex-hacker] Kevin Mitnick. I think there is merit in it but I prefer to call it a momentary lapse in concentration. At Barclays we employ bright,

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committed people who, given the right information at the right time, will make the right decisions. Our job is to give them that information so when they do happen to have that momentary lapse of concentration, which hopefully is very rare, at least they know what to do next to try and minimise what happens next.

“It’s about good technologies, good processes and good people management. I don’t think there’s anything new in that. I think that the danger is that there’s just a focus on one of those things” Both public and private sectors have seen their fair share of spectacular data losses. How do you get staff to appreciate the value of data and educate them on correct procedures? ML. Let’s be clear, I’m not saying this has happened in Barclays but people with good intentions send documents from A to B but with no thought about what happens if they go missing in the post. They are not aware that they might need to encrypt the documents. The reason they did not follow the correct process might be because it was so cumbersome and so inhibitive that it prohibited the business from doing what it was seeking to do. In my view, there has got be a balance of pragmatism against the need for control. In some cases, the need for control wins but users will fi nd a way around it if they can. As I said, a lot of the time it comes down to genuine mistakes. For instance, how many times do we see the phonebook left outside somebody’s household address? It contains people’s names and addresses, right? It comes down to user education; they often don’t know they are supposed to put these things on an encrypted disk, use a double envelope or whatever it might be. They don’t understand what is expected of them in this day and age and make an honest mistake. While the technology and processes might be right, do the people understand what is expected of them? How do you deal with staff mobility and work being carried out on laptops, smartphones and now tablets, 24/7 globally? ML. Staff mobility presents us with magnificent opportunities for new ways of working. Sure, sometimes there are challenges around the way we do things, but we have to manage those challenges in a pragmatic way that enables a business to meet and realise some of the opportunities mobility allows. It is about a risk-based approach because for some people in some jobs it may not be appropriate for them to have remote access in an internet café. For other people in other parts of the business, it may be because the information they’ve got access to isn’t particularly sensitive at all. So we need to manage it appropriately but not in a way that stops the business from realising the opportunities.

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We have a big push at the moment around exploring the use of iPads but we need to manage it in an appropriate way because it may be right for some staff to use them and others to stick with a desktop. It needs to be managed accordingly without saying to people, “You can’t have that or you can’t have that”. It’s about risk managing the process. Data losses can also occur when operations are outsourced. How do you approach this to ensure information doesn’t fall into the wrong hands? ML. Th is is a third-party risk and we share this concern. More recently, we have offered some awareness material, free of charge, to third parties looking after our data so they are aware of what we expect of them. Th is isn’t aimed at the large companies but more towards the SMEs who haven’t necessarily got the resources to spend on that sort of stuff. It’s also targeted at the people on the ground handling our data. We mandate that high- and medium-risk suppliers are properly trained and it proves to be hugely successful. The myriad consultants and contractors that are constantly working with us and provide an invaluable service have an account on the network just like I have too. So you need to understand what sorts of third parties you are talking about because the risk profi le might be different and the controls you put around them as a consequence might change as well. With regard to what information they have access to, we have a segregation tool that allows us to make that call. We put the suppliers into high, medium and low risk categories and the controls we put into place around this reflect the risk potential they pose to us. Of course, we back this up with a performance review to ensure they are doing the right things. We’ll go back at a later stage and say, “You said you’re doing X, but can you prove it to us?” What key trends do you foresee in information risk management over the next few years? Where will the threats come from? ML. The traditional threats will stay the same – fraudsters, organised criminals and insiders – and these threats will remain constant. Another is around consumerisation and the plethora of devices people are wanting to bring into the organisaton and use, which creates some interesting challenges. The one that interests me, going forward, is around identity and people accessing networks. If you think about it, we all have multiple identities. I just wonder how this can be sustained so we might have to look at that.

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Seeking security

he web has become a playground for hackers and malcontents eager to phish, defraud and steal wherever and whenever they can. Policing this landscape is a logistical nightmare, and battle lines are being drawn and redrawn many thousands of times a day – which perhaps hints at why many millions of us are a little uncomfortable with the idea of storing our sensitive data in third-party environments. “The security space is a tough problem, and it’s going to be a tough problem for quite some time,” believes Crawford del Prete, Chief Research Ofﬁcer at IDC. “You have many complex forces coming together, and the threats are changing dramatically because they involve people and the way people approach attacks – and people can be very clever. As a result, online security will continue to evolve for quite some time; it will not commoditise anytime soon, which is why it represents an attractive area for companies to invest in, as Intel has done with its acquisition of McAfee.” Despite Intel’s move surprising many people within the industry, del Prete is of the opinion that the company’s actions have exhibited a great deal of foresight. “I think Intel saw an opportunity to embed McAfee’s security technology into its next generation mobile chips for handheld devices and mobile computers, technology such as iPads and Playbooks. If this leap works, it will not only be a huge differentiation for Intel but also great news for the consumer.” The mobile nature of most next-gen devices has opened up the security perimeter of the internet to previously unheralded outposts, an evolution that has made it even harder to secure. Businesses reliant on the convenience of these devices are becoming more exposed to the dangers lurking out there. “We now have mobile devices that are truly becoming handheld computers,” says del Prete. “If you look at Nokia’s N900 Smartphone, it is a 32 gigabyte device. It wasn’t so long ago that 32 gigabytes was on your desktop or laptop. The company has also just announced their new operating system, with native USB support, so you will soon be able to plug a USB drive into a Nokia phone and it will recognise it as another disk drive, further increasing portability. So securing this data at the very edges is going to be an immense challenge.” Current security methods range from the incredibly ingenious to the incredibly crude. “I know of security guys who literally squirt epoxy resin into their USB ports so that they become unusable,” says del Prete. “But we now have to become much smarter. We have to develop software tools that allow CIOs and their staff to effectively know what is being put out to ports, and the ability to remotely turn ports on and off. This is going to happen on mobile phones as well, where things like remote kills become increasingly prevalent and important. The next big hurdle is going to be securing the data that is on these truly mobile computers that are in people’s pockets. There are tools to do this, but they are not nearly sophisticated or widely deployed enough.”

28/01/2011 13:39

EXECUTIVE INTERVIEW

Better automation for all Martin Bérubé looks at how IT process automation tools can help IT departments optimise their nightly production while reducing operational risks in today’s complex and heterogeneous computing environments. Why do IT directors need a better tool to run and manage their night time processes? Martin Bérubé. For 15 years now, I have personally been involved in the design and deployment of many customer data warehouse and BI solutions. In all cases, I have found that the need for better automation was a key requirement for my customers to fully realise the potential of their business solutions, even more so today with the increased demand for timely information, reports, analytics, dashboards, and more recently the need to interconnect with cloud-based solutions. Historically, IT process automation in the large enterprise has been provided by job schedulers who are generally static in nature, not well adapted to heterogeneous computer environments, and expensive to implement and use. The small and medium size enterprises have coped with a mix of application-specific schedulers combined with shell scripts, batch jobs and in-house programs to create their own process workflows. These traditional solutions to automation are no longer adequate for the modern day computer room. Th is leaves computer rooms across North America and Europe with poor visibility, control and documentation of their night time processes, making night time process automation one of the weakest links and a risk to the businesses that rely on them for near real-time information to make the right decisions. What are analysts saying about this problem? MB. According to Gartner, the current economic climate continues to drive the need for lower operations costs in the computer room by reducing human error and streamlining automation tools for enterprises of all sizes. Th is need is driving demand for the next generation automation tool; a tool that is more intuitive, dynamic, better adapted to exploit today’s popular information management and business intelligence applications, and, fi nally, easier and less expensive to implement and run. Of course, leading job schedulers are re-inventing themselves to become this next generation automation tool. However, this transformation will take several years and will continue to be focused mainly on large enterprise requirements.

medium IT departments are under pressure to produce the same level of quality and reliable information for their internal lines of business and external customer communities than their larger counterparts have been doing for a decade. Worse, they cannot continue to rely on application specific schedulers, shell scripts and in-house programs to manage their night time processing environment. It is just becoming too helter-skelter to manage and is often dependent on a specific highly skilled IT person. This has become a risk to the IT operation environment, and as a consequence to the business that relies on it. The next generation automation tools, what we call business process automation (BPA) tools, tend to focus on specific industry sectors, but their underlying approach is the same. Provide the shortest route to automation by exploiting the visual interface rather than relying on deep knowledge of the business applications or databases sitting behind them. Available since 2004, a BPA tool such as our flagship product agileWORKFLOW offers a simpler intuitive interface, and connectors to popular information management and business intelligence applications. Th is tool can be used directly by non-specialised qualified staff to completely integrate, centralise and orchestrate all the night time processes that we rely on to run our business the next morning – an assurance that few businesses can live without going forward. As I like to say, the modern day IT director needs to become the conductor of his own night time symphony of processes.

agileDSS CEO Martin Bérubé is a 15-year veteran and expert in data warehousing architecture. Bérubé has a proven track record in assisting large and medium customers in implementing data warehousing and business intelligence solutions they can rely on to run their business. Bérubé is also the architect behind agileWORKFLOW.

Is the need for better automation spreading to smalland medium-sized IT departments? MB. Yes. As we move from the information age into the ‘what do we do with all this information age’, small and

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28/01/2011 14:56

AGILEDSS AD.indd 1

18/01/2011 10:34

NEXT BIG THING

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The next generation process automation tool When it comes to reaching the full potential of your investment in enterprise information management and the business solutions that depend on it, agileDSS’ Martin Bérubé believes that a better process automation tool is the key.

istorically, depending on the size of your IT infrastructure, process automation has been dealt with in one of two ways: via an enterprise job scheduler, or by combining application specific job schedulers with scripts and in-house programs. However, in the last five years, the computer room environment has changed radically – from being fairly homogenous to becoming a heterogeneous environment that includes not only a diverse set of operating systems and databases infrastructures, but also includes connectivity to external cloudbased services. This modern day environment complicates how you manage and optimise your production cycles, and highlights the limitations of current automation solutions as they are stretched to their limits and therefore cannot easily adapt to these new requirements. In addition, the pressure to leverage investments and exploit newly generated data to produce timely information for line managers and executives at the start of every business day has sky rocketed. Let’s face it, the traditional approaches to automating your processes to support your production cycles have become antiquated. Why? Because they do not deal well and interact well with modern day heterogeneous and disperse computing environments. And because they require in all cases a highly specialised IT individual with specific business application and database knowledge to be able to string all the processes together. Because they do not deal well with complex event dependencies that are required to create an optimal and rouged process workflow that can deliver an effective production environment.

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The most recent Gartner report on the subject predicts that today’s enterprise job scheduler will evolve within the next two years into a more dynamic, connected and visual tool to better meet today’s enterprise needs. But why wait? The next generation automation tool is available today and is being marketed as a business process automation (BPA) tool. These tools provide the shortest route to automation by exploiting an intuitive visual interface rather than relying on deep knowledge of business applications and databases to produce code and scripts. They allow the seamless integration of heterogeneous processing environments via a set of predefi ned and configurable tasks that can be linked and orchestrated via events, while also providing control capabilities without programming, thus making it usable by any level of technical staff. Available since 2004, BPA tools such as our flagship product agileWORKFLOW, offer a simpler intuitive interface and connectors to popular information management and business intelligence applications. These tools can be used directly by non-specialised qualified staff to completely integrate, centralise and orchestrate all the processes that you rely on to run your business. In addition to being able to optimise visually your process workflows and reducing operation risks by its centralised approach, our tool provides the ability to build into your process workflows contingencies and intelligence by allowing you the capability to deal with complex event dependencies and defi ne custom events and tasks. Another key factor in building efficiency and ruggedness into your production cycles is the ability to connect and exploit native capabilities and functionalities of commonly used enterprise information management applications and business intelligence tools. Oh, and did I mention that all this is self-documenting and can be audited down to every task executed? According to Gartner, the current economic climate continues to drive the need for lower operations costs in the computer room by reducing human error and streamlining automation tools for enterprises of all sizes. agileWORKFLOW is ready to respond to this need both in its capabilities and its pricing model. At agileDSS, we are sensitive that purchasing and implementing a new tool can be expensive and time consuming. Th is is why we offer a free, complete and ready-to-use version of agileWORKFLOW. As I like to say, modern day IT directors need to become the conductor of their own symphony of processes, and we are ready to enable them with the best orchestration tool for the job.

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01/11/2010 13:50

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Getting value from 21st century analytics in ﬁnancial services TIBCO Spotﬁre’s Brian Perfect asks, will game-like experiences become the norm in future business software?

ompanies in the financial services industry are awash with ever increasing volumes of dynamically changing data, for example relating to financial markets, customers, trades, positions, business operations, products, portfolios, assets and liabilities. All companies have systems, tools and applications to help; however many of these, whilst good at what they were specifically designed to do, lack flexibility. Furthermore, traditional business intelligence (BI) tools only provide the answers to pre-determined questions. So it is not easy for people in financial services companies to gain insights that are timely and outside of the box, and to take decisions and actions that will give them a competitive advantage. Today, we can use advanced 21st century analytic techniques to rapidly gain insights from vast amounts of data. In this article I will touch on three of the techniques that offer real benefits to fi nancial services companies: in-memory dynamic visualisation; free-dimensional self-service; and integrated statistics and visualisation.

In-memory dynamic visualisation More and more, business professionals have rich, visual, interactive user experiences with computer games software outside the office. As a result, the people who increasingly make critical decisions in organisations have an entirely different expectation for human-computer interactions. Will game-like experiences be the norm in future business soft ware? The answer is increasingly ‘yes’ since it makes the user more effective. In fi nancial services, interactive visualisation is a powerful technique in risk management, portfolio management and attribution, client reporting, trade execution analysis, trading competitiveness and understanding business performance. TIBCO Spotfire is making a real difference today in all of these areas by applying the principles of game-like user experiences.

Free-dimensional self–service Consider a typical BI systems report. Getting one produced by IT – asking the right questions in the right ways, isolating the right information, formatting it for delivery – is pain-

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Brian Perfect is an IT industry veteran with over 25 years experience primarily in the ﬁnancial services vertical. Today he is Director of Financial Services Industry Sales, EMEA at TIBCO Spotﬁre and prior to that was Director of Sales, EMEA for Insightful, which was acquired by TIBCO in 2008.

ful in its own right. Even then it is fi xed. Is that how a game works? No. Presented with a fork in the road the game user can go back or forward down either fork, or explore their surroundings. Many analytic needs in fi nancial services are best met through this free approach, examples being credit and counterparty risk management, forensic auditing, trade surveillance and fraud detection. These applications require the analyst to either put themselves in the shoes of a rogue trader, or simulate errant and unexpected risk factors. TIBCO Spotfire is a powerful selfservice solution for these needs, blowing away traditional BI design limitations.

Integrated statistics and visualisation Visualisation in itself is powerful, but in many areas of fi nancial services there is a need to apply advanced statistics. A challenge with the abstract world of quantitative fi nance is that it can be very hard for business decision-makers to understand what the numbers mean and how they relate to their business. Quant teams therefore use graphical tools to present their work, which is fi ne until someone in the business asks a follow-up question that requires a model to be re-run with different inputs or parameters. In fi nancial services there are a number of areas that are best served by a combination of the human mind, assisted by visualisation, and the rigour of advanced statistics, for example, capital modelling and capital allocation, risk aggregation, stress testing and scenario analysis. TIBCO Spotfi re provides this, its interactive visualisations are seamlessly integrated with the TIBCO Spotfi re S+ and R (open source) statistical programming languages. 21st century analytics, specifically in-memory dynamic visualisation, free-dimensional selfservice and integrated statistics and visualisation, combined in a compelling game-like user experience gives companies in the financial services industry the opportunity to quickly gain insights into large volumes of changing data, and to make decisions that result in competitive advantage. TIBCO Spotfire is a leading platform in 21st century analytics and across the world companies that use it see benefits every day.

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Cloud computing still generates plenty of interest, but that interest remains stuck in an ever-revolving debate of doubt and concern. So if the cloud landscape is to ever fully mature, what more should cloud providers be doing to convince the industry of its worth? Business Management investigates.

verblown, overexcited, exaggerated and extreme – hype phrases that rarely infi ltrate the fi nancial service technology’s carefully crafted perimeter of suspicion and risk aversion. IT experts working within this field shy away from mind-blowing adjectives and extreme superlatives. They are naturally risk-averse, careful and considered individuals who cringe at the merest hint of hyperbole. But at the same time, they are inquisitive, intelligent, and under increasing pressure to perform, to do more with less and to further support the business goals of their organisations. Hence, when a new industry trend comes along that promises all this and more, they take notice, but are wary of the ‘and more’ part. Cloud computing has been the number one source of hype hoopla throughout the industry for the past couple of years. Introduced as the solution to all CIOs’ concerns, the cloud landscape was meant to transform the ICT industry. It was going to improve systems, cut costs and make data more efficient, easier to store and access, and easier to scale. But here we are, well into 2011 and still the familiar concerns persist: ‘Is it secure?’ ‘How does it work?’ ‘Will it work for my business?’ ‘Does it actually add any value to my key business metrics?’ In an industry as fast-paced and technically savvy as fi nancial services, are the cloud’s stuttering adoption rates a cause for concern? Or does the fact that – even in an industry as famously safety-conscious, decisive and unadventurous as this – cloud computing is still being deliberated over again and again hint at something positive for the technology? Is there a future for cloud computing in the fi nancial services industry, or has the hype put a dampener on the cloud’s buzz? It’s an interesting topic for which there are few easy answers. However, below are five steps the cloud computing industry could undertake in order to gain the trust and support of the technology executives working within the fi nance industry.

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Top 10: reasons cloud computing deployments fail 1. Failing to define success: Setting unrealistic expectations is the number one reason that organisations have trouble with cloud computing. If you don’t set concrete, realistic goals, don’t be surprised when the cloud doesn’t meet your expectations. 2. Failing to update computing concepts: If everything is off-site, how do you know the level of over capacity you actually have? Failover, backups and redundancy were easier to visualise in the on-premise computing world, but the whole concept of data being in a specific place is challenged by cloud computing. 3. Failing to hold service providers accountable: Organisations can easily lose one or two percent of revenues when mission-critical services go down even for a short amount of time. When that happens, it’s important to hold the service provider accountable. 4. Failing to hold yourself accountable: Even if you have a solid SLA that has provisions for remediation, that doesn’t mean you are off the hook if something goes wrong. 5. Failing to scrutinise vendors: While it’s a pretty safe bet that Google, Amazon and IBM will be around in the years to come, you can’t say the same about numerous cloud computing start ups. In 2009, Coghead for example ran out of capital and gave customers a few short weeks to find new homes for their data. 6. Failing to understand the service supply chain: Even if your cloud provider is stable, do you know how stable their service providers are? It’s important to understand the entire service supply chain in order to accurately judge the viability of the service you are signing up for. 7. Failure to manage and monitor applications: If you application performs poorly, your customers will blame you, not your cloud provider, ensure you have the proper performance management and monitoring tools in place and you’ll have a better chance of catching those problems. 8. Failing to understand financial realities: While the cloud may be cheaper than in-house IT, financial visibility into IT systems is tricky and as such the answers as to budgets are fuzzy at best. With cloud computing those costs are painfully clear. 9. Failing to understand the legal complexities of the cloud: When you outsource computing resources, your business, no matter how small, may have opened itself up to the legal risks of a much bigger company. You may have to comply with laws from different jurisdictions, and you may face different liabilities, depending on where your data resides. 10. Failing to get off the sidelines: Finally, the biggest reason cloud deployments fail is because they don’t get started in the first place. Too many organisations fret about issues that are not all that different from the ones they have in their own data centres. Outages, security breaches and compliance are all general IT challenges, not cloud-specific ones.

Source: itmanagement.earthweb.com

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Step 1: Sort out security Cloud security remains the number one concern. Clearly, the subject of security has been the biggest barrier to cloud adoption in the financial sector. Figures from the Eighth Annual Global Information Security Survey conducted by PricewaterhouseCoopers and CSO Online show that 62 percent of the 12,847 global businesses they surveyed still have ‘little to no confidence’ in their ability to secure assets they put in the cloud. “It is clear that a number of CIOs and IT executives within the financial industry are pushing back against the cloud,” says Malcolm Eylott, Senior Vice President and Global Head of Operations and Technology at TD Bank Financial Group. “The issue of general security is a concern for everybody, and until that is cleared up there will always be this necessary discussion.” Len Johnson, Senior Vice President and IT Infrastructure Manager at RBS North America, agrees. “The biggest concern we have with the cloud right now is security. In a private cloud environment I think security is pretty good, but it is the public cloud sphere where we still face issues,” says Johnson. “Losing data is always a major concern, but losing data across the cloud landscape means losing it in somebody else’s environment, which is completely unthinkable for people working in the financial sector.”

Step 2: Define what the cloud is There is still a great deal of misunderstanding around the cloud. Figuring out what cloud computing actually is has been a continuous challenge for everyone working in the IT sector. Actually working out how to then leverage the cloud to one’s own end has proved even more troublesome, and it is this

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confusion and misunderstanding that is hindering the cloud’s wider adoption in the financial technology industry. “Unlike a natural cloud, the cloud computing landscape hasn’t floated away,” says Hong Loh, Chief Architect at Legg Mason. “It has been around for two or three years and it is still stuck in limbo. So it is kind of like an unnatural phenomenon. What does the industry want with it? It has remained a buzzword because of this misunderstanding, and this conflict between the demand for the cloud and the confusion about its value.” Eylott agrees that the way the cloud has been portrayed has deepened both the debate and the confusion around its true value to the financial industry. “Approaching the cloud through third parties can appear to be very, very risky,” says Eylott. “Adopting something like a public, outsourced cloud is not really that different to data centre optimisation or server optimisation – something that most firms have been doing for years. The only difference being you have got somebody else managing your data for you, but you are no longer in control of the data centres and servers.”

Step 3: Differentiate the cloud from other technologies The cloud has to compete with virtualisation software and strategies. Cloud computing can be inclusive of virtualisation, but they can also be implemented and extrapolated as two different processes. Both help to deliver optimised resources, scalability and on-demand utilisation, but virtualisation can be maintained and managed completely within a company’s own enterprise ﬁrewall. Does such competition hinder the cloud’s growth?

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“At RBS, we have just completed a very aggressive section on virtualisation,” says Johnson. “I have a target: to virtualise 60 percent of the servers at 60 percent of our workstations. This programme is driven by cost and recoverability issues. We have gone down the virtualisation route rather than the cloud-computing route because of the ability to move a virtual machine from one environment to another, to replicate it quickly. So if you had a failure on one system you can easily move it over to another, replicate it and be moving again.” “Is cloud computing about sharing service and utilities and hardware and software?” asks Loh. “If it is, then true virtualisation technology enables that; it makes hardware sharing easier. Is this what the industry wants?”

4: Provide a more managed service space Cloud as a utility could represent the future of the industry. Whether used as an analogy or as the reality, if the cloud computing landscape could re-engineer for itself a place in the utility ﬁeld of businesses, then its future adoption rates could increase. The analogy goes that homes and business do not have their own electricity generators and instead rely on an external provider for electricity. This provider responds to their demands for service and scales accordingly. Swap ‘electricity’ for ‘hosted services’ and you have cloud computing. “The vendors of cloud computing technology are looking to provide a utility-type service, almost like your power and your telephone service that you can easily buy without thinking too hard,” says Loh. “This is what the vendors want, but is this necessarily what the customer needs? Electricity works this way because it is

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a dumb thing. You plug it in and it works. Phone services work in a similar manner. But to expect everybody to shift their application to a cloud is unrealistic because the ﬁrst step to sharing is being able to give up your data centre and move it into a core location. “However,” continues Loh, “if you can move your info into a managed service space where things like email, instant messaging and collaborative software can be hosted, then this type of value-added service is where the cloud computing landscape can really thrive.”

Step 5: Be patient

“Technology always finds a way to mature if the interest is there” Len Johnson

Cloud concerns will disappear, but it will take time. As security issues are overcome and the true value of what cloud computing can bring to the industry is realised, the majority of the concerns that surround this technology will fade from view. Cloud computing is still a relatively new phenomenon, and one that has warranted plenty of thought and consideration throughout the industry in just a short period of time. As IT experts begin to gain a better understanding of how to leverage this technology, the cloud computing landscape will become increasingly demystified. “Grid computing is a classic example of how cloud computing can be leveraged for us,” explains Johnson. “It can slide into the cloud and you can then pull all the processor capabilities you want out of it. You could basically metre it up and down, as you need it. As we become more comfortable with this model, I think all of our fears and concerns will disappear. It is just like when PCs first hit the streets. Nobody thought they were going to amount to anything, but now we have got to the point where they are second nature for everyone. Technology always finds a way to mature if the interest is there, and that is what I think is going to happen with the cloud.”

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INDUSTRY INSIGHT

DEMYSTIFYING THE CLOUD Mark Scanlon of Vision Solutions explains the details of the next generation of technology.

f you’ve been intimidated by all the hype surrounding cloud computing, you’ll be glad to know that for once in your life, this technology is pretty simple – at least in how you and your company use it. The cloud is just a metaphor for the internet and it works just like an electricity grid – resources, soft ware and information are provided to users on demand and in the quantity demanded. The cloud network behaves like a collective virtual computer, where the applications can run independently from individual computers or server configurations. The hardware isn’t important; the application is. Any business of any size, and even individuals, can consume storage space, soft ware and other resources ‘in the cloud’ without having to own or manage a datacentre. Recovery as a service (RaaS) Leveraging public or private cloud computer infrastructure to allow for another avenue for disaster recovery is becoming popular as more companies begin to explore cloud architecture. Vendors can provide tools that leverage cloud computer and storage platforms (such as Amazon Web Services, EC2 and S3 products) to create a complete backup and rapid-restoration platform for systems capable of virtualisation. Some allow for protection of entire servers from your location, over a VPN connection, to one or more public cloud-based data-warehousing solutions. If a server fails at the primary business location, it can be restored either to another cloud computer resource, or restored back to the primary location onto repaired or replaced hardware. Often, the choice of restoration location isn’t required until the restore is about to begin, which allows for a great degree of flexibility. Organisations are contracting for cloud computer resources and then parcelling out those resources to business units for DR purposes, while allowing these business units to continue business as usual on their current production data-systems. The advantages of this are numerous. You can introduce the idea of public or private cloud technology into

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areas that would be hesitant to put their production systems on such platforms. In short, cloud platforms can help introduce using cloud computer and storage resources in a non-production form – this is the traditional entrance-way for emerging technologies in the enterprise, and a great fit for public and private clouds. How cloud backup and recovery works Cloud backup and recovery requires a combination of technologies: backup and recovery soft ware plus a cloud service provider (CSP). Th is combination allows you to replicate data and system state information from servers in your production environment into a virtual server – called a repository – running at the CSP. From this repository, you can restore entire servers to virtual machines – also housed at the CSP – to resume normal operations quickly and effectively. Good backup and recovery soft ware is more than an IaaS target DR hardware site, it will be a full RaaS solution that includes both the target infrastructure, and the technologies to replicate and recover your data effectively in the cloud. Is cloud backup and recovery right for your organisation? Finding the right balance of features and price to meet your RPO and RTO is one of the most critical things you can do to protect your business. Today, the idea of the cloud still has a long way to go before we can be sure exactly what its defi nitions, roles and limitations will be. There is a tremendous amount of promise in public, private and hybrid cloud platforms, and much of this promise can be seen in the real-world implementations of cloud technology in the market today. Leveraging cloud platforms where they make the most sense is a matter of careful evaluation and proper migration – in much the same way as most other technology within the corporate organisation. The right partners, the right tools and the right platforms can all work together today to build the data systems that will continue to serve you well for the future.

Mark Scanlon, Regional Director for United Kingdom and Ireland, has worked for Vision Solutions for the past four years in developing the business partner channel and strategic direction for the company. Mr. Scanlon has over 25 years experience working in the IT industry in a variety of sales and sales management roles in the UK and Europe for a number of blue-chip vendors and ISVs. He has great insight and knowledge through working closely within the banking and ﬁnance sector as well as retail and logistics .

28/01/2011 13:41

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18/01/2011 10:40

HOPS TO IT

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arlsberg CIO Kenneth Egelund Schmidt talks to Ian Clover about his company’s use of video conferencing technology, his strategies for diversifying the IT department and the everpressing need for transparency in business.

or a company that sells upwards of 12 billion litres of beer a year, you could be forgiven for believing that the importance of Carlsberg’s IT infrastructure lay some way down its list of pressing priorities. The company is, after all, one of the most instantly recognisable brands in the world, the largest brewer in Northern and Eastern Europe and the fourth largest on earth. Its logo adorns football shirts; its beer taps parade proudly and invitingly atop bars across the globe; its innovative selfpour mini kegs are the discerning party thrower’s choice for sophisticated take-home drinking; and the satisfyingly unmistakeable ‘hiss’ that emanates from its canned beers (and plastic bottle varieties) when chilled and then opened on a hot day has come to shape the soundtrack and atmosphere of summer music festivals more than any band has managed to, ever. Its advertising has been ingenious, inventive, evocative and playful. Carlsberg is a beer of fun, friendship and frivolity. Taken at face value, Carlsberg is the company we all run to on a Friday afternoon, when tools have been downed and time is one’s own. It is always there, reassuringly extensive and probably the best friend in the world. It will

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never let you down. But it is also an organisation that is as smoothly run as its produce is to enjoy; its ubiquity built upon a management team possessing whip-sharp business sense; its brands and growth a result of intensive market research and inspired acquisitions. None of the benefits the average Carlsberg consumer enjoys would be possible without the dedication and hard work of its back room team, of which the IT department is something of an unheralded heavyweight. As with any large organisation, the role played by the IT department is instrumental in shaping Carlsberg’s ability to diversify, grow and maintain its position as a global leader – which is why Kenneth Egelund Schmidt, Carlsberg’s CIO, is a figurehead who is acutely aware of the responsibility his department shoulders on a daily basis. Th is responsibility is manifest in the various pressures he feels to deliver leaner, more efficient IT in order to assist Carlsberg in its increasingly expansive logistical efforts. “In recent months, there has been a drive to streamline and digitise Carlsberg’s IT process in order to create transparency in our cost of processing,” says Schmidt, who is keen to emphasise just how important transparency is for

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his department. “This might sound like a simple task, but actually being able to cost what it takes to conduct a task or run a process is an important part of Carlsberg’s IT strategy, not to mention the overall strength of the business.”

Streamlining IT Schmidt has been at the helm of Carlsberg’s specially created Carlsberg IT subsidiary for the past two years. During his time there, he has been instrumental in overhauling the company’s IT infrastructure in order to bring it in line with the key deliverables that other departments under the Carlsberg umbrella – such as its ever-innovative marketing department and its enterprising business development sector – must adhere to. “One part of my job is based around what I call ‘making a fast business case’, because in my role I see a lot of projects that are quite complex; projects that take a lot of time to implement and develop before we see any of the payback,” says Schmidt. “So for me, to be able to streamline a process, to say ‘let’s go for 50 percent of the potential savings, but then have a much faster project’, and then evaluate and maybe take 20 percent later on, is a better way of working.” In a company as large as Carlsberg, if a certain department can advertise its credentials and promote its own worth, it can create for itself a settled and conducive working environment in which it is afforded time and funds to streamline and test its own business objectives. “In some of

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our projects, we have removed some of the complexity by being less ambitious,” reveals Schmidt. “Within the Carlsberg system, as we drive more and more for compliance in processing and reporting, this ability we have to utilise a process gives us more control, which is an argument we use to supplement our business case. So, our internal audit is a really great exercise to follow in this case. Internally, we have decided that we have an ambition to make the IT department a leading example of good business processes within the company of Carlsberg.” In order to achieve this, Schmidt has proactively nurtured an atmosphere of pride and acclaim within his department, concluding that, if his own team will not champion the work they do, who else will? “We develop our processes and then we tell the company about it, to serve as an example that can be carried within another domain.” Schmidt has also worked hard to redefine not only how Carlsberg’s IT department is viewed from within the company, but also its key deliverables, too. “I have totally changed the organisation in IT at Carlsberg, and one of the key points has been the appointment of a senior manager who is actually responsible for processes. “So he’s driving the end-to-end processes across IT. And that means he is actually quite powerful, especially when compared with the old system we had where domains and silos where commonplace. Now, he can make sure that we have continuous improvements, measurements and communication throughout.”

Carlsberg brands include Holsten, Tuborg, Kronenbourg and Grimbergen

Video conferencing One tangible performance delivered by Carlsberg’s IT department was seen during the drama that unfolded when the Icelandic ash cloud grounded pretty much all of Europe’s planes during a fraught couple of weeks towards the end of April 2010. Businessmen throughout the continent were grounded, with Carlsberg’s no exception. Companies from Ireland to Italy had little option but to seek other

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transport or business arrangements, with a number of the more innovative enterprises adopting or utilising technology to help them overcome the logistical issues they were now faced with. “Like anybody else, we couldn’t travel, but we still had a lot of important business to conduct,” admits Schmidt. “It was a huge inconvenience for us, but we were able to deploy and utilise soft ware to overcome this. First of all, we made a site where all equipment was available for everybody, and in parallel with that we implemented an office communications server from Microsoft. Th is was one stream of our response to the ash cloud; the other was video conferencing technology that enabled us to conduct meetings which otherwise would have been cancelled.” Carlsberg’s video conferencing capabilities are not, however, wholly reliant on ash clouds, tube strikes or other forms of transport upheaval to prove their worth. “While the ash cloud was something of a catalyst for our video conferencing technology, we have begun employing it in more general usage. We have OCS conferencing capabilities that initially had only a medium penetration within the company – despite the technological ability we had in both video conferencing and office communications servers, and the widespread understanding that it could save us a lot of time, there was still this strange hurdle to acceptance.” But since a fair proportion of Carlsberg employees were forced to utilise video conferencing technology during the volcanic ash cloud, there has been, admits Schmidt, something of an upsurge in interest. “Once you’ve used it once, it becomes so easy and normal, and utilisation of this technology saves the business a lot of time and money. So what we are really looking into now is how we can remove these initial barriers for utilisation, looking into finding out what it takes to make people confident with using the technology.” A reluctance to embrace new-fangled technologies is nothing groundbreaking. Even the most confident, self-assured jet setting business delegate can be reduced to a mute, fumbling, obsequious wreck when faced with something as seemingly arcane and fiddly as video conferencing units. Culturally, too, Schmidt has identified an aversion to adapting to this technology. “It is sometimes strange, because even when we have a technician on call who can deal extremely quickly with any problems that arise, there is still some aversion to video conferencing technology. I suppose there remains a level of education and exposure to the technology that has to happen before it becomes widely accepted.” Schmidt is keen to encourage greater adoption and utilisation of video conferencing technology within Carlsberg because he sees the vast wealth of benefits and savings it brings. “Lack of time is a constant issue in business, and video conferencing technology tackles this directly. So instead of planning to meet up two weeks in advance to look into discussing an issue, video conferencing allows us to say ‘well we can hook up, share the presentation, discuss it and make a decision, and we can do this tonight.’ So it is this speed of decision that is actually driving adoption of video conferencing.” Cost reduction is a major offshoot of this, too, believes Schmidt. “For some of my team across

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Europe, we are using video conferencing technology intensively, and that now means the amount of time we spend in a plane is drastically reduced, bringing with it immense savings in both cost and time.”

Restructured and agile It is a perpetual challenge a CIO or IT director faces – how to cut costs, improve the business and ensure the IT department is seen as something more than just a cost centre. Today, there is at least a greater understanding of the role IT plays in ensuring a company’s objectives are met, but for some CIOs, the struggle to prove their department’s worth is a continuous one. “I don’t actually see a problem with being seen as a cost centre,” says Schmidt. “Because in the end, we are part of the same strategy within Carlsberg. However, we do have a duty to be perceived as an efficient part of the business, and that is something completely different. We are faced with a demand to be efficient, to be fast, and to be agile.” In response to such demands, Schmidt admits that he has often asked his IT department to think and work beyond its comfort zone. “Maybe I’ve been quite ambitious in what we do, but we actually spend a lot of time discussing the necessity of shared processes and end-to-end processes, supporting a pan-European and sometimes global objectives, so we have required global end-to-end processes. And this is a huge task, and something that brings me back around to that simple word of ‘transparency’. “Transparency,” continues Schmidt, “is actually twofold. It is transparency in our business, in our data, in our performance. Because basically, we come from a very local set up, and within a small snapshot, we have moved into this shared business model where our top management want transparency in everything. It is a major, major challenge

“There is still some aversion to video conferencing technology. I suppose there remains a level of education and exposure to the technology that has to happen before it becomes widely accepted”

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for us to achieve this, because what I am asked to deliver is transparency within IT costs as a consequence of how the business is behaving.” In such a demanding environment, Schmidt has to make doubly sure that every cost the IT department brings to the Carlsberg business model is quantifiable and accountable. “Just a few years back, cost was just allocated,” he says. “Now, like a lot of other people who have to put in a service catalogue with prices on the different services – and then depending on how IT services are actually consumed, pay for it – The IT department has to not only go from local to global, but it also has to build an entire business system within IT to support that. And that is a huge, huge task.” As a response to these pressures, Schmidt has developed a pan-European SAP system that can support both the local and the glocal markets, covering everything from finances to sales execution and marketing. “We have been extremely ambitious with our pan-European implementation of this SAP system,” says Schmidt. “Th is drive we have for transparency means putting everything in the shared platform, and we have been asked to accelerate that roll out [originally planned for 2014] simply because we need the platform sooner.”

Diversifying the IT dept Expansion, delivery, and diversity – all challenges that Schmidt has had to face and overcome in the past 18 months as Carlsberg has continued to grow and expand at an unprecedented rate. In 2008 the group acquired British drinks company Scottish and Newcastle in a joint venture with Heineken: a move that brought a greater range of products to the Carlsberg portfolio but also a wider IT network across separate departments spread throughout Europe. Such growth brought with it the potential for a number o of logistical headaches, and Schmidt has had to develop and refi ne the company’s IT department in order to cope with such a range of demands. “We looked at cloud computing; all of the pros and cons and, to be quite honest, have not yet found a compelling case for adopting a cloud-based model just yet,” says Schmidt. “What I’m actually doing is watching it mature, particularly in terms of the contracts and cost models involved. It does interest me, particularly the ability it offers you to scale up and down, but we actually haven’t identified any major applications where we need that capability.” Despite his reservations on cloud computing, Schmidt has given plenty of thought into how he hopes to diversify Carlsberg’s IT department in the future, in order to better deliver and drive the company’s business needs. “In my world, the IT department would consist of two parts,” says Schmidt. “The first is a run part, and then another part I call ‘growth and optimise.’ The run part is what I call the ‘boilerman’ – just making sure the lights are on. The other part is simply supporting the business and taking the cost out of doing business and, quite ambitiously I guess, perhaps sometimes providing business opportunities.” Some aspects of Schmidt’s vision have even already been formulated. “What I am doing within Carlsberg IT is

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Along with MasterCard’s ‘priceless’ g’s campaign, Carlsberg’s n the ‘probably the best in world’ advertisements nts have captured the er public’s imagination more than any other over the past decade. BM pays tribute to some of the most memorable… Football For the English, the ‘Carlsberg don’t do pub b teams’ advert is the best loved of all, bringing ging together the great and the good of English h footballing past and pitting them against a real, bogstandard Sunday pub team. The resulting demolition handed anded out by the old timers is only bettered by the sight of them em all enjoying a post-match pint in the pub of their vanquished hed foe, accompanied by the infamous ‘probably the best pub team in the world’ blurb.

BBQs Shamelessly aimed at men of a certain age e with an aversion to vegetables, Carlsberg’ss version of the perfect barbecue goes like this: reassuringly ordinary-looking guy approaches the barbecue and is presented with a succulent breast of chicken, three plump sausages, two huge hamburgers and a ‘salad’ consisting of a sprig of parsley, all the while clasping a chilled bottle of Carlsberg. Roll that tagline…

Nightclubs Complimentary bouncers; beautiful girls insisting on no small talk, just dancing; obliging DJs happy to turn the music down for you when you order a drink at the bar (Carlsberg, naturally), and a legion of taxis waiting for you as you depart, sheltered from the rain by those ever-helpful bouncers – Carlsberg’s version of the best nightclub in the world is not without its faults (he does leave alone, after all), but it looks pretty good.

Banks In what is now time-honoured Carlsberg fashion, an unassuming protagonist enters a sleek, futuristic bank, is ushered into the friendly bank manager’s ofﬁce where he is offered a plush sh seat and a chilled pint by the roller-skating and beautifull assistant before asking for a loan of €50,000. The bank manager instead writes out €75,000 and offers the simple ple erg proviso for him to ‘pay it back whenever you can’. Carlsberg doesn’t run a bank you see, but if it did…

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splitting the IT department into two focus areas which are closely interlinked but their focus is split. There are also two different budgets: the run part should be reduced to become more efficient. The other part will make sure that we can support any upcoming project. This is where we should optimise based upon the business case, not absolute spending. This drives a logical sweet spot for IT within project and portfolio management. We are also building competencies within change management and training, simply to make sure that we actually harvest the value of the systems, not just by enabling the business, but actually making sure we achieve the desired impact.” Carefully considered, cost-focused and impact-driven IT implementation procedures are driving Carlsberg’s business objectives, with Schmidt at the controls and a dedicated, ambitious team forming a capable and efficient engine room. Despite the recent recession, Carlsberg has continued to grow, and the company’s IT department has had to adapt to this expanding environment. “Looking back three years,” concludes Schmidt, “there were a lot of projects being conducted. Right now, although we still have a huge activity level, we are so much more focused on the two prongs of cost and benefit. We found, for example, that when rolling out the shared platform the demand for infrastructure was even more apparent that ever before. Additionally, we still have a high level of expenditure, but it is again much more focused than before. Transparency in decision-making will be the main focus for us moving into 2011, and in order to do this we will focus on platforms. In terms of cost-reduction, I am still working on our commitment to retire our legacy systems, and then it is my fi rm belief that the IT department can make a huge effort in becoming more active in developing and implementing new business processes and models, which is actually the whole point behind a lot of the things we’re doing with IT.” Transforming the IT department from a reactive, cumbersome department into a flexible, agile and proactive arm of the business is Schmidt’s ultimate aim. “What I really like about Carlsberg is the fact that there is an extremely open dialogue between departments. So if you stand up and take the initiative, something happens. But again, it is important because once we have the platforms in place, we need to actually extract the value from them. And I think IT is obliged to really be proactive and show that the possibilities it brings are actually beyond and can surpass the capabilities the business as a whole thinks it can deliver.”

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CONTENT MANAGEMENT

Delivering on the

personalisation Why web content management is ﬁnally looking to live up to its potential.

wo years ago, the boffi ns at Google made a startlingly discovery: that there were over one trillion unique URLs on the web. Understandably, fi nding, indexing and linking all those pages is a major challenge for the search giant, and in response Google downloads the web continuously, collecting updated page information and re-processing the entire web-link graph (similar to a map made up of one trillion intersections) several times per day. It’s the computational equivalent of fully exploring every intersection of every road in America – albeit a map about 50,000 times as big as the US, with 50,000 times as many roads and intersections – and doing it multiple times in each 24-hour period. Of course, the challenge for web content managers is somewhat different; after all, most firms will typically only deal with a tiny fraction of those one trillion pages. But nonetheless, as the web continues to become a central hub for interacting with your target audience, developing a coherent and consistent approach to content remains a key issue for fi rms everywhere. Traditional web content management (WCM) solutions have been constrained by their siloed nature. But with companies increasingly beginning to recognise the benefits of WCM technologies built specifically to empower marketers to take ownership and accountability for website

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promise By Ben Thompson

engagement, there is a growing realisation that web content can have significant strategic value if integrated into wider marketing, branding and customer engagement efforts. As a web content management strategist, analyst and consultant with research fi rm The Gilbane Group – as well as President of content management community CM Pros – Scott Liewehr knows a thing or two about where the market is headed. And he feels content management is fi nally about to start delivering on its initial promise. “When web content management fi rst became a hot topic 10 years ago, fi rms were looking to it for a couple of things,” he explains. “First and foremost, they were looking for efficiency. They wanted to manage the content for numerous websites through one system, re-use content easily, and put the power of managing that content in the hands of nontechnical users so that marketers or business folks could edit that content through a simple interface. That was relatively straightforward. But secondly, they wanted to be able to deliver personalised experiences on the web, delivering content to individuals based on who they are and what the company knows about them. And this second piece was much harder to get right.”

2010 was the ﬁrst time in

23 years Pepsi did not air the Super Bowl ad, focusing on online presence instead

Technology developments But whereas Liewehr feels that the technology wasn’t ready to deliver personalisation 10 years ago, he claims

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“Using your content management system as the single repository for customer information can further help with enhancing the customer experience”

the situation is very different today. “The tide has turned,” he says. “Vendors and their technologies have matured, and they’re now at a stage where they can provide a more personalised experienced. Web experience management is the phrase of the moment in the vendor community, and it is all about engaging consumers, being in their context and in their environment – being as close to them as possible.” Of course, one of the challenges presented by this approach is dealing with the sheer number of different channels, contexts and environments out there. And this is where the degree of personalisation offered by the convergence of online marketing platforms and web content management systems is really helping. Previously, explains Liewehr, there was a sense that the right hand didn’t really know what the left hand was doing when it came to online marketing efforts; email blasts were impersonal and uncoordinated, a one-size-fits-all approach that lumped all customers into the same bracket. Today’s solutions, however, offer a very different model. “With web content management systems today, we now have the ability to know so much more about a person than they’ve been traditionally willing to tell us,” says Liewehr. “Either explicitly (because they downloaded something and gave us their information) or implicitly (via their on-site behavior), we are able to get much closer to the customer and tailor our messages to them accordingly. And so that convergence allows the kind of crosschannel consistency that wasn’t there before.” Using your content management system as the single repository for customer information can further help with enhancing the customer experience. Liewehr believes too many fi rms have one source for their email blasts, one gathered from their online advertising hits, and such an approach just leads to inconsistencies and poor customer engagement. “If you have one repository where you have a customer profi le, and you continuously feed that rather than keeping the information in different silos according to the channel, then you can establish that consistency, which in turn will help with user experience.” It’s an issue that has become especially pertinent given the recent explosion in the use of social networking sites. For one thing, social media provides a whole new basket of channels to manage; for another, it allows customers to share their experiences of your brand in ways that have never been possible before. “Social media is the elephant in the room, for sure,” says Liewehr. “But the companies that are winning today are those that are embracing social media and figuring out how to turn it to their advantage, rather than just ignoring it or viewing it solely as a challenge.”

Marketing messages He believes content management can help companies capitalise on the potential for social media in a number of ways. The first is as a customer listening tool. “It’s more information about your consumers, especially about your consumers’ perception of your brand,” he says. “If people

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are tweeting about you on Twitter, or if they’re writing messages on a Facebook page about you, there are certainly content management technologies that can help aggregate and analyse that information for you. So having your fi ngers on the pulse of the social media channel is certainly useful and something that content management systems can help you with to a certain degree.” However, the greatest potential lies in using content management systems as a vehicle for driving your message to the various social media sites and seeing those as additional channels. “We’ve always talked about engagement with consumers on our websites, but social media provides much more true engagement because, obviously, there are actual conversations that are taking place,” says Liewehr. “The challenge to marketers and to content management systems is to figure out how to harvest all that information, measure it and make use of it effectively.” He cites the example of big brands that are stopping their traditional marketing campaigns – where they create separate marketing sites for each campaign and retain overall control over them – and instead moving marketing activities to their Facebook pages. For example, 2010 was the fi rst time in 23 years that Pepsi did not air an advertisement during the Super Bowl, preferring instead to focus energy and money on its online presence where the brand believes a younger and more accessible demographic is spending the bulk of its time. The Pepsi Refresh Project featured social-networking campaigns that leveraged the participate-and-vote-online model that many brands have used in the past to encourage consumers to engage with their products; Pepsi offered to donate more than US$1 million in February alone to social causes and community projects nominated and selected in a vote by fans. It was a brave move, but industry watchers believe it has already paid dividends. According to a recent survey by Nielsen, Pepsi accounted for more than 21 percent of the media coverage and online buzz around this year’s Super Bowl advertising – about 10 times as much as big rival Coca-Cola – while an added bonus was the fact that while Pepsi spent US$33 million on Super Bowl advertising in 2009, the Refresh Project cost just US$20 million. For Liewehr, it’s an example of what is possible – although he cautions against rushing in blindly. “The upside is they can attract fans and engage in actual conversations; the downside is that they have much less control,” he explains. “The analytics that marketers like to depend on – click-through numbers, drop-off points, conversion rates – go out the window when you’re dealing with other channels that you don’t have control over, such as Facebook. We have to create other metrics by which to judge the value of these campaigns, whether it be number of fans, positive responses, etc. I don’t think it has been addressed very well yet, but there’s certainly a role there for content management systems. You’re seeing a few really embrace the social media channel and talk about pushing messages out and receiving messages in, and I think that’s really positive.” ■

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EXECUTIVE INTERVIEW

Private lessons from the public sector PFIKS’s Rob Smitten highlights the true value of information for businesses today.

What’s your view on information usage in business today? Rob Smitten. In many ways information is the most important business currency of our age. Getting the right information to the right people at the right time is crucial to effective decisions and the success of your business. Decisions based upon incomplete or obsolete information will be costly! The last few years have seen Web 2.0 and social media making an enormous impact, with tools such as Facebook and Twitter demonstrating business value. The problem now is now information overload. Getting tools that deliver the right information and swift ly translating that into meaningful knowledge is a key challenge for today’s managers. How do we realise the value of information for our businesses? RS. PFIKS has worked with clients for 10 years to provide workplace collaboration solutions. As a result, we developed Intelligus as a platform that provides a secure environment where teams and colleagues share information and knowledge to collaborate successfully. It overcomes organisational boundaries that prevent collaboration. Intelligus utilises information from the myriad sources available today – from enterprise data, to expert web sites and newsfeeds. It has the power to blend this with knowledge and conversations contained in less formal social media tools in a meaningful way. So how does Intelligus deliver real business value? RS. Imagine the social networking aspects of Facebook, the recommendation element of travel website Tripadvisor, and the value for money comparisons of moneysupermarket.com. Add value-added applications such as the iPhone apps and a suggestions feature like that used by Amazon. Intelligus brings these elements together around your business information. As well as this single view of information, Intelligus includes collaboration tools including web conferencing, blogs, forums, wikis, messaging and document management. Users choose the tool(s) that they feel most comfortable with to collaborate productively. Information doesn’t have to be lost in ‘the system’. Its easy style encourages people to share their knowledge and thoughts. Previously considered random piles of data are transformed into a valuable resource easily accessible via a powerful search facility. Ultimately the value of Intelligus is that it enables individuals to share ideas and knowledge within a framework that drives innovation.

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Where is Intelligus being put to work? RS. PFIKS has won a major competitive tender with the Local Government Association (LGA) to deliver Knowledge Hub (KHub) with Intelligus. KHub is pivotal for the transformation of public services across the UK whilst also reducing costs. It will be a truly innovative and world-class solution that will lead to major cultural change in the public sector. KHub brings people together in one place online to share ideas and information. Users can find peers and experts that share interests so they can help each other. It will even signpost where you may find valuable information or contacts that you may not have been aware of. With KHub, users will easily gather data from multiple sources and “mash” it together to provide a new innovative solution to an issue. For example, if you were examining trends in youth unemployment you could graphically display relevant socio-demographic data such as crime statistics and schools, league tables to understand any relationships. The possibilities are virtually limitless.

Rob Smitten leads Business Productivity Solutions at PFI Knowledge Solutions, leading UK specialist in applying knowledge management technologies for business transformation.

“Getting tools that deliver the right information and swiftly translating that into meaningful knowledge is a key challenge for today’s managers” Why was Intelligus chosen for such an important project? RS. Intelligus already delivers results for private and public sector organisations, including Department for Business Innovation and Skills, Technology Strategy Board and Humberside Police. Our agile approach to development also provides the flexibility the customer was looking for. Steve Dale, LGA Project Leader, identifies reasons for Intelligus’ selection. He says, “It ticked all the boxes. It delivered the cost benefits of open source soft ware; the inherent flexibility to integrate new web services and applications quickly; and it’s a highly secure and fully supported technology platform. It will help us to realise our vision for a truly innovative product that can adapt and evolve to the changing technology landscape.”

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Are documents drowning your business? Thomas Senger explains how document capture ensures the fast delivery of high-quality information to people, processes and systems.

G Thomas S. Senger is Kofax’s Senior Vice President of Applications Software & Services EMEA. Senger 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 channels and with alliance partners.

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lobal business has never been more competitive. In areas such as banking, insurance and utilities, where deregulation in many countries has opened the door to cheap offshore providers, the glut of supply has put price pressure on providers. But customers still expect the highest levels of service or they take their business elsewhere – helping customers to fi nd the best deals and switch providers is now a business in itself. Add to this the cost pressure exerted on businesses to aggressively market their capabilities and to address internal issues such as control and regulatory compliance, and it’s no surprise that many are feeling overwhelmed. Many businesses have identified the handling of incoming documents from customers and suppliers as a key area of cost and risk to their business. Documents such as application forms, letters, invoices and sales orders flood through the door in mailbags, on fax machines and into email boxes every day and they all must be dealt with promptly and efficiently to keep the business moving and the customers happy. Paper documents present a particular challenge – they are easy to lose, hard to trace and it’s difficult to distribute them effectively without incurring costs and increasing security risk. But hold on. Weren’t we supposed to all go ‘paperless’ about 20 years ago? Clearly this has not happened yet and it’s not going to happen soon either – according to PricewaterhouseCoopers, there are over four trillion paper documents in the US alone and they are growing at a rate of 22 percent per year. To alleviate the problems that document handling presents and stay competitive, industry leaders are investing in enterprise document and data capture solutions that enable them to efficiently ingest all incoming documents and efficiently convert them to actionable business data using scanning and recognition technologies. Automating capture is often a key element of a wider business process automation initiative. Businesses can invest in electronic workflow to formalise their processes, to deliver data to the right person at the right time and to trigger outbound communication to a customer, but until the information is in the system nothing happens – no customers served, no sales orders fulfi lled, no invoices paid. And that’s where capture steps in. Businesses that invest in enterprise capture achieve fast delivery of high-quality information to people, processes and systems, increasing the speed and agility at which they do business. Because every document is converted to a digital format as soon as it is received, access to

documents is easier to control so data security is improved, reducing the risk of fi nes for compliance failure. And the icing on the cake – labour costs are substantially reduced because there’s a vast reduction in manual document handling and data entry. The resulting ROI, typically achieved in less than a year, makes investing in enterprise capture one of the easiest business decisions that business executives will ever have to make. The growth in the market for capture is evidence of this – the global market for capture to feed a business process is growing at just shy of 10 percent yearon-year and the trend is set to continue. Renowned English philosopher and sociologist Herbert Spencer coined the phrase the ‘survival of the fittest’ in the 19th century. Now take a look at the way your business handles documents in 2010 – are you fit to survive?

Enterprise capture delivers three key capabilities:

he ability to capture documents and data at the point of receipt - in branch ofﬁces or at head ofﬁce possibly in a central mailroom – regardless of whether the document is delivered in the mail or through a fax machine or via email – and regardless of whether it’s an application form, an item of correspondence, a sales order, an invoice or any other document type.

utomatic transformation of the documents into process-ready information, using automatic document classiﬁcation to determine the document type and enable automatic routing through electronic workﬂow, and automatic data recognition to extract the necessary information to feed a business process.

elivery of documents and data to workﬂows and business processes, for example to an invoice approval workﬂow within SAP or a customer on-boarding process within a banking application, and also to Enterprise Content Management systems for storage and archiving.

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W S E RV I C E L I TH I M S A Managing 25,000 staff from 198 hotels across seven brands in 30 countries is no mean feat. Just ask Ben Bengougam. By Sharon Stephenson

t’s raining in Watford. Not the usual winter precipitation but the kind of downpour that makes animals start lining up in twos. It may well be that Ben Bengougam’s sense of humour is the driest thing about this dismal day. “My philosophy is to enjoy life and what you do, which of course involves smiling a lot,” says the European Vice President of Human Resources for Hilton Worldwide. “I believe that whatever your responsibilities, there should always be a touch of lightness and fun in the workplace. Enjoying yourself while you are working means that you are likely to perform better and provide guests with those experiences they’ll never forget. And we all know that this is the single most important factor in the success of our business.” There’s no doubt that Bengougam is well suited to the job of corralling 25,000 ‘team members’ from 198 hotels across seven brands in 30 countries: he’s as fi zzy as a human Alka-Seltzer and aims to infuse his staff with a similar passion for what they do. “Our global vision is to fi ll the earth with the light and warmth of hospitality, and to achieve that we need great hotels, outstanding customer service delivery and the very best people at the core of our proposition. For me, that is the core challenge of HR in any organisation and that’s certainly the case for Hilton Worldwide.”

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The seven brands in Hilton Worldwide’s Europe stable include Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Hilton, Doubletree by Hilton, Hilton Garden Inn, Hampton by Hilton and Hilton Grand Vacations, which covers everything from economy hotel brands to the luxury end of the spectrum. But mention possibly the worst economic downturn in living memory and the smile barely leaves Bengougam’s face. The recession, he admits, hasn’t dented the hotel industry from an HR perspective. “We are actually undergoing an exciting period of growth around the world. We have more than 78 hotels in the pipeline across our portfolio of brands, that are due to open between now and 2013. The core challenge from an HR point of view in this, or any climate, is to attract, retain, develop and engage the best people, which is something I think we do well at Hilton Worldwide and something we will continue to excel in as we realise ambitious growth plans.” The key to delivering a fi rst class service to customers is to offer a superior employment proposition to team members, believes Bengougam. “That includes world class training and development, career opportunities and rewards. We are determined to attract and nurture the very best people to come and work with us, and are committed to working with all our partners to position Hilton Worldwide specifically, and hospitality generally, as a worthwhile career choice. That’s why training and development is extremely important to us. Even during the recession there was no decrease in training investment which meant that we could continue our growth.” Managing such a diverse and geographically spread workforce does, of course, present its own challenges. “Globally, we have more than 3600 hotels in 82 countries and more than 130,000 team members. Our challenge is to ensure that although we are a global company, we remain relevant for our team members in every country in which we operate. Here in Europe, we have a focused and high-performing HR team who are absolutely dedicated to the task ahead. We are well placed to support the business by having an HR presence in all our hotels. Th is allows us to provide a tailored approach with at least one representative per property who supports recruitment, as well as team member relations and training.” With such an aggressive expansion plan in place, it’s no surprise that the HR strategy revolves around innovative staffi ng and a continued focus on quality. “Our strategy is to forge strong links and support the communities in which we operate. Hiring a strong local team at each new hotel also allows us to deliver an authentic experience for our guests. We aim to establish links with schools and colleges and provide new employment and career opportunities, often locally then internationally. Our aim is to prepare a legacy of a better skilled local workforce not only to deliver superior and authentic service and experiences to our guests, but also to enable them to better support themselves and achieve their ambitions.” When it comes to incentivising staff to deliver brand standards, optimal fi nancial returns to shareholders and

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owners and “delighting customers every time they come into contact with a Hilton Worldwide property”, Bengougam says a range of factors come into play. “It’s about selecting the right people, training them, motivating them, providing them with a great working environment and career opportunities and rewarding them for their valuable work.” Training and professional development is a key strand of the company’s motivational strategy and Bengougam says it’s an area that has continued throughout the recession to ensure that staff feel that they are progressing in their careers. The jewel in the training crown, however, is the Hilton University, an award-winning e-learning facility that is available to all staff across the world to access online learning and development. “Whether it’s management skills, personal development courses, learning a language, fi nancial training or brand toolkits – it’s all there for team members to access and benefit from.” Complementing this is a range of incentive programmes at all levels of the organisation designed to focus effort and reward success, the key levers of which are customer loyalty, brand standards compliance, revenue per room, profits, customer service measures, market share and return on assets. Bengougam, who started his career in the hospitality industry by doing everything from cooking to making beds, says career progression is a particular strength of Hilton Worldwide. “We have a strong history of promoting from within the company and providing opportunities for personal and professional development. What starts for many as a part-time job can often lead to a long-term career in hospitality. We have an online performance review system where team members work globally with their direct reports on professional development and career progression. We invest significant resources in ensuring that we attract and develop world-class leaders. For example, our Elevator programme is an industry-leading initiative that attracts talented graduates as well as identifies high potential within the organisation. These rising stars then go through an 18-month training programme before assuming their first management position, and are usually fast-tracked to senior leadership positions.” Ask Bengougam about succession planning and he’ll launch into a detailed dissection of effective leadership, empowerment and inspiration of the individual. “We invest significant resources in ensuring that we attract and develop world-class leaders. For example, we have many best-in-class leadership programmes that help develop supervisors, chefs, department managers and general managers, and this forms part of the employment value proposition which enables us to promote such a compelling offer to the labour markets in which we operate. In essence, Hilton Worldwide is committed to

“Our strategy is to forge strong links and support the communities in which we operate”

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ensuring that, once employed, team members are offered a wide range of training and development options, which enables staff to work towards promotions within the company. Th is ensures our team members can progress their careers without having to fi nd a new job and also helps in succession planning and grooming team members for future opportunities.” Such a diverse and scattered workforce naturally lends itself to a large degree of crossover between different regions. But that’s only made possible by the common culture that’s underpinned by common vision and set of values. “Success in globalisation comes from a keen understanding of the differences in language, culture, ways of being and working, as well as social and labour frameworks. Each Hilton Worldwide brand has its own HR programmes and offers team members different opportunities. We have a strong philosophy of promoting from within and generally seek to hire employees from the home country in which we are operating. However, if we are unable to do so, we may look outside the home country to fi ll available positions whilst still complying with local laws. Ultimately, it’s about fi nding the best person for the role.” To illustrate this, Bengougam says in 2010, around 95 percent of Hilton Worldwide’s general manager appointments were internal transfers or promotions. Many of these appointments were to a different country, although a few included entry into brand new markets for the organisation. Bengougam, whose CV includes Trust House Forte, Dixons and Utell International, says he was pleased to rejoin the hotel industry in May 2010. “I had been trying for the last few years to fi nd the right opportunity to rejoin the hotel Ben Bengougam business. I have always felt that HR has a crucial role to play in global strategic priorities and at Hilton Worldwide, HR is truly at the heart of the company’s work as it continues to position itself as the pre-eminent global hotel company in our industry. For me, it’s all about fi nding great people with the right mindset for whom service comes naturally and is a pleasure not just a job.” When Business Management spoke to Bengougam, he had only been in the role six months, but he was already talking about the strides made in repositioning HR in the business. “We have realigned our team to clearer sets of accountabilities and are now majoring on the value-add aspect of HR, including optimising the talent agenda as a hard deliverable to sustain our growth and expansion. If people are important to a business then it follows that good HR must be too, but I will also concede that it must be good or even better. I have great ambitions for the HR function and profession and I’m tremendously proud to work in HR. Let us just be concerned with being business focused, with delivering value and a return on investments which we seek, and with promoting professional competence and excellence in HR moving forward.”

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INDUSTRY INSIGHT

HR solution selection: the key to success Pradip Kumar Jawale explains the importance of correct HR selection and implementation.

oday, the degree to which an organisation is successful is directly proportionate to its use of technology; this is also true of the success of human resources management. Managing human resources is an ongoing challenge, especially when external factors (social, political and economic events) have a big impact on employee productivity. HR management strategies must continually be redefined to deliver improved return on investment in human capital, and HR professionals must continually consider the use of new technologies to tackle the external factors affecting their organisations. HR solution selection and technology implementation is one prominent area that represents a significant challenge for HR professionals globally. To ensure the success of HR management, technology initiatives and operations, the selection of the right HR solution, along with correct implementation at the right time, is extremely important. Organisations that ignore this aspect tend to show a downward trajectory on the success graph. The most common mistake is that HR professionals settle for an administrative role rather than a project owner’s role in the HR solution selection and implementation process, leaving the critical functionality part to be decided by other non-HR professionals in information technology and fi nance. Th is is a mistake. Do your diligence on functionality requirements and then select the HR solution based on technology that best suits your organisation. Address gaps with customised development. Th is will empower you with the right HR technology initiatives to achieve your organisational goals. Most organisations tend to first select technology that they deem is good but that does not necessarily suit them, and then try to customise it for use. Th is can result in disaster, and often leads to the scrapping of investments made in technology. Choosing the right HR solution and leveraging it effectively requires a well-thought-out strategy with a clear focus on real business results. The HR solution selected should be effective and easy to use and one that fits the organisation’s needs. In order to bring about the desired outcome, it is vital to follow a structured approach. Diligence: Identify and validate the project requirements. Th is involves assessing the current state as well as the desired state in terms of needs and wants. Prioritise them, defi ne them and document them. Identification: Identify HR soft ware system vendors who match your needs. Create a vendor score-sheet from an assessment of proposed vendor services and solutions

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through in-depth demonstrations. Matching these with the documented requirement sheet and budget helps in terms of ranking and shortlisting vendors. Thorough gap analysis helps to make provision in advance and allows you to incorporate any such needs in future plans – gaps could be fi lled by customised development for a better fit and to enhance solution effectiveness. This methodical and comprehensive process enables an organisation to achieve a positive selection result. Selection: Make the decision to select the best that meets your needs from the shortlist. Decisions at this point should be easy after your efforts in the previous steps. Implementation: Develop a detailed rollout plan and track its implementation effectively. Having a project task planning and execution schedule helps to track what needs to be done, who does it and when. Without good internal governance – a crucial factor during implementation – you will encounter deviations from the company vision, but a well thought-out and controlled execution will lead to successful implementation, on-time, and will have a measurable positive impact on your organisation’s efficiency and profitability. The challenges in making the right selection can be overcome by adopting the right process knowledge. Following a structured approach, your organisation will never have to settle for less than what was absolutely required, ensuring return on investment and achieving your organisational goals. Ignorance to this process knowledge can cause chaos.

Pradip Kumar Jawale is Managing Director and CEO of CoreBiz Technology Solutions, a leading provider of HR and payroll software solutions in the Middle East, Africa, Europe and Asia. CoreBiz transforms information into empowered services that align with organisational objectives.

For more information, please visit: www.corebiztechnology.com

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MARKETING FOCUS

Signs of the times Once the familiar back-drop of sporting events and skylines of major retail cities, digital signage systems are changing. Bringing quick, direct marketing campaigns right into the store itself, digital signage is paving the way for the stores of the future. Business Management spoke to the Retail Advertising and Marketing Associationâ&#x20AC;&#x2122;s Mike Gatti to ďŹ nd out more.

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75% of retail purchasing decisions are made in store

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iccadilly Circus is one of the most iconic landmarks in London. It is also, unlike the other architectural gems that characterise the city’s landscape, defi ned more by the bright shining lights of the advertising billboards on display than it is any of the surrounding buildings or monuments. The boldly coloured digital signs for Sanyo, TDK and Coca Cola, have come to represent London’s West End. As with most advertising tools, digital display systems are nothing new. Consumers have grown used to seeing them at landmark sites, along high streets, at sports games, and in some cases have even come to identify a place with its digital advertising signs. But the notion of retail in-store screen marketing is today revolutionising the retail world, providing a whole new dimension to the consumer’s shopping experience. “We’ve been seeing an increase in the use of digital display,” explains Mike Gatti, the Executive Director of the Retail Advertising and Marketing Association. Indeed, interest in this marketing tool from retailers is beginning to spike after several years of misuse. “It wasn’t really any specific type of retailer [using digital signage],” Gatti explains. “I think it was more retailers who felt that this was something very important to their strategy. But what happened in the first few years was a lot of lessons were learned, and I don’t really think anybody was using digital displays correctly.” Gatti goes on to explain how early in-store digital display marketing was poorly implemented. Some retailers had screens that were hanging from ceilings, out of any customer’s line of sight; others used their screens to play a reel of, or a constant repeat, of an advertisement that could run as long as two minutes, much longer than any customer would be standing still to watch it. Conversely, research conducted back in 2007 indicated that around 75 percent of retail purchasing decisions are made in store, meaning that this is a largely under-utilised marketing opportunity for retailers. Digital advertising company Digicom then carried out a survey in early 2009 that found that 64 percent of the consumers asked believed that digital advertising screens could improve a shopping experience and 78 percent felt that digital advertising screens can make a brand or product seem more attractive. Only 54 percent, on the other hand, had seen digital signage in stores in the previous 12 months. All evidence stood to suggest that digital signage could be the solution to provide that much needed boost to struggling retailers, displaying direct and relevant campaigns direct to their own customers. “They learned a lot of lessons,” says Gatti. “Now what we’re seeing is that retailers are bringing their screens down to shelf level, they’re embedding them with a lot of products, and they’ve really tailored the messages a lot more so they are able to deliver the message quickly and a lot more effectively to the customer.” Th is point is, according to Gatti, imperative to a successful digital display marketing campaign. “They have to be really relevant to the product that’s around,” he explains, “whether it’s a sale, or

whether it’s something that really differentiates the product such as product information, which really takes having a good understanding of the customer that is shopping in your store.” Perhaps that product information might be its sustainability, or maybe a special offer or another competitive advantage, Gatti outlines. Either way, the direct, targeted and timely nature of digital signage marketing is beginning to provide very real results for today’s retailers. Gatti goes on to outline the numerous ways that digital signage can be implemented to enhance the shopping experience for the customer, highlighting the vast potential that digital signage has as a marketing tool and just how far it has come from the shiny Coco Cola or MacDonald’s digitalised bill boards football pitches. “Depending on your demographic,” he says, “you might even want to have some games available on them, if say you have kids shopping. But retailers are making [their digital display content] more experiential, where you are able to interact with customers, or they can learn about products.”

“Now what we’re seeing is that retailers are bringing their screens down to shelf level, they’re embedding them with a lot of products, and they’ve really tailored the messages a lot more so they are able to deliver the message quickly and a lot more effectively to the customer” Th is new, interactive level of digital signage is a major development in the world of retail, and one that retailers still have yet to fully utilise. In addition to product marketing, retailers are now beginning to use interactive digital signage systems to take over some basic customer service responsibilities, therefore allowing customers more faster, more empowered shopping experiences, as well as freeing up staff to deal with more serious issues. “Maybe a retailer has a certain line of products,” says Gatti by way of an example, “say a certain type of furniture, and the retailer doesn’t have every product on display in the store. [The customer] can go to the kiosk, or the digital monitor, and look at what else is available. Product knowledge and comparison shopping has come from behind the scenes to the forefront when you go into a store now. Where you used to ask a customer-service representative to “tell me about these two different products”, now there is a digital screen that you use to do the comparison yourself.” These developments in the function of digital signage marketing tools in a retail environment are increasing the interest of digital solutions among businesses. “I think we will see an increase in its use,” explains Gatti. “It is becoming a much more essential tool.” He goes on to predict the kind of shopping experience that consumers can expect to have in the future. “In addition to trying out a game or learning some in-depth product knowledge, I think you’ll literally be able to walk into a store and say, “well, they

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don’t have my size or colour”, and you’ll be able to pop it up on a kiosk and order it right there and then and have it shipped directly to your home.” While Gatti’s assertion might be a little way off at the moment, the speed at which the digital signage sector has escalated over the last few years suggests that such a system is only just around the corner. A report carried out by Infrotrends found that in the US, the digital signage market had grown by 56 percent between 2004 and 2006 to a value of US$1.1 billion, and was projected to reach US$2.59 billion by 2011. In addition, the current success of e-commerce platforms suggests that this sort of real-time self-service retail experience is not far off. “There are going to be many more options for shopping and immediate ordering,” explains Gatti, and suggests that soon customers will be able to say: “Well, I don’t have to go shopping. I don’t have to run around to three or four different stores to try to fi nd the item I want. I can order it on the kiosk right now, and I know all about the product that I am buying.”

Digital disputes Perhaps most pressingly, Gatti points out that retailers who have digital signage systems already in place are speaking positively about the effects they have upon the business, saying that they now consider it part of the brand presentation that they make to the customer. “At the same time, the retailers are really learning a lot,” he adds, “and as they apply more of this technology into their stores, they’re learning a lot more about how the customer shops. This will evolve into a more mobile presence, so it’s possible that digital signage could peak a little bit, and then you could start to see a decline as mobile picks up and people start to use their phones to learn more about products that they’re buying.” Th is last point raises the salient issue for both the marketing industry and the retail sector. With the increasing popularity of smart phones and the vast amounts of technology development going into both Apple and Android operating systems, all evidence points to the fact that mobile technology is set to revolutionise these industries, just as the Internet did before it. “There are companies now who are saying that they are monitoring Tweets in their stores, so they can fi nd out what customers are saying, such as “is the cash register line too long?”” Using social media in this way provides a glimpse of the future of retailer-consumer interaction. Such tools will take responsibility away from in-store personnel, in theory placing it under the control of a single person with a computer, who need not be any where near the store. Gatti suggests that soon, customers will be able to Tweet questions. “Where are the light bulbs?” “What aisle is the butter in?” Customers will be able to ask such straightforward questions with their mobile phone, and get a swift response without having to track down a shop assistant. “It’s going to expand the capabilities of the one-to-one relationship,” he says, pointing out that one day, customers will not even need to be in a store to interact with retailers in this way. However, Gatti explains, these developments still could be as far off as five to 10 years. The imminent progress

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Digital signage case study: Aker Brygge Mall Digital display systems are ideal for use throughout a shopping centre, providing an interactive service and advertising platform for a number of business that will target a large number of consumers efficiently and easily. The Aker Brygge’s shopping mall in Oslo is a medium sized shopping centre with 65 stores of primarily high-end retailers. Situated by the Fjord Pier, the unique surroundings have created a popular venue that attracts over 6 million consumers a year, as well as number of workers in the area. The mall needed a wayfinder system, and simultaneously wanted to show adverts. Double sided LCD signboards were used, with touch screen wayfinder systems on one side, and LCD screens on the other, showing adverts, as well as stock market information and weather. The system implemented used different zones within each screen, which could each be dedicated to different purposes and playlists. In addition, only one system was required for the commercials on both indoor (LCD) and outdoor (LED) installations.

The modern shopping mall of Aker Brygge on Oslo’s waterfront development. Oslo Harbour, Norway.

of digital display technology systems looks set to significantly shake up the retail sector, from the fundamentals of brand advertising to providing next generation platforms for customer engagement and in-store interaction. ■

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Sign language Harris Corportation’s Ian Collis speaks to Business Management about how digital signage solutions can beneﬁt businesses today. Tell me a bit about Harris. What are your specialist areas of focus? What is your global presence? Ian Collis. Harris Corporation is a global communications company that provides assured communications to both government and commercial customers. The Broadcast Communications division, which encompasses our Digital Out-Of-Home (DOOH) group, is responsible for providing solutions to any business that needs audio-visual (A/V) technologies to inform, educate or entertain their audience in the business context. Harris Broadcast Communications have a very strong global presence, with regional headquarters around the world, bringing local expertise and presence to customers in both the broadcast and the DOOH space. What is your point of difference? IC. We have been providing technology solutions to the broadcast industry for nearly a century, we have a strong background in media asset management and are experts in the art of ‘transporting moving images’ in mission-critical environments. Our core business has always been to transport the highest-quality images and deliver them at the right time on the correct device without fail. Our DOOH solution was developed from this expertise as a blend of our own hardware, soft ware and services – combined with our extensive experience of creating, managing and delivering content to whatever display device is used. We truly have the ability to deliver all aspects of a successful digital signage solution.

Long-term working relationships with global and financially secure manufacturers are key to allowing the chosen solution to grow and scale as the business grows. Our top five considerations are excellent quality of technology and visuals based on experience in the field of visual communications; reliability of content delivery; maximisations of operational efficiency; compelling applications and intuitive GUI; and a clear return on investment.

Ian Collis is Director of Marketing for Harris Broadcast Communications in Europe and is leading the Digital Out-OfHome (DOOH) business in the region as a key growth initiative for Harris. He has been with Harris for the past four years and was previously the VP of marketing for Sony Professional Solutions in Europe, Middle East and Africa. He has more than 25 years of experience in the Broadcast, Media and Professional AV sector.

What is the future for Harris? What are the challenges for the company and the sector going forward? IC. We are living in an increasingly mobile world, and the use of A/V to communicate either internally to staff or externally to customers is an increasingly important part of our customers’ business challenge. The goal of Harris in the DOOH world is to help companies reach their customers at the right time and in the right place, with engaging and flexible messages to support current business needs. The moment when the message and the person intersect, whether it is for information, education or entertainment, is a crucial point in time; Harris has a unique level of insight and capability to create and monetise that crucial moment.

What kind of spaces do you operate in? And who are your customers? IC. In the DOOH space, we have digital signage network customers in all of the major segments of retail, transport, leisure, hospitality, sports stadia and large venues, healthcare, education and corporate. In the broadcast space, Harris works with the majority of broadcasters in the world, and it is a strong possibility that any programme that reaches a viewer’s eyeball anywhere on the planet has been supported by a Harris device or application at some point in the broadcast process. What are the most important considerations for investments in signage? IC. We would recommend that any business seeking to invest in DOOH solutions consider that investment carefully – not only in terms of the technology they choose, but also in terms of the company they will work with.

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Details. In review 2010’s best books P143 T R AV E L

36 hours in... Rome P138 GADGETS

Technology The best of 2010 P142 |

BOOKS

Agenda Q1’s favourite events P140 |

LEISURE

Photo ﬁnish Australian ﬂoods P144 |

EVENTS

Faster, ﬁtter, better: why Ironman is set to rule the world With World Triathlon Corp. CEO Ben Fertic

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The sport of triathlon – and its hardassed older brother, Ironman – has been rapidly growing in popularity over recent years. Business Management Senior Editor Ben Thompson caught up with World Triathlon Corp. CEO Ben Fertic – the most influential man in the industry – to find out why.

ang around Ironman participants for even just a few minutes and one thing becomes immediately clear: these guys are the ultimate competitors. Driven, disciplined, determined and blessed with a desire to succeed despite the odds, the men and women who race in these physically and mentally demanding events consistently push their bodies and minds to the limits of endurance – and survive to repeat the feat the following weekend. It is, they say, addictive – and Ben Fertic, CEO of the company behind the sport, World Triathlon Corporation, is no exception. Inspired to take it up after watching his brother – a fellow Ironman fanatic and a double-amputee – compete back in 1984, Fertic has taken his passion and converted it into a multimillion-dollar industry. “From the moment I saw my brother compete in 1984, I knew that I wanted to race in Ironman,” he explains. “I started racing in 1985, and for years I raced and raced, but never considered the fact that what for me was a lifestyle could also evolve into a career.” That all changed when WTC came calling in 1999. Despite some initial reservations, Fertic decided to take the plunge. “I had a solid consulting business that had taken me several years to build, and when you own your own business it’s sometimes hard to consider taking on a role somewhere else,” he says. “But when I looked at Ironman and really evaluated the opportunity, I realised that there was just so much potential in the brand and in triathlon in general. Combined with the fact that it was my passion from a lifestyle standpoint, it just seemed like an obvious fit.” Today, Ironman has grown into a multimilliondollar industry. Lucrative tie-ins with Ford Motor Company, PowerBar and Timex are bringing a new level of investment into the sport, which has allowed Fertic to further develop the brand. Since it began as a challenge between an ultra-competitive group of Navy Seals, Ironman has grown to become one of the world’s most recognised endurance events. It now features a series of 28 events at locations on multiple continents that serve as qualifiers for the sport’s flagship event, the Ford Ironman World Championship held every October in Kona, Hawaii. While there are thousands of triathlons around the world, it is this one that truly defines the sport. Held every year since 1977, tens-of-thousands of triathletes try to get one of the coveted spots in the

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A winning mentality The skills needed to run an Ironman are similar to those needed to run a business. GOAL-SETTING: Both in business and in Ironman, you’ve got to set your goals and expectations as a first step, says Fertic. “At some point, you’ve got to make your mind up about what it is that you want to achieve and how you’re going to go about doing it,” he explains. “You need a clear goal in order to measure your success.” PLANNING: A lot of hard work goes in to trying to achieve your goal, whether it means building infrastructure in your business or building up your base fitness levels for Ironman. “You have to do a tremendous amount of planning in business, and Ironman is the same; you plan out your nutritional schedules, you plan out your workout schedules, you plan out every element of the event.” DISCIPLINE: The best plans amount to nothing without successful implementation, and sticking to the task through tough times is key. “Ironman is largely about overcoming obstacles,” says Fertic. “And those obstacles won’t disappear without hard work and commitment to the project. I think those virtues hold true for business as well.” EVALUATION: Once the elation of completing the job at hand subsides, the task of looking back and evaluating its success begins. “Reaching your goal might be more than just crossing the finish line or completing whatever project you were working on; you look at what the goal was, and you measure whether you achieved it or not,” says Fertic.

2.4 mile swim

112 mile cycle

26.2 mile run

17 hour time limit

season finale – encompassing a gruelling 2.4-mile swim followed by an epic 112-mile bike race and full 26.2-mile marathon – every year; only 1800 are successful. This year’s event saw 37-year-old Australian Chris McCormack secure overall victory in a blistering time of 8 hours, 10 minutes and 37 seconds, while Mirinda Carfrae made it an Aussie double by claiming the women’s title. Yet while Ironman is often thought of as an elite discipline, the reality is that the sport has never been more accessible. Fertic concedes that the wider triathlon community is still at a relatively early stage in its development, but says that this is what attracted him to the role in the first place: the chance to build something significant. “The first Ironman was run in 1978, and our governing body was only founded in the mid-to-late 1980s,” he says. “So in general, you’ve got a very young sport that people are starting to try out for the first time. And while back in the early 1980s it might’ve been the case that only the really high-end endurance athletes came to participate in the sport, we’re now seeing a much wider spectrum of people give it a go. Worldwide, our numbers are growing significantly.” Fertic estimates the current number of active Ironmen and women at between 250,000 and 300,000, and suggests that thanks to a recent brand expansion strategy those numbers will grow considerably in the next few years. As well as the classic Ironman event, WTC brands now also encompass the half-distance Ironman 70.3 as well

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as the 5150 Triathlon series (51.5km is the cumulative distance of the popular Olympic distance triathlon). “The move enables greater participation at various levels,” he explains. “It’s not just the ultra-elite person who’s going to race Ironman, it’s people at various fitness levels, all of whom can engage in one of our brands.” That’s not to say the shorter distance events are any less taxing – in fact if anything, Fertic believes the new format allows WTC to introduce a greater level of competition into the sport. “With Ironman, even racing one event is tough,” he explains, “and to compete in four or five events a year is extremely difficult. At a professional level, it’s pretty taxing to the body. But with the advent of 5150, we’ve built a platform for professional athletes to race every weekend or at least every other weekend without any issue at all. And when you have that kind of repetition, you’re able to introduce all kinds of cool things such as world ranking points and point-series races.” Just as importantly, the shorter format races also make the sport much more attractive to TV broadcasting companies. Given that top athletes can run such distances in well under two hours, the opportunity to bring the sport to a much-wider audience via global TV coverage is something that Fertic is incredibly excited by. “It’s really an expansion of the brand to include more people and bring them into the system,” he enthuses. “And it’s also an expansion that allows professional athletes to race more. It’s a win-win for us and the sport as a whole.” Ultimately, Fertic hopes the increased exposure will introduce more people to the spirit and camaraderie that makes Ironman so special. “It’s not just about the person who wins, but about every person who crosses that line,” he concludes. “That’s really unique, and it’s part of what makes Ironman so special – that all the athletes, no matter what level, come back to the line to see the last person finish. I think it’s related to the fact that each person that crosses that line has their own story of why they’re there, and what they did to get there, and you know how hard they worked to cross the line. So there’s an immediate connection. It’s almost like you’re part of a club.”

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TIME: CET (UTC+1) | POPULATION: 2,743,796 (CITY) | AREA: 1285 KM2 | ELEVATION: 20 M

TRAVEL

36 hours in... Rome

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Drink Head out after 11pm if you want to party like the Romans, with the fun-seekers heading for the buzzy bars in Trastevere and Campo de’ Fiori. La Coppelle is the perfect place to relax on leopard-print chairs and lipstick-red sofas with a cocktail or two, while Trastevere’s Big Mama is a temple to blues music. Mr Brown in Trastevere is a popular hangout with a fun-loving crowd and relaxed atmosphere. For something that goes on a bit later head to Goa, an ethno-chic club in the up-and-coming Ostiense district. Housed in a huge garage it attracts some of the world’s best DJ’s to mix hip-hop, house and tribal sounds.

In the know

Eat

History has left a city with much to be proud of. Spanning over 2500 years, Rome was the capital of the Roman Kingdom and the dominant power in Western Europe for over 700 years. Later, Rome was ruled by popes such as Alexander VI and Leo X, who transformed the city into one of the major centres of the Italian Renaissance, along with Florence. Today, the Vatican Museums and Colosseum are among the world’s most 50 visited tourist destinations with four million tourists each year. Indeed, the city boasts more world-renowned sights than many other European capitals put together.

It would be a cultural sacrilege not to have an authentic pizza made with a thin crust and cooked in a wood-ﬁred oven. And the best place in town for authentic pizza romana is Remo. With a prime location on the Testaccio district’s main plaza, you can sit outside at wonky tables balanced on the pavement or inside the cavernous interior, overseen by Lazio team photos. Primo, a large, comfortable restaurant with warehouse-chic décor has a decent wine list and takes its food very seriously indeed, which is great for those who adore the slow-food bias. A soup of black cabbage, croutons and mussels and baked anchovies with artichokes make the menu, along with delicious deserts like caramelised prickly pears and balsamic vinegar. If you are looking for something a bit different then Il Pagliaccio should tick the box. A peaceful oasis in the heart of Rome, it’s cosy and elegant, perfect for a business lunch. With just 28 seats reservation is heartily recommended, as are the tasting menus, which are simply delicious.

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Sleep

Time off For sightseers, Rome is paradise. First stop is the Colosseum: get your picture taken with one of the centurions hanging around outside or head inside for a more cultural look at this awe-inspiring venue. Next is the Pantheon, the best-preserved ancient building in Rome. With bronze doors and curbed brickwork outside and the spectacular dome inside this is a fascinating sight. Trevi Fountain, packed into a tiny piazza should be next on the list, although go at night if you’d rather see it in dramatic floodlights and without hordes of tourists. Galleria Borghese, in the tranquil surroundings of the Villa Borghese park, is the city’s finest art gallery with extravagant frescoes, dynamic Bernini sculptures and Renaissance masterpieces. For shoppers, this city is also a winner. Via Condotti is a dazzling strip of glamorous stores including Armani, Louis Vuitton, Gucci and Prada. Off the main strip and on the cobbled side streets you’ll find quirkier boutiques with vintage clothing and accessories. In the Trastevere district there’s a bohemian spirit in the winding streets and the outdoor food market in Piazza San Costimato is a great chance to watch locals bargaining with vendors. And Piazza Navona is a great place for art lovers to browse the art galleries and antique shops.

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The Hassler Roma at the top of the Spanish Steps is Rome’s legendary five-star hotel. Set in the heart of the city’s historic centre, the Hassler is minutes away from Via Condotti and the most popular shopping venues and landmarks, including the Pantheon, St Peter’s Basilica and the Colesseum. This is for a super luxurious stay, with old style glamour, chandeliers and marble aplenty. Rooms range from €350 to €110. If you’re getting down to business, Hotel Eden is luxurious yet cosy and offers a world-class business centre in the hub of Rome’s business district. The Ambassador floor has adjoining suites and living room areas for meetings, and the upper floors have spectacular views of the Villa Medici. Hotel Eden also offers a fitness centre and spa services along with one of the most renowned panoramas in the world from the rooftop restaurant La Terrazza dell’Eden. For something a little less pricey, try the Daphne, a top-notch, urban B&B with spotless air-conditioned rooms, comfortable beds and a fantastic location, just minutes from the Trevi Fountain. Rates range from €80 for a single room to €630 for a seven person apartment.

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Coming up…

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The Finland Ice Marathon Think the most sensible thing to do would be to draw the curtains and set the alarm for April? Not so, say the hundreds who each year compete in the Finland Ice Marathon, a fun-ﬁlled skating event held at Kupio’s lake-ice track. The major draw card is the 200km race, though the less energetic are also catered for with distances of 100km, 50km and 25km. Or celebrate winter with the less competitive 100km kick sledding event.

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Fans will be treated to a tantalising ﬁnale of the Six Nations with Grand Slam holders France taking on Wales at Stade de France. The England team will then travel to the newly named Aviva Stadium to take on Ireland and Scotland will be keen to avenge last year’s 16-12 defeat when they play Italy. Founded in 1883 the RBS Six Nations is an annual tournament that pits the best rugby players from England, Ireland, Wales, Scotland, France and Italy against each other. Originally contested by the so-called Home Nations, France joined the competition in 1910, with Italy joining in 2000. Six Nations tickets always sell out quickly, especially with such long standing rivalries being played out.

February 23 – March 1

From February. 4

AGENDA

Six Nations Championships

Milan Fashion Week

February 17-20

Kicked off by New York in February, catwalk season continues when Milan hosts its own Fashion Week later in the month. This show will include collections for Autumn/Winter 2011 by top names such as Chanel, Giorgio Armani and Roberto Cavalli as well as up-and-coming new designers. Recently extended to include an increasing number of catwalk shows, Milan Fashion Week reinforces the city’s importance in the global fashion industry.

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Izmir European Jazz Festival

Barcelona Marathon

Providing perfect acoustics, the Ahmed Adnan Saygun Centre hosts the annual Izmir European Jazz Festival, featuring concerts by important names of the European jazz scene. Seminars and art exhibitions on speciﬁc aspects of jazz complement the music programme.

First run in 1977, the Barcelona Marathon now sees the city inundated with runners from all over the world. The course begins and ends at Avenida Maria Christina, allowing participants to take in the city’s famous architecture, coastline and Arc de Triomf. Runners are treated to a ‘Pasta Party’ the day before the race, ensuring they’re stocked up on carbohydrates for the 26-mile slog.

March 6

March 2-17

Birth of Rome Proud Romans celebrate the birth of the Eternal City, founded by Romulus in 753BC. Parades, gladiator shows, traditional Roman banquets and public speeches galore are held at venues throughout Rome, including Fori Imperiali and Circo Massimo. There is also the Dea Roma contest, an annual event drawing numerous candidates keen on representing the spirit and the beauty of the Goddess of Rome.

April 4-10 First held in 1989, the Race of the Classics is now one of the biggest amateur sailing races in Europe. Over 20 teams sail across the North Sea to England and back, competing for the highly prized Challenge Cup. The sailing challenge starts in Rotterdam, sails via Ostend to Ipswich or Lowestoft (depending on the weather) before re-crossing the North Sea to ﬁnish in Amsterdam. The post-Easter race attracts over 20 teams annually.

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April 17

Race of the Classics

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Technology for today’s executive Apple MacBook Air 11-inch Ap

GADGETS

A stunningly sleek design marvel, the new 11-inch MacBook Air is strong, yet light and measures just 0.3 centimetres at the slimmest point. There’s no optical drive or ﬁrewire, but connections include two USBs, a headphone jack and Mini DisplayPort. The 11.6-inch LED back backlit screen is a highlight, as is the MultiTouch Trackpad, and Apple claim claims battery life of ﬁve hours. It’s pretty pricey at UK£849 for the basic model, but it’s the perfect size to pop in your bag and a potential rival to the iPad as it adds the keyboard many iPad users crave.

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Palm Pre 2 On ﬁrst inspection the new Palm Pre 2 is near-identical to the Palm Pre and Pre Plus, both in shape, dimension and form. However, the Pre 2 is in fact sleeker and slimmer and the previous sharp angles have been replaced by smooth rounded edges, made out of a soft touch material. Hardware specs have substantially improved: the camera is an impressive ﬁve megapixels and there’s 16GB of storage. Likewise the operating system is pretty well regarded among technology enthusiasts. All in all, while it’s well-equipped, the competition has nothing to worry about; the Palm Pre 2 is good, but not great.

Kinect for Xbox 360 The newly released Kinect, compatible with all Xbox 360 consoles, looks set to change the way we play games forever. Using motion and voice sensor technology, players are invited to “become the controller”. Various movements and voice commands control the console and it also uses facial recognition. The sensor responds well, as long as the lighting, distance and spacing are correct. The multiplayer capabilities are brilliant for competitive gaming. It’s still in its infancy so we’d be tempted to wait until the second generation Kinect hits the market, or at least wait until the games you really want are available.

Nikon Coolpix S1100pj The Nikon Coolpix S1100pj is the world’s ﬁrst compact camera to incorporate a projector. The 14.1-megapixel camera also has a 5x optical zoom and a touchscreen. It’s 40 percent brighter g than its p predecessor,, which enables a fantastic projected-image visibility in non-blacked-out conditions. Shooting options are operated via the touchscreen, which keeps the camera slim as there’s no physucal mode dial and also allows room for a projector focus ocus dial on the top plate. On-board animations, background music and transitional effects ects can be used with slideshow presentations and handwritten annotation can also be added to images. Overall, it feels like a slightly niche product though and while it works perfectly well as an ordinary camera it’s a little on the pricey side at uk£300.

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On the shelf

The Big Short By Martin Lewis

Shortlisted for the 2010 Financial Times and Goldman Sachs Business Book of the Year Award.

Fault Lines

IN REVIEW

Another account of the recession, but this time in Lewis’s signature accessible and informal style. The book follows a selection of ‘characters’, various ﬁgures who hold positions in the ﬁnancial services industry, and answers the much asked questions about who knew what was happening behind the closed doors of the country’s big banks, mortgage brokers and such. It also closely examines the silent crash in the bond and real estate derivatives market that was playing out in the build up to the major downfall of fall 2008.

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By Raghuram G. Rajan Winner of the 2010 Financial Times and Goldman Sachs Business Book of the Year Award, Rajan’s book has been a great success, offering a stimulating account of the recent financial crisis. Rajan pointedly marks the societal behaviours, such as income inequality and universal desire for home ownership, as well as the environment in the financial market out of which the economic downturn bred. His is not only a comprehensive account of the recession, but also provides an informative and original lesson as to why it happened when it did. His use of case studies intersperse the book nicely to keep the reader engaged and make the content accessible to most readerships. Rajan also demonstrates a solid understanding of the global economy, though remains primarily focused on American finance. BM says: One of the most comprehensive accounts of the recent finanical downturn to come onto the market and an exciting insight into how the recession took hold outside the US.

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BM says: Fans of Lewis’ work will welcome his return to the style that brought him into the spotlight in the 1980s. Not as thorough an account of the downturn as Rajan’s book, but for those who like their non-ﬁction with a side of sensationalism, this is the book for you.

The Art of Choosing By Sheen Iyengar Ever wondered why you choose a Coke over Pepsi, an Android Phone over an iPhone, a Mars bar over a Snickers? Well Iyengar attempts to bring you the answer, while at the same time raising questions about how much control we really have over what we choose, and how in the mass consumer driven society of the West, too much choice can have a negative effect. Being the daughter of two Sheikhs, Iyengar also offers an insightful perspective regarding the cultural differences that surround choice. Shortlisted for the 2010 Financial Times and Goldman Sachs Business Book of the Year Award. BM says: While it is arguably slightly dissatisying in answering the questions about why we chose certain things over other, this book is pleasantly surprising in its ability to deal with the complexities of cutural differences.

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Photo finish Flood waters rise in the Central Business District of Australia’s third largest city, Brisbane. The floods – the worst in some 200 years – have caused billions of dollars in damage, estimate say. The Australian government put together an assistance package to support small businesses affected by the Queensland floods, however many are still ineligible for funding due to the stringent rules. Estimates say the Queensland economy is losing AUD$460 million (€336 million) each day.

PHOTO FINISH

To donate to the ﬂood relief effort, please visit: telethon. smartservice.qld.gov.au

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