BMME 4 by GDS International

www.busmanagementme.com

•

Q4 2008

KING OF THE SKIES Inside the world’s fastest growing airline with Etihad CEO JAMES HOGAN PAGE 32

TOUGH TALK Arab billionaire MISHAL KANOO reveals his controversial views on the Middle East economy PAGE 26

LEADER OF THE PACK SAUD AL DAWEESH Saudi Telecom’s President on the battle to stay ahead PAGE 74

PAR FOR THE COURSE Teeing off with Leisurecorp’s CEO for golf DAVID SPENCER PAGE 116

InforDPS.indd IFC2

9/10/08 09:32:54

InforDPS.indd IFC3

9/10/08 09:32:58

Results happen with 3.03pm Friday Location: HQ.

Sue reads the email. Realises the part is not in stock. She knows Andy the Logistics Manager can get another part, but he is currently visiting their overseas warehouse. Sue checks her desktop UC application which shows Andyʼs presence status as “available”. She clicks on his name and starts a webcam video conference.

3.00pm Friday

Location: On the road.

Peter receives email with an attachment on his Blackberry device. Itʼs an urgent order request from a customer who needs a part ordered and delivered by Monday morning to their overseas oﬃce. Peter forwards the email to Sue back in the oﬃce.

Unified Communications (UC) is not the next big thing...it is here and now! Unified Communications is about bringing together disparate communications systems, device and applications into a single integrated environment to optimise business processes. UC will transform your organisation by reducing delay in accessing and communicating with colleagues, enhance productivity of your employees, reduce communications costs significantly and improve the customer experience. 3D Networks has invested greatly to ensure we are highly accredited with the major industry leaders such as Nortel, Cisco and Microsoft to enable us to break the shackles so you no longer need to be tied to a single device, network or application.

3DnetworkFINAL.indd 2

7/10/08 14:51:00

Unified Communications 3.08pm Friday

Location: Overseas warehouse

Andy receives the online conference request and answers the call from his laptop. An image of Sue pops up on screen and they discuss the issue. Andy uses the file sharing feature to send Sue a picture of the new replacement part. Sue sees the image on her screen instantly and gives the okay. Andy organises delivery to the customer for Monday morning.

Let 3D Networks demonstrate to you how UC allows your organisation to seamlessly communicate between different platforms, different devices using multiple modes of communications anytime,anywhere to anyone. To learn more about UC contact your local 3D Networks office or visit our website at www.3dnetworks.com

9:00am Monday Location: Customer HQ. Delivery truck pulls up in front of customerʼs oﬃce with the replacement part. Problem solved quickly and eﬃciently. Customer is happy!

Results happen with Unified Communications.

Solutions by

3DnetworkFINAL.indd 3

7/10/08 14:51:12

UKS_DPS.indd Sec1:4

9/10/08 09:36:08

UKS_DPS.indd Sec1:5

9/10/08 09:36:09

GreenPAcket.indd 1

7/10/08 14:52:21

EDS NOTE:BMUS 13

16/10/08

09:31

Page 7

FROM THE EDITOR

Survival of the fittest How Middle East businesses are weathering the global economic storm.

“There is a major credit crunch in this part of the world. Banks are becoming very stringent” Mishal Kanoo, Deputy Chairman, Kanoo Group (page 26)

“As a relatively new airline we can make decisions quickly without the burdens that the older airlines have” James Hogan, CEO, Etihad Airways (page 32)

“We are still experiencing double-digit growth figures. I am not as pessmistic as the Western world” Marco Nijhof, Jumeirah SVP for the Middle East, Africa and South Asia (page 126)

or a long time it has been rare to read any bad news about the GCC economy, and Middle Eastern residents are far more likely to read the word boom than bust when they open their morning newspapers. The Western press has long been peppered with the language of economic decline – recession, debt, redundancy, etc. – but the good times in the Gulf have continued to roll with stories about soaring wealth dominating the headlines. In recent weeks there has been only one story dominating the headlines in the Western press – the credit crunch and its devastating impact on global financial markets. And while mega construction projects and multibillion-dollar acquisitions continue to hog the front pages in the Gulf, for the first time articles are emerging that cast a shadow over the rosy picture that has previously been painted of the region’s economic future. As Business Management went to press, it was reported that Merrill Lynch has released a report warning that economic growth in the Gulf is expected to slow this year because of the global economic downturn. The bank announced that it had lowered its growth forecasts for the UAE, Saudi Arabia, Qatar and Kuwait and warned that GDP growth across the Middle East as a whole is expected to slow to 4.5 in 2009 from 6.2 percent this year. Meanwhile, the UAE government doubled its emergency bank funding to US$32.67 million in line with moves by other Gulf Arab states. These figures back up the claims by Mishal Kanoo, who we interviewed for this issue’s cover story. He warned that the credit crunch has already hit the Middle East and that as a result regional banks are tightening their belts. It important, however, to view the impact of the credit crunch on the Middle East within a global context, and to remember that in relative terms the Gulf countries remain in a far stronger position than their Western counterparts. Indeed, in its recent report Merill Lynch stated that the GCC economies are in a good position to deal with the global downturn. You only need to read the interviews in this issue of Business Management to see that business in the Middle East is still booming. Take James Hogan, CEO of Etihad, for example. While Western carriers are announcing mass redundancies and smaller airlines look set to collapse, he plans to double Etihad’s network of destinations by 2020 and recently spent US$43billion on new planes. We also feature an interview with David Spencer, CEO for golf at Leisurecorp, which recently acquired Scotland’s historic Turnberry golf resort. The credit crunch does not seem to have hindered Jumeirah’s growth either. As we hear from the hospitality giant’s SVP for the Middle East, Africa and South Asia Marco Nijhof, the company plans to increase its hotels to 23 by 2011 and to expand internationally. The business leaders we interviewed admitted the global economic downturn was a concern, but said that it would not hamper their expansion efforts – proving that while in the West recession looms, the Middle East is still very much open for business.

Diana Milne Editor

Marsh.indd 1

7/10/08 14:55:00

CONTENTS:aug08

16/10/08

08:34

Page 9

CONTENTS LEAD FEATURES

32 King of the skies James Hogan, CEO of Etihad, reveals how he created the fastest growing airline in commercial aviation history

26 Tough talk Outspoken Arab billionaire Mishal Kanoo talks corruption, conservatism and why he thinks the Middle East is in the throes of a credit crunch

46 On the coal face Madhu Koneru, managing director of RAK Minerals and Metals Investments (RMMI) lifts the lid on why the company plans to invest US$1 billion in mines across the world

116 Par for the course David Spencer, CEO for golf at Leisurecorp, on why buyers are paying millions to live on his golf courses

74 Leader of the pack Expansion into foreign markets, a multi-million dollar football sponsorship deal with Manchester United and a corporate re-branding. Business Management puts Saudi Telecom under the spotlight and speaks with President Saud Al Daweesh

CONTENTS:aug08

16/10/08

08:22

Page 10

CONTENTS BANKING, SECURITY & BUSINESS INTELLIGENCE

INDUSTRY INSIGHTS 54 Alexander Trekin, Vision Solutions 60 Mahesh Vaidya, ISIT

38 Laying down the law Standardising Islamic ﬁnance laws worldwide

42 Winning combination Islamic ﬁnance, proﬁts and mergers, with Emirates NBD CEO Rick Pudner

56 Staying off the hook National Bank of Kuwait CISO Tamer Gamali discusses the growing headache of phishing in the Middle East

62 Global security World Bank CISO Jim Nelms on the next generation of threats

100

64 Automated code testing Lessons in leadership

By Howard A Schmidt

Saad Al Shuwaib’s field of dreams

Paul Hammond, Infor

EXECUTIVE INTERVIEWS

122

Fasten your seat belts

66 R Shankar, Ramco Systems 86 Paul Hammond, Infor 98 Adam Hughes, PA Consulting Group 106 Fadi Abdul Khalek, UKS 114 Saïd Aïdi, HR Access

CONTENTS:aug08

16/10/08

09:30

Page 11

CONTENTS COMMUNICATION, HR & BUSINESS IMPROVEMENT

HEAD TO HEADS

142

Hot wheels

ASK THE EXPERTS

Klaus Gheri, phion

Nik Ismail, Green Packet

50 Clear and present danger, VASCO and phion 78 Moving unified communications forward, Nortel and Green Packet

68 New danger

100 Lessons in leadership

Business continuity management and the credit crunch

Frank Brown, Dean of INSEAD, on the top tips he’ll be teaching business leaders at the school’s Abu Dhabi campus

70 Making a real difference How to achieve strategic HR objectives

82 The promise of unified communications Demystifying UC challenges

84 Putting unified communications to work Advice on the best strategies for getting the most out of the business tool

110 The talent war heats up

Mike MacDonald, 3D Networks

David Allinson, Opennet

Tackling the oil and gas skills shortage head-on, according to Bapco CEO Abdulkarim Al-Sayed

122 The sky’s the limit Luxury business travel with MEBAA CEO Ammar Balkar

126 The business of luxury Jumeirah’s Marco Nijhof talks exceptional hospitality and global expansion

90 Field of dreams Kuwait Petroleum Corporation’s ambitious efforts to ramp up production

96 Satisfied customers Using CRM technology to your advantage

S I LV E R S P O N S O R

REGULARS 14 The brief 15 Middle East business round-up 16 Insight 18 Frontline 23 In my view 24 Project focus 130 Leadership 132 Business doctor 134 On the shelf 136 City guide 138 The knowledge 140 Hot wheels 140 Objects of desire 144 Final word

40 Haitham Abdou, International Turnkey Systems 72 Mike MacDonald, 3D Networks 94 David Allinson, Opennet 108 Tadhg Carey, Thru-U

CREDITS:oct08 15/10/2008 16:35 Page 12

MENA 2009

BMME MAGAZINE BMME IS PUBLISHED BY GDS INTERNATIONAL LTD.

The sooner you registe r, the m you sav ore e! See

www.f

stsum mitm for deta ena.com ils

Level 1, Park House, 2 Greyfriars Road, Cardiff CF10 3AF, UK. Tel: +44 (0)2920 667 422. Fax: +44 (0)2920 663 994. E-mail: cardiff@gdsinternational.com

MANAGEMENT Chairman SPENCER GREEN, spencer.green@gdsinternational.com Chief Executive Officer JAMES CRAVEN, james.craven@gdsinternational.com Editor-in-Chief ADAM BURNS, adam.burns@gdsinternational.com Finance Director JAMIE CANTILLON, jamie.cantillon@gdsinternational.com Sales Director (International) OLIVER SMART, oliver.smart@gdsinternational.com

16-18 March 2009 The InterContinental, Abu Dhabi, UAE The Financial Services Technology Summit is a three-day critical information gathering of C-level technology executives from the financial services industry.

A Controlled, Professional & Focused Environment aFST ’09 is an opportunity to debate, benchmark and learn from other leaders in your own finance market. aFST ’09 is a C-level event reserved for 75 participants. aFST ’09 includes expert workshops, facilitated roundtables, peer-to-peer networking, coordinated technology meetings.

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

“There is no expense or effort spared to ensure that everyone has a good experience.” Matt Calman, Senior Vice President, Bank of America

Find Out More Phone Ross Abbott on +44 (0) 292 066 3626 Visit www.fstsummitmena.com

Circulation Manager JASON GREEN, jason.green@gdsinternational.com Marketing Director RICHARD STIRK, richard.stirk@gdsinternational.com

WEB SERVICES Senior Designer (Web) JAMES WEST, james.west@gdsinternational.com Web Editor JANA GRUNE, jana.grune@gdsinternational.com

EDITORIAL Senior Editor BEN THOMPSON, ben.thompson@gdspublishing.com Managing Editor HARLAN DAVIS, hdavis@gdsnewyork.com Editor DIANA MILNE, diana.milne@gdspublishing.com

INTERNATIONAL General Manager (North America) DAMIEN MUNRO, damien.munro@gdsnewyork.com

RECRUITMENT

Assistant Editor JULIAN ROGERS, julian.rogers@gdspublishing.com

HR Manager (UK-Bristol) IAN CASSLEY, ian.cassley@gdsinternational.com

Staff NATALIE BRANDWEINER, MATT BUTTELL, FRANCES DAVIES, REBECCA GOOZEE, MARIE SHIELDS, HUW THOMAS,

HR Manager (UK-Cardiff ) SANJ MAHAPATRA, sanj.mahapatra@gdsinternational.com

ART & PRODUCTION

HR Manager (US1) OWEN WILSON, owen.wilson@gdsnewyork.com

Senior Designer ANDREW HOBSON, andrew.hobson@gdspublishing.com

HR Manager (US2) HARRY ZAPATA, harry.zapata@gdsnewyork.com

Designers ZÖE BRAZIL, MICHAEL HALL, CRYSTAL MATHER, CLIFF NEWMAN, SARAH WILMOTT

SUBSCRIPTION ENQUIRIES: +1 212 904 0888

Junior Designer ÉLISE GILBERT Production Manager ROBERT SIMMS, robert.simms@gdsinternational.com Production Co-ordinators HANNAH DRIVER, HANNAH DUFFIE, JULIA FENTON, KELLY TUCKER

ADVERTISING SALES Brand Director GARETH JONES, gareth.jones@gdsinternational.com Senior Project Manager MARK BURKE

“What stood out was the quality of the speakers chosen to moderate the roundtables. I like working with genuine facilitators who can open people up and keep the discussion moving.” Paul Bergamo, VP & CIO Liberty Mutual

CIRCULATION & MARKETING

Sales Executives LAWRENCE RICHARDS, GAVIN WILLIAMS, LEE DOUGLAS, EMMA BOHAN, REBECCA SCADDING, DANIELLE DOCHERTY Sales Director (UK-Bristol) MAX FORD, max.ford@gdsinternational.com Sales Director (UK-Cardiff) DARREN ROACH, darren.roach@gdsinternational.com

SUBSCRIBE ONLINE: www.busmanagementme.com GENERAL ENQUIRIES: info@gdsinternational.com (Please put the magazine name in the subject line) LETTERS TO THE EDITOR: letters@gdspublishing.com

HEAD OFFICE Queen Square House, 18-21 Queen Square, Bristol, BS1 4NH, UK. Tel: +44 117 921 4000 Fax: +44 117 926 7444. E-mail: info@gdsinternational.com Cover Photography © Francisco Fernandez 2008 www.photographer.ae

Sales Director (NY) ROB DAVIS, rob.davis@gdsinternational.com

BMME (Q4 2008) is published three times a year by GDS Publishing. All rights reserved. Reproduction in whole or in part without permission is prohibited. The views expressed within this publication are not necessarily those of the publisher.

FinancialTimes.indd 1

7/10/08 14:52:05

UPFRONT new:oct08 16/10/2008 08:10 Page 14

THE BRIEF ANALYSIS

EASTERN PROMISE As turmoil in Western financial markets hits crisis point increasing numbers of banks are looking to the booming economies of the Middle East to recoup their losses. DIANA MILNE reports. IF YOU WALK THROUGH the heart of Dubai’s financial district, you’ll encounter a very different atmosphere from that currently pervading the business districts of Europe or the US. Recent events have left Western financial institutions reeling – and increasingly looking to the Middle East for salvation. Once regarded as a remote outpost by international banks, the Gulf is now being eyed as a potential gold mine by some of the banking world’s biggest players. Dubai was recently named as the number one financial centre in the world in a list of those most likely to become significant on the world stage in the future in the Global Financial Centres Index. Surging oil wealth and a flurry of high profile investments by sovereign wealth funds means that financial services are in high in the Gulf – and as a result financial institutions are heading there in droves. In September both Deutsche Bank and Credit Suisse announced plans to beef up their presence in the Middle East. Credit Suisse announced it had won a licence to open an office in Bahrain, adding to its existing operations in Dubai, Abu Dhabi, Doha, Riyadh, Beirut and Cairo. Meanwhile Henry Azzam, Deutsche Bank’s CEO for the Middle East and North Africa, revealed it too planned to expand its Middle East presence following the news that it is to provide new custody services on the Abu Dhabi Securities Exchange and the Dubai Financial Market. Earlier this year, Lehman Brothers moved one of its more senior po-

www.busmanagementme.com

sitions, Philip Lynch, the bank’s co-head of equities, to Dubai and Barclays dispatched one of London’s highest paid bankers, to the emirate as chairman of investment banking and investment management. They were joined by Citigroup, which transferred its co-head of global investment banking from London to Dubai. The Dubai International Financial Centre is expecting such an influx of banking professionals to be employed there that it is building the world’s largest car park, featuring 35,000 spaces, to cater to the demand. And Bahrain’s 38,000 square foot Financial Harbour district was built specifically to cater to the country’s growing financial services sector. The situation means that while jobs in the European banking sector may be scarce, the huge growth in the Gulf financial services sector, particularly in the UAE, has created an acute shortage of skilled financial services professionals. In the past year alone over 20,000 US-based finance professionals have lost their jobs. In the UK, earlier this year the Confederation of British Industries announced that it expected at least 10,000 financial sector job losses this year. Since then the Lehman Brothers collapse has left around 5000 employees looking for work. With further culls expected across Western financial markets, relocation of financial professionals to the Middle East could well become a stampede.

UPFRONT new:oct08 16/10/2008 08:10 Page 15

MIDDLE EAST BUSINESS ROUNDUP NEWS within the tower. Men will be allowed to work there but woman will be provided with special facilities including their own entrances, elevators and car parks. The tower will be completed in 2010 and will be part of the Hydra Towers Project that is made up of five high rise towers. A Hydra Properties spokesman said the aim of Eve’s Tower was to encourage entrepreneurship among women.

ENERGY ROYAL DUTCH SHELL has signed a multi billion-dollar deal with Iraq for a joint venture in the Basra province. The deal between Shell and the Southern Gas Company will include work to capture natural gas released as a by-product of crude oil extraction. Under the terms of the deal Iraq will hold a 51 percent stake in the venture, and Shell will hold a 49 percent stake. Iraq has the world’s third largest proven oil reserves and has said it wants to focus on developing in southern gas fields. If successful it could become a major supplier to Europe.

HOSPITALITY DUBAI-BASED HOTEL OPERATOR the Jumeirah Group has announced plans to operate 60 hotels by 2012. The group currently manages 11 hotels for investors and has another 11 under construction. As well as operating in the Gulf region it is expanding to resort islands in the US Virgin Islands, the Maldives, Majorca and Thailand. The group’s expansion is focussed on the Middle East and the Asia Paciﬁc.

CONSTRUCTION THE GCC’S US$2.4 TRILLION construction industry could be threatened by acute labour shortages, a report by the project management ﬁrm ESI International has warned.

According to the report, the region is facing severe shortages of construction professionals such as skilled programme and project managers. Raed Haddad, senior vice president of ESI said the scale of construction activity in the region is placing “severe strain on the viability of projects”. He warned that companies must tackle the skills shortages or risk facing delayed handovers of projects or poor quality ﬁnishes on projects.

REAL ESTATE THE WORLD’S FIRST EVER female-only owned tower is to be built in Dubai. Eve’s Tower is being constructed by Hydra Properties within Dubai’s Business Bay development. Only women will be allowed to own office space

TECHNOLOGY SAUDI ARABIA’S KING ABDULLAH University of Science and Technology is joining forces with IBM to build one of the world’s most powerful supercomputers. The Shaheen supercomputer will be the most powerful in the Middle East and will rival Europe’s fastest machines. Development work on the Shaheeen supercomputer is currently underway at IBM’s research laboratories in the US.

Shaheen is expected to be completed in September 2009.

INVESTMENT FOREIGN DIRECT INVESTMENT (FDI) in the GCC rose by 19.6 percent last year, according to a study by the United Nations Conference on Trade and Development (UNCTAD). The study found that investment into the wider region is expected to keep rising in 2008 despite a slump in global financial markets. Within the region, Saudi Arabia, the UAE and Turkey attracted more than four fifths of the total RDI, which rose 12 percent to US$71 billion. Energy and commodities investment was responsible for a majority of inward FDI in the GCC. Outward FDI concentrated on financial and telecommunications services. FDI is defined by the UN as an acquisition of 10 per cent of more of a company.

AVIATION UNITED AIRLINES has launched a new route directly between Dubai and Washington Dulles International Airport. The move makes it only the second US carrier, after Delta Air Lines to fly directly to the UAE and Dubai and will be the airline’s only new destination this year. It will fly to Dubai seven times a week using a Boeing 777-200 ER. Flights will depart from Dubai at 11.30pm and take 15 hours.

www.busmanagementme.com

UPFRONT new:oct08 16/10/2008 08:10 Page 16

INSIGHT

HOT TOPIC GULF ARAB BANKS’ CREDIT OUTLOOK GULF ARAB BANKS face slower growth and lower profitability, because of the credit crisis, according to the latest research by Moody’s. But while the outlook may be darker for regional financial institutions their situation will remain stable, the report goes on to say. It does warn of concern about the banks’ exposure to the real estate sector and the trend towards speculative purchasing of properties, which could distort the market. Moody’s concludes that banks in the Gulf are cushioned from the credit crunch by their countries’ huge cash reserves and the fact that they rely not on the financial markets to obtain funding but on ample customer reserves.

NEWS IN NUM8ERS

8 23

123,000

Number of millionaires in India according to Merrill Lynch’s latest Asia Pacific Wealth report.

US$4.2

billion: Cost of the Dubai Metro project which officials have announced will be completed in

September 2009.

$1.7bn

COMPANY SPOTLIGHT IMAGENATION was formed by the Abu Dhabi Media Company so that it could enjoy a slice of the action in Hollywood by funding feature films. At a time when producers are struggling to secure funding for their projects from traditional sources, Imagenation is offering to invest over US$1billion in films over the next five years. Already it has formed a partnership with US-based Participant Media with the two having pooled their resources to form a US$250 million fund to finance feature films. Mohamed Khalaf Al-Mazrouei, Chairman of Imagenation and the Abu Dhabi Media Company said the firm would help make the emirate a “major player in the media industry”. Abu Dhabi Media Company, was formed in 2007 and employs 1800 people across its operating units, which include publishing, television, radio, digital media, distribution and printing. The company is headquartered in Abu Dhabi but has offices in Cairo, Dubai and Washington DC.

www.busmanagementme.com

Value of the latest project by Dubai real estate firm Limitless in Indonesia.

327

Length of a highway being built to link Abu Dhabi with the Saudi Arabian border.

60.8%: Growth of the Qatari economy in the second quarter of 2008. The country’s economy is now worth

US$26.41 billion. 200: Number of London taxi cabs being imported by the Arabian Taxi Company to work on the streets of Bahrain.

UPFRONT new:oct08 16/10/2008 08:10 Page 17

THE TOP FIVE BIGGEST SHARE MOVERS IN THE FIRST HALF OF 2008 (ALL PRICES ARE IN USD) COMPANY Mena Holding Group (Kuwait) Aref Energy Holding Company (Kuwait) International Fish Farming Company (UAE) Ezdan Real Estate Company (Qatar) Methaq Islamic Insurance Company (UAE) Jordan Phosphate Mines Company (Jordan) Vending Network Company (Kuwait) First Dubai Real Estate Development (Kuwait) Gulf Medical Projects Company (UAE) Gulf Rocks Company (Kuwait)

INDUSTRY Building Contractors Schools and Nursery Fishing and Seafood Landlord and Developers Insurance Companies Nonmetallic Minerals Restaurants and Cafes Landlord and Developers Hospitals and Clinics Cement

% INCREASE 453.85 400.81 388.00 313.82 229.51 224.23 212.09 174.44 174.01 125.00

MARKET CAP 179.87 million 1.11 billion 415.23 million 6.39 billion 328.37 million 4.13 billion 257.92 million 1.77 billion 165.00 million 177.59 million

The large arched entrance of the Atlantis hotel at Dubaiâ&#x20AC;&#x2122;s man-made Palm Jumeirah island is seen after a fire broke out there in September. Dubai police confirmed the fire started in the hotelâ&#x20AC;&#x2122;s lobby as labourers were carrying out maintenance work prior to the opening of the hotel.

NEWS IN PICTURES

Iranian President Mahmoud Ahmadinejad speaks during a press conference in Tehran before heading to New York for the UN General Assembly. Ahmadinejad said that Iran has no fear of threatened new international sanctions over its controversial nuclear drive.

(Source: ArabianBusiness.com)

MOVERS AND SHAKERS

INSIGHT

An investor holds his prayer beads as he follows the stock market activity at the Dubai Financial Market as Western financial markets faced meltdown.

www.busmanagementme.com

UPFRONT new:oct08 16/10/2008 08:10 Page 18

FRONTLINE A GLOBAL PERSPECTIVE

CYBER CATCH-UP A REPORT BY the market research ﬁrm RNCOS has revealed that the number of internet users in the Middle East soared by 600 percent – in the past decade, three times higher than the global average increase. It attributes the increased number of users to reduced charges and upgrades to the network infrastructure in the region. The Middle East country with the top number of internet users is Israel, followed by Saudi Arabia, Egypt and the UAE. The report claims: “The Middle East broadband market is poised to grow at rapid pace in the backdrop of positive economic outlook and increased market liberalisation.” The report also predicts that by 2010 there will be over four million internet 3G subscribers in the Middle East.

INTERNET PENETRATION IN MIDDLE EAST December 2007 Middle East

17.4%

Rest of world

20.1%

World total, Avg.

20.0% 0

Penetration (% Population)

For WILLIAM WELDON, CEO of US drug giant Johnson & Johnson, a successful leader is the person with enough courage to make difficult decisions and enough compassion to understand their impact, as the US version of Business Management discovered during a recent interview with the man himself. Staff too, are incredibly important for Weldon. “To me, everything is based upon the strength of individuals in the company, and you see it time and time again – if you have great people then you have a great organisation.” To read more, go to www.busmanagement.com and click on the lead interview.

CORPORATE BRAND INFUSED WITH THE POWER OF ‘FUSION’ AMD HAS LAUNCHED a new corporate brand campaign under a new tagline, ‘The Future is Fusion’. The adoption of the ‘Fusion’ brand and the accompanying global campaign, which is expected to run through the end of the year, are among several steps AMD is taking as part of a broader transformation designed to sharpen its focus around its core microprocessor and graphics technology businesses. “Fusion is AMD’s way to express how we blend our customers’ needs, dreams and desires with our unique passion for enabling innovation,” said Nigel Dessau, AMD Senior Vice President and Chief Marketing Ofﬁcer. “While this unique approach has always been our practice, ‘Fusion’ is the most focused articulation yet of how AMD marries innovation with collaboration in ways that can yield beneﬁts to the marketplace greater than the sum of its parts.” At the heart of the campaign is the ‘Fusion’ brand

www.busmanagementme.com

concept: a unique energy created by connecting AMD people and technology with those of its partners. Fusion is the AMD working philosophy that marries innovation with collaboration, and is the process by which AMD and its partners can enable next-generation technologies that change the way we live, work and play. Consumers, especially PC gaming fans, can see and experience the power of ‘Fusion’ on their PC desktop in a new and exciting way. Available today for download, the AMD Fusion for Gaming utility beta2 is designed to allow gamers to experience greater performance on AMD processor-based PCs with a simple click of a button. It works by temporarily reducing resource-consuming background services while boosting compute performance with advanced acceleration technologies. For more details about the new advertising campaign, visit http://fusion.amd.com

DON’T WORRY, BE HAPPY According to Maktoob Research’s survey, Omanis and Saudis are the happiest people in the GCC.

Percentage of population that said they were happy: Oman

61%

Saudi Arabia 57% Qatar

56%

Bahrain

54 %

Kuwait

53%

UAE

52 %

UPFRONT new:oct08 16/10/2008 08:10 Page 19

FRONTLINE STRANGE BUT TRUE

IT PAYS TO KEEP TABS ON STAFF SALARIES IN A COMPETITIVE EMPLOYMENT MARKET such as the Middle East, the challenge facing companies in many industry sectors is how to establish and maintain competitive levels of pay and benefits. During the last three to five years, salary inflation has increased year on year in most parts of the region. 2008 has been a particularly challenging year but are companies managing salary reviews in a structured manner or are they making random, kneejerk decisions in response to market forces? John Macdonald, Managing Director of ORC Worldwide (Middle East), a global HR consulting company that specialises in compensation-related issues, believes that many companies in the region are moving towards a pay philosophy that places more emphasis on maintaining alignment with the external market than with internal equities. “A lot will depend upon the culture of the organisation and, clearly, you cannot simply ignore internal comparisons, but market realities will cause companies to sacrifice some of their internal equity ideals in the interests of attracting and, more importantly, retaining high calibre people.” Inevitably, this will create tensions for many companies as long-serving employees often see newcomers recruited at higher rates of pay. Macdonald continues: “Any company’s first priority should be to the high performing, high potential individuals who will have the biggest impact on the long-term success of the business and these people are not just in management positions. It is essential that companies stay tuned to what the market is paying these individuals and that they pay the going rate for up-to-date, sought after skills and experience.” Since ORC Worldwide opened its Dubai Office in 2007, they have seen a lot of interest from clients seeking reliable data on market rates of pay and benefits. “Companies are hungry for data to help establish market-driven pay scales and it is encouraging to see this becoming integral to their overall pay philosophy and strategy,” MacDonald concludes. For more information on ORC’s activities in the region, contact John Macdonald at john.macdonald@orcww.com.

GLOBAL TECH THE LIST

1. Silicon Valley 2. Bangalore 3. London 4. Tokyo 5. Boston

6. Cambridge 7. Shanghai 8. Tel Aviv 9. Seoul 10. Beijing

HOTSPOTS:

11. Chennai 12. Pune 13. Singapore 14. Helsinki 15. Moscow

16. Hong Kong 17. Hyderabad 18. New York 19. Sydney 20. Shenzhen

THE UAE is planning to design and build the largest ever hot-air balloon seen in the Middle East, Africa and Asia. The huge balloon will be designed and built under the leadership of Italian balloon designer Paulo Benano. The UAE will be the only country in Asia and the third worldwide after US and Canada to have such a powerful balloon. Expected to be 50 metres in length and 25 metres wide, the balloon will have two engines and is due to be launched in December 2009 to mark the country’s 37th national day.

NEWSMAKER 1000 950 900 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 Burj Dubai (Dubai)

Russia Tower (Moscow)

Chicago Spire Taipei 101 Shanghai World Petronas New Tower Empire State (Chicago) (Taipei) Finance Centre Towers (Dubai) Building (Shanghai) (Kuala Lumpur) (New York)

THE SKY’S THE LIMIT FOR PLANNED TOWER JUST WHEN YOU THOUGHT you had seen it all in Dubai, along come jaw-dropping plans for the next world’s tallest tower. The multibillion dollar development, the centrepiece of a port and harbour complex, will rise to an incredible 1000 metres – 200 metres higher than the yet-to-be-complete nearby Burj Dubai. In fact, the tower is so tall that it is thought the temperature at the top will be around 10 degrees cooler than at the bottom, while high-speed lifts will whisk people to the top so fast that you will be able to witness sunset twice. Nakheel, the company behind the new project, say the eponymous tower will boast more than 200 floors, 19,000 residential apartments, 3500 hotel rooms and a 100-room super luxury hotel at the summit. Bosses say the whole development will spread over 270 hectares and be home to 55,000 people and a workplace for 45,000. “There is nothing like it in Dubai”, His Excellency Sultan Ahmed bin Sulayem, the CEO of Dubai World (Nakheel’s parent company), said at the launch.

www.busmanagementme.com

UPFRONT new:oct08 16/10/2008 08:10 Page 20

FRONTLINE

KUWAIT SETS MINIMUM WAGE THE KUWAIT GOVERNMENT has agreed to a new minimum wage after protests rocked the country. Tough penalties will be brought in for employers abusing foreign workers and maids. Parliament's human rights committee has introduced a bill stipulating jail terms of up to 15 years for offences including forced labour, abusing workers or sexually exploiting maids.

GOOD NEWS/BAD NEWS GOOD NEWS: BAHRAIN COMMUTERS

BAD NEWS: DUBAI HOUSE BUYERS UAE BANKS HIT BY WAVE OF CARD FRAUD UAE BANKS HAVE BEEN hit by a wave of ATM card fraud, with criminal gangs using counterfeit cards to access local accounts from abroad. HSBC has refunded the small number of its customers have been affected and warned others to change their PIN numbers as a precaution. “Together with other UAE-based banks, we have been experiencing an attack on our local accounts from counterfeit ATM card usage abroad” said Jonathan Campbell-James, regional head of security and fraud risk at HSBC Middle East.

MIDDLE EAST REVENUE SET TO DOUBLE ROYAL BANK OF SCOTLAND expects its revenue from the Gulf to double over the next two years on the back of booming economic growth in the region, said Colin Macdonald, regional head of the Middle East for RBS. He continued that revenue had doubled over the last two years and he expected growth to remain at current levels.

www.busmanagementme.com

✓

TRAFFIC CONGESTION in the Bahraini capital of Manama is to be eased with the building of a monorail train network. The Bahraini government’s cabinet has unveiled the ambitious plans to build the metro in a bid to tackle the city’s traffic problems. It will be built in three phases to be completed in 2030. The plan is similar to the US$4.2billion Dubai Metro project, which is scheduled to be completed in September 2009.

✗

DUBAI BASED SHUAA CAPITAL has warned that 70 percent of Dubai residents are being priced out of the country’s property market. The rapid rise in Dubai’s property prices and the high demand means there are few homes for those in the lower to middle income sector, the company has warned. Shuaa Capital predicts a year-long price correction in the Dubai property market starting in 2009.

ARE YOU BUSINESS CONFIDENT? ACCORDING TO A NEW SURVEY, business conﬁdence is falling across the GCC. The survey recorded the opinions of over 500 business people from across the GCC and asked respondents if they expected overall economic conditions in six months to be better, the same or worse than they were presently.

Most pessimistic countries: Bahrain and the United Arab Emirates Most optimistic countries: Saudi Arabia and Oman Source: Arabian Business Business Confidence Survey

LATEST RELEASE OF THE ENTERPRISE KNOWLEDGE PLATFORM NETDIMENSIONS, a global provider of performance, knowledge and learning management systems recently released Enterprise Knowledge Platform (EKP) 5.5. A major upgrade in EKP 5.5 is the hierarchical picture-based catalogue view. “Nesting catalogues under other catalogues is now a standard feature,” said NetDimensions CIO Ray Ruff. “A hierarchical catalogue view enables listing of a course in more than one catalogue. This is useful in ecommerce, document management applications and multiple groups or business units where they need to be precisely managed.” Version control of courses and learning objects give managers the ability to keep track of versions a user has taken, making it easier for compliance and certiﬁcation audits. Visual enhancements also give users a more appealing and navigable interface. “The new Learning Path feature presents a graphical layout of the courses currently assigned to learners, making it easier to view course assignments that need action, in process or have been completed,” explained Ruff.

Enhancements tailored to the needs of managers include tracking certificate IDs for easier management of certifications, greater flexibility in planning multiple training days, as well as setting up deadlines and availability dates for courses. This allows managers to set up the same course over different days when training a diverse group of learners. “Clients conducting classes using WebEx Virtual Classroom can also use EKP to coordinate classes and keep track of enrollments and scores,” Ruff noted. Learners can now specify a date range when printing user transcripts, view the map of a training facility, and have greater flexibility to change their status when enrolled in a course. “We also made the e-commerce interface more intuitive, walking the buyer through the whole process.” added Ruff. “Our ultimate goal is to give our clients a more convenient EKP experience so they can focus on learning. EKP 5.5 takes us one step closer to that goal.” Find out more at www.NetDimensions.com

UPFRONT new:oct08 16/10/2008 08:10 Page 21

FRONTLINE

PLANNING FOR THE WORSE CASE SCENARIO Emergency response plan

A successful outcome

Crisis management/ communication plan Activity

IN SOME SECTORS business continuity management (BCM) is a mature and widely accepted discipline, but the journey to get to that point was one of gradual development. Marsh Risk Consulting (MRC) began delivering solutions in this area many years ago. The services developed out of a growing need to protect companies’ balance sheets from loss. This was traditionally through insurance cover by providing financial compensation for loss of profits after an incident, often after many months, or even years of wrangling with lawyers, accountants, underwriters and loss adjusters. Indeed, one of our earliest marketing publications included the statistic that 88 percent of small and lower medium-sized organisations never recovered from a severe fire. MRC initially worked with clients to construct emergency plans. This included the key actions required in the first 24 hours after an incident such as evacuation, first aid and firefighting procedures. Next we worked on producing crisis management plans covering the days and weeks that followed. Actions in this area typically look at command and control. During the 1990s organisations realised that following the above actions there was a longer term need to manage reputational damage with stakeholders such as customers, investors and employees. We worked with our clients on business recovery plans outlining actions such as restoring critical processes, media manage-

Business recovery plan

Time objective

ment and redeveloping business strategies. The combination of these three areas is demonstrated in ﬁg1. As our consulting practice grows throughout the Middle East, Marsh recognises the differing cultural and geographical challenges in the region. Through a combination of thought leadership and learning from our clients the process and style of BCM is constantly evolving and we recognise and support forums such as this in driving the maturity of the discipline to contribute to a robust economy particularly at this time of signiﬁcant global economic change.

WHERE NEXT FOR OIL? ECO-FRIENDLY RULES AIM TO TRANSFORM ABU DHABI Abu Dhabi is seeking to transform itself into a green city in line with the city’s master plan, Plan Abu Dhabi 2030. An interim set of community planning guidelines to ensure sustainable development in Abu Dhabi have been unveiled and the new regulations from the emirate’s green initiative, The guidelines, which will eventually become mandatory, will also boost the amount of green space in the emirate. For every 10,000 people, the city will have a minimum of two hectares of open space.

IN THE PAST FEW MONTHS crude prices have been on a rollercoaster ride, leaving industry experts scratching their heads over where the price is heading next. Crude hit US$147 a barrel in July before plummeting to less than US$80 a barrel three months later. Opinion suggests that the price could remain around the US$75 mark for the rest of the year, while some analysts claim it could go as low as US$50. The deepening financial crisis and global economic slowdown, as well as a general fear amongst investors, is being blamed for the fall. However, the economic woes are expected to lead to a drop in steel prices and other equipment which will be good news for the oil and gas industry.

www.busmanagementme.com

UPFRONT new:oct08 16/10/2008 08:10 Page 22

FRONT LINE

IN MY VIEW Abdallah S. Jum’ah is President and Chief Executive Officer of Saudi Aramco. Forecasting the future isn’t easy: When it comes to predictions related to oil, the record is rather chequered. In general, we have grossly underestimated mankind’s abilities to find new reserves of petrol, as well as our capacity to raise recovery rates and tap fields once thought inaccessible or impossible to produce. Concerns over energy security are nothing new: Back in 1972, an interdisciplinary research group known as the Club of Rome issued The Limits to Growth, a landmark study that predicted the rapid depletion of natural resources leading to worldwide socioeconomic chaos. Fortunately the dates predicted for the exhaustion of these natural resources have come and gone without the dire consequences of societal collapse and economic misery envisioned in the report.

Confidence is no excuse for complacency: I am confident that this growth trend will continue. But I also believe we must take a hard look at the earth’s total endowment of liquid fuels, and realistically assess our ability to meet future demand for energy.

The joker in the pack among nonconventional liquid resources is biofuels: Their growth will be a function primarily of government policies and incentives, rather than market fundamentals. Frankly there are huge uncertainties associated with biofuels, and I think it is therefore difficult to predict with any certainty their ultimate contribution to the global energy mix.

I do not believe the world has to worry about ‘peak oil’ for a very long time: What we do need to worry about is ignoring liquid fuels in our energy policies and investment decisions, and discouraging their development and growth on various pretexts. Petroleum is too important to the global economy to be subjected to superficial analyses, doom and gloom prophecies or simplistic assumptions. Rather, oil deserves to be the topic of a rational and realistic dialogue.

UPFRONT new:oct08 16/10/2008 09:12 Page 23

FRONT LINE SOFTWARE COMPANY CONTINUES MIDDLE EAST GROWTH IT IS NOW THREE YEARS since Advent Software opened its Dubai office and in that time the business in the region has grown considerably. The office in the prestigious Emirates Tower is the home for the team of 10 who cover the full range of services – from sales, to consulting and provide local support to the clients in the region. Advent’s client base in the region has expanded across all territories that include the UAE, Bahrain, Qatar, Egypt, Lebanon and more recently Saudi Arabia. With almost 30 clients spread across the region, Dubai is the home for almost one half. However, the company is seeing a significant surge in demand for more sophisticated portfolio management systems from Saudi Arabia, where the gradual opening of the markets has highlighted a need for reliable and proven technology. Asset managers, family offices and wealth man-

agers in the region are now looking to build and grow their businesses on a platform that will support their growth without adding cost and also improve efficiencies and productivity. Clients are now much more demanding and need faster, more accurate information via any channel and to deliver this level of service firms need the right technology to support them. Today, it is not just about acquiring new clients – the focus is just as strong on retaining existing clients and you can only achieve this by providing world-class service and support to deliver the products that meet clients’ requirements fast and without fuss. To be successful at these key areas there needs to be a strong front and middle office platform to support the investment manager. For more information see www.advent.com or email emea@advent.com.

SOCIAL CLIMBERS UAE INTERNET USERS have the second highest rate of membership of social networking sites in the world, according to Synovate. Around 13,000 people aged between 18 and 65-years-old were surveyed by Synovate and 46 percent of those that took part from the UAE said they were members of sites like Facebook. The highest number, at 49 percent, came from the Netherlands. As well as being the second most likely to sign up to a social networking site, UAE users were shown to be the most prolific with 37 percent of users saying they had more friends online than in the real world.

COMPANY INDEX Q4 2008 Companies in this issue are indexed to the first page of the article in which each is mentioned. 3D Networks Abu Dhabi Royal Jet Accenture Advent Software Airbus Aircel Algeria Telecom Alsalam Aircraft Company AMD Anti-Phishing Working Group Apple Bahrain Petroleum Company Beximco Pharmaceuticals Boeing Bombadier Skyjet BoxSentry BP Business Continuity Institute Chevron Commercial Bank International Cyveillance Datamonitor Efma Emirates Alluminium Emirates NBD Etihad Etislat ExxonMobil

2,72 122 31 23,45 32 74 74 66 18, 93 56 140 110 38 32 123 56 90 68 90 66,70 56 96 96 66 42 32 74, 137 90

Ferrari 32 Financial Times 13 Forbes 74 Four Seasons 126 GPD Industries 116 Green Packet 6,78 Guinness 74 Gulf Helicopters 66 Hotmail 56 HR Access Solutions 114 IBM 94 IDC 82 Infor IFC, 86 Innovative HR Solutions 105 INSEAD 100,130 Insignia 84 International Institute for Research 74 International Turnkey Systems 40,135 Iron Mountain Digital 60 Islamic Financial Services Board 38 Island Global Yachting 116 JBOSS 94 Jumeirah 126 Jumeirah Golf Estates 116 Kanoo Group 26 Kanoo Shipping Agencies 26 Koenigsegg 142 KPMG 56

Kuwait Petroleum Corporation 90 Leisurecorp 116 LexisNexis 38 Liberty Alliance 50 Manchester United Football Club 74 Marsh 8,21 McKinsey & Company 42 MEBAA 122 Meet The Boss 125 Moody’s Investor Service 74 Moroc Telecom 74 Motorola 140 National Bank of Kuwait 56 Net Dimensions 20,59,103 Nortel 78 Oger Telecom 74 Opennet MEA 94 Oracle 86 ORC Worldwide 19,113 PA Consulting 98,121 PayPal 56 Pearl Valley Golf Estates 116 phion 50 PricewaterhouseCoopers 100 RAK Bank 66 RAK Minerals and Metals Investments 46 Ramco Systems 66,70 Ras Al Khaimah Investment Authority 46

Ritz Carlton 126 SAP 86 Saudi Aramco 23 Saudi Telecom Company 74 Securicor 66 Shamil Bank 38 Shangri-La 138 Sharjah Teaching Hospital 66 Shibboleth 50 Siemens 37,84 Snowmass Colorado 116 Standard & poor's 74 The Peninsula 138 Thru-U 108, OBC Trend Micro 56 Trimex International 46 Troon Golf 116 Turnberry 116 UK Financial Services Authority 38 UKS 4,106,IBC UN Relief and Works Agency 66 VASCO 50,73 Vertu 140 Vision Solutions 54 Volvo 142 World Bank 62 Yahoo! 56 Zain 74

www.busmanagementme.com

PROJECT FOCUS

“GENTLEMEN START YOUR ENGINES” Abu Dhabi will win a coveted place on the F1 racing calender once the Yas Marina Circuit is complete. Business Management takes a look at how far the circuit is from the finishing line in this issue’s project focus. n November 15 2009 five glowing red lights suspended across the starting line of Abu Dhabi’s Yas Marina Circuit and a cacophony of roaring engines will signal the start of the emirate’s inaugural F1 Championship race. At first glance a birds’ eye view of the development on Yas Island looks like nothing more than a dusty, sprawling construction site. But look closely and you will see that the track and state-of-the-art facilities are finally beginning to take shape. Recently released artist impressions give you some idea of just how impressive the track will eventually be. Next year’s race will be the finale for a 19-race season that would have seen the world’s best drivers battle wheel to wheel across four continents. The fact that the race could be the championship decider will add extra spice to the event. Designed by respected F1 track architect Herman Tilke, the 5.6km circuit will boast a non-permanent section that will replicate a street circuit, as well as extensive stadia and a marina. Up to 150 yachts will be able to allowed to berth alongside the track, which is being built by the UAE’s Aldar Property Development Company. But the Etihad Airways Abu Dhabi Grand Prix (to give it its official title) is not just about the racing. Yas Island, a natu-

ral 2550-hectare island located off the coast of Abu Dhabi and will also house a Ferrari theme park, a water park, signature hotels, golf courses, a 300,000 square metre retail area, apartments and villas, and much more. These facilites will help put Yas Island up there with the best circuits on the F1 calendar. However, there have been whispers that the ambitious circuit won’t be ﬁnished on time, something that Phillipe Gurdjian, Chief Executive of Abu Dhabi Motor Sport, has rubbished. He told reporters that he is a “perfectionist” and that he is solely focused on the development being ready for the earmarked date. His Excellency Khaldoon Al Mubarak, Chairman of the Executive Affairs Authority, Abu Dhabi has also been keen to stress that work is progressing well, with some parts actually ahead of schedule, including the piling work for the pit building and the excavation of the marina. Gurdjian, who was drafted in to rescue the Grand Prix events in Spain, Malaysia and

www.busmanagementme.com

ABU DHABI GP.indd Sec1:24

16/10/08 08:21:07

VITAL STATISTICS No. of laps: 56 (estimated) Length: 5.6km No. of corners: 20 Top Speed: 320 km/h (estimated) Lap time: 1min 38sec (estimated)

Bahrain believes that the race will showcase Abu Dhabi and the UAE’s offerings to a global audience. Sport is such a good revenue channel that both businesses and governments are vying to cash in on its worldwide appeal, especially Formula One. Just look at Bahrain, for instance. This Middle Eastern neighbour hosted its inaugural F1 Grand Prix in 2004 – the ﬁrst ever race to be held in the region – at its US$150 million circuit in Shakir. The ﬁnancial gains are clear: last year’s race weekend alone generated almost US$400 million in direct income to the businesses and traders of the Kingdom. In fact, it is thought that the F1 Grands Prix events create more revenue per event than any other sport in the world. The multimillion dollar sponsorship deals with the world’s largest companies and the internationally recognised luxury brands echo this sentiment. On top of this are the millions of viewers seeing what Abu Dhabi has to offer through their TV sets. The emirate believes the Yas Island project is another step toward competing with neighbouring UAE emirate Dubai, which already plays host to world-class golf, tennis and horseracing events, as well as its US$8 billion Dubai Sports City – due to be complete in 2010. Whether

or not Abu Dhabi can overtake its neighbour will remain to be seen but it has certainly gained a motor racing upper hand and a highly-coveted spot on the F1 calender. All that is needed now is for the site’s 15,000 workers to ﬁnish the circuit on time and to the high standards that have been set. . Al Mubarak told the media in the summer that Yas Island Circuit will create an “unparalleled” experience. “By starting with a blank canvas we have had the luxury of learning from existing Grands Prix as well as other major sporting events to ensure everything we do is best-practice and that the experience we will deliver spectators is unparalleled.”

“F1 Supremo” Bernie Ecclestone seals the deal with HE Khaldoon Al Mubarak

www.busmanagementme.com

ABU DHABI GP.indd Sec1:25

15/10/08 16:03:27

Mishal Kanoo:5oct

16/10/08

08:05

Page 26

COVER STORY

Mishal Kanoo:5oct

16/10/08

08:05

Page 27

TOUGH TALK He’s a member of the 11th richest family in the Gulf and oversees a multibillion-dollar business empire. But, as Diana Milne finds out when she meets Mishal Kanoo, he has controversial views on the state of the Gulf economy.

here are few Arab business leaders that are more publicly outspoken than Mishal Kanoo. And when it comes to his views on the future of the Middle East economy, he pulls no punches. To date Kanoo, Deputy Chairman of the Kanoo Group with an estimated personal fortune of US$1.7 billion, has written articles predicting a stock market crash in the Gulf, the collapse of the region’s property market, and the destruction of the economy by family-run ﬁrms. So it’s no surprise that when I ask Kanoo whether he thinks the tremors of the credit crunch will be felt in the Middle East – his answer is an unequivocal yes. “When you have these kind of events happening in Europe and the US, it would be reprehensible, and unacceptable for anyone to say these things are happening in isolation and it has nothing to do with us,” he says. “There is a major credit crunch in this part of the world. Banks are becoming very stringent. They are fearful of what’s going to happen and rightly so.

www.busmanagementme.com

Mishal Kanoo:5oct

16/10/08

08:06

Page 28

“They are looking at the future and thinking, ‘I’m going to be straddled with a lot of debt and a lot of people who are not going to be able to pay up’”. This, claims Kanoo, will result in a situation where the ambitious projects under construction across the region could be delayed and global players could be deterred from establishing headquarters in the Gulf: “You’re not going to see the free flowing money that there was in the past. It’s going to slow expansion plans, it’s going to slow a lot of additional businesses coming into this part of the world.” Kanoo’s pessimism on the state of the Arab economy is ironic given the success his own ﬁrm has enjoyed. The Kanoo Group is one of the largest family-owned firms in the Gulf and spans industries ranging from travel, machinery, oil and gas, industrial chemicals and shipping. Kanoo Shipping Agencies is the largest regional shipping agency in the Middle East supporting over 5000 vessels a year across the Arabian Peninsular and the success of the business has made the Kanoo family the 11th richest in the Arab world. And while Kanoo himself may have a reputation for holding

“There is a major credit crunch in this part of the world. Banks are becoming very stringent”

Kanoo Shipping Agencies is the largest regional shipping agency in the Middle East.

radical views on the future of the Gulf economy, he admits his family business has conservative aims. While the Kanoo Group continues to expand, it does so mostly within the boundaries of its existing markets and its established business divisions: “To be honest we haven’t changed,” Kanoo reveals. “What we’ve done is we’ve added onto our existing businesses. We have not added any new divisions. I sincerely doubt we will go into anything outside our area of expertise. But within our areas of expertise there’s a lot of new businesses to get into.” Kanoo says that the main focus of the group will continue to be its activities in the industrial sector: “The reason why is because it is one of the hardest types of businesses to get up and running but when you have it up and running with the right partner, it is very rewarding – not only ﬁnancially but also socially.” He goes on to say that the company has recently acquired a majority stake in a UAE-based landscaping company with an industrial focus – an area the Kanoo Group is keen to branch into: “We’ve established a majority share in a well established landscaping company here. That is the type of business which we think is going to blossom, pardon the pun,” he jokes. “The governments of Dubai and Abu Dhabi are concerned with beautifying the cities so this makes sense to us.”

Mishal Kanoo:5oct

16/10/08

08:06

Page 29

However despite being keen for the company to continue to expand on its home turf, Kanoo is highly critical of the business environment in the Gulf compared to in more developed markets and claims that weaknesses in the economies’ regulatory frameworks could deter foreign investors. “Any investor (in the Middle East) has to ask him or herself a few questions regarding the rules and regulations, i.e. the law, and whether it is stable or ﬂexible. If you are the type of person who wants the laws to be ﬂexible then BAHRAIN JUBAIL MANAMA SHARJAH DAMMAM RIYADH this environment would suit you. But if you are coming from DUBAI DOAH ABU DHABI a European background where people live or die by the law ABU DHABI AL AIN YANBU then this would not work for you. It all depends on the type of UAE RABIGH MUSCAT business environment you are looking for.” JEDDAH He adds that while legislation is in place to support the MECCA E practice of corporate governance by Middle East businesses, AT AN AN the enforcement of this is patchy – leading to corrupt pracT L M SU F O ABHA tices “We do have best of the breed legislation. But the probO lem comes with implementing those rules and regulations. EN “That’s not something I can say, hand on heart, is being M SANA YE done perfectly by the book. If you talked purely about publicly traded companies, there are issues of governance, of Kanoo Group’s office network transparency, insider trading and you have them happening all the time. It’s like an illness we don’t want to address. That said, are the authorities trying to combat it? Yes. Are International expansion is part of the Kanoo Group’s business stratethey putting enough resources into it? I don’t know. Only time will tell.” gy, at least within the travel industry, having last year acquired full ownThe best efforts at enforcing corporate governance are being made ership of 12 American Express Foreign Exchange services, 10 in the UK by the Dubai authorities, according to Kanoo, who argues that efforts and two in France as well as 18 American Express consumer travel outlets have not been as successful so far in Saudi Arabia. He says that it is in the UK. “What we’ve managed to do so far in travel is to piggy back on more important, now than ever before, for Middle East-based compaour expertise. We’ve expanded into businesses that are part and parcel of our core business. So for examFAMILY FORTUNES: THE KANOO GROUP ple we now have a travel agency in the UK and Egypt,” he explains. Any additional expansion by the company into inThe Kanoo Group is one of the largest independent, family-owned, ternational markets should be within emerging economies, group of companies in the Gulf region. Established in Bahrain in 1890 he goes on to say. “If you have a successful model, yes, you by Haji Yusuf Bin Ahmed Kanoo, it grew from its early trading and can replicate it. Trying to replicate the idea in more shipping business to become one of the most diversified stable economic countries does not give you and highly regarded business houses in the Gulf region the same fantastic return as you would get and beyond. from emerging ones. But it does give you Today the Kanoo Group is a diversified security. The only problem is because business conglomerate with business activities these markets are stable you have a lot across the world’s most dynamic industries from of competition there versus if you set shipping, travel, holidays, machinery, oil and gas, up in certain parts of Latin America, power and industrial chemicals to exhibition Asia and Africa for example.” services, courier services, logistics and business While he acknowledges the need centres and other retail and commercial activities. for the Kanoo Group to expand its presIn addition, the Kanoo Group has formed joint ence in the international markets, Kanoo ventures with international companies serving the says the company’s main focus will remain on service and industrial sectors such as Norwich Union existing Middle East markets. “I would still stick to Insurance, Mearsk, BASF, Johnson Arabia, Akzo Noble, my regional areas. You play to your strengths,” he says. Freightworks and others. “That’s my strength. I wouldn’t limit this to the GCC. I would say the region now.”

SAUDI ARABIA

www.busmanagementme.com

Mishal Kanoo:5oct

16/10/08

08:06

Page 30

nies to meet world standards in corporate governance, given that many are now joining their international counterparts on the global stage. “Corporate governance and transparency are things that will take a while for people to absorb and get done. The question is at what pace? In this region it’s not a question of is it ready. It’s a question of we have to be ready. Because when you have to attract international buyers, you no longer have a choice.” The Kanoo Group has recently made steps to improve the quality of its own organisation having applied to be assessed using the Dubai Quality Mark standards in partnership with Dubai Industrial City. Earlier this year the company also announced plans to “re-engineer” its business with a focus on its leisure division and how to run this and its corporate operations more efficiently, admitting it had not fully reached its goals in these areas.

“Any organisation eventually becomes, to a certain degree, content with itself. If you look inwards, you will only see what you have seen in the past”

MISHAL KANOO’S BIOGRAPHY Mishal Kanoo, was born in 1969 and he received his higher education at the American University of Sharjah and the University of St. Thomas in Houston, Texas, where he obtained an MBA in finance. He joined the family firm in 1991, left to work as an auditor for Arthur Anderson in Dubai, then rejoined the firm in his current position in 1991. In his spare time he teaches business part time at the American University of Sharjah where he specialises in the subject of family businesses. Kanoo is also a regular contributor of columns to Middle East-based magazines and newspapers.

www.busmanagementme.com

Given the rapid growth of the company and the many divisions it now comprises of, an overall assessment of the way it is run makes sense. The family-run company also appointed an outsider, Julian Knott, as divisional manager of business development and re-engineering, to conduct an overview of the way the business is run. Describing the move, Kanoo says: “Any organisation eventually becomes, to a certain degree, content with itself. If you look inwards, you will only see what you have seen in the past. But if you have brought eyes in from the outside, in this case Julian, you will see different aspects and from a different angle. This will benefit our customers. And at the end of the day, we live and die by our customers.” Kanoo is prone too to reassessing his own life and where he wants to go next. And while clearly devoted to the family firm he admits he harbours ambitions to pursue personal goals. “There are only two things I wanted to do,” he reveals. “The first is that I wanted to go back to teaching. And the second thing is that I’d like to write a book. I don’t know what on yet but I’m hoping to tend towards something more philosophical – to bore the cr** out of people.” Kanoo’s controversial views and outspokenness however mean that he is very unlikely ever to bore anyone.

Accenture.indd 1

9/10/08 09:54:17

ETHIAD_ed:5oct

16/10/08

08:45

Page 32

AVIATION

With plans to double its destinations and fly 25 million passengers by 2020 Etihad Airways is flying high. But as the airline’s CEO James Hogan tells Diana Milne, like every international carrier, it faces tough challenges ahead.

ames Hogan is not a man who believes in doing things by halves. Five years ago Etihad Airways didn’t even exist.Today the Abu Dhabi-based airline is a household name that has flown four million passengers to 50 destinations worldwide and has invested billions of dollars in new aircraft this year alone. And under Hogan’s leadership it shows no sign of slowing down. In September he revealed to the American media that he planned to double the number of cities Etihad services to 100 and to fly 25million passengers by 2020. These goals will be supported by Etihad’s US$43 billion shopping spree at the UK’s Farnborough Air Show in July at which it purchased 55 Airbus aircraft and 45 aircraft from Boeing. Etihad, like so many Middle Eastern companies, has experienced accelerated growth thanks to the region’s abundant oil wealth – putting it on a par with more established Western airlines, despite only being three years old. And according to Hogan it is precisely Etihad’s relative youth that allows it to set such ambitious targets.“One of the key advantages Etihad has is that it’s not a legacy carrier,” says Hogan “As a relatively new airline and evolving brand, we can make decisions quickly without the burden that the older, more traditional airlines have.” But while youth may give Etihad the edge over its more established rivals, it shares with them the threat posed by volatile oil prices. Hogan is bullish on Etihad’s prospects of surviving the storm, but admits the airline will have to make cut backs to meet the rising costs. “The high cost of fuel is a challenge and it’s not one that is going is to disappear overnight,” he says. “Thankfully we’ve hedged aggressively and we have a strong focus on keeping costs that are within our influence under control. There are no plans for Etihad to compromise its customer service in order to cut the weight of our aircraft. However, the airline is currently pursuing a number of fuel saving initiatives, which are already realising significant savings on Etihad’s aviation bill.” But while he may be looking to cut the costs of Etihad’s fuel bills, Hogan has invested heavily in the continuing expansion of the airline – both by purchasing aircraft and by expanding its network of routes. Among the new destinations added to Etihad’s network this year alone are Lagos, Melbourne, Chennai, Belarus, Kazakhstan and Moscow. And while that may sound impressive, Hogan says the list is just the tip of the iceberg for Etihad.

ETHIAD_ed:5oct

16/10/08

08:45

Page 33

ETHIAD_ed:5oct

16/10/08

08:41

Page 34

THE ETIHAD STORY Etihad Airways was set up as the national airline of the United Arab Emirates in July 2003 by a royal decree issued by Sheikh Khalifa bin Zayed Al Nahyan, then the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Services. Soon after, Dr Sheikh Ahmed bin Saif Al Nahyan was appointed Chairman of the airline. Based in Abu Dhabi, the capital of the UAE, it started, with the twin objectives of creating an airline that would bear the UAE flag and extend Arabian hospitality to its guests. ‘Etihad’ is Arabic for ‘united’, and hence a symbol of the bonding among the seven emirates that constitute the UAE. Services were officially launched with a short, ceremonial flight to the oasis city of Al Ain in the emirate of Abu Dhabi on November 5, 2003. A week later, on November 12, 2003, commercial operations started with the launch of services to Beirut.

“To give you some idea of our intentions, we don’t yet fly to places like Japan, Korea, or anywhere in South America. Currently we only serve New York in the USA and that situation will change,” he says. At Farnborough Etihad purchased a total of 205 planes – at a time when most airlines around the world are making cut backs. The growth of the airline is in many ways, concurrent with the growth of the Abu Dhabi as an international tourism and business destination and Hogan says he forecasts strong future demand from visitors to the emirate. This, he says, is why he spent US$43 billion at Farnborough: “The growth of Etihad Airways and Abu Dhabi are inextricably linked. We would not have made an order of this size and magnitude unless we had absolute confidence in the future success of the emirate, both from a tourist and business point of view. Our order reflects our belief in Abu Dhabi’s future plans.”

www.busmanagementme.com

In the months that followed, Etihad added almost one new route a month. In June 2006, it achieved another milestone: 30 destinations in 30 months. By 2010, it plans to touch 70 international destinations. Other significant achievements in the airline’s three-year history include: • An unprecedented US$8-billion order for new aircraft in 2004 (five Boeing 777-300ERs and 24 Airbus aircraft, including four A380s). • The first-ever direct flight from the UAE to Geneva (June 2004), Brussels and Toronto (October 2005). • The first-ever non-stop flight from Abu Dhabi to Johannesburg. • The World’s Leading New Airline of the Year Award (2004, 2005 and 2006, World Travel Awards). • The World’s Leading Flatbed Seat Award (13th World Travel Awards, 2006).

Hogan has every reason to be confident. Approximately US$200 billion is to be invested the UAE capital in the next 10 years. Among the attractions set to put Abu Dhabi on the global map are Saadiyat Island which will feature a Ferrari theme park, racetrack, hotels and leisure facilities and Yas Island which will feature the Middle East’s very own Guggenheim Museum and Louvre art gallery. Travel to the region is also set to continue to grow at a rate that far oustrips the global average. According to IATA, the Middle East witnessed growth of 18.1 percent in passenger traffic in 2007, compared to 7.4 percent growth in global traffic. It predicts growth in the region between now and 2015 to be around 7.1 percent – the highest of any region in the world compared to a global average of 5.3 percent. As well as capitalising on these growing numbers Hogan says he plans to continue to target niche travellers to the region. “We tap into many different mar-

ETHIAD_ed:5oct

16/10/08

08:42

Page 35

Below: A class of Emirati cadet pilots on their first day of training Bottom: Etihad Cabin crew with an Etihad sponsored Ferrari F1 car

kets – religious traffic, business, tourists, and people using the Middle East to connect to their final destination. “Coupled with a rapidly strengthening business and tourism market, the Middle East is a recipe for success and Etihad is proud to play an integral part in it,” says Hogan. But Etihad faces hot competition in the aviation market and in order to increase passenger numbers it must invest not just in new aircraft and destinations, but also in strengthening recognition of the Etihad brand globally. Like neighbouring Emirates Airline, sports sponsorship has been a cornerstone of this strategy. Its most high profile sponsorship agreement to date is a threeyear sponsorship deal with the Ferrari F1 team, which will see Etihad’s logo displayed prominently on the Ferrari cars and on the drivers’ uniforms. Etihad is also the official airline of Chelsea Football Club and closer to home it is the title sponsor of the Formula One Abu Dhabi Grand Prix, the official airline of the Abu Dhabi Golf Championship and sponsors the Abu Dhabi Harlequins Rugby Union Football Club. Investment must also be directed towards ensuring the airline’s image is an ethical one – particularly at a time when the spotlight has been turned on airlines in the bid to cut carbon emissions. Hogan is keen to emphasise that the airline is doing all it can to stay green. “We take our commitment to the environment seriously. Etihad operates one of the youngest and most environ-

www.busmanagementme.com

ETHIAD_ed:5oct

16/10/08

08:39

Page 36

mentally-efficient fleets in the world. The average age of the fleet is three years meaning lower levels of emissions than older fleets. A key selection criterion in the Farnborough deal was the environmental performance of the aicraft. The new generation aircraft we have ordered from both Boeing and Airbus are amongst the most fuel efficient and will help maintain Etihad’s fleet as one of the youngest and greenest in the sky.” He goes on to say that the airline is currently developing policies to minimise its impact on the environment in line with Etihad’s commitment to sustainability. In the area of social responsibility, Hogan says the airline is also His Highness Dr Sheikh Ahmed bin Saif Al Nahyan, Etihad Airways’ Chairman, CEO James Hogan, Airbus CEO Tom Enders and Airbus COO, Commercial, John Leahy. keen to create and promote employment for Emirati nationals. Indeed, he says the participation by Emiratis in the airline’s success story is one of his proudest achievements to date: “A particular issue which continues to lar number of casualties worldwide over the next three to four months.” please me is the increasing role that Emiratis are playing in the continued deThe situation has prompted some to predict wealthy Middle East airvelopment of our airline. Etihad continues to build its Emiratisation scheme, lines such as Etihad could acquire struggling European airlines. Indeed which, by the end of 2008 will boast more than 100 participants across the there was media speculation this year that it was in “firm talks” over a cadet pilot, management trainee and technical engineering programmes. With possible US$1 billion merger with UK carrier BMI British Midland. Etihad’s incredible growth set to continue, it is crucial that we develop our According to the reports, Etihad had approached Lufthansa, which multi-talented, multi-cultural workforce with strong Emirati representation.” holds a stake in BMI, and is believed to want to sell its stake for US$357 The expanding of Etihad’s workforce and the favourable market million. Such a stake would give Etihad the second strongest position at conditions it enjoys in the Middle East are in sharp contrast to those in BA’s home airport Heathrow. In a statement Etihad admitted it was considthe West where crumbing financial markets and a looming recession are ering such a move but said it had no definite plans to strike a deal at preset to hit airlines’ profit margins hard and will lead to mass redundansent, stating it had held “a number of discussions with a variety of carriers cies. Earlier this year British Airways CEO Willie Walsh announced rearound the world”, however it had “no firm talks planned with any airline dundancies of 1800 and warned that he predicts 30 airlines will go or any proposals in the pipeline with any possible new carrier”. bankrupt before Christmas. “We are in the worst trading environment Hogan admits that Etihad is not immune to harm from the economic strife the industry has ever seen,” he said at the time, adding “We have seen affecting the European and US aviation industries and that his airline must en30 or so airlines go bust this year and it would be fair to expect a simisure it remains competitive in order to remain in business. “The aviation market remains incredibly competitive. The deteriorating economic situation in Europe and North America is amongst the headwinds that we face going forward. By continuing to focus on the customer experience and by providing the best service both in the air and on the ground, we will continue to achieve the challenging targets we set ourselves.” Deteriorating global economic conditions may lead some to describe Hogan’s ambitious target-driven approach as unrealistic. But so far the airline has hit every one of its targets, making it the fastest growing commercial airline in history. And judging by this track record, there’s nothing to say Etihad won’t keep flying high.

JAMES HOGAN’S BIOGRAPHY James Hogan was born in 1956 in Melbourne, Australia. After a distinguished career with Hertz International spanning 13 years, he joined BMI British Midland in 1997 as Service Director. In 1998 he was appointed to the board of Forte Hotels Limited as Worldwide Sales Director. In 1999 he re-joined BMI British Midland as Chief Operating Officer. He was based in Melbourne, Australia as Chief Executive of Tesna, a consortium engaged to restructure Ansett Airlines before moving to the Bahrain as President and Chief Executive of Gulf Air from May 2002 to September 2006. He was appointed as Chief Executive of Etihad Airways in October 2006.

www.busmanagementme.com

Siemens.indd 1

9/10/08 09:54:45

ISLAMIC FINANCE

Laying down the law There is a growing need to address the challenges of regulating Islamic financial institutions in global markets. Legal expert Antony Hainsworth describes the difficulties involved in standardising legislation.

ew areas of law come about only rarely. The core principles of contract law, tort law and criminal law have long outlived their earliest practitioners. Some areas of law, including, for example, financial regulation, have expanded greatly from a small seed of minor legal issues to a great hulking oak of law; others, such as the law of restitution, came into being from isolated legal issues coalescing into a single, coherent body of law. The process by which new areas of law are created is rarely, however, straightforward. The same is true of Islamic finance law. Shari’a law, in and of itself, is certainly not new. As Potter LJ observed in his significant speech on the decision of the Court of Appeal in Shamil Bank of Bahrain v Beximco Pharmaceuticals Ltd, “most of the classical Islamic law on financial transactions is not contained as ‘rules’ or ‘law’ in the Qur’an and Sunnah but is based on the often divergent views held by established schools of law formed in a period roughly between 700 and 850 CE.” What is new, however, is the growth of Islamic financial business into a significant part of the financial mar-

www.busmanagementme.com

Antony Hainsworth.indd Sec1:38

15/10/08 15:46:13

kets. This has led to the court systems of essentially secular countries having to grasp the significance of Shari’a principles. This process requires the courts to reach decisions on how what are, in essence, religious principles, are to interact with black letter law. As with many conventional areas of law, there is often no easy answer. Significant steps were taken by the decision of the Court of Appeal in the Shamil Bank case. Although the court chose not to recognise the Shari’a as an independent body of law capable of governing the relationships between parties, significant concessions were made. It was recognised that Shari’a principles may be relevant to the intentions of parties when entering into a contract. It was recognised that the courts may have regard to expert evidence from Shari’a scholars in determining such intentions. From such simple beginnings larger things often grow.

Regulators

With the UK positioning itself for the anticipated worldwide growth in Islamic ﬁnance, it is increasingly important to understand how secular English laws and regulations will be applied to Shari’a compliant products and services. Whilst there are a number of publications in the market, which seek to explain Shari’a principles, there are few, if any, that seek to address the accompanying black letter law issues that come with them. It is this interaction between English laws and regulations and unfamiliar religious principles that will be of particular interest to practitioners. Even a passing knowledge of Shari’a principles will give some indication of the practical challenges that must be met. Should Shari’a compliant products and services be originated and marketed in a different way to conventional products and services? Do conventional ﬁnancial institutions wishing to offer Shari’a compliant products and services need to engage the services of Islamic scholars? Are fatwas issued by Islamic scholars binding on an institution that commissioned them? Are default fees permissible under the Shari’a? If a default fee is impermissible under the Shari’a, is it enforceable before the English courts? These are just some of the questions that need sensible, practical answers.

“Financial services regulators are finding that there are significant differences in the way that Islamic financial institutions operate, which they must take into account in regulating such institutions”

The courts are not alone in having to meet the challenge that Islamic finance poses. Financial services regulators are finding that there are significant differences in the way that Islamic financial institutions operate, which they must take into account in regulating such institutions. At the same time, regulators are finding conventional financial institutions, which they regulate wishing to expand into the Islamic sector. Islamic financial institutions may pose different prudential and systemic risks from conventional institutions; this becomes all the more significant when Islamic financial institutions and conventional financial institutions are inextricably linked in a single, interconnected financial market. These are just some of the reasons why the UK Financial Services Authority chose to publish a significant policy paper in November last year entitled Islamic Finance in the UK: Regulation and Challenges. Financial services regulators in a number of other jurisdictions have already introduced regulatory rules on the operation of Islamic financial businesses. The FSA’s paper is an early indication that similar legislative measures should be expected in the UK in the near future.

Antony Hainsworth is a LexisNexis Section Editor and a leading lawyer on Islamic finance. He is also a financial services and financial regulation specialist at Clifford Chance LLP. He advises both local and international institutions on all aspects of regulated financial activity and financial business. He is the editor of the new Division on Islamic Financial Institutions and Islamic Finance in the LexisNexis Encyclopedia of Banking Law.

Principles It has been over a year now since I was first approached by LexisNexis to write a new chapter for the Encyclopaedia of Banking Law on Islamic Financial Institutions and Islamic Finance. This was no small undertaking. English jurisprudence on Islamic finance is in its infancy. A number of international bodies, including in particular the Accounting and Auditing Organisation for Islamic Financial Institutions (‘AAOIFI’) and the Islamic Financial Services Board (IFSB), have taken steps to introduce standardised principles on the governance and operation of Islamic financial institutions, but are finding that there is a lack of consensus amongst Islamic scholars on the practical application of Shari’a principles. Institutions as significant as ISDA have commissioned projects to create Shari’a compliant versions of their standard documentation. Trying to capture and commentate on all these developments is, in many ways, like trying to paint a picture of a moving subject. However, it is for precisely this reason that a publication such as the Encyclopedia of Banking Law lends itself to the subject. As a loose-leaf work with monthly updates, it is very well positioned to take account of new developments in the area. In many ways, this is an editor’s dream. New decisions can be commented on promptly. New regulations can be taken into account. The publication can be responsive to new developments both at home and abroad. The chapter is likely to change and develop over the coming years as law and practice develops. I couldn’t be happier to be involved.

www.busmanagementme.com

Antony Hainsworth.indd Sec1:39

15/10/08 15:46:13

ASK THE EXPERT

ISLAMIC BANKING REACHING NEW HEIGHTS While the world’s financial institutions are taking a battering, Shariah compliant banking is witnessing unprecedented growth says Haitham Abdou.

aving been virtually unheard of two decades ago, the concept of Islamic banking has since become a powerful force in mainstream banking and is now an industry worth an estimated US$300 billion with an annual growth rate of between 15-25 percent. This makes the Islamic banking and finance industry a very lucrative opportunity for conventional and Islamic banks alike. Although most of the Islamic banks and financial institutions in the world reside in the Middle East, they are rapidly mushrooming in Asia, Europe, and the US. Demand for Shariah compliant banking products and services is now so great that conventional banks are rushing to offer such products, referred to as Islamic windows, to cater to the demands of their customers. Increasingly, non-Muslim customers are being attracted due to the principles of Islamic banking that dictate risksharing and no interest policies. Despite the immense potential of Islamic banking and financial products there are numerous challenges that the industry faces. As a result of accelerated globalisation and fierce competition between Islamic and conventional banks, Shariah compliant products need to provide competitive products that are customised to suit local needs. At the same time, these products must meet international standards. Specialist support is therefore strategically essential to implement information technology solutions that are specific to the different modules used in Islamic banking products.

ITS.indd 40

It is also essential that providers have the capability to integrate with other banking systems and comply with Central Bank rules and regulations. For over two decades International Turnkey Systems (ITS) has been the leading ICT solutions provider for Islamic banks and Islamic finance organisations. The ITS solution is specifically designed to fulfil the needs of the Islamic banking and financing sector. To that end, the ITS products take into account the great importance of the Islamic Shariah in the community’s financial dealings while remaining easy to use, with simple interfaces. ITS has a keen understanding of what its customers really need from an ICT partner. In short, to enable technology utilisation in order to allow your business to grow. ITS realises the importance of the Islamic banking field and how dynamic the industry is. Based on subsequent changes in Central Bank rules, the ITS Islamic Banking Solution has been developed to comply with multiple Islamic rules. ITS appreciates the unique structure of Islamic banking as well as the differences between Islamic banking and conventional loan or debt markets.

Firmly rooted The ITS Islamic banking solution enables providers to offer a competitive range of alternative ﬁnancing vehicles, different to those offered by commercial banks, while, staying ﬁrmly rooted in Islamic principles. The Islamic banking solution also allows conventional

banks to employ Islamic financial techniques in their banking, giving a profit/sharing framework as an alternative to an interest rate mechanism. Over 70 banks and financial institutions operating worldwide utilise ITS’ banking solutions. Currently, the ITS Islamic banking solution processes an average of 750,000 transactions daily, although the solution’s transaction processing capabilities are unlimited. Islamic banking solutions for newly launched Islamic banks and financial institutions can be implemented in less than two months. In less than six months, ITS can provide solutions for banks that are converting from a conventional framework to an Islamic framework. Furthermore, ITS offers Islamic banking solutions for conventional banks that provide Islamic banking products. Lastly, ITS Islamic banking solutions can also be implemented in Islamic financing companies. ITS also provides value added services that include facilities management. Through this product, ITS handles the management and operation of a corporation’s existing IT facilities for a predefined period of time. This ensures the high availability, efficiency, and robustness of the facilities throughout that period. For more information visit www.Its.ws

Haitham Abdou, Group Director of Marketing at International Turnkey Systems, has over 13 years of experience in the banking and finance industry. His areas of expertise include IT strategies for financial institutions, SOA for Islamic finance banks, automation projects, core replacement, AML, electronic banking and payment systems.

www.busmanagementme.com

15/10/08 15:50:49

ITS.indd 1

7/10/08 14:54:47

BANKING FOCUS

WINNING COMBINATION UAE-based Emirates NBD is a banking heavyweight in the Middle East following the merger of Emirates Bank and National Bank of Dubai last year. CEO Rick Pudner talks to Business Management about the group’s strength in the region and how Islamic banking is providing a significant boost to earnings.

BM. What has the merger done for the new group’s stature in the region? RP. The deal made Emirates NBD the biggest bank in the Middle East by assets and it’s this scale and the heritage of the two legacy banks that positions us as a national champion bank. The size of our balance sheet also makes the bank a natural leader in big ticket project lending, an important growth catalyst in the GCC banking sector. Emirates NBD boasts over 20 percent of the domestic, corporate loan market. The deal also meant pooling two talented staff teams in the region. This team remained dedicated throughout the deal, enabling us to grow further still since. BM. Has it been difﬁcult bringing together two banking giants? RP. Generally, the banks’ stakeholders were pleased with how the deal went. The banks partnered with best-in-class advisors early on and thus the merger progressed very smoothly. Evident of how smooth the process was is the fact that business ran as usual and even managed to grow throughout the deal. Our staff, the regulators, our customers, public sector bodies and our shareholders were all very supportive throughout the deal. The case for merging was compelling and the bank was transparent throughout the transaction with all of its stakeholders. An important challenge is the integration of our staff. With new ofﬁces and merged teams in place, settling the bank’s people and creating a positive new culture has been a priority over the past year. To this end, we have hosted ‘Culture Workshops’ for all employees. These sessions focused on team building and communicating the new vision, mission and values of Emirates NBD to all. Technical integration is of course a challenge, front-end and back-end. We are on-track with all areas of integration and are on-line for our 2009 deadline. It has been said that the Emirates NBD merger is a blueprint for future large regional mergers. BM. Do you forecast further consolidation in the UAE banking sector? RP. Consolidation in the UAE banking sector is overdue. The market is overbanked, with 49 banks servicing a population of 4.6 million people, according to the 2006 census. This is true throughout the GCC. I believe we can expect to see some other big banks in the region look to join forces within the year.

www.busmanagementme.com

Emirates Bank.indd Sec1:42

15/10/08 15:47:57

merger. This is a reﬂection of a fertile banking landscape, but mostly, and I speak for bank’s shareholders when I attribute this in large to the hard work and dedication of Emirates NBD’s workforce. BM. Your CFO Sanjay Uppal announced that much of this gain could be attributed to a major upswing in Islamic ﬁnance. What’s driving

“We have not made a secret of our hopes to make one or two strategic acquisitions in the medium term” BM. Do you feel threatened by the arrival of international banks in the UAE or do you see the competition as being healthy? RP. Competition is always healthy and inevitably drives progress. As the market stands, cluttered as it is, the authorities are hesitant to issue new licenses to international competitors. After further consolidation I’m sure this will ease up but we are the biggest in the region with the largest distribution network in the country. We will always work hard to secure this position. BM. Emirates NBD posted a surge of 45 percent in second quarter proﬁts. How has the group achieved such a rise in growth and how pleasing were these results for you personally? RP. As I mentioned before, the new scale has positioned Emirates NBD well for big-ticket lending, an area of considerable growth for Emirates NBD. Retail banking and wealth management are also expanding successfully. Islamic banking has been another area of exponential growth for the bank. Such growth is of course very pleasing for us all at the bank and for those who have supported it throughout the

this upswing and how are you placed to cope with future demand for Islamic banking? RP. Emirates NBD’s award winning and market leading Islamic financial services arm, Emirates Islamic Bank, increased its profits and assets significantly in the first half of 2008, compared to the same period in 2007. Analysts forecast Islamic assets increasing from 13 percent of UAE system assets in 2007 to 18 percent by 2012. Continuing to expand our Islamic banking services amongst such opportunity is an important focus in Emirates NBD’s long-term growth. Globally, Sharia-compliant assets have grown by 20-30 percent a year over the last decade to reach US$400-500 billion. Consensus is unanimous that Islamic or Sharia financial services is a market geared for continued exponential growth over the next decade. Islamic bonds – Sukuks – are one of the fastest growing financial instruments globally. They are expected to be the largest contributors to sustained doubledigit growth in Islamic finance. McKinsey & Company has suggested that the broader region’s sector assets – excluding Iran – could hit US$750 billion, and will exceed US$1 trillion by 2010. We are building the Islamic business in line with these forecasts and the rapid growth witnessed internally. Emirates NBD has a reputation for innovation and this is important to the Islamic bank too. By continuously designing new products and services we aim to stay at the head of the curve. BM. How big is the mortgage market and how much demand are you seeing for your products? RP. The UAE’s mortgage market is set to double from US$8.7 billion in 2007 to US$17.4 billion in 2011. The real estate sector’s strong performance, buoyed by overall economic performance, steady population growth, negative real interest rates, and higher tourism receipts are driving the country’s thriving home finance sector. Domestic mortgage lending represented only 3.5 percent of the gross domestic product in 2006 and 4.7 per cent in 2007 whereas the average for emerging markets mortgage is 15 to 30 per cent of GDP. In developed countries, mortgage lending accounts for more than 50 per cent of the GDP. So we can expect an increase in this business. Emirates NBD is an active player in this market and we are seeing positive growth in the demand for home financing in the first half of 2008 which is reflecting on our market share in this market. BM. There are suggestions that customer service levels in the Middle East are not up to the same standard offered by US or European lenders. What is your response to this statement? RP. The Middle East is a rapidly developing region which is, of course, behind the US and Europe in a number of areas. The GCC is perhaps developing faster than the rest of the region in some sectors, banking is one of them.

www.busmanagementme.com

Emirates Bank.indd Sec1:43

15/10/08 15:47:58

Customer service is not dependent on infrastructure and so the region should not be a determining factor. Customers anywhere in the world are more demanding and generally more savvy when it comes to their ﬁnancial services providers. We have strong customer retention and strong customer satisfaction levels. But as with everything else, we are always keen to learn what we can do better and often look to banks in the US and Europe markets for inspiration and often best-practice benchmarks.

Emirates NBD headquaters

BM. What is Emirates NBD doing to improve customer service and use it to leverage a competitive advantage? RP. The bank reviews its customer services continuously and we worked tirelessly to ensure that it didn’t suffer amidst last year’s transaction and that it will not for the duration of integration. Recent research has suggested that there has been no considerable effect to customer services over all throughout the merger. Any organisation can always service its customers better and we dedicate a lot of time and resources to learning how. Ongoing training is one of the tools we use to ensure our employees are well equipped to provide an excellent service to our customers. Ongoing training across Emirates NBD is utilising best practice from both banks and is proving to be particularly useful. The new Emirates NBD brand, which is still to be unveiled, will focus on the whole customer experience. At whatever scale the bank is at, Emirates NBD will never become complacent. Our customers have supported us throughout a busy year and we will always strive to thank them with great service. BM. Finally, what goals or targets do you have for Emirates NBD in the next 12-18 months? Is overseas expansion on the cards? RP. The bank aims to continue growing at a steady rate. Growth will be both organic and inorganic. Organically, we see the Islamic ﬁnance division continuing to develop as with our lending. We are also seeking to strengthen existing international positions over the next year. Inorganically, we have not made a secret of our hopes to make one or two strategic acquisitions in the medium term. Outside of the UAE, building upon our position in Saudi Arabia is a priority. Other markets on our radar include Turkey and some of the CIS nations.

www.busmanagementme.com

Emirates Bank.indd Sec1:44

15/10/08 15:47:58

Advent.indd 1

7/10/08 15:06:12

RMMI:5oct

15/10/08

15:52

Page 46

INDUSTRY

RAK Minerals and Metals Investments has embarked on a multi-billion dollar global shopping spree buying up mines across the world. And as Managing Director Madhu Koneru reveals, the strategy is paying off. Diana Milne reports. olatile oil prices and a surge in demand for coal has created lucrative investment opportunities for RAK Minerals and Metals Investments (RMMI). The company, set up by the Ras Al Khaimah Investment Authority (RAKIA) in 2005 and co-owned by the industrial minerals giant, Trimex Group, may not be the best known name on the UAE business scene. But when it comes to its achievements to date – the numbers speak for themselves. This year alone it will invest US$1billion dollars in acquiring mines across the world. This will lead to a global asset base worth US$4 billion. But, says the company’s Managing Director Madhu Koneru, who is also executive director of Trimex International, the group is not focussed solely on its proﬁt margin. Ensuring the welfare of the workers at the mines it acquires is a key part of its strategy – not just in terms of corporate social responsibility but also to maintain a stable workforce. Indeed, Koneru says he believes that implementing this strategy is one of the biggest challenges that mining companies currently face. “One of the big chal-

V 46

www.busmanagementme.com

RMMI:5oct

15/10/08

15:52

Page 47

lenges that companies like RMMI face is that the mines they run are in very remote and underdeveloped places. How you deal with the people in these areas is very important. “Out of the money that you make from the mine, a percentage of this has to go into corporate social responsibility. And if you don’t do that you can face all sorts of issues such as workers striking. Koneru goes so far as to say that he believes implementing corporate social responsibility strategies is in fact more challenging than the mining process itself. “Handling a mine is very easy. There’s no rocket science in that. You drill it, remove the raw materials, process them and sell them. But dealing with the people at the mine head is very sensitive. They want you to make them understand how building a railway track or doing mining in their area will help them and their children in the future.” But overcoming such challenges is one of the reasons why RMMI has become so successful in such a short space of time. The company does not shy away from acquiring mines in challenging areas including Armenia, where earlier this year it invested US$200 million in the acquisition of the TSCC Armenia. This covers three mining complexes spread across north and south Armenia and under the terms of the deal RMMI will also establish a concentrate plant in the country. Koneru says he believes Armenia holds a great deal of untapped potential for RMMI – largely due to the fact that few of its rivals to date have been willing to invest in the country . “Because of the political relationships they have with its neighbouring countries, European and American companies are not keen to invest in Armenia. It is also a country that has not been developed for a number of years because it is landlocked,” explains Koneru. To overcome the logistical challenges of transporting materials and equipment to and from Armenia, the Ras al Khaimah government acquired 50 percent of the nearest port – Poti in Georgia. It will be utilising the port to do most of its exports when it starts production in Armenia. RMMI has faced similar infrastructural challenges in Australia where it has invested in mines in remote areas on the country’s east and south east coasts. To overcome these challenges, Koneru says the company plans to build a railway or port facilities. “We will do a similar thing to what we are doing in Indonesia right now which is to put up a railway track or a new port facility. Ras Al Khaimah has always been an industrialised city in this part of the world. It handles close to 80 million tonnes of bulk raw materials for the cement factories so the company has the expertise to build something over there.” As part of its strategy to invest in mines on each continent, RMMI has acquired a mine in Indonesia and earlier this year announced it was investing US$ 250 million in a Congo-based copper mine. “We have invested US$50 mil-

MADHU KONERU’S BIOGRAPHY Madhu Koneru obtained a bachelor degree in commerce from the Delhi University and started his career with the Trimex Group in 1992 as a trainee. Three years later he was appointed General Manager and became the company’s Executive Director in 1996. During this time he has also been a member of the boards of directors of Al Ghanem Industrial Company, Kuwait, and TJ Shipping and Logistics. In his role as Managing Director of RMMI on behalf of Trimex, Koneru is focused on building RMMI into a world-leading mining solutions provider in the metals and minerals industry. Koneru is a YEO, India member, a charter member of the Indus Entrepreneurs in Dubai and a member of the Indian Business and Professional Council in Dubai. In 2007 he won the Asian Business Award Middle East for ‘Young Asian Achiever of the Year’. He has also been instrumental in facilitating bilateral initiatives between the governments of Dubai and Ras Al Khaimah and India.

lion in acquiring the mine and we are investing another US$200 million in building the smelter,” says Koneru. “We have been doing a lot of exploration there and it’s going fantastically,” he enthuses. The next region it hopes to target is South America, and Koneru says the company is currently seeking out possible investment opportunities there. “The next place that we’re looking to go to in the next couple of years is South America,” he says. “It’s rich in iron ore and coal so we’ll be focussing on those areas. We are trying to look at some opportunities in Colombia and Brazil. We’re just shopping right now.” But this is no ordinary shopping trip. Once it has chosen the right spot, RMMI will invest millions of dollars in a mine there – a project that will be

“The next place that we’re looking to go to in the next couple of years is South America, it’s rich in iron ore and coal so we’ll be focussing on those areas”

years in the making. The company has every reason, however, to be conﬁdent of high returns on its investments. Globally, energy needs are set to increase by 55 percent by 2030 with the usage of fossil fuels, dominated by coal, estimated to grow by 84 percent. JPMorgan recently revised its 2008 global coal price forecast to US$90 per metric ton – an increase of almost 62 percent from its 2007 prices. Meanwhile, the analysts suggest that demand for metals such as copper, nickel, zinc and iron, could double or even triple over the next 25 years. The

www.busmanagementme.com

RMMI:5oct

15/10/08

15:52

Page 48

TRIMEX Founded in 1985 by Koneru Rajendra Prasad, a mainstay of the minerals business since 1973, Trimex Group was launched to fill the demand supply gap for quality industrial minerals to the oil drilling industry. It has since grown into a leading minerals and metals conglomerate with interests in all areas of the minerals supply chain, from mining and logistics to processing and research and development. Located in UAE and India, the group has grown from strength to strength, doubling its market capitalisation several times over within the past decade. Trimex’s success is the result of strategic diversification through forward and backward integration, which looks at all aspects of the mineral value chain. Trimex Group today is one of the region’s largest mineral and metal conglomerates that prospects, mines, sources, processes and delivers industrial raw minerals, heavy minerals and metals to the world’s leading oil-well drilling, ceramic, glass, construction, energy and fertiliser industries. situation is helped by the surge in oil prices earlier this year and a drop in the productivity of oil ﬁelds which has prompted many developing countries to turn to coal for fuel. This has led to particularly strong increases in demand from China and India, which Koneru says has boosted the building of power plants within both countries, as well as in the Middle East. There will be a lot of demand for coal coming up from power plants that are being built in India and in the Middle East,” he says. Koneru also believes that his company is insulated from the effects of the credit crunch on demand for metal as a component in consumer goods, by the fact that it focuses primarily on copper. “Whether the economy is up or down, copper is always going to be used,” says Koneru. “Unlike other metals such as lead or zinc which are directly related to consumer products, copper is related to infrastructure. So the resources which we have acquired are a very long term investment.” Part of the proﬁts gleaned from these projects will be invested back into developing the infrastructure of the emirate of Ras al Khaimah. The RAK government, through the Ras al Khaimah Investment Authority (RAKIA) has embarked on an ambitious plan to develop the emirate into the focal point for industrial activity in the UAE.

www.busmanagementme.com

RMMI:5oct

15/10/08

15:52

Page 49

To date it has established a thriving limestone and aggregates mining industry. Describing the relationship between the establishment of RMMI and the RAK government’s vision to develop the emirate, Koneru says: “RAK was very particular about developing the emirate and it needed to invest a lot of money in building infrastructure there. The raw materials needed for that are very expensive and copper and coal are not available locally so the government decided to go out and invest in it. That can be directly or indirectly hedged to the emirate,” he goes on to say. “If we invest in a coal mine in Indonesia and we are selling coal to China, whereas the RAK government is buying it from South Africa at a higher price, they are at least making money from the Indonesia and China deal. That is how the cost of infrastructure will be indirectly hedged.” RMMI hopes to enter into partnerships with other Middle Eastern companies which also want to develop mining industries. “We are being approached by various other companies within the region to do partnerships because the whole Middle East region now wants to invest in natural resources,” he notes. “They have traditionally invested in oil and gas but now they want to invest in mining also. Everyone has seen the value of natural resources because of the cost of infrastructure and what they are paying. We are negotiating, we are talking to some people, we are trying to do some co-investments but nothing has come to the ﬁnalisation stage.” Judging by RMMI’s achievements to date, however, there is little doubt that these agreements will be finalised. And while Koneru is keen to remain cautious about the future of the company, increased demand for coal and a surge in demand for copper means that RMMI could be sitting on a gold mine.

“Everyone has seen the value of natural resources because of the cost of infrastructure and what they are paying”

ABOUT RMMI RMMI was established in 2005 as a joint venture with the Ras Al Khaimah Investment Authority (RAKIA) and the Trimex Group. Its mandate is to extend Ras Al Khaimah’s long-term investment strategy in minerals and metals. RMMI’s mission is to become a leading mining solutions provider in the metals and minerals industry through strategic, long-term investments across the entire mining value chain – from geological exploration, mining and processing to trading and logistics. RAKIA’s mandate is to underpin the investment attractiveness of Ras Al Khaimah, which has a long history in mining and has produced about 100 million tonnes per year of limestone and aggregate in the last 30 years. With 25 years of experience in the

business, Trimex specialises in mining, research and development, processing, shipping, logistics and marketing. Trimex benefits from its extensive regional experience and global reach – shipping close to four million tonnes of various cargoes all over the world. Although still a relatively young company, RMMI has emerged as a highly successful investment arm of RAKIA and is now a fully-fledged Middle East mining company, currently managing 23 licences in Indonesia, Congo and Armenia and recently investing in Australia. RMMI will invest approximately US$1 billion during 2008 towards building an asset base exceeding US$4 billion.

www.busmanagementme.com

HEAD TO HEAD

many), requires companies to increase efforts regarding legal compliance. These challenges are visible at a global level, including also the Middle East.

CLEAR AND PRESENT

DANGER Security threats are coming from all angles and organisations need to be on their guard in the battle against cyber criminals. Two industry experts, Roger Vandeplas of VASCO and Klaus Gheri of phion discuss the issue with Business Management. BM. Protecting information and conﬁdential data is paramount today. What challenges are organisations facing when it comes to security and are there any differences in the Middle East? KG. As the digital world does not know any borders other than those barriers organisations put up as safeguards for themselves, one would strongly suspect that the ‘threatscape’ in the Middle East is the same as everywhere else. The vast and rapid economic growth that many areas in the Middle East have seen over the past years also means that the abundance of prosperous businesses there make interesting targets for criminals. RV. An important security challenge for many enterprises is caused by ‘de-perimeterisation’, which refers to the blurring of the company network’s boundary. The boundaries of networks disappear more and more through the use of smart phones, laptops, wireless

network connections, USB-devices and the use of web services for business partners. ‘De-perimeterisation’ implies that security mechanisms must not only be implemented at the network boundary (e.g. using a firewall) but that there is a need for distributed security including authentication, encryption, etc. A second challenge is referred to as identity and access management. Employees of a company need to use multiple applications, and therefore different usernames and authentication mechanisms. These applications require authentication mechanisms with varying strength. Identity and access management is required to allow employees efficient but also secure access to confidential resources. Finally, the growing importance of electronic information has caused governments around the world to enact legislation with respect to its retention, use and destruction. This legislation, ranging from Sarbanes-Oxley (US) to the Bundes-Datenschutz-Gesetz (Ger-

BM. How has technology evolved in the past few years to ensure information and systems security and keep the criminals at bay? KG. Those who believe that protecting against spam mails and defending against virus and phishing attacks is enough, are wrong. Content such as SSL-encrypted data trafﬁc, XML web services or RSS feeds pose real threats that are extremely difﬁcult to monitor at all with conventional security solutions. There are also other security-relevant areas that have to be addressed with the same caution in order to stop the transfer of damaging content from the outset. These include cross-location networks using VPN or wireless LANs. One single remote access from an unprotected PC or laptop is often all that it takes to open the famous backdoor into a company’s network. Another important complication is posed by access control and identity management systems. The question has to be answered here as to who is permitted to access which data in the company network and how to ensure that only this person has access?

“The growing importance of electronic information has caused governments around the world to enact legislation with respect to its retention, use and destruction” Roger Vandeplas RV. In the area of ‘de-perimeterisation’, endpoint security technology has emerged. This technology allows for the performing of a health-check on end-points (e.g. desktops, laptops, smart phones) to verify whether their security status is in line with corporate security policies. Trustworthy computing, the idea of which is to allow proving that the hardware and software of a certain computer have not been tampered with, can be seen as a type of endpoint security technology.

www.busmanagementme.com

IT Security H2H.indd Sec1:50

16/10/08 08:17:34

Vasco.indd 1

7/10/08 14:57:15

THE PANEL In the area of identity and access management, key technology providers take efforts to standardise identity management systems (e.g. Liberty Alliance, Shibboleth). At the same time, other companies specialise in providing strong authentication mechanisms in different form factors including dedicated hardware devices, smart card readers and mobile phones. In the area of legal compliance, vendors come up with software that can be used as a ‘control layer’, allowing for monitoring compliance of the company’s infrastructure with legal requirements. BM. As workforces become more mobile and devices get smaller and more sophisticated how can companies best protect defences? KG. With the advent of novel technologies work habits have changed dramatically throughout the past years. The portable laptop, vast amounts of data easily portable on a small USB stick, intelligent phones, ubiquitous wireless network access, personal area networking all have attributed to the fact that endpoints in corporate networks have become an increasingly hard to control hazard. Effective endpoint security today extends far beyond historical personal ﬁrewall and antivirus concepts. It still entails protection of an endpoint against network threats using a host ﬁrewall and malware detection software, but extends the protection concept by adding the new dimension of policy governed network access control.

Roger Vandeplas is the Vice President of Sales and Marketing at VASCO Data Security

unavoidable. Only a mature solution that combines different security measures can identify even hitherto unknown attack methods early and prevent them, this guaranteeing sustainable protection. Similar to physical security measures at an airport, where tickets, passport, luggage and passengers are checked before they can board an airplane, it is crucial for web applications security to answer these questions in advance – that is, who someone is and secondly, what they are doing?

“Those who believe that protecting against spam mails and defending against virus and phishing attacks is enough, are wrong” Klaus Gheri

RV. In order to prevent unauthorised access to company assets, companies need to follow a ‘defence-in-depth’ approach, consisting of multiple protection mechanisms. Firstly, companies should install strong authentication technology for establishing the identity of end-users requesting access to company resources. Additionally, companies can implement end-point security technology as well as authorisation and audit mechanisms.

RV. Because prevention is still the best cure, an ongoing security awareness and training pro-

BM. What advice would you offer for a quick recovery after a security breach? KG. Attacks on web applications such as online banking services and e-commerce businesses are not coincidental, but targeted and on the increase. The systematic protection of web applications and services is therefore

gram needs to be part of any company’s overall security strategy. When a security incident does occur, it is of utmost importance that the incident is managed adequately in order to ensure that lessons are learnt. This means that responsibilities regarding security have to be established clearly within the company. The people

Klaus Gheri is the CTO and cofounder of phion

that are responsible should be empowered appropriately to allow them to take measures to prevent future security incidents as much as possible. Responding to security incidents starts with having a proper organisation and procedures in place. BM. How are your products and services helping your clients today? KG. Enterprises are confronted with an increasing need for efficient, highly integrated security and connectivity solutions. By using phion products, multinational corporations and large to medium size companies are provided with an integrated protection platform covering all needs for comprehensive and compliant network security, secure web access, access control, WAN protection and optimisation, web application security and central management. RV. VASCO Data Security develops and sells hardware and software solutions for strong user authentication. Worldwide, millions of e-banking end users and more than 7000 companies, including over 1000 financial institutions, already use the VASCO solutions to secure access to their networks (local and remote) and/or applications (including SaaS environments). Virtually all these customers rely on the DIGIPASS by VASCO strong user authentication solution offering. Deploying a DIGIPASS by VASCO brings our customers and their user: convenience, ease of use, flexibility and higher security levels.

www.busmanagementme.com

IT Security H2H.indd Sec1:52

15/10/08 15:50:22

Phion.indd 1

7/10/08 14:56:02

INDUSTRY INSIGHT

Automation ensures confidence

The new realities of business Organisations cannot afford to ignore the importance of disaster recovery and should the worse happen information availability is critical, says Alexander Trekin.

ALEXANDER TREKIN

oday’s real-time reality for businesses is that if a system goes down, their operations stop. The unavailability – or downtime – of applications and databases cannot be ignored. Downtime now affects business proﬁtability as well as productivity.

• Globalisation and eBusiness mean 24/7 operations. There is no ‘end of the day’. • Outages are not localised. Today’s justin-time delivery means that one system outage can impact the entire enterprise. • Transactions are increasingly electronic, with less paper documentation and human involvement. • Database growth means maintenance, data backups and batch processing can no longer be accommodated in off-hour windows. There’s a new reality, however. With an advanced, easy to install and manage software from Vision Solutions, IT staff have an information availability solution that enables continuous, optimum availability and switch-

ability. Vision Solutions’ high availability and disaster recovery tools reduce the risk and administrative IT environment challenges and can easily configure to fit a wide range of topologies. They take remote journaling to the next level of efficiency with more capabilities to optimise processing resources without additional management time. To solve the realities of business, Vision Solutions technologies can make an ideal option to: • Deliver maximum uptime and zero data loss for the business. • Provide real-time information for more responsive business decisions. • Switch systems on demand to completely eliminate planned downtime whenever application and server maintenance is required on production systems. • Respond within seconds to unexpected system or server outages with a one-step failover to the backup server.

High availability (HA) solutions vary significantly in the level of sophisticated automation and autonomics they incorporate – as well as the ability of the automation and autonomics to remain effi cient and invisible to the operator over the long term. As a general rule: the more automation and autonomics, the less operator time involved and the healthier your overall HA environment. Of particular importance in maintaining confidence in the active HA infrastructure is how well the availability software validates the data is always in sync. Auditing technology is critical to the success of the active HA infrastructure. For example, when something changes in the IT environment, most solutions will not automatically notice the change. This may become a serious issue in the future.

Turning downtime into new productivity Many businesses now view their high availability solutions as a way to add new value on a daily basis. No longer viewed just as an insurance policy against a potential disaster, companies are using HA to generate quantiﬁable and documented return on investment. Maintaining a switch-ready HA environment over time, and in spite of changes within your infrastructure, requires a combination of IBM’s advanced autonomics technology with innovations that provide a self-managing, self-healing, self-auditing – even adaptively self-learning solution. These essential ingredients ensure high availability solutions remain switch-ready today and every day.

Alexander Trekin is Vision Solutions’ Sales Director for Russia, CIS and MENA. For more information, call +44-207-5152169 or +44-7920-026185. You may also e-mail alexander.trekin@visionsolutions.com

ABOUT VISION SOLUTIONS Vision Solutions, Inc. is the world’s leading global provider of high availability, disaster recovery and data management solutions for IBM Power Systems. Vision keeps critical business information continuously protected and available. The company’s products ensure business continuity, increase productivity, reduce operating costs and satisfy compliance requirements.

www.busmanagementme.com

vision solutions.indd 54

15/10/08 15:53:56

VisionSolutions.indd 1

7/10/08 14:57:27

SECURITY REPORT

The Middle East has been hit by a spate of bank security breaches and phishing frauds in recent months as scammers go on the prowl for new victims. Business Management catches up with the man on the front line at National Bank of Kuwait (NBK) – Chief Information Security Officer (CISO) Tamer Gamali – to discover more about battling the on-going phishing threat.

n the morning of Sunday, June 22 2008, alarm bells began to ring at NBK. A phishing scam was targeting customers in a bid to steal customer information and passwords. A bogus email, purporting to be from NBK, claimed that the bank had lost the details of two million bank customers and that re-registration was required. The fraudsters tried to direct customers to a fake NBK log in page where details would be stolen and accounts raided. Fortunately, NBK’s anti-phishing controls quickly detected the con and the site was taken down within hours. No losses were suffered by NBK or its customers. “It wasn’t the standard ‘update you banking details by clicking here’,” reveals the bank’s CISO Tamer Gamali. “They added a story about the bank losing details in an effort to try and mislead the customer.” But there was one glaring error, as Gamali explains. “The email was done by someone with not a great deal of knowledge because it mentioned two million customers. The population of Kuwait is 2.7 million and there are at least eight banks operating here. No single bank has two million customers.” Despite the inflated online customer numbers (the correct figure is just over 100,000), the email would have appeared genuine to an unsuspecting NBK client checking their email accounts. They could have re-registered only to later discover that their account had been emptied. And don’t forget, just a tiny strike rate is good enough for the gangs behind these scams. “They will send 500,000 emails and if they can get one or two to respond then they have made their money,” says Gamali. The incident in June was just the latest in a long list of phishing attacks on banks in the Middle East as the criminals increasingly divert their efforts away from the European and US banking giants. Indeed, Gamali says he discovered 10 fake NBK websites two years ago but in 2008 this figure has leapt to 50. On top of this, a survey conducted by Readiminds revealed that more than 20 percent of banks in the Middle East have been targeting by phishing or pharming (a hacker’s attempt to redirect a website’s traffic to another, bogus website). Institutions in the region are having to ramp up security and controls, as well as educate customers, in order to stay ahead of the fraudsters; not an easy task in these times of 24/7 online banking. “Three years ago the phishers were going for the mainstream banks; they weren’t targeting the Middle Eastern ones,” Gamali remarks, “How-

Staying

off the

hook

PHISHING STATISTICS 3.6 million people lost money last year to phishing scams worldwide. 40% of phishing sites are hosted in Asia. 90% of business emails received in the Middle East are Spam. Sources: Trend Micro and BoxSentry

www.busmanagementme.com

NBK.indd Sec1:56

16/10/08 08:30:33

ever, three years down the line they are moving to other banks, so now is the time that the banks here should have all the measures in place. They have been lucky to get away with being affected for a while now but no longer because they are easy pickings – especially those that have a lack of controls in place.” Gamali also notes how important it is for these controls to be different. For instance, if you are a bank that has a single password for logging in and a single password for a transaction, then a phisher, if he can get the customer to respond, has all the details that he needs. The ﬁrst time the customer discovers the fraud he or she will probably be seriously out of pocket. In terms of re-imbursement, some banks do offer to refund customers and others won’t; it’s a grey area with no clear law or policy.

Attack, not defence Over three years ago NBK identified the need to tackle the security threat (not just phishing) head-on. Gamali, previously head of security services for KPMG Kuwait, started the information security unit from scratch when he arrived at NBK. At first Gamali and his team dealt with phishing scams themselves, but they soon realised this was not practical. “We used to contact the ISPs directly and work on getting the [phoney] sites taken down,” he explains. “However, the volume of work started to increase to a point where we began facing the challenge of how to speak Korean to an ISP in Korea or Dutch to an ISP in the Netherlands. All of a sudden we needed to speak 25 languages.” NBK also had to work with the international ISPs to get bogus sites removed. June’s fake NBK website was taken down in just over two hours. But success depends on where the ISP is based, with Eastern Europe, the Far East and south America often taking longer. “There is no hard or fast rule on how long it takes – it depends on which country and ISP you are dealing with,” Gamali confirms.

“You are trying to find solutions that provide the highest levels of controls but the greatest amount of flexibility for the customer” To help with the legwork of detecting contacting fraudulent websites and contacting the ISPs, NBK opted for the services of Cyveillance. The US-based company monitors the main mail boxes, such as Yahoo! and Hotmail, to spot the bogus emails and locate where the fake websites are being hosted. Kuwait’s biggest lender is then able to carry out quick analysis to identify compromised cards before a fraudulent transaction has occurred. The bank can also send a SMS text to a customer’s phone the minute a transaction takes place. If it is indeed an unauthorised movement of money the customer can contact the bank to block it. This pro-active approach to phishing, and security in general, fended off the attack on NBK in June but Gamali is all too aware that won’t be last incident he and his team have to deal with. Indeed, according to research more than 60 million phishing emails are sent each day, with about one in six eventually opened. The Anti-Phishing Working Group (APWG) reported between 30,000 and 50,000 new phishing sites per month in 2007. “Phishing and related website spooﬁng has grown to an epidemic worldwide,” acknowledges APWG Chairman Dave Jevans. “Most people would be shocked to learn that billions, yes billions, of spam and phishing emails are sent every day by scammers.”

www.busmanagementme.com

NBK.indd Sec1:57

15/10/08 15:52:02

And Gamali suggests that do-it-yourself phishing kits on the internet are only exacerbating the problem. “These online kits take you step-by-step through how to ﬁnd websites that you can hack and upload your pages to, and it gives you a mailing list of who to send it to,” he notes. “So if you have the kit and a reasonable IT knowledge you can have a go at phishing.” After the criminals have reeled in a victim then comes the problem of how to get the money out of the account. With international transfers there is a ‘window’ that allows transfers to be stopped if spotted by the bank or the customer. Not to be outsmarted, the phishers are exploring ever-more devious methods – including utilising mobile phones. “This is a new trend here but one that has been going on in the US for a while,” Gamali reveals. “If they can obtain card details through phishing they can then go and buy credits from a telecoms company and charge up the phone with thousands of dollars of credit and then transfer smaller amounts of credits to people enticed into money making business opportunities advertised through the internet, who would then go on and sell credits to end users on the street. If any alarm bell rings then the local credit dealers, who have no link back to the original culprits, would be arrested. This is using the telecoms companies to launder money.”

Education In an ideal world customers would just delete phishing emails when they land in their inboxes. It’s customer gullibility that the con artists prey on along with the fact that online banking is an important revenue stream for the banks. The institutions have been educating customers on what to look out for and to be extremely suspicious of emails purporting to be from their lender. Unfortunately, this education won’t prevent everyone from falling victim. Jevans is philosophical about the problem. “Even if we could afford the expense of educating tens of millions of consumers, the phishers and crimeware authors are continually improving their techniques in order to make it virtually impossible for people to discern fake emails from the real thing.” One security expert who knows a thing or two about the global problem of phishing is PayPal CISO Michael Barrett. For him, a positive attitude goes a long way. “People have a tendency to say, ‘Woe is me, phishing is insolvable’. We think that’s way too defeatist and that actually

TAMER GAMALI

the problem is surmountable. Education, on, technology and industry partnership will be the answer to the phishing problem.” .” Gamali agrees but is keen to stress ss that the banks walk a fine line beteeen n security and flexibility. Controls need d to be tight but not too rigorous and d time consuming that consumers can’t be bothered to bank online. “You are trying to find solutions that provide the highest levels of controls but the greatest amount of flexibility for the e customer. You don’t want them to be e heavily impeded by using online banking because it is a channel that the banks encourage customers to use. We want to continue to provide that service but we also want to provide the assurances thatt it is secure.” vHowever, with all the media covherage about the proliferation of phishhat ing scams and the security steps that e is banks have had to implement, there og off a danger that customers will log he asfor good. After all, without the nking surance there that online banking ggle is safe there is an uphill struggle to attract new customers. So ing is banking on the web slowing edown or even declining over seys curity fears? NBK’s CISO says e evidence suggests this is the e case. “I recently saw some statistics that there was a decline in online banking last year by somewhere between 10 and 15 percent nce because customer confidence had dropped due to people perceiving erceiving online banking to not be secure.” So what would Jevans like to see done to restore customer confidence and deter criminals? “We, as an industry, must implement email authentication technologies to allow ISPs to automatically reject fake emails, and ensure that important business emails are reliably delivered.” He adds: “It is crucial that banks and brokerages start to authenticate the email that they send, in order to allow receiving computers to verify the authenticity of emails, and automatically reject phishing and other spoof messages.” Gamali describes the banking sector as a “moving target” and emphasises the need for institutions to stay active. He concludes: “You can’t stop people sending emails but the priorities are to shut down sites, educate customers and put in place internal controls to detect fraudulent activity.”

www.busmanagementme.com

NBK.indd Sec1:58

15/10/08 15:52:03

NetDimensions.indd 1

7/10/08 14:55:24

INDUSTRY INSIGHT

Preparation is key How the solution ‘Connected Backup for PC’ addresses backup and recovery issues for a client’s Middle East operations. ohn Crane, founded in 1917, has built its global reputation by designing and manufacturing seals and associated products mainly for the oil & gas, chemical, pharmaceutical, pulp and paper and mining sectors. The John Crane business has an impressive turnover of US$744 million and boasts 20 manufacturing sites and more than 6000 employees, located in 50 countries. John Crane MENA alone covers 10 countries and employs over 130 personnel. The growing success of John Crane’s business resulted in a considerable increase in the number of ofﬁce staff administering and monitoring its interests. The daily processing of electronic data had thereby become the lifeline of all core activities. For John Crane’s IT Network Manager, Samad Khokhar, it was the key to address backup risks, to improve data protection, eliminate recovery problems and prudently manage costs – by means of a scalable, easy-to-use backup solution.

Backup risks Impressed with the launch presentation ofthe storage company ISIT, a fast growing storage company, in February, Khokhar approached the ISIT CEO Mahesh Vaidya with the following situation: Despite the crucial importance of the electronic data residing on the employees’ laptops, there was no clearly assigned responsibility in case of data loss. There was no local automatic backup process in place, and it was basically left to the employees to backup their local business data manually on ﬁle servers.

The limitation of mailboxes and the introduction of employee .pst-files produced a further issue for the manual backups to home shares as this resulted in an ineffi cient storage of increasing amounts of data. In addition, a growing number of identical local files – for example, corporate PowerPoint presentations – became redundantly stored on John Crane’s PCs and file servers. As if this were not enough, Khokhar realised that the number of mobile workers had been constantly increasing, which perpetuated the risk of losing company information when laptops got stolen or break.

Looking for a solution In early 2008, John Crane started a selection process, evaluating several backup solutions that could solve its fundamental problems. Within the first pre-qualification phase, several vendors were evaluated in terms of offered product functionality, scalability, usability and price. Eventually, ISIT’s solution of Connected Backup for PC by Iron Mountain Digital remained amongst the top two choices. At this juncture three main criteria were looked into before John Crane chose Connected Backup as its favourite backup solution with its ability to reduce the .pst file volume by up to 80 percent by means of the integrated EMAILOPTIMIZER, which uses SendOnce (de-duplication) and Delta Block technologies. Secondly, the product’s ability to check the network speeds before starting its backup process through bandwidth throttling. And fi nally, the option to manage the backups easily in one central console, while still being able to specify backup parameters individually for each user. Today, it is Iron Mountain Digital’s leading market position and Connected’s ability to restore PCs and laptops to their previous working condition after a HW failure that has turned the tide towards Iron Mountain. “Connected Backup for PC convinced us because of the balanced combination of technical flexibility and business value” says Khokhar.

Enrolment

Samad Khokhar (left) and Mahesh Vaidya

John Crane ultimately started the rollout process together with Iron Mountain Digital and its partner ISIT. Impressed with the process and procedure Khokhar states: “We received excellent cooperation, support and service from ISIT with their simple and effective solution from Iron Mountain which ultimately proved very valuable for us. ISIT’s unique approach to storage in partnership with Iron Mountain’s comprehensive solution makes for a winning combination from which customers have greatly beneﬁ ted.”

www.busmanagementme.com

Iron mountain Digital.indd 60

15/10/08 15:49:48

ADVERTISING FEATURE

The Case for Outsourcing

Data In, Value Out ‘Storage-as-a-Service’ model enables IT managers to focus on risks and costs A rich set of services applied to outsourcing data capture, protection and management can lower costs and risks for IT Managers, while enabling them to focus on aligning IT with business goals. Senior IT executives today are working to concentrate their efforts on the bottom line instead of just “keeping the lights on. “ In fact, their priorities have been shifting steadily toward business outcomes and away from technology-centric initiatives. Senior IT executives focus more and more on enabling business innovation, creating competitive advantage and growing existing revenue streams. In light of refocusing IT managers’ attention on the business and the pressures resulting from signiﬁcant trends in data management, Storage-as-a-Service is emerging as a model for capturing, storing and protecting data, and putting that critical business data into action. According to IDC Storage-as-a-Service is becoming a viable alternative for enterprises, small and medium-sized businesses, and individual customers who need to store digital data and would prefer to procure storage services and storage capacity as a hosted service rather than as an onsite product or set of products. Using a storage service can provide assurance that they are meeting requirements and will have enough capacity to account for future growth.

Challenges in Data Management When it comes to data protection, rising storage costs, the threat of litigation and regulatory compliance demands make secure and efficient data protection and storage today difficult at best. Key challenges like out of control IT costs, data loss concerns, data growth explosion as well as unmanageable data on the edge of the network constitute real difficulties in managing information and ensuring the relevant data is accessible whenever needed. On top of that, companies may be spending too much money backing up too much data that is stored for too much time. Iron Moun-

BMME.indd 1

tain research shows that 42% of those that do archive say their backup is their archive. “Many organizations are keeping everything for as long as possible, and that’s not always the best thing to do,” says Mahesh Vaidya, CEO of ISIT and local partner of Iron Mountain Digital. “They are looking at cost and human bandwidth efficiencies. But the big question is what makes that data beneficial to the organization, and over what period of time?”

In today’s fast-changing environment, IT managers cannot afford to overlook the expertise, speed-to-market and cost benefits that outsourcing can deliver. Outsourcing not only helps them create business value better, faster and cheaper, it also provides valuable new insights into their own data management, protection and storage policies—or lack thereof. Recent IDG research indicates the most appealing potential benefits of the Storage-as-a-Service model are more simplified legal discovery (46 percent), long-term protection (45 percent), enhanced compliance (41 percent) and improved utilization of current infrastructure (41 percent). “It is all about helping IT Senior Executives manage the data the way they need to manage it,” Abdeslam Afras, Iron Mountain Digital’s Sales Manager Middle East, says. “With this service-based approach to storage that includes the value of making the stored information actionable, Iron Mountain can help organizations understand their data requirements, and define and implement policies in the context of the overall hierarchy of their information needs. In essence, he says, it forces organizations to get smart about storage.” Iron Mountain Digital’s Storage-as-a-Service model delivers online data protection and recovery, digital records management and information destruction. Most important, Iron Mountain helps you know what information you have, know it’s secure, know you can get it when you need it. With Storage-as-a-Service, organizations can get quick, „rich“ access to their information for legal discovery, business continuity, disaster recovery, compliance, audits and other demands. And organizations can reduce two prime concerns for IT managers: risks and costs. Storageas-a-Service tamps down the risks associated with online data storage and protection, and carries with it a real opportunity to save costs. At the heart of any information storage plan is security, and with the storage-as-a-Service model „We can put more effort into securing information than the customer can,“ says Stephan Haux, Senior Product Manager EMEA of Iron Mountain Digital.

7/10/08 14:54:36

BMME_4_JimNelms:5oct

15/10/08

16:07

Page 62

SECURITY FOCUS

GLOBAL

security World Bank CISO Jim Nelms tells Business Management how the organisation is battling the next generation of IT threats.

oday’s market has seen security risks advancing and becoming more and more complicated. There is no doubt about it; banks simply have to deliver new products and services to beat these threats. At World Bank, combating key security risks has proven to be an integral part of the organisation’s DNA, as Nelms explains: “The primary security risk that we’re facing at World Bank is user-related, and it has to do with phishing or spear phishing of user credentials.” As phishing has become more widespread, the techniques and sophistication of these attacks has become more focused as well, with locating entry points to the World Bank networks becoming a prime target for e-criminals. “To combat this at the bank, we have gone to a full two-factor authentication model using a token-based authentication process, and in the very near future we’ll be linking that to a persistent credential using a certificate with key pairs both for signing and for encryption.” This is not the only way that the bank is tackling these problems. “We have also found a huge increase in the number of attacks through weaknesses in the web interfaces,” adds Nelms. “This particular adversary looks to create entry points into the network on externally facing websites, and then one of two things happens. They either use those entry points to resell, or to place you on the underground for access to the system, or they use it for exfiltrating corporate information. Whereas five years ago somebody who exploited a website might have defaced it or taken a system down, the adversary today seems to want to keep the system up,” says Nelms. “They’re quiet, they don’t disrupt things, but they do collect and harvest information, encapsulate it, and then try to exfiltrate it outside of the institution.”

www.busmanagementme.com

Alignment The fear of systems hackers harvesting information obviously poses some serious issues for the banking sector, and as Nelms highlights, World Bank has taken a different approach to externally facing websites, choosing to go to a registration and accreditation process before signiﬁcantly reducing the external points used using a common framework. “The techniques we're using is to separate three components that make up an externally facing website: the coding itself, the database behind it, and then the web server. What we have done is move them into much more discreet segments, so the network behind the bank has become much more granular.” Subsequently, in the event of a breach, even after it is certiﬁed with regular scanning procedures, the extent of the anomaly would be much smaller than it would normally be. World Bank has of course been aligning its entire IT infrastructure over the last few years. “We are aligning the IT services and security with the business sides themselves, focusing both from a business continuity and a security perspective. We do this through a layered approach, strengthening the areas of the business and organising them in a much more granular fashion; the internet may be the most popular choice in which to do business, but it has also become an increasingly unsafe way to do business. We’re utilising different technologies such as encrypted MPLS and point-to-point frame lead-ins for very critical services, and then using a much more granular approach at the externally facing systems.” As Nelms points out, the internet plays a huge role in today’s market. Because of this, he is certain that there are specific challenges raised in terms of operations. Nonetheless, he also thinks the cure to these prob-

BMME_4_JimNelms:5oct

15/10/08

16:07

Page 63

lems is much the same. Many of the projects, World Bank carries out for monies or resources, and financial instruments that it either manages or holds on behalf of other countries or other businesses, have a huge risk potential if they were to be compromised from an external source. “With the continued rise in weaknesses in web interfaces, we have established a part of the office of information security where we have increased the technical capabilities and the focus of one segment of that team to do nothing but stay in front of the curve in terms of website security,” says Nelms. “Because it is a primary point of business, and because in many of the countries in which we do business internet access is the most reliable form, we have focused on a very segmented type of services that we offer and focusing on those areas requires the highest degree of monitoring and security.

Ahead of the curve Though it operates in a very particular way, there is certainly a thing or two other financial institutions could learn from World Bank’s approach to information security. The granular approach that Nelms talks about is surely offering some key ideas to the market. “What I would recommend for the financial institutions who are looking to do this is to take a very close look at the technical underpinning of how they provide web services,” says Nelms. “Most institutions have a central point where data is accessed, where websites are accessed, and I we’re finding that that’s going to create much larger exposure than if you use a smaller, dis-

creet approach.” As Nelms highlights, if you have three business lines, you should not put these in the same interface. Even though it may appear that is a good way of handling it from an information technology standpoint, from a security and reliability standpoint it’s not. “You may compromise more than one of your business lines at the same time,” says Nelms “I’d recommend independent business lines to the outside world.” With this, however, Nelms predicts that the total cost of ownership will go up correspondingly. “You lose some of the economies of scale by not being able to use huge web servers or huge databases or collective

“The biggest security threat, the most visible, is probably going to be identity theft”

information on the internet, and unfortunately, that is once again not a choice we get to make,” he explains. And while information security may be reducing the risk to a tolerable level, it is not eliminating it. “What we’re finding with a more sophisticated and persistent adversary is the probability of compromise has gone up significantly in just the last two years alone. Now the only choice an institution has to make is whether it will spend its time and money in remediation, or it will spend it in a preventative measure to reduce the impact of when a breach occurs,” says Nelms. “Over the last couple of GONE PHISHING years, looking at a number of companies that have had breaches, they may not even be in a position to detect The facts about one of the biggest security threats of these breaches for weeks or months after they have ocour time curred, so I think from a financial perspective, we have to respond to that business environment very quickly An estimated 59 million phishing emails are sent each day. and realise that that has become an intolerable risk for financial institutions.” Security threats certainly aren’t going to go away About 1 in 6 are opened. either. And preventing future attacks is clearly something that is crucial to the work Nelms does at World About 20,000 phishing campaigns are identified every Bank. “The biggest security threat, the most visible, is month. probably going to be identity theft. That’s going to continue to rise. The most detrimental to businesses is going to be the compromise of websites through techBetween July 2005 and July 2006 the number of distinct nological weaknesses, through SQL injection or brands attacked increased by 135 percent, from 83 to 195. through cross-side scripting or other weaknesses in the software that we’re using to develop applications and the exfiltration of information will be the most devasThe average loss per victim in 2006 was €845, compared tating to a company. with €167 in 2004. “The practice of information security, and the convergence of that, is becoming much greyer in these areas Victims recovered an average of 54 percent of their losses because of the number of ways, and the complexities of in 2006, compared with 80 percent in 2004. the systems that are required to do something as simple as price a derivative, or follow a yield curve. Ultimately, ﬁrms will have to look at the technology that underpins their businesses with the same views as they do their Source: Gartner and Iconix standard operational risk measures.”

www.busmanagementme.com

EXPERT OPINION

A compelling argument for automated code testing By Professor Howard A Schmidt. he golden age of hackers and cybercriminals driven by a desire to embarrass website owners or cause mindless evandalism is a fading memory. Today, e-crime is the domain of organised gangs, often from countries that are difficult to get help from, with a sole motive – to steal money and goods. Cybercrimes, and the cybercriminals that perpetrate them, have evolved. To protect the organisation from today’s attack, methods and attitudes must evolve too. According to Gartner, 75 percent of security breaches are due to flaws in software. One of the major security problems faced by organisations today is that the business applications needed to run the business are also the very applications making it insecure. Cybercriminals have identified this and are now focusing all their attentions on applicationlayer vulnerabilities. It’s a problem that simply can’t be ignored. The main target of cybercrime today is e-commerce web sites and the customer databases behind them. Databases that hold credit card numbers, expiry dates, PINs, addresses, and everything else that’s needed to empty a victim’s bank account. Their operations are so slick that stolen data is exploited within seconds of it being submitted by unwitting victims. A total of 143,757,645 database records are reported to have been exposed since 2005, yet many incidents go unreported and unnoticed. The big growth in e-commerce right now is in the use of web-based applications to replace traditional overthe-counter or telephone-based transactions. Primarily those applications have been put together as quickly as possible with the main aim to get a working system up and running, often without sufficient thought given to the security implications.

Since six years ago, when Microsoft and other vendors made security a priority, operating system and network-layer vulnerabilities have become harder to find. Of course weaknesses still exist, but they're more frequent in the application layer, predominantly in Web 2.0 applications. That said, exploitable errors can appear in any type of code; however, Web 2.0 apps, which companies are increasingly reliant upon, tend to be particularly vulnerable when not coded with security in mind. Many web applications make use of JavaScript, for example, which was primarily designed for portability. A recent report, ‘Why Application Security Is Crucial’, released by UK-based research fi rm Quocirca, reveals that: “One of the key security problems with using JavaScript is that it can be manipulated by attackers in order to gain access to the information being transported”. Another problem, confirmed by the Quocirca report, is that Web 2.0, or Ajax, applications tend to rely on a large number of modules and higher-level interaction than traditional programming languages, adding complexity and increasing the possibility of programming errors. The report states: “The large number of small modules also makes Ajax more vulnerable to attack as it increases the overall attack surface, with each request for information and response representing a potential attack vector”. The research firm conducted its study in December of 250 senior IT executives in Germany, the United Kingdom and the United States. It found that among respondents developing Web 2.0 applications, “a significant number are reporting that they are encountering vulnerabilities that are specific to new programming languages and this can actually increase the overall number of vulnerabilities to which the organisation is exposed”.

75%

of security breaches are due to flaws in software A total of

143,757,645

database records have been exposed since 2005, yet many incidents go unreported and unnoticed More effort is needed to design secure applications and to use proper procedures to test them

www.busmanagementme.com

BMME_4_HowardSchmidt.indd 64

15/10/08 15:56:35

A firewall will happily let someone access an insecure web application if they meet all the criteria for being allowed in. Surely this can’t be allowed to continue. We need to focus our efforts into building secure applications in the first place, which can't be compromised. Perhaps the decision on whether someone should be allowed to use an application should be based on whether that application is secure, not on the user’s IP address or the port they’re trying to connect to. As the move to online applications expands beyond online shopping, the need for secure applications will become even more important. If an evoting application allows someone to vote twice if they enter a couple of thousand random characters as their surname, a ﬁrewall isn’t going to help.

UK-based company websites harboured at least one weakness that could allow hackers to gain unauthorised access. The same research also found that a third of those websites exhibited vulnerabilities that are known to, and used by, cybercriminals across the web. No doubt the hacker community has been busy discovering how to exploit the other two thirds. Using automated security tools when developing software lowers the overall cost of IT security. The US government has listened to this argument, and has concurred, with many federal agencies now starting to demand code analysis and I wouldn’t be surprised to see a move to independent labs in the future validating code. Referring back to Quocirca’s study, commissioned by Fortify, it revealed that “over 10 percent of UK respondents spend more than 15 percent of their IT budget on security, but are the least likely to use automated tools for application security. Conversely, 96 percent of German organisations spend less than 10 percent of their IT budgets on security and make the most use of automated tools for building security into applications during the early stages of the software development life cycle”. The internet is here to stay, and so is internet crime. As the relentless move online by all sorts of business and government agencies continues, e-crime will carry on evolving. With more coffee shops and libraries offering free, anonymous Wi-Fi access, tracking down cybercriminals will get harder. So as hackers evolve, so must our efforts to defeat them. Automated security tools are the best way to reduce application-layer vulnerabilities. We know now what to do and how to do it, we just have to get it done.

“Cybercriminals are now focusing all their attentions on application-layer vulnerabilities”

CYBERCRIMINALS As cybercriminals continually up their game, the securities and futures industry in the US recorded, in 2007, a 150 percent annual increase in the amount of suspicious activity detected on its systems. During the same period, research carried out at the University of Maryland found that a computer system connected to the internet was typically subjected to an attempted hack every 39 seconds.

So how can we make our web-based applications more secure? Historically, software developers have always been so immersed in trying to make the software bug proof and resilient they have not focused on the security side. It is now time to change this approach. To illustrate the point, I can buy a jacket with a tag that identifies inspector number 16 has checked the item for imperfections – I can’t get a similar certification for code. More effort is needed to design secure applications, and to use proper procedures (as well as automatic software solutions) to test them. A 2007 report from NTA Monitor found that 90 percent of

Professor Howard Schmidt is Director of Fortify Software. For more please visit www.fortify.com

Howard Schmidt has held some of the most prominent positions in the security field. He has been Chief Information Security Officer and Chief Security Strategist of eBay, where he helped establish the online commerce giant as the leader in securing online transactions for businesses and consumers. He is the former Cyber Security Advisor for the White House, where he was appointed Vice-Chairman of the President's Critical Infrastructure Protection Board by President Bush. He was formerly Chief Security Officer for software giant Microsoft and helped establish the Trustworthy Computing Program. He continues to lead many efforts that bring public and private sectors together to share critical cybersecurity information internationally and is currently director of Fortify Software.

www.busmanagementme.com

BMME_4_HowardSchmidt.indd 65

15/10/08 15:56:47

EXECUTIVE INTERVIEW

The complete solution R. Shankar, Vice President for Middle East and Africa Operations at Ramco Systems, provides insights on how his company is taking the Middle East by storm through the power of IT. BM: Can you provide some background on Ramco in the Middle East? RS. Ramco formally commenced its Middle East operations in 2005 with an ofﬁce in Dubai. We invested our initial efforts into understanding the market, customer needs, creating a solid, referenceable customer base and building partnerships in the region. Having achieved excellent traction in all these areas, we will now be accelerating our growth. Currently, our solutions are deployed across 13 countries in the MENA region, and accessed by over 1200 users in UAE, Oman, Saudi Arabia, Qatar, Bahrain, Jordan and Kuwait. Ramco’s HRMS and Payroll solution generates the monthly payslips for over 48,000 employees of our customers in the Middle East. We have established a strong presence in vertical segments such as manufacturing (process and discrete) and Aviation MRO, as well as horizontal offerings like HRMS across industries. Some of our key customers include United Nations Relief and Works Agency (UNRWA), Schlumberger, RAK Bank, Commercial Bank International, Alsalam Aircraft Company, Gulf Helicopters, Ducab, Group 4 Securicor, National Life and General, Citibank and Emirates Aluminium (EMAL). Very recently, we have entered into a signiﬁcant partnership with Sharjah Teaching

Hospital (STH) where Ramco’s enterprise solution will be made available to students in the health and management programs of University of Sharjah. This will assist Emirati students in understanding the beneﬁts of enterprise solutions as a part of their curriculum.

Ramco’s solutions are deployed in

13 countries in the MENA region, and accesed by

12,000 users STH is one of our most important government customers in the region. They will be implementing a full-suite Ramco solution centred around Financials, HRMS and Analytics for running their day-to-day operations. Our outstanding customer references in the region, with opinion leaders voicing their satisfaction with Ramco’s offerings & services helped us clinch this deal.

BM. Despite being a newer entrant into the market, you have done well. What has been the secret? RS. As an emerging player in the Middle East region, we offer signiﬁcantly more value to customers than our competitors, both with respect to quality products, and our approach to professional services, implementation and support. We believe in leading the way with our innovative approach to create enduring value for our customers. Our unwavering focus is to deliver best-in-class solutions with end-toend functionality on time and within budget. Two important facets are the ﬂexibility of our system and its readiness to quickly and painlessly adapt to change at all times. We dive deep into every engagement and ensure that all our customers derive true value from our implementations. We bring in dedicated professionals who demonstrate sincerity, commitment and honesty of purpose during customer engagements. Our ecosystem of partners and 24/7 support mechanisms enables our customers to reach us whenever they need to. BM. What is your view on the potential of IT applications space in MENA? RS. Across the region, there is substantial growth in the economies and businesses of

www.busmanagementme.com

ramco.indd Sec1:66

15/10/08 15:53:07

various countries. New levels of investment are visible across various sectors. Businesses are clearly experiencing the need for a new class of IT solutions on the latest technologies that do not carry the baggage of older, legacy-type systems. More than at any other time in the past, CXOs are aware that their IT solutions have to really keep pace with changes in the business. To achieve this, they need to work with a different genre of solution providers offering their products on exciting foundations like SOA and web services. Customers should also demand that solution providers and their partners need to be transparent, dedicated and committed towards rendering a value-adding experience. Moving forward, we believe that the small and medium segment of the market will be best served through an ‘on demand’ model, where customers can access hosted ERP solutions from data centres located in their respective countries. BM. What is your business strategy and how does Ramco differentiate itself from its competitors? RS. Customers have pain points that impact their entire business. Through its well-integrated solutions, Ramco addresses these pain points very uniquely and emphatically. This is achieved through a combination of deep functionality, a distinct implementation methodology with quality consulting, and flexible solutions. We nurture an ecosystem that delivers very high customer satisfaction through superior products and services. This level of customer satisfaction pays off handsomely in the long term, particularly since enterprise solutions is a reference-driven business. We invest in people, processes, partnerships and products that ensure sustained and profitable growth. While we bring in global best practices, we believe in partnering with local firms that enable us to deliver localized global solutions. From a technology perspective, our strategy is to remain evergreen by continuously investing in R&D and partnering with leading technology vendors. This helps us stay ahead of the curve, and enables our customers to derive a distinct competitive advantage.

R. Shankar, a post-graduate mechanical engineer from the prestigious Indian Institute of Technology, Kharagpur, is a senior management professional with over 24 years in the industry. Currently, he has P&L responsibility for the Africa and Middle East operations of Ramco Systems. A widely-traveled professional with an international outlook, Shankar has strong leadership skills and is a respected speaker.

Ramco VirtualWorks, our solution delivery platform, forms the foundation on which all our enterprise solutions, products and services are built and delivered. Our solutions can be implemented with unparalleled speed and ﬂexibility to provide a glove-ﬁt for enterprise needs. Based on open standards and SOA principles, our solutions support our customers’ ongoing business needs, enabling high agility. BM. How much does Ramco invest in the Middle East and Africa and what is the importance of this region to your global operations? RS. ME and Africa form an integral and important part of Ramco’s global operations, contributing almost 30 percent of global revenues. Although we entered this region later than other providers, we are growing well. We are strengthening our presence in MEA and plan to add more resources in the coming quarters. The region has also witnessed several breakthrough deals for Ramco.

RS. Our efforts in the region are yielding positive results. We will be enhancing our ﬁeld sales teams, rolling out an integrated marketing program and also forging new partnerships to accelerate our growth. We aim to double our revenues in the region in the next three years. Our focus verticals are aviation, manufacturing, insurance and human capital management (HCM). We will also pursue select opportunities in the government sector. We strongly believe that business partnerships/strategic tie-ups are the best way forward to leverage emerging markets in the region. We already have some strategic partners across the region, such as Emitac, CERT, Intercol, Lindenberg, CEM Business Solutions, MAJAL, Eurosoft, Mabas and Al Kalima. Ramco will invest into strengthening these relationships. BM. Is there a success story in the Middle East that you wish to talk about? RS. Every one of our engagements in the region has been a success story, and each of them is unique! What is signiﬁcant is the fact that our customers have been realising tremendous value from Ramco’s solutions. In all cases, the return on investment for them has been very high. With all our engagements in the region, we have been able to render the unique customer experience that forms the theme of the book recently released by Professor CK Prahalad, ‘The New Age of Innovation’. Ramco’s solutions provide a great foundation for businesses to transform themselves.

Ramco is a global provider of business consulting, enterprise solutions and outsourcing services that enhance business value through better business processes and agile, global-class applications. The company’s solutions run at over 1000 customer sites across more than 40 countries, serving a customer base that includes Fortune 500 companies, SMBs, large enterprises and government organisations.

BM. What are Ramco’s growth plans for the Middle East and Africa?

www.busmanagementme.com

ramco.indd Sec2:67

15/10/08 15:53:07

BMME_4_LyndonBird:5oct

16/10/08

08:18

Page 68

EXPERT OPINION

n the second half of 2007, the world woke up to a taking business risks is a good thing. Although excessive whole new set of rules. The “easy” decade was over exposures need to be hedged and closely monitored by and the credit crunch became the word on everymiddle office procedures, the whole point of them is to one’s lips. Terms hitherto the exclusive property of make profits. Although events at France’s Société the financial world were suddenly in common curGénérale last year suggest that controls could be better rency. Following the crash in the US sub-prime mortgage at times, no one suggests you can run a successful insector, we began realising that things we had never heard vestment bank without taking managed risks. about were impacting our lives, business and personal fiOn the other hand, operational risk is about avoidnances. We were all soon familiar with such esoteric coning problems and is always seen as a cost. Either you cepts as LIBOR rates, lenders of last resort, securitisation, spend money to reduce the risk or you have much K adequacy and systemic risk. We quickly learned that the greater costs if the risk is realised and you haven’t. In interplay of these factors resulted in a shortfall of cash other words it is a sort of insurance, a drain on the botLYNDON BIRD availability globally. Commercial banks were sitting on tom line, not a potential profit generator. their funds and governments, while regulators and central banks were alI am firmly on the side of those who claim BCM does not cover normal most powerless to influence them. Without liquidity in capital markets, commercial problems. It is certainly nothing to do with BCM if your prodmany businesses big and small suffered badly, and not all survived. ucts are uncompetitive or your management is uninspiring. However it is Whilst thinking about this, I pondered how many financial executives everything to do with BCM if an ‘out of the ordinary’ event triggers a situawould consider such things to be a business continuity issue. I would guess tion in which an organisation cannot meet its primary business mission. If very few. So why is this type of crisis not yet seen as a concern of Business I am a mortgage broker, surely lack of available mortgages in the market is Continuity Management (BCM), whereas losses resulting from computer a bigger threat to my business than loss of a computer system or head offailures, pandemics or terrorist attacks are? fice building? I can only conclude that this is due to the traditional distinction beAn example from the UK serves to illustrate my point. Northern Rock, tween legitimate business risk and operational risk. To most executives, a reasonable sized domestic bank specialising in providing private mortgages, finds that its lending policies are unsustainable as sources of credit dry up. News of this triggers a run on the bank, during which the UK government has to make guarantees to deposit holders and ultimately nationalise the bank to save it from administration. If this were a BCM area of concern, many things would have been in place. Single points of failure would have been identified (limited sources of funding),

NEW DANGER The recent troubles in the financial markets offer a fresh perspective on business continuity management, says Lyndon Bird Technical Director of The Business Continuity Institute.

www.busmanagementme.com

BMME_4_LyndonBird:5oct

16/10/08

08:18

Page 69

4 KEY BCM QUESTIONS operational resilience would have been implemented (more diverse and less risky trading activities) and a clear recovery strategy developed and staff trained should the threat be realised. This would not have changed the global financial reality in which this happened, but it would have given the bank, its employees and its shareholders a much better chance of surviving reasonably intact. Many organisations either do not have a full-time BCM function in place or, if they do, it is hidden in some specialist area like IT or risk management. Surely no one would disagree that the decisions covered by these questions are the most critical, far-reaching and business threatening if they go wrong? In other words they put your business continuity at risk much more than loss of an office block, a data centre or even critical personnel. They can ruin your reputation, market share and credibility overnight. So the conclusion is that most companies use business continuity to protect against operational problems, but not to provide input to strategic decisions. Many board members might choose to ignore the views of the BCM professional, assuming they will be risk averse and non commercial in their thinking. It is easy to see why this might happen. BCM traditionally looks to eliminate single points of failure, to spread activities around so as to improve resilience and have adequate resources to deal with unexpected contingencies. This is not a message likely to be popular with many managers, increasingly eager to embrace business partnerships and single sourcing, larger and larger fully automated distribution centres and ‘just in time’ delivery. This perception only occurs because business continuity managers are generally not operating at the correct level. If they are part of the senior management team with clear strategic responsibilities for inputting to and ultimately implementing board policy then their vision has to be wider. Your current BCM Manager might not be viewed as of the right calibre to make this step up, but that is only because you probably have not defined the job correctly and, therefore, not resourced it appropriately. Even at a more basic level there is much that BCM can do to help reduce the risk of failure when we make strategic changes. For example, the risks involved with ‘single points of failure’ are almost entirely preventable and only occur because of lack of a good business impact

Should all types of risk be managed consistently in an enterprise wide framework? If BCM provides a solution for IT and many other operational risks, why can’t the same principles work for business, strategic or reputational risk? When something unexpected happens, do you not need to have anticipated something similar and planned what you might do? Why do financial firms invest hugely in training staff and exercising procedures to deal with physical disasters but ignore other crisis situations?

3 VITAL QUESTIONS FOR TOP MANAGERS When you are considering a major strategic change to your business (e.g. outsourcing, off-shoring, rationalisation of locations) whom do you involve in the decision process? When you are considering a major strategic change to your products and services what is the basis for your decisions and how are the risks evaluated? If you have a business continuity manager, where does he or she fit in the organisational structure?

analysis. Knowing your critical products, services and dependencies is vital. It is then often possible to design out the risk by changing the design or the speciﬁcation. Don’t be surprised when things go wrong but make sure that your process can manage the unexpected. BCM is not really about clever technical solutions or documented procedures. It is about process reliability and continuous improvement – topics close to the heart of any serious manager. I am often asked about the role of BCM in managing the impact of climate change on business. BCM is traditionally about dealing with serious but unexpected incidents at very short notice with limited available resources and confused sources of information. Climate change is anything but unexpected or unpredictable, it will take many decades for its worst consequences to happen and it has potentially the entire resources of the world to solve it. Better still, if scientists are to be believed we could take actions now that would solve the problem, or at least mitigate the impact and prevent the worst consequences happening. However, if we accept the cliché that every problem is an opportunity, companies that provide imaginative solutions will become the successful companies of the future. Technology might have caused much of the problem, but it is only technology that can solve it. When you are talking business change on this massive scale you are also talking serious business continuity management.

www.busmanagementme.com

CUSTOMER INTERVIEW

Making a real difference Commercial Bank International’s Abdulla Amer Jasem discusses how Ramco Systems is allowing the UAE-based institution to achieve strategic HR objectives. BM. With the recent corporate identity transition, can you brief us about the road ahead for Commercial Bank International (CBI)? AJ. CBI is making a concerted effort to be identiﬁed as an organisation that understands what people need and be a bank with all the answers. In keeping with our new motto ‘Exceeding Your Expectations’, we have made every possible effort to offer a range of products and services to sustain our remarkable progress in the competitive banking sector as well as strengthen our clientele. We are expanding in a major way in the country and this includes setting up branches in strategic locations with ATM/ CDM machines, Internet banking support, phone banking and investments. To achieve this, CBI is very keen on nurturing and retaining the best people who have the talent and the necessary competencies – so that we are well equipped to meet our business objectives. BM. What steps have you taken to support this? AJ. We quickly realised that apart from automating core functions of the bank, one major area we needed to focus on and streamline was Human Capital Management. We wanted to completely re-engineer our employee programmes to improve the quality of our employees. To achieve this, we introduced cutting-edge IT to streamline talent management, leverage internal talent pools, modernise company structures and improve HR productivity. BM. Can you share some more details with us? AJ. Given the number of employees (over 620), the HR division of our bank had the challenge of managing a rapidly growing workforce. Functions like manpower, planning and recruitment, training, compensation and beneﬁts play a very critical role in good governance and enhancing employee satisfaction. Manual

HR processes and an outdated payroll system were hampering our growth plans and we recognised the need for an integrated IT solution to streamline our complex and dispersed HR processes and payroll. After a thorough selection process, we conﬁdently chose Ramco Systems, a leading HRMS and Payroll solution provider in the region. With 10 years of experience in the international human capital management space, Ramco comprehensively addressed our requirements – whether it was the size of our operations, complexity of our HR processes, diversity in our organisation structures or meeting unique and exceptional requirements. Ramco HRMS & Payroll provided us a deﬁnite edge.

“Given the number of employees (over 620), the HR division of our bank had the challenge of managing a rapidly growing workforce”

BM. How does Ramco help you align your workforce with your strategic objectives?

employee assets, organisation structure, performance appraisal and self service. In tune with CBI’s requirements, Ramco HRMS comes with additional interfaces to our core-banking system for financial postings and amortisation feature-specifically for banks, handles Emiratization and equal distribution of nationalities, and automates email pay slips with password protection. The payroll is errorfree and the processes run accurately. The best part is that the solution easily complies with the Middle East statutory requirements, and also seamlessly integrates with our existing systems. The entire rollout, including system setup and installation plus implementation was completed as per our timelines and as per our budget guidelines. BM. Has Ramco’s solution been able to strike positive changes in your HR initiative? AJ. Definitely. The solution is enabling us to reduce HR costs through greater efficiency and increased productivity, improve HR service standards and free up our HR staff to focus on strategic tasks. Moreover, our HR and payroll department has strengthened its visibility within CBI and especially with our top management. This is due to the diligent execution of the project and implementing/ improving our internal services regularly.

AJ. Ramco’s solution helps us determine what talent to acquire, develop and retain to meet our business objectives and demands. This critical information, provided by Ramco HRMS, pinpoints exactly where the gaps are and provisions for analytical information. This drives the success of real time workforce management and long-term talent management strategy. Ramco HRMS comprehensively streamlines and automates our end-to-end HR processes including recruitment, training, manpower, career plans, succession plans, employee induction, payroll, leave, reimbursement Items, loans, employee relations,

As head of Human Resources & Administration at CBI for three years, Abdulla Amer Jasem drives all the human capital initiatives of the bank. Abdulla has two decades of his HR experience from the oil & gas industry, and now five years of experience in the banking and finance industry, which qualifies him to be amongst a handful of UAE Nationals with 25 years’ exposure in HR.

www.busmanagementme.com

ramco-customer pro.indd 70

15/10/08 15:53:29

Ramco.indd 1

7/10/08 14:56:14

3D NETWORKS:5oct

15/10/08

15:41

Page 72

ASK THE EXPERT

The communications revolution Reducing costs but keeping service levels high is the name of the game for businesses today. Mike MacDonald, Director of Marketing and Technology for 3D Networks, explains how unified communications (UC) is helping organisations to meet their targets.

nified technology is the consolidation of virtually any communibedded soft client in the set-top box, the in-room phone, or a preferred cation system, including federated instant messaging, email, personal mobile device. voice, social networking, video, web services and even file ex3D Networks strongly believes that UC will bring a new dimension to change to enable a collaborative sharing environment that provides more the way businesses operate today by enabling employees, customers, supeffective communications, increased productivity and reduced operapliers and executives to stay in contact whenever and wherever they need; tional and capital costs. Normally we think of communications as two or essentially improving workforce productivity. By further extending UC into more people exchanging information. However UC can be extended to business processes, a customer driven organisation can provide more timehuman-to-machine and machine-toly responses, reduce costs and have a greater demachine communication as well. Where gree of personalisation, which ultimately drives previously collaboration was based on consatisfaction and hence revenue. ference calls and emails in non-real-time, it UC should always be approached, however, with now consists of voice and video conferenca view to enabling all aspects of the solution over time ing with application sharing, interactive (say a three- to ﬁve-year time scale), as just approachmessaging and the ability to launch coming it from a presence, IM, or even video conferencing munications from within any application, all solution, will cost more in the long run. We encourage in real-time. For example, a guest in a hotel customers to explore mobility, customer interaction, may use the in-room ‘infotainment’ system telepresence, application sharing and smart video colto contact the hotel staff. The guest will laboration as well as the more traditional elements browse a list of click-to-call enabled consuch as IP Telephony, IM, presence, web, audio and tacts on the television and one is presentvideo conferencing and application sharing. ed with a choice of initiating the call from Working together with 3D Networks and adopting the ema long-term business process change approach, the Mike MacDonald has been providing right solution can be determined to drive the approconsultancy expertise for over 10 years priate return on investment. We have customers using in both the carrier and enterprise enviUC to provide extensive data to mobile workforces and ronments for major customers throughensure teams in remote locations can collaborate with out North America, Europe and Asia. His organisations using RFID tagging to enable objects to current focus is networking and applicafacilitate faster delivery of service. UC solutions entions with specific emphasis on web serables you to do business differently, to make it easier, vices and communications enablement. and to enrich the experience. Employees within an organisation inherently know where these process improvements lie. Our job as a solutions provider is to tap into that thought process and provide the tools to enable the evolution. 3D Networks is uniquely positioned to offer expert consultation, implementation and support of UC solutions from a variety of best of breed solution partners. The consultation process involves a thorough understanding of the customer’s needs typically addressed with a multiple question evaluation criteria that explores the organisations size, employee, supplier and customer collaboration, the desire for business process change and its IT strategy. By exploring these areas we can easily determine the most appropriate path forward and establish a long term relationship with the customer to drive the bottom line of any organisation.

www.busmanagementme.com

Vasco.indd 1

7/10/08 14:57:15

SaudiTelecom ed:5oct

15/10/08

15:53

Page 74

TELECOMS

LEADER There are challenging times ahead for Telecoms titan Saudi Telecom Company (STC) as it battles to defend its position as the industry leader in Middle East and spreads its tentacles into lucrative overseas markets. STC President Saud Al Daweesh tells Julian Rogers he is confident that his business is equipped to succeed and emerge victorious from the telecoms war, that is heating up in the region.

Saud Al Daweesh 74

www.busmanagementme.com

audi Arabia may have been slow to join the mobile communications revolution, but thanks to the effors of STC it is catching up fast. “Over the past decade, telecommunications has been – and still is – one of the fastest growing industries worldwide,” STC president Saud Al Daweesh announces proudly from his office in the heart of the Saudi capital Riyadh. Indeed, STC itself was formed 10 years ago and has strengthened its position as the number one player in the Kingdom and the largest telecoms operator in the Arab world. The explosion in mobile phone usage has been the catalyst for STC’s rapid growth. The boss says catering to customer needs has always been its forte. “Our first requirement was to get up to speed and then stay up to date with the newest technological developments, the latest marketing trends and, above all else, the current needs of our customers.” STC, which boasts over 22 million domestic customers, is experiencing strong growth for its ﬁxed lines at the moment. In fact, Al Daweesh sees this arm of the business as having great po-

SaudiTelecom ed:5oct

15/10/08

15:53

Page 75

OF THE PACK tential, especially for rural areas of the Kingdom. “Mobiles are the future of communications and they will continue to dominate the market compared to handsets, but the great majority of households still require a landline phone and we will continue to increase our customer base by network expansion and outreach to rural communities,” he explains.

Top of the tree Within the Middle East mobile communications market STC is engaged in a heated battle with Kuwait’s Zain and the UAE’s Emirates Telecommunications (Etisalat/Mobily). Although

STC previously held a monopoly as the sole telecoms operator in its homeland, in 2003 the market was liberalised. The same is true for the fixed line sector when three consortia were awarded licences in the Kingdom last year. Al Daweesh puts a positive spin on the increased competition. “Yes, the regional market is becoming increasingly competitive but at the same time it is big enough for all newcomers. We welcome competition because it means that we must continue to be innovative in launching new products.” Nevertheless, there are industry experts who accuse Saudi Arabia of becoming a saturat-

ed market with the telecoms rivals jostling for business. Although the sector still shows real promises seeing as around one third of the population is aged between 10 and 24, STC has been looking abroad to re-enforce its position with the telecoms leader shelling out in excess of US$6 billion on domestic and foreign expansion in the past 15 months alone. This included US$3 billion for a 25 percent share in Malaysia’s Maxis Communications, which gave it an 18 percent share in India’s fourth largest mobile operator – Aircel – as well as access to the Indonesian market. A 35 percent stake was also secured in Oger Telecom for US$2.6 billion

THE RIGHT NUMBER

US$6 BILLION Total investments made by STC in 2007-08

72 MILLION Number of customers both inside in and outside the Kingdom

18 MILLION Mobile phone (AlJawal) customers in the Kingdom

35 New services launched in 2007 and 2008

21,000 Number of employees, of which 90 the percent are Saudi nationals

www.busmanagementme.com

SaudiTelecom ed:5oct

15/10/08

15:53

Page 76

Saud Al Daweesh meetings Microsoft founder Bill Gates

opportunities.” But with these telecoms ﬁrms scrapping over the same business surely consolidation is inevitable? “Simply, the answer is economics. With the costs of labour and raw materials continuously rising, a high degree of consolidation is inevitable to minimise the impact and better serve our customers,” says Daweesh.

Click online Al Daweesh is keen to discuss the subject of his company’s online services. Broadband subscriptions have increased three-fold year-onyear and are expected to hit one million by the end of the year, while business subscriptions have risen by 12 percent on average every year. It’s impressive growth but there has been criticism in the Kingdom over the coverage, poor speed and reliability, especially regarding broadband. Broadband in Saudi Arabia is also a great deal costlier than that of neighbouring countries. Nevertheless, Al Daweesh is buoyant about the market in the Kingdom. “Our vision for the internet is to provide a world class service and in this respect we have recently signed a Memorandum of Understanding with several leading international companies to construct a high-speed submarine cable system.

NEW LOGO AND IDENTITY Coinciding with Business Management’s meeting with Al Daweesh, he was proudly unveiling a new corporate identity and logo for the business. The new brand is designed around four values: Transparent, Progressive, Straightforward and Brilliant. Al Daweesh says the idea was to create a corporate feel that can be leveraged internationally while keeping reference to its Saudi origins. It is also about modernising and simplifying the brand, as well as creating a sense of unity to consolidate all the sub brands under one umbrella.

www.busmanagementme.com

earlier this year. This gave STC a strong foothold in the Turkish telecoms market. The firm also won the third mobile licence in Kuwait last year in a deal worth US$900 million, while untapped markets in North Africa are on the company’s radar. This includes getting a share of the delayed privatisation of Algeria Telecom. However, a bid to buy French media group Vivendi’s stake in Morrocco’s Moroc Telecom was recently rejected. When quizzed on the expansion, an enthused Al Daweesh is quick to point out the upsides. “The benefits of partnerships with companies abroad are many and varied, including sharing technologies and network resources. In terms of financial gains, STC’s objective is to achieve 10 percent of its total revenues from investments outside the Kingdom by the end of 2008.” He says the company’s financial muscle pays dividends as it expands. “Diversification is sound business policy and since STC is a cash-rich company we have the resources to both protect and maintain our home market position while expanding our interests to other markets that offer great

“Since STC is a cashrich company we have the resources to both protect and maintain our home market position”

“It also addresses regional bandwidth requirements,” he notes, “and recently we activated the largest international internet connection in the region with a speed of 10G per second as an additional track for connecting STC’s internet gate with the universal net that includes the major internet services providers around the world.” Al Daweesh says this will aid with business continuity efforts. “This will help avoiding visible and invisible risks, such as what happened during the disconnection of the sub-marine internet cable last February which the Kingdom was not affected by due to STC’s investments in pro-

SaudiTelecom ed:5oct

15/10/08

15:53

Page 77

STC SCOOPS PLAUDITS In 2008, Saudi Telecom was recognised both locally and regionally as the leading telecommunications provider and one of the most socially responsible organisations in the region. STC won the ‘King Abdulaziz Quality Award’ by the Saudi Arabian Standards Organisation, which is the most prestigious award in the Kingdom and took ‘Best Organisation for Cooperative Training Award’. The telecoms giant also received the ‘Saudi Joint Stock Company Award for Transparency’ presented by BMG Financial Advisors for the company’s

viding alternative solutions that contributed to the continuation of internet connectivity for its customers.” The internet is still relatively nascent in Saudi Arabia but sources suggest penetration could hit 30 percent by 2012.

Image is everything Of course, any major company is constantly striving to raise its international proﬁle, and STC is no different in that respect. However, today brand-building is not just about bombarding potential customers with adverts of the latest deals or products; exclusive deals with superbrands are becoming all the rage in the corporate world. This summer STC bosses put pen to paper with European football giants Manchester United on a deal that will allow the club’s logo and imagery for STC’s marketing purposes in its retail stores. The firm will offer customers video clips of match highlights as part of the mammoth US$18.6 million deal, one of the largest non-shirt sponsorships in British football. As a lead sponsor, STC will have a presence inside MUFC’s 76,000 capacity Old Trafford stadium and will be featured on the club’s website, which is the most visited sports website in the world. Furthermore, each year 70 Saudi students will be sent to train at the Manchester United Academy, one of the world’s most prestigious football training centres. As you would expect, Al Daweesh is delighted with the move and his face lights up when discussing the matter. So is he a fan of the team? “Manchester United is a brilliantly successful global brand and was the obvious choice for STC because the club has a huge following of supporters

continuous and transparent communications with regional and international financial analysts, financial research companies and investors, both inside and outside the gulf region. It doesn’t stop there, however, with the International Institute for Research awarding STC the ‘Leadership Award’ for corporate social responsibility. In terms of scale, Forbes recently named Saudi Telecom the largest telecommunications company in the Middle East and the fourth largest Saudi company.

in Saudi Arabia, as evidenced by the attendance figures at Manchester United’s match in Riyadh.” I’ll take that as a yes. Back in January Manchester United took the unusual step of making a 6000mile round-trip to Saudi Arabia to play in a testimonial match. The club was paid US$2 million and it was here that the deal with STC was believed to have been brokered. Manchester United has a huge fan base in country, as well as the Middle East as a whole. STC believes that it can acquire new customers through its affiliation with the current European champions. Al Daweesh is reluctant to put a figure on projected revenues from the deal but it will need to be more than a tidy sum to recoup its hefty investment. “There are many factors that

will contribute to recouping our investment in this prestigious partnership, not the least in terms of goodwill among the many Manchester United supporters in Saudi Arabia.” Sport, and especially football, is extremely popular in Saudi Arabia, something that has not gone unnoticed by STC. In fact, the company is in the Guinness Book of World Records as the first and only company to sponsor 12 clubs in the same league at the same time. This record has never been broken. With the exposure of the Manchester United deal and the move into new markets, Saudi Telecom is certainly on an international charge. Indeed, second-quarter profits rose 24 percent as income from foreign ventures starts rolling in. But it’s not all good news; as Business Management went to print reports surfaced that the company could axe 14 percent of its home market workforce in order to focus on expanding into North Africa – a move that could affect 3000 employees. Al Daweesh says his targets are clear in order to strengthen the company’s position and stay ahead of the pack. “Our goals over the next eighteen months are to consolidate the gains made in recent years, strengthen STC’s leading position in the home market and maximise the advantages of our expansion into markets abroad. We have every confidence in our ability to stay ahead of the competition due to STC’s technical expertise, innovative content, and marketing know-how that is based on our understanding of what our customers want and giving it to them at the right price.”

STC’s multi-million dollar agreement with Manchester United is a record non-shirt sponsorship deal

www.busmanagementme.com

HEAD TO HEAD

Moving unified communications

forward

While unified communications (UC) has been around for some time, it seems that the time is now ripe to embrace it head on. Business Management gets the views of two industry experts, Jim Brindley of Nortel and Nik Ismail of Green Packet, on the UC solutions currently on offer. BM. How can unified communications help firms achieve their business goals? JB. It can boost employee productivity. Users now have one location to access and manage the many ways they communicate. This means no more wasted time checking various voice mail, email and instant messaging (IM) systems. With presence information indicating when colleagues are available, you can eliminate unproductive phone Lag. It also allows you to stay in touch wherever you are. You are no longer chained to desktop phones, and mobile workers can answer voice calls on their laptops wherever they have network connectivity, such as in airports and hotels. Callers don’t have to remember separate home and on-the road numbers. Voice calls are delivered over cost-effective IP connections and your existing telephony infrastructure. And it dramatically reduces communication costs. Nomadic workers can take full advantage of broadband connections to make and receive calls when away from the office. There will be no more expensive calls from hotel rooms. No need to use a home phone for business calls. No need to run up the wireless minutes. Yet you maintain consistent voice quality and accurate presence status (on/off phone).

Furthermore, UC promote communication efﬁciency in the workplace, which ultimately translates into improved productivity towards achieving business goals. UC converge various fragmented channels of communications, devices and access networks to bring about cross-format, cross-device, cross-network communication ability. UC allows employees to have seamless access to data, voice, image, instant messaging, and video on their ﬁxed line phone, mobile devices, and laptop utilising any of the available networks including WLAN, 3G, WiFi, or even WiMAX.

“It is very important to analyse why the business needs UC and identify these needs clearly in the project preparation”

NI. All businesses aim to improve productivity and cut costs. However, mobility is the key factor in many businesses today and with employees spending much of their time outside the office some costs are increasing instead of decreasing. Travel and communication costs including equipping employees with the various mobility tools they need to stay in touch and mounting phone bills can quickly take their financial toll on a firm. As many enterprises are moving towards a flexible and mobile environment unified communications help by providing a competitive edge via seamless mobility and more effective communication tools in economical and scalable solutions. This can drive communication costs down by 30 to 40 percent.

BM. For some companies, issues about quality are still obstacles to entering the UC market. What is your response to this argument? JB. It’s a good point and one we recognised three years ago. This is the key reason that Nortel and Microsoft formed the Innovative Communications Alliance. Our customers told us that unless there was a joint development effort they would hesitate to adopt UC. Our partnership brings together the best of both worlds – the world’s leading desktop software with the business-grade telephony from Nortel. Our joint R&D teams have delivered together market recognised leading UC solutions. We have also brought to market a portfolio of professional services to help customers design, implement and operate their UC projects. NI. When making a considerable investment in a UC product it is best to choose a proven product, one that is developed by a company with experience and which can provide services and support. Green Packet has global ofﬁces in the US, Malaysia, Singapore, Australia, China, Taiwan and Bahrain, as well as distribution centres in Australia and Europe. Green Packet has already enjoyed success in its home market of Malaysia, in China, Taiwan and Bahrain securing contracts with major ﬁrms in various industries, major telecommunication providers, internet service providers, as well as VOIP service providers.

www.busmanagementme.com

Green pac-nortel H2H.indd Sec1:78

15/10/08 15:48:24

GreenPAcket.indd 1

7/10/08 14:52:21

THE PANEL integrity of the data that is being transmitted or received.

Jim Brindley represents Nortel as Middle East Innovative Communications Alliance Prime.

Nik Ismail is the Director and Vice President of Business Development for Green Packet.

Green Packet’s strength is in our research and development and our first-to-market experience. Our research and development centres are located in the USA, Malaysia and China. We know what employees need and what employers require to keep in touch with their employees and maintain productivity. BM. How are companies managing risk when using UC? JB. Here are the areas that I would advise require careful consideration. Business drivers: It is very important to analyse why the business needs UC and identify these needs clearly in the project preparation. It is not the same as implementing another router or pbx, for example. These projects will change the way people work. At Nortel we have consulting teams working at the CIO/CEO level to help firms get the most business value out of their UC investments. Architectural design and vendor selection is vital. Selecting the best design and the best products for the solution will ensure it is right first time. We often help customers integrate non-Nortel products as well. Network Assessments: For those firms migrating to UC we firmly recommend the assessment of your network infrastructure before adding the potential stress of a UC service on top. The analogy here is that building the tower of Pisa on poor foundations will not stand the test of time as well as the Pyramids in Egypt. We are able to do this for our customers regardless of the infrastructure vendor. NI. With employees communicating from all ends of the globe across different media, data security is of the utmost importance to firms. Green Packet’s solution for enterprises offers seamless mobility, secured connectivity and UC. Our UC is securely connected via a Mobile Private Network (VPN), a combination of two powerful technologies – Mobile IP and IP Sec VPN. It enables users to securely connect to their office’s LAN even while on the move, connecting to various access networks such as WLAN, 3G, Wi-Fi, or even WiMAX without having to worry about the

BM. What do your solutions offer companies? JB. Simply put. I offer my customers the best possible UC experience. From the advisory stage through to on-going support we have made the strategic investments in R&D and services. We also have a global footprint with trained engineers and project teams all around the world to support our customers. We have a proven track record and have delivered well over 600 projects. If you are considering IP Telephony and Uniﬁed Communications then I would be delighted if you consider Nortel.

NI. Green Packet’s UC solutions operate on a ‘one-click-access’ mode to provide utmost convenience and efﬁciency to companies. Users need only access a single client interface, apply a single login, and a single authentication control to conduct their day-to-day communication needs. Our UC solutions allow companies to be connected seamlessly at all times and across all access networks including LAN, WLAN, Wi-Fi, 3G, and WiMAX. The switch between networks is intelligent and is an auto handoff based on the best available and best pricing factors. Our solutions offer improved productivity and cost savings by unifying fragmented communication channels. Users do not have to attend to different communication channels can be managed via one client. The UC platform can be integrated with corporate telephony system (IP PBX) to allow overseas-based employees to call their fellow colleagues without incurring international roaming charges. Our UC solutions are modular and scalable to suit the needs and size of any company. Green Packet’s UC is represented by our product known as the ‘Interact’ series for consumers, enterprise and operators. With Green Packet’s UC, employees can communicate with their colleagues in real-time and with customers more efﬁciently when they are on the move.

WHAT THE ANALYSTS SAY “In 2007, unified communications witnessed a growing demand, with 50 percent of enterprises reporting that they are evaluating, installing or running UC solutions,” says Henry Dewing at Forrester Research. So what should we expect in 2008? “Mobility will become an expected part of UC, video will come of age for multiple purposes, communication-enabled business processes will start providing ROI, and hosted and SaaS UC offerings and demand will grow. Don’t expect federated presence to break out of the pack just yet though; interoperability and user-configuration tools remain roadblocks to adoption in the near term.”

www.busmanagementme.com

Green pac-nortel H2H.indd Sec1:80

15/10/08 15:48:25

Nortel.indd 1

7/10/08 15:08:01

ANALYST VIEWPOINT

The promise of unified communications Senior Research Analyst at IDC, Nora Freedman, demystifies UC adoption challenges and discusses when and why companies should make the move to UC. BM. What do you think the promise of unified communications (UC) is making process as to where to begin with UC? for companies who are prepared to do it right? NF. You have to understand that UC is more of an architecture, as opNF. The essence of unified communications is really about streamposed to a point solution. All of the major IT vendors are hoping to capilining business processes that are already voice intensive, but not talise on the attention being paid to this market. But putting the term making them separate exercises. You want to minimise navigation ‘unified communications’ or UC in front of their product names, without between multiple applications. With UC, you’re trying to reduce time additional product engineering, doesn’t automatically make those prodto ‘X’ – whether it be for an approval, finding out about available supucts UC-enabled. plies, or locating a person or artifact. The future direction of a company’s unified communications stratIf there was a way to do that within an ERP application or within a egy has a lot to do with its current infrastructure, because some of the CRM application, then you could automatically launch those searches steps in the process can be leapfrogged. Certain enterprise environto make a phone call and get the right people. This ments – dependent on which vertical is particularly relevant in emergency and alert nomarket they are in – are just not relevant TRUSTED PARTNERS tification scenarios, where the onus of figuring out in others. For example, some of the rewho is the right person and where he or she might quirements and regulations in financial be located is embedded within the application, as services are very different than, say, “In terms of trusted partners that people opposed to leaning on your own mental directory as federal governments. So you have to uncan turn to, there are obviously heavy to who does what and where. derstand what the security implications vendor biases,” suggests Freedman. “So are, who the essential personnel to be don’t be afraid to seek out the system BM. There’s been some confusion around UC, in terms notified are, which regulations need to integrators. Tier 1 system integrators like of the number of vendor offerings, different implemenbe adhered to, and then what the genIBM Global Services or HP Services have tations, etc. How should firms clarify the decisioneral business culture is, because a lot of well-established UC practices. These the work can be done in theory but not systems integrators and some other tier achieved in reality. 2/3 resellers have been on the frontlines People can often be the biggest of making this stuff work. For those obstacle. Because UC is so new, there is customers who are particularly wary of still a limited amount of people who are vendor hype and bias, trusted partners trained and adept at training end-users, can be crucial in helping serve as a key as well as installing and maintaining the solution advisor and/or the prime project system. There is still a lot of confusion deployment lead.” and there are limitations on that. Enterprises will have to do their own due diligence to determine if their internal staff is skilled and equipped. If they are not, then the enterprise will have to identify which partners can help fulfill those project gaps. The development of unified communications practices among consultants and systems integrators is very much akin to 10-15 years ago when we saw the emergence of internet and e-business practices. A lot of companies were very focused on e-business enabling, developing websites and providing web services. But now it is just a general business expectation that you’re going to have at least a website and some web services available. I think the same thing will apply here. Over the next three to five years, we’re going to see a lot of initiatives focused on what organisations are doing in terms of unified communications. I think we’ll evolve to the point where if you can’t automatically locate people within the key business applications you’re using or be able to access certain applications through whatever device you choose,

www.busmanagementme.com

BMME_4_NoraFreedman Sec1:82

16/10/08 09:01:41

then it is going to be seen as unsatisfactory. Expectations of baseline functionality are going to be much higher, and UC is not going to be a strategy in isolation. BM. How do organisations determine if their infrastructure is ready for UC? NF. Their internal IT department can do the pre-deployment assessment. If they’re large enough, they can also go directly to the vendor or hire a reseller to do some of it. There are certain aspects about the infrastructure that simplify the move to UC; for example, we usually use IP telephony as a leading indicator about how prepared certain companies are. A lot of times in the preparation for IP telephony, companies have completed the network upgrades and some of the network management. They’ve done some assessment of the kind of connectivity required and the servicelevel agreements (SLAs) so that they will not have to worry about service degradation when the bigger applications or more comprehensive business processes are accessing multiple things, from multiple locations, across multiple geographies. BM. Can you discuss the heightened attention on security needed as these disparate pieces of technology become part of a unified solution? NF. The security part has to do with the fact that there are just so many more devices connecting to the network. Does your organisation have device-specific authentication policies? Or can users authenticate themselves across a variety of applications and devices? Are these identities consolidated into one directory service or multiple ones? Because there may be multiple directories within the organisation, it is crucial that all user information is consistent. Otherwise, the promise of UC may be compromised. If we look at US, government regulations may also highlight new tion are rarely those who are forced to use it every day in order to business requirements, especially in financial services and healthcomplete their job. care. Due to Sarbanes-Oxley and HIPAA, organisations must be The best-use case scenarios emerge from conversations between acutely aware of who is accessing customer and patient information someone from IT, someone from the line of business and someone and must also be able to provide an audit trail. Befrom the executive level across the organisation. cause new UC solutions may introduce a new level These groups tend to welcome explorations into Nora Freedman is a of auditing exposure, some organisations have what the real business issues are that need to be Senior Research Analyst decided to disable certain features. For example, addressed and how UC can solve them. with IDC’s Enterprise some financial organisations have disabled the Consumer-based Web 2.0 applications Networking group. In this voicemail capabilities of their unified messaging have also increased the expectations among role, Freedman provides solutions, since they don’t want these voice mesbusiness users about what their organisations research, market analysis sages to become subject to SEC regulators and/or should provide them. For example, most of us and consulting services they lack the appropriate mechanisms to capture, became more adept at instant messaging from about enterprise IP archive and retrieve the voice messages to idenAOL and MSN Messenger, as opposed to using telephony equipment, tify any policy violations. the Microsoft Exchange or Lotus Sametime. unified communications Only after security breaches occurred did enterand telepresence. BM. Can you talk about some of the best practices prises learn about the corporate vulnerabilities for making sure that communications are integrated with processes, workflow, applications and so forth? NF. Some of the best UC examples or UC success stories have come from those companies that have built UC steering committees with their organisations. Traditionally, those who purchase the IT solu-

exposed through the use of consumer apps into the enterprise. And thus, enterprise grade applications were deployed to displace those consumer applications. Now, many consumers are expecting the same level of usability coming from their Apple iPhones as from their enterprise devices and smartphones.

www.busmanagementme.com

BMME_4_NoraFreedman Sec1:83

16/10/08 09:01:43

COMMUNICATION FOCUS

CHANGING THE WAY WE INTERACT hile the term ‘uniﬁed communications’ is now being used by many CIOs, they often lack real understanding of the many ways it can help their businesses and the key requirements they should seek in a uniﬁed communications (UC) solution. There are enormous pressures on businesses today to reduce costs, deliver higher levels of service and be environmentally responsible. UC can answer these issues, but before CIOs can determine the right solution for their business, they need to evaluate and understand how UC can help achieve their goals.

ductivity and avoidable expenses incurred as a result of poor communications. The study identifies these costs for varying sized companies – ranging from several thousand to several millions of dollars. Clearly, there’s a large opportunity for improvement and streamlining, which in turn has a positive financial outcome. The communications status quo must be addressed for companies looking to stay competitive and productive, eliminate redundancies, speed business and improve their expenses and bottom line. The answer, in large part, is unified communications. UC enables enterprises to automate and embed communications into business Eliminating fragmented communications processes resulting in faster, more effective decision-making. In a Despite the advances in communications technology – or ironitypical business workflow process, each time human intervention and cally, possibly because of them – business users face a complex and decisions are required, the process slows or stops if the appropriate fragmented communications environment. While the variety of deperson can’t be reached– adding minutes, hours or even days to the vices and media provide flexibility, they also process, detrimentally impacting the comadd to communication latency, friction and pany’s bottom line and customer satisfacoverload. The ability to ‘connect’ in real-time tion. Using UC, these workflows can be suffers, duplicate and redundant communicaautomated to use rules-based routing to tion attempts proliferate, and key business reach the appropriate person on their deprocesses that rely on communications are sired device, or forward to their designated Survey respondents slowed (or even stopped altogether) because alternate, so decisions can be made quickly experiencing latency as a of fragmented communications. and the workflow kept on track. But how does this impact business? A Another study by an independent reresult of waiting for information study done by Insignia Research set out to search organisation examined the total cost from unavailable colleagues measure the nature and impact of communiof ownership (TCO) of communications solucation friction, latency and overload, based tions including traditional PBX, IP PBX, Manon the real-world experiences of end-user aged IP PBX and Siemens OpenScape Voice employees. Application (formerly known as HiPath 8000). The scenario looked at a The study estimated the full financial impacts of doing nothing Global 1000 enterprise with 25,000 total users with applications including about fragmented communications by calculating the cost of lost procontact centres, messaging and conferencing.

94%

www.busmanagementme.com

Insigna.indd Sec1:84

15/10/08 15:49:19

SURVEY FINDINGS The most common and costly pain point (experienced by 94 percent of respondents) was latency resulting from waiting for information from unavailable colleagues. The average delay directly attributable to the use of disjointed systems is 5.3 hours/week, resulting in an average annual cost of over $9000/user. This delay is indeed troubling, particularly in customer-facing roles. Business travellers estimated spending 11 days in the past year on avoidable business travel, equating to an annual waste of at least US$3400/person in travel expenses. This happens when collaboration through existing communications systems is ineffective, forcing teams to synchronize through expensive face-to-face meetings. A majority of respondents reported spending at least 10 percent of their time working remotely, reporting reduced productivity by an average of 7.8 hours/month because they lack the communications tools off-site that are available in their main office. 75 percent incurred incremental communication costs on up to four business trips within the previous six months, with an average annual expense of $1488 per business traveler.

The study found an IP PBX the most expensive solution, with OpenScape Voice Application offering the least expensive TCO over five years. Siemens designed OpenScape Voice with TCO in mind, with features and functionality to improve operational efficiency, reduce costs and eliminate unnecessary business expenses. By consolidating nodes and servers, network and operational costs are also reduced. Its modular architecture provides nearly unlimited scalability and allows IP, TDM and analog networks to co-exist, protecting legacy investments while introducing IP benefits to the enterprise.

Supporting green efforts As CIOs consider the economic impact of productivity and ownership costs, they should also understand how UC can aid their efforts to be more environmentally conscious. In traditional TDM technology, the intelligence resided primarily in phone systems comprised of proprietary hardware and discrete components. It provided most of the computing power and consumed the lion’s share of energy. It also required convection cooling, which has a big appetite for power. The total electrical connected load of phone systems with 1000 extensions ranged up to 5.4 kilowatts, and their cooling systems consumed at least as much power. For networked phone systems, the overall power consumption is signiﬁcantly higher when you consider that every site had its own system. Software-based VoIP solutions (such as Siemens OpenScape Voice Application) that run centrally on standard servers in the data center can signiﬁcantly reduce power consumption. Far fewer computers are needed for a communications system centralised in a data center. Just

two servers are all it takes to provide phone service to as many as 100,000 subscribers. IP systems spanning many sites can decrease overall power consumption by up to 38 percent, depending on the configuration. Furthermore, these sophisticated systems can be installed, operated, and maintained remotely. Service engineers need not travel to different locations, further reducing CO2 emissions. Thus a centralised communications system residing at the data center reduces energy consumption directly as well as indirectly. Companies can further reduce their carbon footprint by leveraging technologies such as HD video and telepresence that eliminate the need for travel. Connected by multimedia-enabled internets, employees at different sites can collaborate in virtual meetings. Modern videoconference capabilities allow them to work together as if they were in the same room, rendering many business trips superfluous. And with the video application using the same directory as voice and all other media, the complexity of the video call of the past is replaced with the ease of a click-to-dial videoconference, from the boardroom to the desktop. Modern telecommunication solutions have also made the home office increasingly viable and reduced the need for daily commuting. With innovative teleworking tools, companies can commit fewer resources to on-site work places while maintaining productivity and efficiency. Smart desk-sharing schemes allow enterprises with a sales focus to operate with up to 70 percent fewer workstations. With less office space to lease, maintain, heat and air-condition, companies save on capital expenditures and energy costs.

Open communication So with unified communications established as the way to go, what kind of solution is best? That’s where open communications comes in. Siemens believes that an open, software-based approach is key because it allows customers to evaluate, design, integrate and support multidevice, multi-media and multi-network solutions easily and effectively, as opposed to bolt-on proprietary approaches. Because Siemens solutions such as OpenScape Voice Application and OpenScape UC Application use open interfaces and standardsbased technologies, they can converge seamlessly with your existing infrastructure to make the most of legacy investments. This provides the freedom to evolve your communications environment to meet current and future needs. Siemens has worked with a number of other business software vendors to integrate with the OpenScape UC Application. By seamlessly embedding real-time presence information into commonly used business applications, enterprises can accelerate decision-making, reduce process latency and improve collaboration. Today’s businesses are rapidly changing and adapting in order to maximise productivity at the lowest costs. Unified communications and Siemens can help them achieve a more streamlined, efficient communications infrastructure that results in a more productive and effective workforce and better customer satisfaction and bottom line.

A white paper that reviews the complete findings of Insignia Research’s UC survey can be downloaded from www.siemens.com/us/open

www.busmanagementme.com

Insigna.indd Sec1:85

15/10/08 15:49:20

EXECUTIVE INTERVIEW

A “leader and innovator” for the Middle East Paul Hammond, General Manager and Regional Vice President for the Middle East at Infor, talks to Business Management about how his company provides innovative business software to the region. BM. Oracle and SAP are the market leaders. How does Infor expect to make a mark? PH. Infor has evolved over the last six years and we are already established as the 10th largest software company in the world. Perhaps more importantly, Infor is already recognised as a leader and innovator, with a different strategy that really does offer the market a viable, unique alternative. Infor’s strategy is to make business software better. We’ve made 35 astute, strategic, major acquisitions while annually we invest millions of dollars in R&D to further improve the software; to make our business software better. Fundamentally, Infor has already filled a huge gap in the enterprise software market. This gap has been left by the giants you mention who typically provide stability and a global presence but have generic, onesize-fits-all solutions. The drawback is that these type of solutions are expensive and resource intensive to implement and require substantial customisation, just to meet basic, business specific needs. Until now, the only other choice has been to look at smaller niche vendors who provide feature-rich, industry specific solutions. We know this, as Infor has acquired some of the best players in the market. However, on many occasions these niche vendors lack financial stability and global reach – quite often they simply disappear off the map – that’s not good if you are building your business around their technology. At Infor we have taken the very best of both choices to successfully fill the dilemma between the one-stop-generic-shop giants or the risky niche vendor with great functionality. Our strategy is proven. We have grown to having 70,000 customers worldwide and we’re continuing to gain brand new customers organically in all regions – 2200 new name customers last year.

Paul Hammond joined Infor in 2008 as GM and Regional VP for the Middle East. Having 20 years of Global IT experience, Hammond comes from webMethods where he established the company’s Middle East operation. Prior to this, Hammond spent seven years in international sales at Veritas (since acquired by Symantec), his latter years heading up the oil & gas sector.

BM. What about Infor’s successes in the Middle East? PH. EMEA accounts for 41 percent of Infor’s revenues – nearly US$1billion and we have a very successful and growing business here in the Middle East, and I’m delighted to have joined Infor as the General Manager to further this success. The Infor brand name is actually relatively unknown in the region; however some of our acquired brands are very well established in the market, such as Baan (ERP), DataStream (Enterprise Asset Management), SunSystems (ﬁnancials) and Epiphany (CRM) amongst others. We have a very broad portfolio of business speciﬁc solutions that are widely deployed amongst our 800 plus customers across the region, comprising Enterprise Resource Planning (ERP); Supply Chain Management (SCM); Warehouse Management (WMS); Product Life Cycle Management (PLM) Enterprise Asset Management (EAM); Human Capital Management (HCM), Performance Management (PM) Financial Management (FM), Expense Manage-

ment (XM) and of course Customer Relationship Management (CRM). BM. In which areas has Infor been most successful? PH. Taking the hotel market, just as one example, our Infor FMS SunSystems accounting software is sold in partnership with MICROSFidelio International a leading provider of information technology solutions for the hospitality and retail industries, to over 2000 of the world’s ﬁnest hotels. It is an integrated solution that has been adopted by hundreds of hotels here in the Middle East. One of the most pioneering companies in the region is a household brand hotel chain, which has embarked on a project to deploy part of our human capital management solution in order to improve customer service through improved management of its staff. Another incredibly exciting area we see in the region is in enterprise asset management (EAM). One of our most fascinating projects is supporting Nakheel where we have success-

www.busmanagementme.com

Infor.indd Sec1:86

15/10/08 15:48:53

fully deployed Infor EAM Enterprise Edition to provide them with the tools to better manage their assets – from bridges, cranes to pumps, air conditioning systems and property maintenance requests. These can all now be serviced with an improved turnaround time to maximise productivity whilst minimising costs. We’re seeing incredible interest in these EAM solutions right throughout the region from Civil Aviation Affairs (CAA) Bahrain to SWCC in Saudi Arabia; it’s a real sweet spot for any asset intensive industry. BM. What is your go-to-market strategy for the Middle East, and is this likely to change? PH. We sell both direct and through the channel, and we are about to embark upon a channel partner enhancement and recruitment campaign to bolster our offering in the region. Our approach to channel recruitment is focused on quality over quantity. We are not looking to take on dozens of partners and risk dilution of our focused approach, but a smaller number of partners that are well aligned with our products and company ethos and can articulate our unique ‘making business software better’ value proposition to customers.

70,000 Infor’s customers worldwide Infor has also developed a series of ‘business edition’ suites for many of its enterprise software solutions. These are in effect template-based and designed for rapid implementation and setup – we are talking days and weeks here–whilst providing rich functionality and built-in best practices, making them ideally suited to the SMB market, regional, divisional or departmental level. They are equally ideal for those cases where an enterprise customer wants a rapid implementation to

Infor’s solutions focus on a whole host of business-critical functions.

fulﬁl a pressing business requirement. At the customers’ own pace they can then transition to the enterprise version at a later date to add advanced functionality to support their continued growth and evolving business objectives. This rapid time to value implementation will really resonate in the Gulf markets.

as AC chillers, generators and lighting. They then need to provide intelligence regarding optimal maintenance and replacement based upon energy consumption. By incorporating energy management into asset management, companies can now account for more than 90 cents of every dollar of operating cost.

BM. What are the crucial areas for Middle East companies to concentrate on in the coming year? PH. Focusing on becoming ‘green’ by being more energy efficient. Not just paying lip service to this current topic or turning out the occasional office light switch. Most companies we talk to are still in the planning phase, trying to formulate their energy conservation or ‘go-green’ plans. It is staggering that so much still needs to be done. According to a recent Plant Services survey, 80 percent of executives ranked energy as the most impactful variable on operating costs, yet many executives do not know where their energy is being spent. Energy and utility resources here in the Gulf cannot support the growing demand, hence costs will continue to rise and companies need to manage these costs carefully. Nakheel is a great example of this – implementing ‘green’ initiatives as a key business differentiator. Energy costs are all part of a necessary efficiency drive for every organisation. For energy conservation, businesses need to select technology that gathers information on all facility assets that consume energy, such

BM. Where else should companies be looking for efficiency savings? PH. Infor would also encourage Middle Eastern companies to take a holistic review. Replacing a machine may save hundreds of dollars on an electricity bill; altering a warehouse layout can save thousands; but optimising the flow of goods from freezone to delivery can save millions. We feel one of the most significant ‘green’ opportunities is in relation to the total supply chain and here it is critical to work with suppliers and customers to devise new ways of efficiently getting products into consumers’ hands. All across the supply chain there are opportunities to reduce energy consumption and emissions. Reduce, rework, re-cycle, renew are becoming watchwords for the way to re-think supply chain strategy. More strategically, companies will re-assess their sourcing strategies through newer, green tinted glasses and perhaps reverse some of the trends towards mass outsourcing that have been experienced in recent years. To contact Infor’s regional Middle East HQ telephone +97143914438 or email middle.east@infor.com. Alternatively, visit www.infor.com/middle_east

www.busmanagementme.com

Infor.indd Sec1:87

15/10/08 15:48:54

InforSP.indd 1

7/10/08 14:54:06

FIELD OF DREAMS

OIL AND GAS

Kuwait is ploughing tens of billions of dollars into an expansion plan that will see production eventually hit four million barrels of oil a day (bpd). But will it meet its targets? Julian Rogers meets Saad Al-Shuwaib, CEO of Kuwait Petroleum Corporation (KPC) to find out. erched on the 19th floor of KPC’s headquarters in Kuwait City, Saad Al-Shuwaib’s plush office stands as a shining example of what petrodollars can buy these days in this energy-rich emirate. Panoramic views over the stunning Arabian Gulf Coast can be seen through its expansive floor-to-ceiling windows and a beautifully crafted infinity pool greets visitors at its entrance overlooking Kuwait Bay. Officially opened in February, the gleaming Kuwait Oil Sector Complex, which is also home to the country’s oil ministry, has two fan-shaped glass towers spouting from the front and an opulent lobby which offers a welcome respite from the searing heat outdoors. While this state-of-the-art facility sends out a clear

message about the KPC’s wealth, the recent rocketing price of black gold has, of course, swelled the coffers further. A founding OPEC member, Kuwait is the oil cartel’s second largest exporter, and its reserves account for 10 percent of the world’s total. According to ofﬁcial data, the land here holds the fourth largest oil reserves in the world. Its state-owned business, KPC, and its stable of subsidiary companies currently produce around 2.6 million bpd. However, the Kuwaiti government has ambitious plans to ramp up production to three million bpd next year – 12 months ahead of schedule. Looking further ahead, Al-Shuwaib, who was appointed CEO last year, says production will hit 3.5 million bpd by 2015 and four million bpd by 2020. These are bold targets but ones that will have to be achieved if world supplies are to meet soaring demand. Indeed, OPEC predicts that consumption could reach 118 million bpd by 2030. “Expanding economic activities in the world and especially in China and India are the main drivers for continuous rising demand for

www.busmanagementme.com

KPC Al-Shuib-4pg.indd Sec1:89

17/10/08 11:14:46

energy,” says Al-Shuwaib when quizzed on global supply and demand fears. “We adopt the view that there is sufﬁcient petroleum resources, conventional and non-conventional liquid fuels, to meet growing demand for decades to come. However, key players in the market need to make timely investments to expand oil and gas supplies.” This includes Kuwait. “We in Kuwait will pursue with our long term plans to sustain enough supplies to the market according to strategies set for KPC until 2020”, says Al-Shuwaib.

Strategies Leaning back in his leather chair, Al-Shuwaib explains how his vision for the business will become a reality, in a country that is seeing home energy demand rise 10 percent annually. First, he says KPC will spend US$55 billion between now and 2013 to finance production, refineries and new tankers. At least half the investment will be needed for new drilling and enhanced recovery technologies. Tapping into undeveloped areas of the country will also be a priority. Earlier this year Al-Shuwaib told reporters how KPC was exploring in “less than one-third” of the country’s total area. KPC plans to exploit difficult fields in the north and west of the country, holding vast reserves of heavy oil. Indeed, in

12 years time, the plan is to pump 750,000 barrels of heavy oil a day. However, this cannot be achieved without the help of the international oil companies (IOCs) who have been involved in the country’s operations since the industry was nationalised in the 1970s through basic technical service agreements. But now, for the ﬁrst time ever, KPC is involved in negotiations with foreign majors for performance-related contracts – dubbed “enhanced technical service agreements”. These new deals allow overseas companies a greater role in operations and key projects. “These technical service agreements are still working, however, we are working to improve and strengthen such relations,” Al-Shuwaib comments. US heavyweight ExxonMobil has signed a preliminary deal for the north, while BP, which already holds service contacts, is in talks re-

“Capital project management is becoming a big obstacle as projects are becoming more complex and at the same time exceeding their costs and not meeting their deadlines”

Abdeli Field

Ratqa Field

Sabriyah Bubiyan Island

Raudhatain

Bahrah Failaka Island Kra’ Almru Field Medina

Khashman Dharif Minagish

Abduliyah Greater Burgan

KUWAIT OIL FIELDS 90

Umm Gudair

garding oil fields in the West. Fellow global player, Chevron, is negotiating an enhanced technical service agreement for the oil-rich Burgan fields to the southeast. More than two-thirds of the country’s oil production comes from the greater Burgan area – considered to be the second largest oilfield in the world. Unfortunately for the IOCs, the fly in the ointment continues to be the Kuwaiti parliament’s reluctance to allow foreign companies any operational control over its prized reserves. So for the time being the multi-billion dollar Project Kuwait (originally drawn up in the 1990s to award IOCs 20-year “operating services contracts”) appears to be no closer to being resolved. The political disputes and objections to Project Kuwait, by some MPs, has stunted progress, whilst the country was left without an oil minister for six months until acting oil minister Mohammad Al Olaim was appointed to the position on a permanent basis earlier this year. But when you consider that the oil sector accounted for 60 percent of Kuwait’s gross domestic product (GDP) in 2007, it’s not hard to fathom why some hostility exists. Despite the opposition to partnerships with foreign companies, for AlShuwaib the advantages are abundantly clear: “The desired benefits from foreign participation includes extracting maximum value from the reservoir assets, adding reserves, optimisation of

www.busmanagementme.com

KPC Al-Shuib-4pg.indd Sec1:90

15/10/08 15:51:23

Zour is up and running, KPC plans to close the Shuaiba refinery. But it’s not only at home that KPC is expanding; the company is flexing its muscle on the international stage too – Asia especially. Al-Shuwaib earlier this year and a delegation from KPC, travelled to Vietnam to sign contracts on a deal between KPC’s subsidiary Kuwait Petroleum International (KPI) and the country’s national oil company Petrovietnam, Japan’s Idemitsu Kosan Co. and Mitsui Chemicals to build the socialist republic’s second refinery and petrochemical complex. The planned facility, 200 miles south of the capital Hanoi, is expected to produce 10 million tonnes per year. KPC FACT FILE Vietnam’s neighbour, China, is also a country that KPC is involved with. Indeed, the • Established in 1980 country’s fourth largest oil company, Sinochem • Acts as the umbrella organisation to 10 oil and gas Corp, will be processing Kuwaiti crude at its subsidiary companies proposed refinery in East China in around 18 • Operations spanning six continents months. This will be through a joint venture • Currently producing 2.6 million barrels of oil a day with KPC and Royal Dutch Shell that will see • Has around 1600 producing oil wells the refinery process 240,000 bpd. As well as this, KPC is progressing with plans to build a huge refinery-petrochemical complex in the capital expenditure, cost savings, the application of new technology, southern Guangdong Province, while KPC hopes to sign agreements acquisition of improved management systems and creation of job opwith India in the future. Al-Shuwaib stresses that these overseas deals portunities for Kuwaitis.” are all about securing long-term outlets for Kuwaiti crude. Like a lot of the national oil companies (NOCs), KPC needs outside help, particularly as easy-to-reach oil is dwindling – creating the need Green credentials for improved technologies to extract hydrocarbons. Indeed, field maWhen the conversation broaches the issue of climate change, the turity is a problem with most in the country being more than 60 years boss is quick to point out how Kuwait is not shirking its ‘green’ responold. “Production is moving to increasingly difficult locations as easy oil sibilities. Al-Shuwaib talks openly about how the business will invest is diminishing and the high oil price makes previous exploration and US$100 million in new energy technologies, including hydrogen fuel complex asset maximisation economically viable,” Al-Shuwaib explains. cells, carbon capture and storage, and hydrogen generation from oil. “A very important challenge in this area is to improve technologies to “KPC has been very conscious to the dilemma of climate change and respond to these complexities and at the same time improving technolinvests to improve energy efficiency, reduce emissions and to continuogy application capabilities.” ously monitor its carbon footprints. Furthermore, carbon capturing Downstream, the organisation plans to drastically improve capacand storing (CCS) is one of the industry’s main objectives at the time ity with new refineries and petro-chemical plants. As much as US$30 being.” Naturally, technology is a required necessity. billion is being allocated. In May it was announced that KPC had “A stated objective of KPC is to promote the development of new awarded US$10 billion worth of contracts to construct the grassroots technologies which will maintain oil’s long-term competitive position 615,000 bpd Al-Zour facility – the largest single-phase refinery project by making it a more efficient and environmentally-friendly energy ever built. Situated near the border with Saudi Arabia, it is due to be source through an active investment policy,” Al-Shuwaib states. complete in 2012 at an estimated cost of US$15 billion. Al-Zour will also He also enthusiastically explains how KPC adopted a zero fl aring produce 200,000 bpd of low sulphur fuel oil for electricity generation. policy in 2002 for both onshore and offshore operations This is set In the pipeline too is a large-scale upgrade of current refineries in the to be reached in 2011. KPC also supplies low sulphur gas oil for the country “to enable us to produce cleaner products and meet environlocal market and low sulphur fuel oil for the Ministry of Electricity mentally friendly fuel specifications”, Al-Shuwaib notes. Kuwait also and Water Power stations. “Our role is to be proactively managing plans to upgrade two of its three existing refineries, Mina Ahmadi and the environment, and health and safety aspects related to KPC’s Mina Abdullah. With Al-Zour on line, Kuwait’s total refining capacity businesses and become a regional leader in HSE (health, safety and will swell to 1.4 million bpd. It currently stands at 930,000. After Alenvironment) performance.”

www.busmanagementme.com

KPC Al-Shuib-4pg.indd Sec2:91

15/10/08 15:51:25

None of this can be achieved without a strong workforce, he asserts. Indeed, KPC faces a universal challenge affecting both the NOCs and IOCs – the talent war. As projects get larger and more complex, the need for experienced staff across the many facets of an oil and gas giant’s operations is only going to intensify. Indeed, the industry is having to replace experienced and skilled workers approaching retirement age, while more and more students are choosing to shy away from the oil and gas industry. “A skilled and motivated workforce is becoming increasingly scarce,” he muses, “so the HR, learning and development departments are therefore becoming increasingly important.” And with Kuwait’s expansion plans, HR is intensiﬁed: “The need for such talents is increasing as projects become more complex and management becomes more difﬁcult,” Al-Shuwaib points out. He says KPC is developing and will continue to develop advantageous tageous remuneration and compensation packages in addition ition to extensive training and development schemes for its ts current and new employees.

HISTORY OF OIL IN KUWAIT Oil was first discovered in Kuwait in 1938 by Kuwait Oil Company (KOC), a London-based joint venture of the Anglo-Persian Oil Company (now BP) and Gulf Oil (now Chevron Corporation), under a concession granted by the then Amir of Kuwait, Sheikh Ahmad Al-Jaber Al-Sabah. KOC had been formed in 1934 following more than a decade of concession negotiations. However, development of this bounteous natural resource was delayed by World War II starting the transformation of Kuwait from a largely impoverished desert sheikdom into the modern nation-state it is today. Over the next three decades, extensive developments occurred both in the upstream and downstream elements of the industry. A key turning point came in 1974 when Kuwait acquired 60 percent of KOC from BP and Gulf Oil. In addition, the Supreme Petroleum Council was formed to oversee the country’s oil interests.

Outlook

The following year, the Ministry of

Oil was established in its own right, For KPC and its subsidiaries, the next few years will separate from the Ministry of Finance. be an interesting but challenging period in terms of oil On January 27th, 1980, Kuwait Petroleum production; but what about that other highly-sought ht Corporation was formed, which brought after commodity – natural gas? Kuwait is going to together all elements of the industry under need more gas to fuel refineries and other industriess In 19 4 6 His H one holding company, thus enabling greater – a significant chunk of these hydrocarbons will ighnes Al-Jab sS er and more effective control. Throughout the come from imports from Qatar, Iran and Iraq. to sign Al-Sabah tu heikh Ahmed rn al oil exp the flow of th ed a wheel However, KPC is about to start production of 1980’s, expansion and integration occurred or t s e first Kuwait free gas (not a by-product of oil exploration). Two continued. Today, the country is a major i years ago 35 trillion cubic feet of free natural gas oil exporter with an estimated 190 years of was discovered in the northern oilfields. Al-Oliam was quoted reserves a current consumption levels. in June as saying that the target was to produce a billion illion cubic feet of free gas a day by 2015 but for the time being, KPC is set to produce 175 million cubic feet a day. issues that need addressing are “magnified” by the scale of capital So gas production is looking good and imports have been secured, needed. “Capital project management is becoming a big obstacle for oil production is being ramped up, alliances are being forged with the the oil industry and KPC in particular as projects are becoming more IOCs and KPC is spreading its tentacles into emerging markets. As our complex and at the same time exceeding their costs and not meeting meeting comes to a close, Al-Shuwaib is keen to reiterate that KPC’s their deadline. This is a competency that needs to be nurtured and developed to ensure the strategic objectives are met on the medium and short-terms” he remarks. And it is only going to get worse for the A BRAND ABROAD energy companies; according to the IEA, energy demand growth will require US$800 billion of investment per year over the next 25 years. Outside Kuwait, the international arm of the KPC’s oil and gas As the lift whizzes back down to the lobby from Al-Shuwaib’s operations refines and markets fuel, lubricants and other petroleum office, I can’t help but wonder what impact Kuwait’s energy targets products under the distinctive “Q8 sails” logo. Founded in 1980, will have on the nation’s future prosperity. After all, this is a crucial Kuwait Petroleum International’s network of more than 4000 Q8 period for Kuwait if it wants to keep pace with the rampant economies branded service stations extend across seven countries – Italy, of fellow Arab countries. However, according to the Energy Information Germany, Sweden, Denmark, Holland, Belgium and Luxemburg. Administration in the US, the nation’s reserves may only last another KPI also holds significant interests 50 years if production reaches four million bpd by 2020. Whether or in Asia, while Q8 Aviation not this outlook is true, only the Kuwaitis know for sure. Then there is supplies jet fuel to many of the fear that the country may have already reached the dreaded Peak the world’s major airports. Oil scenario. Question marks remain, but this is certainly one OPEC producer to keep a close eye on in the next few years.

www.busmanagementme.com

KPC Al-Shuib-4pg.indd Sec2:92

15/10/08 15:51:26

AMD.indd 1

7/10/08 14:51:40

OPEN NET ATE:5oct

15/10/08

15:49

Page 94

ASK THE EXPERT

Tapping your hidden development resources David Allinson gives Business Management the lowdown on open source middleware software.

BOSS is the leading open source middleware software supplier and competes in a market traditionally dominated by Websphere (IBM) and Web Logic (BEA/Oracle). CIOs considering this critical area of the enterprise computing may think that JBOSS represents an unknown and unproven alternative to their more traditional suppliers. However, we have seen evidence that these organisations are (quite often) sitting on JBOSS expertise that they did not know about. Earlier this year, at JBOSS World, it was announced that JBOSS had recorded 20 million downloads of its products. Ten million of these were recorded in the last five years and a further 10 million after its acquisition by Red Hat in 2006. As an open source company, JBOSS has a very large development community and continues to make a free version of its products available to this (open source) community. However such a huge number of downloads indicates that there are many Java developers (and not just in the open source community) using this enterprise middleware solution spread across the market. Its acquisition by Red Hat led to the creation of an enterprise-ready version of JBOSS, which was fully documented and fully tested so that the widely acclaimed

www.busmanagementme.com

JBOSS technologies could be deployed with confidence by enterprise customers. This is made available on a subscription basis where the software continues to be free but the customer pays for support testing and quality assurance. Since the acquisition, Red Hat has come across many customers whose software developers were working with JBOSS for proto-typing but chose to go with one of the proprietary suppliers when it came to production implementation. If CIOs from large enterprises checked with their development team, they might be surprised to see their exposure to JBOSS. However, whether or not they already have the in-house skills CIOs may derive many other beneﬁts from a move to JBOSS. The open source model plays out particularly well when it comes

David Allinson is the General Manager for Opennet MEA, the authorised master distributor and certified training centre for Red Hat products in the Middle East and Africa. Allinson is responsible for the running of its Middle East operations. He brings over 25 years’ experience in growing and developing businesses and creating winning strategies to strengthen their position in their individual markets. For further information email sales@opennet.ae

to the implementation of middleware projects. In the area of system integration it is particularly useful to be able to view first hand how a vendor has approached and implemented features and standards with access to source code. There is also the benefit of rapid product innovation with a global team of contributors working on the JBOSS product enhancement and assisting each other in projects. On many occasions the community will also provide its own technical support and troubleshooting to resolve issues encountered in a development project. The open source subscription model also offers a major incentive to the vendor to provide excellent support services since it is this and not the software itself for which fees are being received. Finally, freedom from software license fees reduces the cost of JBOSS middleware projects considerably. For example, a portal implementation using JBOSS can be achieved for less than half of the cost of the same project using one of the proprietary competitive products. So if you are faced with a decision on where to go for your next enterprise middleware project first look in-house and then contact us to further your evaluation.

OpenNet.indd 1

7/10/08 15:09:08

CRM:5oct

15/10/08

15:41

Page 96

CRM FOCUS

SATISFIED

CUSTOMERS CRM technology has become a vital tool in the battle for banks to win and retain customers. Business Management reports on a study which reveals how many banks are deploying the software.

ver half of the banks in the Middle East and Europe plan to invest in CRM technology in a bid to keep customers happy, according to a study by the European Financial Management and Marketing Association (Efma). Increased competition and the need to improve their brand images were the two key drivers behind the decision to invest in CRM, a survey of 108 banks entitled Achieving Customer Centricity Throughout the Enterprise found. Efma collaborated with SAP and Datamonitor to conduct the online survey, the results of which highlight the growing importance of CRM to Middle East and European banks, particularly given the current economic climate. Commenting on the study Martha Bennett, Research Director for Financial Technology at Datamonitor, said: “In the current economic climate, it is more important than ever for banks to have as much insight as possible into the financial needs and behaviours of their customers and prospects. “Providing a level of service that makes the client feel well looked after and valued is as critical as the ability to offer the most optimal product at the right time,” she goes on to say. Bennett added that in order to provide the best service to their clients, banks should have systems in place, which allow for an overall view over distribution channels, to avoid organisational silos. Four key findings were highlighted from the study. The first is that while banks recognise the strategic importance of CRM, they face many challenges in the implementation of this, including price competition, pressure to lower operating costs, fragmentation of customer segments and channel proliferation. The study also found that banks are moving towards a more customer centric approach but that this is a slow and gradual process. According to those surveyed, CRM is implemented by individual departments and as a front-end process rather than across the whole enterprise. And while they are increasingly realising the importance of CRM technology to the success of their businesses, banks have limited access to information to analyse the impact of the technology. Overall, the banks were aware of CRM as a key strategic driver but admitted that they had not been able to address fragmented customer segments using the technology.

www.busmanagementme.com

The reason why so many banks plan to invest in new CRM technology, according to the study, is because many of the existing packages they have are based on outdated legacy systems which lack the flexibility and the scalability required to allow the banks to have a strong enough overview of the whole organisation and connect customers from different departments together. Deploying technology with these capabilities will not only improve customers’ experiences but will also increase the productivity of the employees at the bank and will increase return on investment. Patrick Desmares, Secretary General of Efma, said: “The results from the survey show that a high percentage of banks see the ability to differentiate their brand and products as strategically important by offering superior customer service. “But additionally these findings emphasise the importance of well-chosen staff with the right attitude through all distribution channels.” Of those surveyed 50 percent of the banks said they had invested or would be investing in CRM technology. These investments, said Julian Johnson, SVP, Industry Business Solutions, Global Field Operations, SAP, are evident in the purchases of its technology by financial institutions across Europe and the Middle East. “In recent months, SAP has experienced the investment banks are making standardised software for their core processes. As the survey results support a bank’s customer facing activities are now an integral part of its business and included in its criteria for selecting standardised software. The value this brings to a bank is seamless integration of its back-office functions, which will provide a true endto-end view of the customer.” However, while banks are certainly adopting a more customer centric approach, the survey found that their key focus remained on operational issues rather than strategic ones. This, the study found, was due to growing pressure on banks from the increasingly competitive environment they are working in, particularly in less mature mar-

CRM:5oct

15/10/08

15:42

Page 97

kets which are experiencing rapid growth. One major issue faced by Cultural issues, such as internal politics, were not however a barbanks is the pressure to drive down operating costs – with 56 percent rier to CRM, according to the survey. It concluded that banks recogof banks having listed that as their biggest challenge. Within this connise the strategic role that CRM has to play but that they realise that text therefore it is no surprise that banks are adopting a customer enterprise-wide adoption of the technology will not be easy. It states centric approach – in order to attract more customers. that major progress must be made in order to achieve the internal However, the market pressures they face mean the banks’ primaprocess changes necessary to gain the maximum effect from CRM imry focus is on tackling operational challenges, and in the execution of plementations. goals rather than deciding on their vision for future goals. With reBut as global economic conditions continue to increase the presgards to how, specifically, CRM technology can help banks to adopt a sure on banks to improve their customer satisfaction levels, it has bemore customer-centric approach. The study highlighted the fact that come imperative for them to ensure that progress takes place. the credit crunch means it is more important now than ever before for Figure 1: How important would you say CRM is to your bank, and how important do banks to be discerning in their you expect it to be in three years’ time? product sales and to target specific customer segments. CRM technology allows them to do this more effectively. CRM technology also enables banks to offer the right products to their customers by providing staff with instant access to real-time information about the different products on offer. According to the study, the lack of integration of CRM technology within some banks’ limits their ability to assess the lifetime value of their customers and the return on investment (ROI) that they are receiving from the technology. In those situations, the survey claims, the benefits of the CRM technology will be undervalued. But while emphasising the value to banks of implementing CRM systems, the study also acknowledges that the complexity involved in implementing the technology remains a major inhibitor to banks deploying it across their enterprises. Other barriers to the technology actually being deployed include low take-up by the business and the need for process engineering to take place. “Both of these issues have adversely affected past efforts at rolling out CRM, and are indicative of banks’ unwillingness, or inability, to address the business and process issues fundamental to CRM success,” the survey noted.

Europe and Middle East

In 3 years

3.23

Now

1.0

1.5

2.66

2.0

2.5

3.0

3.5

4.0

Average (4-very important, 1-not important)

Figure 2: How does your bank measure CRM successs?

Customer satisfaction Customer retention Increased revenue Customer acquisition Increased profitability Employee productivity Customer lifetime value Return on Investment Faster processing times Reduced costs Increased win rates 0%

10%

20%

30%

40%

50%

60%

70%

80%

Percentage of respondents Source: Datamonitor and Efma European & Middle Eastern banking study

www.busmanagementme.com

EXECUTIVE INTERVIEW

Putting your customers first Business Management speaks to Adam Hughes of PA Consulting Group to discover how organisations can implement CRM initiatives that will identify, win, retain and expand customer relationships. BM. How can companies achieve successful return on investment through CRM Projects? AH. The key objective for CEOs is to maximise the ROI for shareholders in the business and to achieve this objective, they must focus on maximising the profitability of their customers. In any business, financial performance from CRM projects ultimately depends on whether the business ‘captures customer value’ (CCV) as efficiently as possible. For many companies CRM is a powerful tool for creating CCV. PA’s research across 500 organisations, and our own experience shows time and again that the most successful companies are those with the highest CCV. The analysis reaches the conclusion that CRM is not a panacea, but that in the right areas it has the potential to create large amounts of value. Whilst businesses have undertaken CRM related initiatives, they are still not fully utilising customer information to create business benefits. Well implemented CRM systems should lead to a virtuous circle of dialogue with the customer, in which a good set of offerings leads to a greater share of the market and more and better customer information. This allows additional tailoring and improvement of the offerings - leaving competitors further and further behind. This is the route to maximising CCV, and thereby ROI of CRM projects. BM. How can effective CRM solutions provide companies with a competitive advantage? AH. The goal of CRM solutions is to identify, win, retain and expand customer relationships – in the most profitable way – across the complete spectrum of points of contact with the customer, from sales force to call centre to the Internet. New technological developments are making it possible to deliver CRM effectively across a company’s many channels to market. However, although the CRM technology plays a vital role, it is only an enabler. The

smartest sales system is only as effective as the quality of the salesperson and the set of processes that govern how they operate. Integration of all the company’s CRM elements, along with other aspects of the manufacturing and supply chain, is essential when seeking competitive advantage. Attitudes and procedures in dealing with customers must also be consistent, particularly across channels. If it was up to the CRM systems alone to deliver competitive advantage, it would fade away when all the competitors had implemented the systems.

Adam Hughes is a partner in PA’s Solutions and Infrastructure practice and heads up PA’s IT Gulf operation. He is one of PA’s leading experts in IT development and is a recognised CRM specialist. Hughes focuses on the delivery of enterprise CRM solutions across multiple sectors and technologies. His experience ranges from providing expert client side advice on the selection and implementation of CRM solutions to developing projects both within the public and private sectors.

BM. How do you think companies will change the way they use CRM in the future? AH. The businesses that have experienced disappointing ROI on their implementations need to ensure that their systems are best fit to purpose and that the processes are optimised. After all, CRM is still about product excellence, good communications, helpful staff, good service and all those things that depend on company culture and the ethos of leadership. BM. How do you think CRM technology will evolve in the future? AH. The internet has forever changed the way customers want to be served. Customers want service across a variety of channels and the CRM technology that helps deliver this must be as easy to use as Google. In a discredited CRM market beset with stories of costly failures, new approaches are rising. Framework technology applications (middleware integration products with tools to develop workflows and screens from business processes), combined with best of breed applications, are emerging as a new wave of innovative technology that, when combined with the business imperatives of CRM, offers the best hope yet for delivering CRM technology that adds value. BM. What factors should companies look for when choosing a CRM package? AH. The key to success is to break CRM projects into flexible, manageable chunks and develop a process-led approach. Use of flexible solutions, such as framework technologies, is an emerging and highly successful alternative to implementing complex CRM packages. PA Consulting Group is independent of the major CRM software vendors. As such, our client experience and research indicates that a process-led approach to capturing customer value, independent of software solutions and with uncompromising attention to delivering rapid results, provides the greatest benefit to companies and their customers.

www.busmanagementme.com

PAConsulting.indd 98

15/10/08 15:52:33

PAconsulting.indd 1

7/10/08 14:55:48

Frank Brown:5oct

15/10/08

15:47

Page 100

EXECUTIVE TRAINING

Frank Brown:5oct

15/10/08

15:47

Page 101

Executives from across the Middle East are going back to the classroom to be put through their paces at INSEAD business school’s Middle East campus. INSEAD Dean Frank Brown tells Business Management about the lessons they are learning.

year has passed since the international business school INSEAD opened its first Middle East branch in Abu Dhabi and already it has smashed its own targets by signing up over 500 students so far. INSEAD Dean Frank Brown, who worked at PricewaterhouseCoopers for 26 years before taking on the role, is understandably excited about training the business leaders of the future in one of the world’s fastest growing economies. And he says, one of the main aims the school hopes to achieve through the campus in Abu Dhabi – its third globally – is to encourage an entrepreneurial spirit among the local population. “I think that right now, a lot of the business environment in the Middle East is driven by expatriates. “I think that’s fine but I also think that locals need to play more of a role going forward. So education for all levels of the indigenous citizenry is really what’s important. “I think entrepreneurship is one area that we need to teach. But I also think marketing and finance and the interpersonal side of business are critical needs as well.” He goes on to say that given how fast the economy in the region is growing, there is also a need for a greater focus on planning and strategy. “When you travel in the Middle East and you look at the enormous property development that is taking place, you realise how the planning of organisations and infrastructure and that kind of thing is crucially important.” He acknowledges that achieving these aims and encouraging the local business community to change won’t be easy, particularly in a region with as rich a history as the Middle East, where many businesses have been run by the same families for generations: “In societies that have developed over generations and generations, resistance to change is a big issue,” says Brown. “Entrepreneurship is about innovation but it’s also about being open to change.”

www.busmanagementme.com

101

Frank Brown:5oct

15/10/08

15:47

Page 102

The credit crunch and ensuing turmoil in Western financial markets are undertaking a number of research projects in the region, looking into means it is more important now than ever before to coach business people the key issues affecting the economies of the Middle East. Among the topin how to avoid making bad decisions or investments. Brown says that one ics it will be researching will be alternative energy, sustainable supply of the most important lessons that INSEAD teaches its students is the imchains, health management and women in business. “I’m delighted to say portance of remaining sceptical and not adopting a herd instinct: “I have a the research so far has been very well supported in Abu Dhabi,” says very simple view on this and maybe it’s because I used to be an auditor. But Brown, adding that the school is also involved in ongoing research projects my view is that what people need to do in business is to aimed at strengthening the African economy. “We have make fact-based decisions. Don’t go with the crowd. You’ve an initiative focussing on Africa and helping to not make got to do your homework and rely on facts to make deciAfrica still the forgotten continent. And I think there’s an “You’ve got to do sions as opposed to relying on somebody’s sales pitch.” It interest in that from the Middle East in terms of impacting your homework and was a lack of adequate levels of scepticism that led to the on healthcare and other similar issues in Africa as well.” rely on facts to credit crunch, according to Brown. “If you look at the meltWith regards to the research on women in business, make decisions as down in the dot.com area and you look at the meltdown of Brown says this is a particularly hot topic in the Middle East opposed to relying today, there really is very much a crowd instinct of not thinkgiven the significant gender gap within many regional oron somebody’s ing on one’s own or having the healthy scepticism to make ganisations and the noticeable absence of women from sales pitch” business decisions,” he says. “There is naivety across the many of the GCC’s boardrooms. “First of all women in busiboard. We’ve seen it in London. We’ve seen it on Wall Street ness is an important area of research for us at INSEAD and and I think that’s something we’ve got to make sure doesn’t for the business world in general,” he says. “I talk to so get repeated in the next generation of business.” many business executives that say, they initially bring in a balanced team that But while he is keen for students to learn the art of good decision makis split equally between men and women. But within five years that balance ing, Brown says the school also encourages them to accept and learn from starts to slip away. And by the time you get to management level the balance mistakes along the way. “You’re never going to make 100 percent right degoes from 50/50 to 80/20 or even 90/10. One of the things we’re focussed on cisions, 100 percent of the time,” he explains. “I always tell people that if is why this happens and what you can do to change it. There’s something very three out of four decisions they make turn out to be winners and they recogwrong with that and it goes back to resistance to change and using different nise their mistakes the other 25 percent of the time then they have the poways of rewarding and managing careers.” tential to be great leaders.” As well as teaching future and existing business He goes on to say that the research the company has conducted so far leaders about the art of successful entrepreneurship, INSEAD academics into women in business in the Middle East has been well received in the region. “It has been very much been welcomed in the Middle East. The Middle East in general does not have a very great history in terms of women in the FRANK BROWN’S BIOGRAPHY workplace, Abu Dhabi in particular is very focussed on this.” Frank Brown is the second American Dean since the founding of INSEAD and for the first time in the school’s history, was appointed on the basis of his professional experience rather than his academic credentials. Before joining INSEAD he spent 26 years working at PricewaterhouseCooper in various roles including as leader of the firm’s US$3.5 billion Advisory Services practice. His role also involved developing leadership programmes within the company. Brown is the author of The Global Business Leader: Practical Advice for Success in a Transcultural Marketplace. He is a member of the American Institute of Certified Public Accountants and the New York, New Jersey and Connecticut State Societies of Certified Public Accountants. Brown is also a member of the Bridgepoint Capital Ltd Board, the European Academy of Businesses and the European Executive Council (EEC).

102

www.busmanagementme.com

Frank Brown at the inauguration of INSEAD in Abu Dhabi

NetDimensions.indd 1

7/10/08 14:55:24

Frank Brown:5oct

15/10/08

15:47

Page 104

INSEAD FACT BOX

Brown says students from a wide range of backgrounds have been taking part in coaching at the school including executives from major Middle Eastern organisations. “We’re getting very junior people from companies like Mubadala and others. We’re working with businesses that are indigenous to the region and global companies that have operations there. If you look at some of the regional businesses we’re working with, we’ve had the likes of Qatar Telecom, Aramco and Mubadala.” The school likes to use a novel approach to teaching, including running boot camps for executives to help them brush up on their core skills. Describing one such camp, Brown says: “We do a boot camp for Mubadala’s analysts which has been a lot of fun. We do a bit of ﬁnance, a bit of marketing. You run into people on that programme that are as young as 21 who are very sharp, eager and fun to be around.” It’s no surprise that so many aspiring and current UAE business leaders are keen to sign up to one of the world’s most prestigious business schools. There is a huge demand for skilled business professionals in the country and for those with the right qualifications, the rewards are lucrative. It is against the backdrop of these market conditions that INSEAD has seen demand for its services higher than it ever expected. Describing how the school has signed up over twice the number of students it had aimed for since opening last year, Brown says: “It’s way over our targets. I’m almost embarrassed to say it’s almost two and a half times over what our targets were. And we’re not shy about the way we estimate.

• INSEAD was founded in 1957 • There are INSEAD campuses in Abu Dhabi, Singapore and Fontainebleau in France • INSEAD formed a strategic alliance with the US-based Wharton School in 2001 • Standing and affiliate INSEAD faculties total 138 spread across 32 countries. • There are 512 staff working across INSEAD’s three campuses • INSEAD MBA students currently total 887 – made up of 76 different nationalities • Over 95,000 people from 100 countries and 2000 different companies are taking part in INSEAD’s executive programmes • The school has 54 PhD students from over 21 nationalities • There are over 36,000 INSEAD alumni from 160 countries

Frank Brown:5oct

17/10/08

11:14

Page 104

INSEAD FACT BOX

104

www.busmanagementme.com

Inspiring People. Shaping Success. Successful businesses are shaped by their people. Innovative HR Solutions has been supporting Middle East organisations identify and develop talented employees for the past decade. We support our clients: • Select the right people • Transform teams • Build HR capability

• Grow leaders • Retain talent • Maximise potential Contact us: Innovative HR Solutions +971 4390 2778 info@ihsdubai.com www.ihsdubai.com

InnovativeSOLUTION.indd 1

7/10/08 14:54:20

UKS ED:5oct

15/10/08

15:35

Page 106

EXECUTIVE INTERVIEW

The power of education How e-learning is enriching employee development and boosting business performance.

BM. How can encouraging the education of employees help companies achieve their own goals? FK. To achieve business success, an organisation must ensure that its workforce is productive, efﬁcient, motivated and, above all, well retained. This perspective towards the workplace talent continues to lead organisations into taking a more proactive, dynamic and effective approach towards personnel management with learning and development being a major pillar of such approach. Continued education, when adequately implemented, can ensure that experienced talent is properly transferred through peer to peer mentoring and coaching educational programs and that new talent is effectively motivated by drawing learning paths that simultaneously meet business objectives and personal growth. BM. How can online education institutions ensure that the right dynamic between students and tutors is achieved? FK. When we address learning requirements at the workplace, we take a hybrid approach that blends face-to-face classroom work with online, personalised learning in order to achieve the best of both worlds. With our partners, we make sure we use the most optimal learning technologies to achieve that. Such technologies combine both synchronous tools such as virtual classrooms, chatting and video conferencing and asynchronous tools such as discussions, podcasts, wikis, emails and online simulations. This provides an environment that not only matches face-to-face interaction but, in many cases, even supersedes it. BM. Students can ‘attend’ a course at anytime, from anywhere, and course material is often accessible 24-hours-a-day, seven days a week. How important are these factors? FK. In a typical classroom environment, it is estimated that the retention percentage of any taught material among learners does not ex-

106

www.busmanagementme.com

Fadi Abdul Khalek is the President and CEO of UKS, one of the leading elearning organisations in the Middle East with extended operations in Europe, Asia and North America. Prior to joining UKS, Khalek had more than 12 years’ experience in both academic and corporate education and has been involved in a variety of research, development and implementation of various knowledge based technologies. More recently, he has been spearheading UKS’ efforts in the research and development of innovative and advanced learning technologies that are capable of transforming education into the 21st century and beyond. To contact him please telephone +971 4 3910171 or email fakhalek@uks.ae

ceed, at best, 30 percent. One of the main reasons for this is the relevance of the material for the learner. This necessitates that we develop learning solutions that are able to not only make learning material available to the learner any time, but that are also capable of tailoring the right learning material to the right learner. With online learning environments learners do not only have unlimited accessibility to learning material, but can also have personalised, engaging, interactive and relevant material that they can associate with while still maintaining the collaborative, social and mentored experience of faceto-face learning. BM. How is UKS aiding e-learning across the Middle East? FK. We have successfully managed to overcome many of the misconceptions and inhibitions that were prevailing with regards to the notion of elearning by implementing comprehensive, effective and all encompassing e-learning initiatives. We have always taken a strategic partnership approach with our clients. It is an approach that is mainly vendor agnostic, focusing on how best to achieve the speciﬁc learning objectives of our partners rather than selling

them a long list of products and services. It is an approach that focuses on the learning rather than the ‘e’ using technology as a tool rather than as an objective on its own. In order to make sure that technologically enhanced education continues to achieve its desired objectives, we continue to focus on building the capacity of the tutors. We have developed, jointly with well-recognised academic institutions, some very solid and comprehensive teachers’ education and capacity building programmes that would ensure the overall success of any education enhancement initiative on any level. BM. What do you think the future for the online learning space holds? FK. Pure online learning has had its pitfalls in the past and will continue to lack the necessary momentum both regionally and globally. Our approach has been more focused on hybrid (blended) learning and this is where the majority of the effort will continue to be. It is not about the new technologies developing as much as it is about our ability to cope with such technological developments. Our focus on capacity building, teachers’ education and strategy development will ensure just that.

UKS_SP.indd 1

7/10/08 14:57:03

SEEING IS BELIEVING How to speed up learning using 3-D visual training techniques. isualisation using dynamic 3-D animations and interactive simulators to practise skills is the secret to enhanced and accelerated learning for engineers, technicians and operators. Better training outcomes will be achieved in less time and at a lower cost by using interactive audio visual training and this will result in a rice in profits due to increased productivity, reduced quality failures and reduced safety incidents. To understand how this can be achieved we must start by looking at how we learn. Human beings acquire more new knowledge and skills in the first four years of their life than they do during the rest of their lives. This is before they learn to read. As children our brains are programmed to adapt quickly to our surroundings. How is this accomplished? From our earliest childhood we are mentored by those closest to us to learn from what we see and hear around us. Our mentors also quiz us to see if we understand what we have just been shown. When our mentors are satisfied that we fully understand what we are being taught, we are encouraged to practise the new skills safely under their supervision.

‘seeing, hearing and doing’. Trainee pilots are first taught the theory of aviation audiovisually by instructors. Then their knowledge of the subject matter is checked using evaluations. Finally, when they are deemed to have sufficient knowledge of the subject matter, they are permitted to practice their flying skills in a safe, cost effective environment using interactive simulators. In 1988 our associate company, Carey international, started using interactive simulators in instructor led ‘fast-track’ training for engineers and technicians in the international petroleum industry. At our clients’ request, we further adopted the use of simulators for fast-track training of electricians, mechanics and instrument technicians. Following on from 15 years of success in training engineers, technicians and managers, our company thru-u.com applied the

“Vermont Technical College has certified all of our safety modules and so all courses automatically carry US standards”

Cycle This training method is quick and successful because it encompasses the complete learning cycle: First, knowledge acquisition: The learner is given the information they need to learn audio visually (by seeing and hearing). Second, competence testing: The learner undergoes evaluations to check that they have sufﬁcient command of the subject matter. Third, practice: The new skills are practiced in a safe, controlled environment. Pilots are an example of a profession to avail of this proliﬁc learning mechanism of

108

same philosophy of seeing, hearing and doing when converting our engineering, safety and technical training programmes into online modules. We have patented our dynamic audiovisual, interactive training technology and in so doing, we have delivered the three phase learning cycle online. How do we do this? First, our course content is delivered audio visually using an onscreen mentor and 3-D graphics and animations. Second, the learner’s competence is tested with online evaluations, pro-

Tadhg Carey is CEO of thru-u.com. He started Carey International in 1987, using simulators, for ‘fast-track’ training of engineers and technicians for global markets. Carey developed and delivered the first ever Western Petroleum Engineering Training for the former Soviet Union, scoring a Triple ‘A’ rating in a report by the EU. Thru-u.com holds patents on its revolutionary technology.

viding a record of each learner’s performance. Third, each course has an online interactive simulator, like a computer game, where the learner can practise their new skills. This allows them practise and the opportunity to make mistakes, learn from them and continue to perfect their skills in the safe and cost effective environment of a simulator.

Certified Vermont Technical College has certiﬁed all of our safety modules and so all courses automatically carry US standards – a major advantage for the petroleum and manufacturing industries. We are converting Vermont Technical College’s electrical and plumbing apprenticeship programmes into online courses using our audiovisual animations and interactive simulators. This is only the beginning, in addition to our safety, petroleum, electrical and mechanical training, we will continue to add accredited apprenticeships to our online portfolio. This is real interactive safety, engineering and vocational training, available worldwide online 24/7.

www.busmanagementme.com

Thru-u Ed P108.indd 108

16/10/08 08:55:03

Thru1.indd 109

17/10/08 15:54:50

SKILL FOCUS:5oct

15/10/08

15:54

Page 110

HUMAN RESOURCES

FIGHT THE TALENT WAR Large-scale oil and gas projects require skilled workforces but, sadly, a dearth of experienced engineers – both upstream and downstream – is hampering the energy companies’ efforts. Bahrain Petroleum Company (Bapco) CEO Abdulkarim Al-Sayed says the Middle East needs to tackle the problem head-on or face falling behind the rest of the world.

he oil industry in the Middle East is witnessing an unprecedented boom. Driven by a mix of rising international oil demand and geopolitical uncertainties about supplies, crude prices and reﬁning margins have surged in the past four years, providing abundant liquidity to government and oil companies alike. This liquidity and positive outlook on world oil demand has triggered a wave of new investments aimed at boosting oil production and producing higher value products that can also meet the more stringent environmental speciﬁcations. The petrodollar was also aimed at new projects to enhance the countries’ infrastructure that previously suffered from the long recessions of the 1980s and the 1990s. To draw a scale, the total value of active and planned projects in the Gulf region was estimated at over US$1.8 trillion for the period 2006 to 2012. The value of projects at Saudi Aramco alone, the world’s largest oil exporter and reserves holder, was estimated at around US$500 billion. The value of projects at Saudi Aramco was estimated at US$70 billion in 2007, requiring a workforce of about 23,000 engineers in 2007. In an ideal world, the government agencies responsible for development industries should be able to invest time and money in training an army of local engineers and other professionals. But this is far from an ideal world. Training engineers and professionals for example takes time, and with the US$1.8 trillion-

110

www.busmanagementme.com

SKILL FOCUS:5oct

15/10/08

15:51

Page 111

worth of projects planned or under way in the Gulf region alone, time is the one asset that the region’s clients and contractors do not have. So, the only immediate solution is to look overseas, to Europe, the US and Asia. But those regions are also facing an engineering and skilled workforce capacity crunch. Coupled with the still common misperception outside the region, that the Middle East is a dangerous place to work, it is somewhat difficult to attract foreign professionals to the region. The inevitable result is that employers in the region are going to have to pay inflated prices to attract the necessary resources, driving up the cost of projects and further restricting the development of indigenous talent.

A global problem

The present shortage of skilled manpower for the oil and gas sector is felt equally by the IOCs (international oil companies) and NOCs (national oil companies). They were all unprepared for the over US$100 per barrel crude price which brought about this flurry of major investment projects requiring professional manpower. In the West, for almost two decades now, engineering colleges and universities have suffered from a lack of interest on the part of indigenous school leavers in joining these institutions. Many engineering departments faced closure due to this – they only survived by throwing open their doors to foreign students (mainly from the Asian sub-continent). “A major US oil company The present shortage of qualified manpower is not has declared that all their The cause the result of any normal supply-demand internal adTo learn from the past, the present crisis goes current projects will build-in justment between various branches of science and enback to the oil price collapse in the early 1980s a manpower cost escalation gineering. The cut in the supply side is far deeper and through the 1990s when the oil process indus- of 20-30 percent per annum is the result of no new candidates entering for a long tries experienced a tidal wave of re-engineering period of time. The demand, on the other hand, has into cater for the higher and down-sizing in an effort to mitigate the tide creased tremendously over the past two years. A major wages that will have to be US oil company has declared that all their current proof rising costs. Tens and possibly hundreds of given to engineers and thousands of engineers were laid off worldwide. jects will build-in a manpower cost escalation of 20-30 Recruitment in the global oil industry slowed and percent per annum to cater for the higher wages that technical staff” students, turned off by the bleak job outlook in will have to be given to engineers and technical staff in the sector, opted for other disciplines. Training and development prothe years to come. In some cases the situation is rather comical when the grammes targeted at the indigenous workforce suffered. All of this caught client company, the EPC contractor, and the technology licensee all try to us unguarded against the current surge. lure away each other’s staff working on the same project. One of the most worrying aspects of the current skills shortage in the The skilled manpower crunch in the oil and gas sector this time is not region is the likelihood that the response to the problem will repeat the a short-term phenomenon. The supply-side might be able to mount a conmistakes of the past, which led to the crisis in the first place. With the certed effort and we could see some improvement in the situation in about Asian regions, traditionally suppliers of the needed resources, also facfive years time. The NOCs in the Middle East employ Western expatriates ing shortages, we need to give a more serious long term look at dependand Eastern expatriates in their organisations. ing on our own indigenous talents. At Bapco, we felt the pinch in many ways. We have lost over 30 THE WESTERN DRAW Western employees through resignation since January 2006. From a situation where the Eastern employee turnover rate was traditionally very Sayed Abdulkarim Al-Sayed says there are several reasons why low, Bapco has lost over 40 such employees through resignation since it is difficult to attract and retain qualified and experienced January 2006, mostly engaged in critical jobs. It has become increasWestern expatriates: ingly difficult to attract and retain expatriate design engineers, geo-scientists, production, drilling, and refinery process specialists. India, Demand in home countries has increased tremendously. which was Bapco’s most effective source of such recruits for professional jobs, is now in similar need of engineers and skilled manpower The IOCs have launched a recruitment blitz that has to meet its ambitious industry development needs. sucked up the supply pool. A “Quick Hit” committee consisting of all the senior management members was immediately put in place to address short- and long-term solutions. The committee introduced a number of measures to address Demand by the non-oil sector has mushroomed. difficulties in attracting and retaining both Bahraini and expatriate – workforces in the face of rising expectations. Bapco however, successThe perception about the security situation in NOC counfully completed a number of projects on its strategic investment protries has worsened. gramme. The Low Sulphur Diesel Production (LSDP), at a cost of US$725 million, is one of the most complex projects undertaken in the history of Spouses have become more demanding; many of them are Bapco and it was successfully commissioned in 2007. The project used professionals in their own right and wish to pursue camany innovative ways to alleviate risks through sharing manpower reers. This facility is often not available in NOC countries. shortage problems with the E, P & C contractor by selecting a fitting contracting strategy.

www.busmanagementme.com

111

SKILL FOCUS:5oct

15/10/08

15:51

Western expatriates

Page 112

other items such as fringe benefits, living conditions and other social acFor most of the NOC’s in the Middle East, the English-language trained tivities should also be stressed or considered. pool of expatriates is the only one that presents workable options. Even in the The NOCs, especially those in the GCC countries, must launch serious face of dwindling supplies, the Western expatriate can provide good value for awareness campaigns aimed at the headhunters and the potential Western money. In addition to a tremendous rise in demand in their home countries, expatriates to highlight the fact that many places in this part of the world, for the demand for Western expatriates has also example Dubai and Bahrain, are fast becoming betgrown from some new and unexpected regions: ter options to live from the standpoint of a Western Russia, oil-rich former Russian states, China, life style (climate, housing, standard of living, Africa, Pacific Rim, and even India. This factor, amenities, entertainment, sports, schooling, doalong with some real and imaginary personal semestic help and servants, low crime rate…). curity concerns, has made it difficult for NOCs’ HR Construction of luxury villas and plush apartment departments to attract the requisite number of complexes is at its peak. These are aimed at not Western expatriates (who have the technical/ only the currently working high-income professionmanagerial skills to deliver value for money). als, but also to lure rich expatriate retirees to make As far as pay packages are concerned, there a home-away-from-home in this part of the world have been many salary surveys conducted by professional institutions and several other non-govEastern expatriates ernment organisations from time to time; a well India is the primary country that currently has qualified (PhD level) geologist with good working a pool of English-speaking technical and managerexperience earns considerably more than what the ial professionals that is large enough to supply the NOCs are currently prepared to pay. immediate need of the NOCs. It would take Poland “An experienced engineer in The first factor to grab their attention is an and the Czech Republic at least 10 years to introNorth America will earn a attractive salary. Like it or not, the whole Middle duce English into their technical and engineering East is seen as a dangerous place from the North colleges to the extent that they would have surplus yearly base salary of American perspective. If they do not see a sigmanpower in this category to meet the needs of US$80,000 – US$100,000. Why nificant financial benefit to working in what they NOCs (currently the trend is migration to the UK). would they leave the relative perceive as a risky area, there will be little interBut this pool of technical and engineering mansafety and comfort of North est. We can assume that a 10-15 year experipower resources (like India) is also drying up rapidAmerica to move to the NOCs enced engineer in the oil industry in North ly. The oil and gas sector in India is giving serious America will earn a yearly base salary of consideration to the problem created for them by and earn less?” US$80,000 – US$100,000. From this perspecthe sudden, en masse flight of their experienced tive, why would they leave the relative safety and personnel to pastures greener. In the recent past comfort of North America to move to the NOCs and earn less? On top of the the eastern expatriates started moving within Middle East due to considerable base salary that they can earn in North America they would probably be difference in the pay packets offered. The NOCs need to implement some kind looking at a premium of 30-40 percent to be an expatriate in this part of the of a ‘no poaching’ code of conduct to prevent the luring away of each other’s world. Once you have their attention with an attractive salary offer, then the expatriate staff.

112

www.busmanagementme.com

ORCworldwide.indd 1

7/10/08 14:55:36

HR ACCESS:5oct

15/10/08

15:44

Page 114

EXECUTIVE INSIGHT

THAT HUMAN TOUCH Once seen as a back-office function, HR has burst forth into a key business driver that can deliver real benefits. Saïd Aïdi believes investment in employees can make a real difference to a company’s performance. BM. Why has HR become such an important function for organisations today? SA. Organisations have noticed that investing in materials is not the only route to competitive advantage in today’s business environment. The people who are in charge of those materials need to be trained, have a competitive salary but and have certain expectations of their company. Moreover, we are talking now of a job market. That means that we also have an investment in the employee. People are more ﬂexible now in our worldwide business market and have no hesitation in seeking what they expect: career and evolution, salary perspective and training to increase their skills. Organisations now consider HR as a critical function, thanks to the employees, and that people are more added value they can offer to their customer.

BM. What are the benefits for organisations that choose to outsource this critical function of the business? SA. Outsourcing HR may involve all domains: payroll, recruitment, training, compensation and career development. Making the outsourcing decision is usually guided by two goals – saving costs by outsourcing the majority of low-level tasks and gaining expertise for some tasks that HR can’t handle. The first choice is usually made in a global company strategy: outsourcing database administration, printing payslips, distributing payslips, managing payroll programmes and maintenance (even legal), recording applicants’ resumes, printing applicants’ letters and so on. The second choice is made when HR wants to be able to really focus on strategy and services delivered to its employBM.How can good HR practices deliver a competitive ees. Outsourcing becomes a way to deliver those advantage? services. The efforts are focused on talent manSaïd Aïdi is Managing Director for HR SA. In order to deliver good HR practices, the organiagement, training path proposals, assessment of Access Solutions Tunisia, tasked with sation has to understand what its employees’ expecspecific profiles and so on. managing the company’s roll-out in the tations are. On the one hand, common language like Middle East and Africa and with building up retention, motivation and giving visibility of the future BM. How are your services and tools helping ora large and strong added-value team in are normally used to implement HR practices. But it ganisations with their HR needs? Tunisia to support the global development also concerns the way a manager manages, the serSA. HR Access is a complete HR solutions tool that and the services activities of HR Access. vices offered, and the benefits proposed that make gives an HR team the ability to help deliver more Aïdi joined the business in 2006 after his people stay in the organisations and be confident in services and advice than just purely administrative own company, ATLASYS, was acquired by it. Evolution is also critical; an organisation can include tasks. Our new release, HRa Suite 7, is a full web HR Access Solutions. long-term career perspectives for their employees. For solution delivering all services HR may expect from example, internal mobility is another way to ‘keep’ a Human Resource Information System (HRIS): people in the organisation and capitalise on their skills and knowledge. The comguided processes based on HR best practices, document management system, petitive advantage can be better quality products and/or better services. But HR information space, key performance indicators, HR process tracking tools those goals can only be achieved if the employee is committed to them. and also personnel administration and payroll, recruitment, training, career management, compensation and benefits, time and attendance, expatriate assignment management, risk management, HR warehouse and more. Thanks to its architecture, HRa Suite 7 is able to communicate with every other information system in the market. Our customers choose HR Access for its leadership in HRIS, our HR services offering and our excellent customer references. The investment decision is usually driven by a reduction of low added-value tasks and a strengthening in delivery of talent management advice such as individual training path, compensation and benefits programmes. We also deliver business consulting advice on organisation, training, skills assessment plus specific advice on how to manage change in HR services. HR Access Solutions also provides outsourcing services and now owns a dedicated outsourcing platform: HR Access ESP. In addition to HRa Suite 7, the platform delivers a range of tools and ‘best practice’ processes that enhance the value and efficiency of each customer’s outsourcing solution. For more information please visit www.hraccess.com.

HRAccess.indd 1

7/10/08 14:53:24

Leisurecorp ED:5oct

15/10/08

15:49

LEISURE

Page 116

Leisurecorp ED:5oct

15/10/08

15:49

Page 117

Golf and real estate have proved a lucrative combination for Leisurecorp, which is developing a multi million dollar residential golfing community in Dubai. Diana Milne meets the company’s CEO for golf, David Spencer to find out why all homes on the Jumeirah Golf Estates have sold out.

ITH demand for golf facilities soaring in the Middle East and the likes of Greg Norman and Sergio Garcia designing its courses, Leisurecorp is on a winning streak. So much so in fact that earlier this year the company achieved the ultimate coup when it acquired the historic Turnberry golf course and resort in Scotland, one of the world’s leading golﬁng destinations and host to the 2009 Open Championship. That’s a pretty impressive achievement for a company that was set up just two years ago. Part of Dubai World, Leisurecorp is regarded as a serious player in the world golf tourism market which is estimated to be worth US$17.5billion. As well as acquiring Turnberry it also owns South Africa’s prestigious Pearl Valley Golf Estates and is months away from the completion of the Jumeirah Golf Estates development, which includes luxury residential properties and courses in four different neighbourhoods: Fire and Earth designed by Greg Norman, Water by Vijay Singh and Wind by Sergio Garcia, Pete Dye and Greg Norman. Describing the demand for golf facilities in the Middle East, Leisurecorp’s CEO for golf, David Spencer, says: “What we have in Dubai is a situation where the demand for golf far outstrips the supply. “We do not have enough golf courses to fulﬁl the current demand let alone the future demand.” Furthermore, he says, demand for golf-related real estate is even greater, meaning that the luxury properties on the Jumeirah Golf Estates have sold out before the development has even been completed.

www.busmanagementme.com

117

Leisurecorp ED:5oct

15/10/08

15:49

Page 118

Clockwise: An artist’s impression of the Jumeirah Golf Estates Fire Villas; Pearl Valley Golf Estates; David Spencer with Leisurecorp’s Group CEO, Alan Rogers.

“The demand for golf property, particularly quality golf real estate, is intense,” says Spencer. “If you took a one million dollar house in a non golf development you could probably get 1.2 to 1.3 million dollars for the same house in a gated residential golf community. In the Middle East region though, I think the premiums are ranging from between 30% and 50%.” But Spencer says that it is not just golf enthusiasts that are willing to pay a premium to live alongside the fairway. Around 70% of those that buy properties in gated residential golf communities do not in fact play golf, according to Spencer. “Only 30% of the buyers play golf,” he says. “But these sorts of developments provide a very nice lifestyle. Obviously I’m biased when I speak about the development I’m involved in. But with

118

www.busmanagementme.com

the green spaces, parks, indigenous ﬂora and fauna and the birdlife, it’s a very pleasant place to live in and these developments are very sustainable from an environmental point of view.” Spencer admits that building golf communities in the Dubai desert poses unique challenges because of the region’s climatic conditions. “Building golf courses in this region is actually quite expensive and that is because of the amount of water required to keep those golf courses in pristine condition,” explains Spencer. “It’s about having to get the right amount of water in what we call a watering window. So we have to put out, say, 7mm of water over 130 plus acres of green space in a four-hour watering window.” Leisurecorp has counterbalanced these costs and boosted the ROI of the Jumeirah Golf Estates development by including prime real estate properties in themed neighbourhoods. Fire is built with a Tuscan Italian theme, Earth in a European and North American parkland style, Water in the style of the Paciﬁc Islands, Florida with a waterfall centrepiece and Wind, which

Leisurecorp ED:5oct

17/10/08

14:08

Page 119

follows the course of the Arabian Canal: “What’s ing possible other acquisitions and that there are several potential new happened here is that we’ve used golf courses to purchases in the pipeline. “Part of our business plan is acquisitions. We help us in assisting to drive real estate sales and are absolutely looking at a lot of different properties. We’re not particthat has worked very well,” says Spencer. ularly close to announcing any. But we are 50% down the track of due While acknowledging the appeal of diligence with a lot of acquisitions.” Leisurecorp’s developments to the non-golfer, His words follow the announcement at the start of this year by Spencer is keen to emphasise how serious the Leisurecorp’s Group Chief Executive Alan Rogers that the company plans to company is about the game, particularly when it broaden its portfolio over the next two years. Speaking at the time of the ancomes to holding international tournaments. On its nouncement in January, Rogers said: “Over the next two years, we will congolfing calendar the company will be hosting the Dubai World Championship at the Jumeirah Golf Estates, the South African Open Championship at the Pearl Valley Golf Estates and now the 2009 Open Championship at Turnberry. Having its name associated with such major events will make Leisurecorp a major player in the global golfing world, according to Spencer: “I think the fact that Leisurecorp was able to acquire the Turnberry project was absolutely mindblowing. It’s one of the greatest venues in the world and it helps us to create this unusual trilogy where we have the world’s oldest golf tournament being played at Turnberry in 2009, the second oldest golf tournament in the world at Pearl Valley Golf Estates and the newest, Dubai World Championship, being played at the Jumeirah Golf Estates.” Spencer goes on to say that he believes further international golf events will eventually take place in other parts of the Middle East, where the sport is growing in popularity: “There are plenty of events for our company to handle. But I think the focus on golf in Europe, the Middle and Africa is firmly on the Middle East. I wouldn’t be surprised if a tour event came to Bahrain, Morocco or Oman because there is room for growth in the region.æ The golfing champions Leisurecorp has enlisted to design courses have added considerable kudos to the Jumeirah Golf Estates development leading to increased interest from buyers.“The fact that you can buy a house and have someone like Greg Norman landscape your backyard has been very well accepted by the real estate buying public in this region,” says Spencer. But he adds that the company must now work to attract the world’s most up and coming players in order to appeal to a younger generation of potential buyers. “There are some fantastic new names in golf such as young fellows like Justin Rose. That’s great because golf to a certain degree has been fuelled by baby boomers and the baby boomer generation when it comes to golf hasn’t really moved on and it’s become a bit vanilla. To make our industry relevant to the next generations we need vibrancy, colour and we certainly Sergio Garcia who helped have that coming through.” to design the Jumeirah As well as signing partnerships with coming golf Golf Estates stars of the future, Spencer says the company is eye-

Leisurecorp ED:5oct

15/10/08

15:49

Page 120

David Spencer with Greg Norman

ABOUT DAVID SPENCER David Spencer joined Dubai World in September 2004 to spearhead its foray into the golf development business through Istithmar Leisure, which has now become Leisurecorp. David has a wealth of experience in golf course development and management, in Australia and the Middle East. His achievements in Australia include The Grand Golf Club; Pelican Waters; The Glades, Brookwater; The Vintage; and The Golf Club at Kennedy Bay – and all of the Australian developments in which he was involved are now rated in Golf Digest’s Top 50 courses in the country. Spencer was also a Director of Troon Golf in Australia. In Dubai, David was an integral part of the development of The Montgomerie course at Emirates Hills and The Desert Course at Arabian Ranches, before joining Leisurecorp to set up Jumeirah Golf Estates. David’s knowledge and influence in the world of golf helped to secure the partnership between Leisurecorp and The European Tour in November 2007. This deal resulted in the Dubai World Championship, the world’s richest golf tournament; the new European Tour international headquarters to be built at Jumeirah Golf Estates; and the re-naming of the European Tour Order of Merit to The Race To Dubai.

120

www.busmanagementme.com

solidate and develop existing investments – and look to broaden and deepen our portfolio into other leisure-related business sectors. You will see further investments in golf, which is the powerhouse sector within the leisure industry, but you will also see us reaching into other target sectors.” But while Leisurecorp is continuing its expansion, Spencer says he is well aware of the potential impact of the turmoil in Western ﬁnancial markets on the leisure industry in particular. “I think anyone who is not aware and somewhat concerned about what’s going on in the world at the moment would be a very cool customer. What one has to do at times like this is go back to your business plan, always review your business plan and make sure it has enough elasticity in it to go through strong times and weaker times. We have a very strong business plan that we work to. We review that business plan when things are going great. And we also review that business plan when various things happen.” As well as its golf estates, Leisurecorp has stakes in several major businesses, including: Island Global Yachting, a manager and owner of luxury marinas; Troon Golf, the world’s leading luxury brand golf management company; GPS Industries, a provider of WiFi enabled GPS systems for golf communities; and Snowmass Colorado, a 2.8million square foot redevelopment of one of North America’s premier ski resorts. But with the company’s CEO Alan Rogers having described golf as the “powerhouse” sector of the leisure industry, Spencer is at the forefront of driving the company’s most lucrative business forward and ensuring that it both serves and fuels demand in the Middle East.

PAconsulting.indd 1

7/10/08 14:55:48

MEBAA 2:5oct

15/10/08

15:48

Page 122

EXECUTIVE TRAVEL

Private jets are soaring in popularity in the Middle East as executives and the wealthy ditch commercial carriers in favour of the ultimate in luxury air travel. Ammar Balkar, co-founder and CEO of the Middle East Business Aviation Association (MEBAA) believes the industry is on course to reach even greater heights. BM. How did MEBAA come into existence and what is its mission? AB. MEBAA was established in June 2006. During my time with Royal Jet as VP of Sales and Marketing during 2005, we decided to check the market and organise a conference to handle this industry in particular – not the major airlines or national carriers. We wanted to see how feasible the project was so needed to get some data from the market. However, it was very difficult to get some data on the industry, the types of aircraft flying, operators, handling agents, airports available and so on. Overall, it was very hard to get information. It a very successful conference (held at the Dubai Air Show) and afterwards we announced the formation of MEBAA. The response was great and companies, operators and manufacturers were very enthusiastic about setting up something that would handle their issues, their concerns and promote this industry. And hence, 16 founding members – probably the biggest names in the industry –

established MEBAA. Today, this figure has grown to 95 members. The whole purpose is to have one single platform that can communicate the concerns and the needs of the operators to the authorities, to the regulatory bodies and governments, as well as promote the industry to the media. BM. You spent your whole career working in aviation in the region. How have you seen private aviation rise in prominence and what do you think is driving this growth in the Middle East? AB. The growth has been tremendous because the region was a virgin territory for the industry. Between 1975 and 1999 there was only one operator covering the whole region. From 1999 onwards there has been 22 new operators in the region so this gives you an indication of the growth. Also, back in the 1970s there were probably one or two handling agents. Today, there are more than 20. The reason why is because back

ARRIVING in style 122

www.busmanagementme.com

Visajet.indd 123

9/10/08 09:44:12

MEBAA 2:5oct

15/10/08

15:48

Page 124

in the 1970s there was no need for people to move around as quickly cancel the flight because of an extra US$1000 when he’s already as possible. Time wasn’t really an important issue because everyone paying US$40,000. It definitely affects those flying on a commercial was in less of a hurry. airline where previously you had to pay US$1000 and now it’s Privacy and confidentiality were not really of concern to the high US$1300. I cannot say that crude prices have affected the demand net worth individual or the businessmen either. for business jets. However, around the late 1990s we saw the economic development of the region and multinational companies moving in and setBM. How seriously does MEBAA take the issue of security? ting up regional offices here. Suddenly business people realised they AB. Of course, it is one of our major issues. The members get together needed to fly quickly to places like Bahrain or Qatar in meetings and discuss safety issues. We also pass and come back on the same day because they had our concerns to civil aviation authorities and vice other meetings to attend. Of course, the petrodollars versa. It is one of, and probably the most important ashave meant that governments can spend a great deal pect, of the business as far as MEBAA is concerned. of MEBAA on infrastructures and safety and security in the region. passengers are I would say that it is a combination of factors that has BM. For those considering using a business jet, what business travellers led to the growth of the industry. benefits would you say it offers customers compared to flying with a commercial airline? BM. What effect did 9/11 have on business? AB. When flying on a private jet you can arrive 10 minAB. The events of 9/11 actually increased the demand utes before departure. You don’t have to be at the airon business jets worldwide by almost 40 percent due to port 90 minutes or two hours beforehand. It’s just 10 the safety issues. These are international figures, not or 15 minutes maximum and you are on board an airMEBAA’s own statistics. craft that gives you privacy and confidentiality. You can also conduct several meetings in two or three countries all in the same day. You BM. What obstacles has MEBAA had to overcome since its concepcan have your own guests on board and it’s your flight. You decide tion? when; you decide how long; you decide your destination; you decide AB. We have not really had that many problems because the Dubai on the catering; you decide on the entertainment on board – the government helped us in setting up a non-profit association. In the videos, the DVDs, the magazines on board. And, as I said, time is very past 18 months MEBAA has come along very quickly. We became memimportant and that’s why 90 percent of our flights are for business bers of IBAC, the International Business Aviation Council, which holds purposes. It is becoming a more affordable form of transport, rather 13 associations worldwide. All of the associathan a luxury. tions come together to discuss their needs, concerns and challenges. Ammar Balkar has spent his entire BM. How big can the business jet industry get It’s also worth mentioning the advanworking career in aviation throughin the next few years and how much will the tages of becoming a MEBAA member. It is out the Middle East. Starting with market be worth? not only an umbrella organisation where all Royal Jordanian Airlines, he has a AB. The 2005 figures show US$500 million these members come together to address wide range of experience in comworth of business sold. Our estimates state concerns and issues, but it also communimercial airlines, corporate jets and that there will a 20 percent yearly increase so cates with the civil aviation authorities in helicopters. This experience inby 2010 or 2012 we are targeting a US$1 billion the region about our concerns, our needs cludes assisting in the formation of worth of private jet business being sold. and about any issues with any of our mema number of business jet start up bers. MEBAA also has purchasing power for companies, the most recent being BM. And do you have any targets or goals for bulk fuel or insurance, which cuts tremenAbu Dhabi’s Royal Jet where he MEBAA over the next 12 to 18 months? dously the costs for operators and service was Vice President, Sales and AB. We need to promote MEBAA as much as providers. Also, MEBAA shows the authoriMarketing and sat on the executive possible. We need to increase the number of ties the importance of a private jet cusmanagement board. members because the more members you tomer because they are more likely to invest have, the more power this gives you to push in a country. for certain rules or regulations. MEBAA also held its first show in 2007, which was very successful because it was BM. You mentioned about buying fuel in bulk. How did the rise in about promoting this industry. This year we have tripled the size of the crude oil prices this summer affect members? MEBAA 2008 show – an important event worldwide with 150 compaAB. It has been very minimal actually. If you tell a businessman or a nies participating and almost 60 aircraft on static demo. This shows customer that instead of paying US$40,000 a flight it has to be the demand for this type of industry and I believe that we are on track US$41,000 or US$41,500 the impact is really minimal. He will not to hit our targets.

90%

www.busmanagementme.com

124

MTB MAG AD:Layout 1 15/10/2008 16:35 Page 125

Dedicated To Finance

20,000 Challenges. One Industry. 20,000 Executives. One Community. MeettheBoss.com membership reads like a financial services industry who’s who. CEOs, CIOs and other senior executives from the leading institutions are just two clicks away. But there’s more. Weekly interviews with industry leaders are webcast on the site’s dedicated channel. These are combined with live, moderated discussion groups, video conferencing, IM and secure e-mail in one easy-to-use app that’s dedicated to financial services.

New York 8:50 a.m.

London 1:50 p.m.

Dubai 4:50 p.m.

Tokyo 9:50 p.m.

John is upgrading some core banking functions. He wants to know how to ensure a smooth transition, so he calls…

Paul, who has seen the benefits of an upgrade and is now sharing project management tips with…

Georgina, the turnaround expert who’s moving on to a new project in Japan, where…

Ringo has the local knowledge. But he’s also planning for tomorrow, and that’s all about core banking…

If your network isn’t focused on your business, change it. Join now: www.meettheboss.com MeettheBoss.com is simple, intuitive, unintrusive and secure. It’s also free to use. Membership restrictions apply.

JUMEIRAH ed:5oct

15/10/08

15:45

Page 126

HOSPITALITY

luxury The hospitality industry in the Middle East is thriving – none more so than in Dubai where Jumeirah is the homegrown king of luxury resorts. Bold and extravagant expansion plans are in the pipeline for this precocious group as it matures into a truly global brand, as Marco Nijhof, SVP for the Middle East, Africa and South Asia tells Julian Rogers.

or a man charged with overseeing the smooth running of some of the world’s most extravagant hotels, Marco Nijhof is in a jovial and relaxed mode when we meet in the lobby of the Burj Al Arab hotel. His diary is chocker block full of meetings and people to see, but as we sit down for his first meeting of the day, he’s still smiling. “It’s certainly given me some more grey hairs,” he jokes. This is an exciting period for the 48-year-old Dutchman as the group’s wealthy backers forge ahead with

126

www.busmanagementme.com

JUMEIRAH ed:5oct

15/10/08

15:45

Page 127

their grand vision to increase Jumeirah’s stable of luxury resorts across the Middle East to 23 by 2011 (60 in total worldwide by 2012). Jumeirah currently manages 11 hotels, including eight in Dubai. “This is a major goal when you consider that we only had a handful of hotels a few years ago,” Nijhof enthuses. In fact, he says the group would like one day to have a presence in all countries throughout the Middle East. Marco Nijhof “The growth that we are seeing in the Middle East is fantastic but the potential is enormous and we are growing in Asia, Europe and the Americas. It’s a great situation to be in.” Although the hotel chain only opened its first hotel in 1997, the group has since burst forth as one of the world’s most recognised Arab brands. And with hotels in London and New York, as well as properties earmarked for China, Bermuda and Europe, Jumeirah is muscling in on the turf of global five-star players like the Ritz Carlton and the Four Seasons chains.

Home champion However, it’s in Dubai – the birthplace of Jumeirah’s first hotel (Dubai’s Jumeirah Beach Hotel) – that the business is most recognised for its stylish and iconic hotels; none more so than the 321-metre high all-suite Burj Al Arab. This unique hotel is synonymous with sumptuous surroundings and first class service and facilities, says Nijhof, who has worked at A significant number of the customers arriving by helicopter, as some of the world’s finest hotels and resorts during his career. “When well by slightly less glamorous means, are on business or holiday from you have a hotel of this nature and calibre, everything revolves Europe, Russia and Asia, while Americans are increasingly making the around the attention to detail and the focus on your long-haul trip to bask in the year-round sunshine. And, customers.” He says the sheer number of staff make a of course, the Burj Al Arab attracts its fair share of crucial difference. “We have around eight staff per Middle Eastern guests. This is also the case for suite in the Burj Al Arab, which is unheard of. In Europe Jumeirah’s other hotels. “We have a fantastic customer of Jumeirah’s it might be 0.7 per room. So I would say that this hotel base that comes from a truly international market.” guests come from is made very special because of the people who work Nijhof comments. “What they expect is great service, a Europe, the US and great product and friendly people and this is what we there. And, of course, we spend an extraordinary the Middle East amount of time and effort training our employees.” are able to provide our guests.” The extravagant hotel is known the world over for Nijhof says rapidly growing airlines like Emirates its distinctive sail-shaped design, opulent interior and and Etihad Airways help to raise the profile of Dubai, as first-class restaurants. The Burj Al Arab also whisks you well offering excellent service levels. New routes are to and from the airport in a chauffeur-driven Rolls bringing increasing numbers of visitors to the emirate Royce. And as Nijhof remarks, not many hotels in the to sample what it has to offer. The experience is what world have a helipad on the roof for the ultimate in luxury transfers. brings guests back, says Nijhof passionately. “We have guests staying He says it sees no shortage of demand. “I was in the swimming pool at the Jumeirah Emirates Towers Hotel (located in the heart of Dubai’s with my children the other day when we spotted one helicopter landcommercial district) who have come for the 48th time. It’s the same at ing and two in the air waiting to land but unfortunately I didn’t have Jumeirah Beach Hotel. The repeat booking rate there is very high too – my camera. That was an unbelievable sight.” we find that people come to stay for Christmas and immediately book

75%

www.busmanagementme.com

127

JUMEIRAH ed:5oct

15/10/08

15:45

Page 128

Left to right – images from Jumeirah’s luxury hotel portfolio

for Easter. You can only achieve this if you have good products and fantastic service. This is where we can make a difference.”

ferent products – not only from a tourist point of view but also in terms of investment opportunities. “Whether it is Education City, Media City, Healthcare City or Internet City, there are so many iniAmbitious goals tiatives that are taking place in order to bring new customers. That Jumeirah’s vision to turn the group into a recogwon’t stop; Dubai will keep developing different nised global brand relects the Dubai government’s de- “In Dubai I believe there are things which are essential to the growth of the 50,000 new residents termination to transform the emirate into a premier emirate.” Nijhof describes the government’s suparriving per month – an tourist and business destination. The developments port of new projects and initiatives as “exemunbelievable statistic. And plary” and says that it is keen to see new that currently exist (as well as those on the drawing Dubai as a destination board) are mind blowing. This creates a great opporbusinesses being set up and allowed to develop. keeps coming up with new tunity for Jumeirah and Dubai as a whole. “We truly However, Dubai’s drive for greatness will create attractions and believe that the vision that the government has put competition for Jumeirah. Just look at the stunning developments with its out Atlantis resort and flagship development on The forward is working,” Nijhof muses. “The Middle East of the box thinking” is where most aeroplanes are sold today. The Middle Palm, Jumeirah: it is up there with the world’s very East is where most hotels are being developed today. best hotels but Nijhof is unperturbed about it afIn Dubai I believe there are 50,000 new residents arriving per month fecting business. “When the Atlantis opens what will it do? It will bring – an unbelievable statistic. And Dubai as a destination keeps coming more visitors to Dubai. It won’t take business away from us because up with new attractions and developments with its out of the box it is actually catering for a new market within Dubai.” thinking.” He adds that the vision is all about creating new and difAnother potential threat to bookings is the knock-on effect of

128

www.busmanagementme.com

JUMEIRAH ed:5oct

15/10/08

15:46

Page 129

the credit crunch and economic slowdown that is gripping the US and Europe. On the face of it the hospitality industry in the Middle East, appears unaffected but is Nijhof panicking? “There may be an economic recession or downturn in Europe and the US but look at the Middle East: nothing whatsoever is happening in terms of recession.” So is Nijhof ignoring the economic worries elsewhere and the potential impact? “No. I would be a silly businessman if I did. We are keeping a very close track of it but we are still experiencing double-digit growth figures over last year,” he acknowledges proudly. “I am not as pessimistic as the Western world.”

Vision This optimism is reflected in the group’s impressive plans to fatten its global portfolio over the next few years, For instance, it plans to open its first resort and spa in Europe’s Port Soller while a third London hotel on the banks of River Thames is on the cards. Plans are also afoot for resorts in Thailand, the Maldives, Mexico, the US and the Caribbean. Asia too is looking to be hot growth area (the group’s first hotel in China will be opened soon) while future projects will in-

clude mixed residential developments under the Jumeirah Living brand. It’s reported that staff numbers will mushroom from 11,000 to around 55,000 to cope with the expansion effort. “We are very ambitious with our goals because we are not purely a Middle Eastern company,” Nijhof remarks. Nijhof says he believes Jumeirah is playing a major role in raising Dubai’s profile as a global tourism destination: “It’s about keeping Dubai up there with London, Paris, Singapore and so on. And it’s working because we still see very good growth levels this year compared to 12 months ago.” He adds: “The economic force of Dubai is very important for the well being of the country.” As our interview draws to close, I am keen to discover what gives this hotel boss the most satisfaction from his role. After all, there are worse hotel chains to be in charge of. A smile develops. “I love to spend time with managers to see how they grow and take on greater levels of responsibility,” he responds. “It’s great to see that you can make a contribution to somebody’s life and their career. It’s extremely rewarding.” As is, no doubt, the opportunity to spend his working days in some of the world’s most luxurious hotels.

www.busmanagementme.com

129

LEADERSHIP:feb08

16/10/08

08:31

Page 130

LEADERSHIP

130

Corporate Philanthropy vs. Strategic CSR in the GCC By Dr. David Ronnegard, Post-Doctoral Fellow, INSEAD, The Abu Dhabi Centre

hat is the current state of Corporate Social Responsibility (CSR) in the GCC and how does it compare to CSR in the West? During the past five years CSR has quickly become a topic of great interest among business leaders and government officials in the region, but its current practices differ starkly from Western practices. CSR has been defined in many ways, but most would agree that it means corporations should assume responsibilities towards society beyond merely the production of goods and services at a profit. In other words, corporations should act in a manner that not only takes into consideration shareholder interests, but also considers the interests of a broader group of stakeholders. Usually these other stakeholders are employees, customers, suppliers and the general public. The companies in the GCC that have started to engage in CSR have primarily done so through corporate philanthropy. In other words, they have aimed to satisfy the interests of a broader group of stakeholders through donations to local charities and interest groups. This is an “easy” form of CSR engagement in the sense that it requires little managerial effort beyond the signing and posting of a cheque. In the West where the notion of CSR has been around much longer, many corporations have moved past philanthropic donations and have instead started to integrate CSR into their corporate strategies and managerial practices. The reasons for this growing shift towards strategic CSR in the West largely centres around “the business case” for corporate activities more generally, and in particular, the belief that corporations can better contribute to the public good

130

www.busmanagementme.com

by focusing on their core competences. On the one hand, it is easier to convince shareholders to engage in CSR activities when they are regarded as investments that aim to further business goals, rather than engage in activities that are simply regarded as costs. On the other hand, corporations’ relative advantage in society compared to other factors lies in their core competences, and by harnessing these in a socially strategic way, they can do more good than by simply donating liquid assets. Furthermore, by integrating CSR into the business of the organisation, the activities become sustainable in the long term because they will not disappear in times of recession

as is usually the case with activities that merely cost money. Strategic analysis is about understanding the relationship between different forces that affect an organisation’s ability to realise its goal(s). Given a corporation’s goal (often to increase its profit), one needs to understand how the organisation has internal resources and competencies to overcome obstacles and capitalise on opportunities in its external environment. Corporations are usually well tuned towards the activities that occur in the markets where they compete, but many are less aware of the social and

LEADERSHIP:feb08

16/10/08

08:34

Page 131

political circumstances in which their business activities are embedded. To regard CSR from a strategic perspective is largely about paying greater attention to political and social risks and opportunities. It is important to note that there is no “one-size-fits-all” model for CSR strategy; as with any strategy decision it will depend on the particular circumstances of the organisation. From a political perspective, a new environmental regulation might pose a risk to a business with a large carbon footprint, but this could be turned into an opportunity if the corporation adapts and positions itself ahead of its competition- as we have seen in the car industry. For example, Toyota has led the way in fuel efficiency with its hybrid technology and is now widely considered the leader in an industry beset by emission regulation. From a social perspective, a corporation that not only understands the technical product requirements of its customers but also their social values, might find that it matters to them how the products are produced which might present an opportunity as well as a riskas we have seen in the clothing industry. For example, Nike did not sufficiently take heed of the social concerns of its customers, but has now set up strict guidelines for working conditions in the factories of its suppliers following a public uproar against sweatshop conditions. Much discussion about CSR concerns the corporations’ affect on society which sometimes leads to its internal stakeholders being forgotten. For example, a corporation’s employees are perhaps its most important constituency in part because of the pervasive influence that the corporation has over their lives, but also strategically because they are the holders of the organisation’s core competences. This is particularly relevant to companies in the GCC who during the current boom, find it incredibly difficult to attract and retain employees with the right skills. A good example is SAS Institute which is one of the world’s biggest software companies. The company regularly wins

awards as “Best Employer” in many countries. At the corporate headquarters in Cary, North Carolina, the employees receive many benefits, such as onsite healthcare, sports facilities, and daycare for their children. SAS Institute does not have the highest salaries in the industry, but is nevertheless a very sought after employer and has an enviably low employee turnover. The industry has an average employee turnover of about 20 percent, while at SAS Institute the turnover is merely three percent according to Jeffrey Pfeffer, professor at Stanford University. He estimates that the corporation easily saves

US$60-80 million per year only from reduced recruitment and training costs. Within the field of CSR, the employees are seen as a very important stakeholder group and SAS Institute shows how one can be mindful of their interests in a manner that also benefits the corporation. The benefits of well executed CSR strategies are clear, both from a corporate and a social perspective. It might therefore seem

natural that corporations in the GCC will move in this direction as well. Although this shift seems likely to occur over time, there are also important local characteristics that will influence the CSR activities of corporations in the region. Firstly, most managers in the GCC believe that their governments should be involved in guiding corporations with regard to CSR activities. Managers think that the government should indicate what areas corporations should focus on in their CSR activities and provide incentives to guide them in that direction. For example, the government could subsidise corporate practices that it wishes to encourage and tax other practices that it wishes to discourage. Secondly, religious values permeate the societies of GCC countries far more than in the West, especially compared to Europe. In the non-secularised societies of the GCC region, religious values are seen in all facets of life including business. The tradition of giving is very prominent in Islamic societies and this has a particular influence on the current and likely future shape of CSR in the region. Corporations in the GCC are mostly family owned which characteristically allows family values to influence the conduct of enterprises. These organisations may often take stakeholder interests into consideration when making business decisions, but may not think of calling it CSR. Moreover, many regional managers regard the concept of CSR to be a corporate form of Zakat (the charitable percentage of wealth that Muslims of means are expected to give), which helps explain the current focus on corporate philanthropy. Although CSR in the GCC may move towards becoming more strategic and organisationally embedded, in the near future it is likely to maintain its focus on corporate philanthropy due to its deep cultural and religious underpinnings.

www.busmanagementme.com

131

BUSINESS DOCTOR ED P132-133:feb08

16/10/08

08:54

Page 132

BUSINESS DOCTOR

132

Ececutive coach Natalie Gillam answers your business dilemmas.

Dear Business Doctor, I am CEO of a Qatar based technology company, which, like so many other firms in the region, is facing a skills shortage. It has become very difficult to recruit staff from outside the country because of the rising cost of living, and the situation means that the work burdens of existing staff have increased significantly. Morale within the company is low and I fear that unless something is done to provide incentives for staff, they will leave to join rival companies. Short of offering pay rises and promotions – what else can I do as CEO to show my existing staff how much I appreciate their hard work and encourage them to stay on board? Regards, C Peters, Doha.

he lack of skills would be the obvious thing to tackle. By investing in your people and developing them, you show them that you value them and that you are prepared to give them something of much more long term value than cash. You also provide yourself at the same time with a better workforce with greater bench strength. Offer your key staff development in management and communication skills so that they are better able to motivate and inspire their teams. Performance management is vital, as people like to know that they are doing well and what they need to do better in order to be more successful. Make sure you have a simple and robust performance management process – so that all staff receive and understand specific, individual objectives and get regular, high quality feedback on how well they are doing, with training or coaching provided in areas where they need some learning or improvement. Have awards for particular areas where you want to show what great performance looks like, not necessarily just the obvious sales targets being met but also in

132

www.busmanagementme.com

other aspects of your business, such as invoices being paid on time, admin being efficient, payroll being excellent. Ask yourself also why morale is low. Great leaders pay close attention to the environment they create and sustain within the organisation. How are you creating an environment where people are unhappy? How can you create an environment were people can be more motivated and feel loyal to your business? Cash is only one way, developing people’s skills for their (and your) long term benefit is another excellent way. There are also things you can do that encourage people to feel part of a team, feel they belong, that they matter. It is very motivating for people to feel proud of their company, feel that it is a team/brand they actively want to belong to – like a football team. So if you spend some time with your senior leadership team creating events and opportunities for people to take part in something together, to build their sense of loyalty and belonging, that will be an excellent investment.

“People like to know that they are doing well and what they need to do better in order to be more successful” Individuals spend much of their waking life at work – they deserve and will seek an experience that makes them feel part of something really worthwhile. Speak to people – listen – find out what would make a real difference to them. Seek first to understand them and they will feel important and valued, they will want to take part in sustaining a good working environment.

BUSINESS DOCTOR ED P132-133:feb08

16/10/08

08:54

Page 133

Dear Business Doctor, I have recently been promoted to the position of Senior Vice President of the company where I have worked for three years. While I was delighted to have been selected for promotion it has meant that my relationship with some colleagues has deteriorated as a result. A long-term colleague had hoped to be made Senior VP himself and he is making his feelings about having been passed over very clear – as are his closest associates. Their behaviour is making my job difficult and creates an awkward atmosphere in departmental meetings. I would very much appreciate it if you could advise me on how to tackle this situation. Regards, Florence Biggs, Bahrain.

t is always tough to be passed over for promotion. Can you imagine or perhaps remember how that feels? Empathy is a great tool for helping us to sustain good relationships. However, if they had a good relationship with you before, they should be able to be happy for you now and to celebrate your success. The key thing here to recognise is that your relationship is now different. You may be in transition, but essentially you now have different status – and you also have new responsibilities in relation to them and their performance. You have accepted a leadership role within the organisation and part of your new role must be to do whatever you can to ensure the highest levels of performance from your teams. This means that you must quickly establish with each of them how you would like the relationship to be in order to get the best possible success for them, which will mean success for you and for the business.

Clear objectives are one aspect of this, which should be set by the business and cascaded down in very specific terms for each and every individual, including you. One reason this is important is that it means that everyone should be very clear on what they are there to do, how they add value and what they need to do in order to be successful. Your relationship with others at work, whilst it is great and enjoyable if you can also be friends, should be based on this clear sense of purpose. Make sure you express very clearly in departmental meetings what your purpose is, how that relates to others and that you are very positive about that. If your energy is focused and positive on what you are all there to do – make the business successful – then you remove the personal ‘awkwardness’ from the meetings. As a leader, your positive energy and focus will also be an inspiration for others to get on and do well, so that they too might be promoted in future.

Natalie Gillam works for NG Coaching, an executive coaching company based in Dubai and London. NG Coaching provides executive coaching and leadership master classes in the UAE. To find out more about how NG Coaching contact Natalie Gillam by Email on coachmenatalie@yahoo.com.

In other words, be a model of how you want the relationship to be – positive and focused on what will bring success. No need to feel bad or apologetic for being successful. Nor is there any need to gloat. Reward the organisation for their trust in you by doing a great job and the rest will follow.

www.busmanagementme.com

133

ON THE SHELF

134

There is no shortage of executive self-help guides claiming to reveal the recipe for success in the workplace. Here is a quick look at what the latest management book releases have to offer.

The Game-Changer How Every Leader Can Drive Everyday Innovation, by A.G Lafley and Ram Charan Co-author A.G Lafley is Chairman and CEO of Proctor & Gamble, a company that has tripled its profits in the past seven years. In this 336-page book he and Ram Charan guide you through how the likes of P&G, Nokia and Lego have become today’s game changers. This book claims to help you redefine your leadership style, whether you are running a company or in your first management job. The book is packed with thoughtful insight and advice on how and why certain strategies employed by multinationals have succeeded or failed. BM says: The sections devoted to P&G’s organic revenue growth offer a fantastic insight into how the company has outstripped its rivals. The book also demonstrates how an innovation curve should be an achievable goal, not just wishful thinking. Recommended.

The Secrets of CEOs 150 Global Chief Executives Lift the Lid on Business, Life and Leadership, by Steve Tappin and Andrew Cave In this fascinating, authoritative book, 150 of the world’s top chief executives share their advice for getting to the top, and, once there, how to be successful leaders and still have a happy life. The book reveals frank discussions with some of the West’s most influential CEOs and incorporates radical and thought-provoking comments from the heads of companies in India, China and Russia and well as the US corporate giants. BM says: The Secrets of CEOs contains a wealth of strategies that individuals and organisations alike can use to encourage a new standard of leadership. It could well be an essential guidebook for those wanting to know what its really like to be a CEO – and the health warning that should come with the job.

Why Women Don’t Ask The High Cost of Avoiding Negotiation – and Positive Strategies for Change, by Linda Babcock and Sara Laschever. According to this new book, by neglecting to negotiate the starting salary of her first job, a woman may sacrifice over $400,000 in earnings by the end of her career. From career promotions to help with child care, studies show that time and time again women don’t ask. Babcock and Laschever draw on research in psychology, sociology, economics and organisational behaviour to explore why women seldom ask for what they need, want and deserve at work and at home. BM says: This book will strike a chord with modern women and will encourage them to pluck up the courage to ask for more.

134

www.busmanagementme.com

book review.indd Sec1:134

15/10/08 15:46:46

ITS.indd 1

7/10/08 14:54:47

CITY GUIDE:feb08

15/10/08

15:33

Page 136

CITY GUIDE

136

Doha Your essential guide to Qatar’s capital city, from shopping hot spots to where to find the best coffee.

oha is Qatar’s capital city and it houses around 80 percent of the country’s population. Located on the Persian Gulf, it was brought to the world’s attention in 2006 when it hosted the Asian Games. While far quieter than the nearby UAE, work is underway to develop the city’s tourist attractions and to construct major new commercial and residential developments. The biggest of these will be the PearlQatar, a man-made island covering 400 hectares of reclaimed land which will feature three five star hotels, luxury homes, marinas and two million square metres worth of leisure facilities.

Check in: For the ultimate in comfort book a room at Doha’s most prestigious hotel, the Four Seasons. Located on the waterfront it offers luxurious rooms overlooking the Arabian Gulf and a top of the range spa. Alternatively, for a stay with a difference, book into the Sharq Village and Spa, a low-rise seafront resort, which has been designed in the style of a traditional Qatari village where guests stay in secluded courtyard homes.

136

www.euinfrastructure.com

Shop: No visit to Qatar is complete without a visit to the Souq Waqif, one of the GCC’s most traditional and atmospheric bazaars. Shopping at the souq is a little like stepping back in time with artisans using traditional methods to make intricate ornaments and the smell of traditional Arabian perfume drifting through the wide covered lanes. To pick up some authentic Qatari pearls shop at the Gold Souq. Visit: Qatar National Museum was founded in 1975 and includes displays with rare photography showing the country’s past and a model lagoon filled with models of Qatari sailing and pearling vessels. The museum also has a large aquarium. Due to open in November this year, Doha’s Museum of Islamic Arts will be the first of its kind in the Gulf. It has been designed to reflect traditional Islamic architecture and will feature an extensive collection of Islamic art. Walk: Take time out to join the locals for a stroll along the palm tree lined corniche. Enjoy the breeze from the Arabian Gulf and see the working boats in the Dhow Harbour. The corniche also features a tribute to the country’s pearl fishing heritage – a sculpture

of a giant shell holding a larger than life pearl. On your way down the corniche stop in at the Rumeilah Park to escape the sun under the shade of the palm trees among picnicking local families.

Dine: For spectacular views over the Doha skyline dine at the 23rd floor La Mer restaurant in the Ritz Carlton which offers superb French cuisine in opulent surroundings. For a more down to earth, authentic experience, join Doha’s local populations at Al Khariss in the Souq Waqif where you can enjoy a traditional thyme pie and a mint tea. After dinner smoke sheesha on the rooftop of neighbouring coffee shop Eshairiq Coffee.

Party: Doha does not have a reputation as a party hot spot and the variety of venues available for night owls isn’t great. However, the Admiral’s Club at the Ritz Carlton offers guests a chance to hit the dancefloor in stylish surroundings. The club is designed with a nautical theme and overlooks the marina. A resident DJ provides the music and signature cocktails are served.

Etisalat.indd 1

15/10/08 15:54:46

THE KNOWLEDGE:feb08

16/10/08

08:56

Page 138

THE KNOWLEDGE

138

Business hotels This issue we bring you the insider guide on where to stay when you are travelling on business.

LONDON London Hilton on Park Lane Situated on one of London’s most fashionable streets, the Hilton on Park Lane offers rooms and suites with spectacular city views and extensive business facilities. There are 13 function rooms and a grand ballroom with the capacity to host up to 1250 guests. Wireless internet access is available in all public areas within the hotel and after hours, travellers can dine at the famous Galvin at Windows restaurants, which has 360-degree views over London.

NEW YORK The Four Seasons The Four Seasons is where New York’s biggest movers and shakers broker deals and take power lunches so it’s the ideal place to do business and impress clients in the Big Apple. Featuring 11 private boardrooms and conference rooms, including two ten-person executive meeting suites with dramatic city views, the hotel has 368 terraces including two with fully furnished terraces. Dining options include the high-ceiled American restaurant, 57 and L’atelier de Joel Robochon, a fine dining French-Asian inspired restaurant with an open plan kitchen.

138

www.busmanagementme.com

CAPE TOWN Cape Grace When on business in Cape Town, experience the ultimate in luxury at the five star Cape Grace hotel. The hotel is situated on its own private quay on Cape Town’s vibrant Victoria and Alfred Waterfront and provides top notch facilities for work or play. Its business facilities include a 24hour communications centre, board rooms and private spaces for meetings of any size while staff can arrange plasma presentation monitors for PCs, broadband internet connections and courier services. After work watch the African sunset from the quay or enjoy a spa treatment that has been specially designed for busy business travellers.

THE KNOWLEDGE:feb08

16/10/08

08:58

Page 139

DUBAI Jumeirah Emirates Towers There is no shortage of luxury hotels in Dubai but when it comes to the best choice for business travellers, the Jumeirah Emirates Towers is number one. The unique design of the hotel’s two towers, has made it an architectural icon on the Dubai skyline. Situated in a prime position on the city’s main highway, Sheikh Zayed Road, it is a short distance away from the Dubai International Financial Centre (DIFC). The hotel’s business facilities are top notch and include 12 boardroom-style congress rooms, three 24-hour boardrooms and a high tech video conferencing system, which delivers telepresence quality. There is also a private dining room suitable for seating up to 70 people.

HONG KONG The Peninsula With a reputation as the grand dame of the Hong Kong hotel scene, The Peninsula has been serving business travellers visiting the island since 1928. Its lobby is renowned as the best place in the city to meet business associates for afternoon tea, and its impeccably styled meeting rooms show clients that you really mean business. The hotel’s concierge service can service business travellers’ every need, from booking helicopter flights across the city to reserving tables at Hong Kong’s best restaurants.

SINAGPORE Shangri-La hotel Having been voted the world’s best business hotel in the 2008 Business Traveller Awards, there’s no better place to combine work and play when in Singapore than the Shangri-La hotel. Located just 30 minutes from the international airport, it is just a 15 minute drive away from the central business district and features a 24-hour business centre equipped with full secretarial services, three private meeting rooms and an interview room. And when work is over, the hotel offers plenty of ways to unwind including a spa, three allweather tennis courts, an indoor rock climbing wall and an outdoor free-form swimming pool.

SYDNEY Park Hyatt Sydney For the ultimate room with a view – and broadband connection – check into the Park Hyatt in Sydney. Most of the hotel’s rooms feature private balconies overlooking the Sydney Opera House and all have a direct dial telephone with two lines and desks with modem dial-ups. The hotel has its own private wharf with a water taxi, which is the ideal way to beat the city traffic. It is situated close to Sydney’s business district and is within the historic Rocks District. Its function rooms cater for up to 120 guests and its harbour rooms have spectacular views over Sydney Harbour and cater for up to 50 guests for a sit-down dinner.

www.busmanagementme.com

139

GADGETS:feb08

16/10/08

09:36

Page 140

GADGETS

140 iPhone 24 carat gold, unlocked 3G iPhone customised by Goldstriker US$2000

Motorola MOTORAZR Luxury Edition Snakeskin embossed ultra slim phone featuring 18 carat gold plated accents US$700

140

www.busmanagementme.com

Gold rush Impress your colleagues with this selection of opulent mobile phones that are guaranteed to give you the Midas touch.

Nokia E65 18 carat gold and diamond encrusted Nokia designed by Peter Aloisson US$44,000

Vertu Signature Yellow gold handset with 4.75 carat ruby bearings US$35,000

CATALOGUE PAGE:oct08 15/10/2008 16:29 Page 141

Your World. Covered From the people you hire to the products you sell, if you’re in business, we’ve got it covered...

Business Management

US Edition

MENA Edition

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

Find out more: www.busmanagementme.com

CXO Technology leadership is merging with strategic and financial leadership, and senior management is being called into a partnership for the future. CXO brings together a range of voices with one shared vision: to develop a strategy that considers business needs and technology’s role in moving your company forward. Available for: US, Europe, Asia-Pacific Find out more: www.cxoamerica.com

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

Also available for: US

Next Generation Pharmaceutical Approximately 50% of new drug development fails in the late stages of phase 3 – while the cost of getting a drug to market continues to rise. NGP is written by pharmaceutical experts from the discovery, technology, business, outsourcing, and manufacturing sectors. It is committed to providing information for every step of the pharmaceutical development path. Available for: US, Europe, Asia-Pacific Find out more: www.ngpharma.com

Financial Services Technology

HRManagement

Providing for its customer’s needs and demands is the goal of financial institutions now more than ever. But it is a tricky remit to fulfill. Your customers want it all – security, costefficiency, speed, added functionality and, most of all, convenience.

HR needs three eyes: one on the past – don’t lose sight of the systems that generate value; one on the present – determine if current processes are efficient; and one on the future – be proactive in meeting new challenges.

Can it be done? Read FST to find out…

HRManagement concentrates on the development of HR strategies, directions and architectures.

Available for: US, Europe

Find out more: www.us-fst.com

Find out more: www.hrmreport.com

Oil & Gas Collaboration between Government and multinationals to ensure the energy supply is developing on two fronts. O&G is the definitive publication for stakeholders and service companies to read about the regional projects, technologies and strategies affecting their group. Available for: MENA, US, Russia Find out more: www.ngoilgasmena.com

gdsinternational

NextGen Power & Energy A poll of 4000 utility executives posed the simple question: what keeps you up at night? The answers were costs, new technologies, ageing infrastructure, congested transmission and distribution, viable renewables and inadequate generation capacity. NextGen P&E covers them all. Available for: US Find out more: www.nextgenpe.com

www.gdsinternational.com

CARS 2:feb08

15/10/08

15:33

Page 142

HOT WHEELS

142 S

Swedish sizzler Looking for that special something to get your heart racing with lightning acceleration and an eye-popping price tag? Then take a look at this issue’s star car, the Koenigsegg CCXR Edition.

weden – the land of Volvo, ABBA and flat-pack furniture is, as strange as it may sound, also home to a company building ridiculously-fast supercars. Koenigsegg (it doesn’t exactly roll off the tongue like Ferrari or Lamborghini) has been producing high-performance cars since 1993 from its base in Margretetorp. But don’t be fooled by its lack of pedigree – the eponymous carmaker Christian von Koenigsegg sure knows how to give his customers the thrills they crave from a supercar brand that is heralded in racing circles. The CCXR Edition (pictured) houses a twin-su-

142

www.busmanagementme.com

percharged V8 engine under the bonnet that kicks out over 800 bhp. But there’s more: this supercar can also run on biofuel that produces more than 1000 bph, making this the most powerful production car in the world. From a standing start you’ll hit 100km/h in a shade over three seconds, while the car’s top speed is a nerve-jangling 400km/h. It’s unlikely that you will ever to get to test this top speed claim but it is still satisfying to know that all that power is at the mercy of your right foot. This Koenigsegg, which has stiffer chassis settings and a lower ride height than pre-

vious models, has an adjustable wing stuck on its back in order to stop the car from taking off. Inside, the cockpit is futuristic but minimal, while the speedometer dial has to be seen to be believed. It’s not exactly spacious but then not many supercars are. This is s rocket on four wheels that will excite and terrify but is also kind on the environment. Shame it’s not so friendly on your wallet; prices start from around US$1,500,000. Koenigsegg plans to produce just six examples of the CCXR Edition and 14 of the slightly less powerful CCX Edition. Better get your name down quick then.

Microsoft.indd 1

15/10/08 16:00:33

LAST WORD:feb08

16/10/08

08:49

Page 144

LAST WORD

144 “What Dubai obviously needs is that 25-year plan to see where the global economy is going, how the balance of power is shifting, what industries would have risen and fallen and how Dubai can exploit that in the best possible way” Former London mayor Ken Livingstone tells an audience at the Cityscape exhibition in October what he thinks Dubai should do next.

“The Arab world is the Hindi film industry’s strongest foreign market. Shah Rukh Khan Boulevard is my tribute to the love and affection shown by the people of the UAE to Indian cinema” Bollywood superstar Shah Rukh Khan on the luxury residential development that is being built in his name in the UAE emirate of Ras al Khaimah.

“All I can say is that it will be more than 1km tall. It will be ambitious, creative and innovative” Chris O’Donnell, CEO of Nakheel, describing the Nakheel Harbour & Tower development which aims to be the world’s tallest building at one kilometer high, beating the Burj Dubai which, it is thought, will be 900 metres tall.

“Our customers tasted the fruit of years of planning, investment and commitment. While we were quite confident in the robust systems and facilities, today was a day of reckoning” Emirates Airline chairman Sheikh Ahmed bin Saeed al-Maktoum declares the opening of the new Terminal 3 at Dubai Airport a success.

144

www.busmanagementme.com

UKS_SP.indd 1

7/10/08 14:57:03

Thru2.indd 1

8/10/08 11:44:31