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HOW THE BUBBLE BURST As the credit crunch heads east we report on the financial crisis hitting the GCC PAGE 32

PLUS Qatar Airways CEO Akbar Al Baker Rotana CEO Selim El Zyr Sunny Varkey of GEMS Education COVER.indd 1

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FROM THE EDITOR

Counting the costs There is no escaping the fact that the GCC is now feeling the full force of the global economic downturn.

“The industry that has been the most seriously affected is the property market. That has completely imploded in on itself” Mishal Kanoo, Deputy Chairman, Kanoo Group (page 32)

“Oil and gas businesses rely on the systems that constantly produce accurate data to support diversified and dynamic activities, especially in our group”

t is difficult to comprehend the impact of the economic downturn in the GCC purely by reading the numbers alone. Indeed these begin to lose meaning when they reach multiples of billions and trillions. Here are some of the vital statistics: Around 53 percent of the projects in Dubai’s US$582 billion property portfolio have been suspended; Kuwait has reportedly suffered losses of US$30.98 billion from investments made by its sovereign wealth funds; Kingdom Holdings, one of the largest companies in Saudi Arabia suffered losses of US$8.26 billion the fourth quarter of 2008. But what do these numbers actually mean? One way to understand the impact of this financial crisis in real terms is to look at the human cost. This is what we have done in our special report on the economic downturn in the GCC. Before the credit crunch hit home, the GCC was regarded as a land of opportunity for expatriates who left everything behind to help make the dreams of the region’s leaders into a reality, and to earn enough money to support their families. The crushing blow suffered by the construction sector, however, has meant that tens of thousands of those workers are now heading home. Dubai’s population alone is expected to drop by eight percent this year and 1500 visas are currently cancelled there daily. And what about those who invested their savings in the region’s property boom? The downturn has seen prices crashing by as much as 50 percent in parts of the GCC, resulting in heavy losses for investors. In fact, so desperate are many debt-laden expatriates in Dubai, that thousands of them have reportedly abandoned their cars at the airport leaving letters to the bank and credit cards in the glove boxes. For GCC governments, however, there is no escape from the mounting challenges facing their economies or the fact that many ambitious construction projects have been put on hold across the region. The region’s leaders must now draw on the ambitious vision that led them to plan these projects in the first place, in order to help the GCC to recover from this economic slump. Judging by what they have achieved so far, the potential for the region’s future is high. However it is also through the hard work and expertise of expatriate workers that these leaders’ visions became reality. Without this, the region could find itself paying a high price for the human cost of the economic downturn, even when the cash starts to flow once again.

Sina Khoory, Head of IT, ENOC (page 56)

“If the slowdown of the real economy continues and the recession proves to be more severe than expected then we will have to review our plans” Habib Fekih, ME President, Airbus (page 128)

Diana Milne Editor

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CONTENTS BMME5:mar09 04/03/2009 15:38 Page 11

CONTENTS FEATURES

How the bubble burst As the future of the GCC economies hangs in the balance we report on the impact of the global downturn on the regionâ&#x20AC;&#x2122;s expansion plans and why thousands of expatriates could be heading home

50 Life lessons Founder and Chairman of GEMS Education Sunny Varkey, reveals why his school days inspired him to specialise in the business of learning

32 40

46 He who dares wins

The aviator

Selim El Zyr, President and CEO of Rotana Hotel Management Corporation on why it pays to take a risk

BM meets Akbar Al Baker, CEO of Qatar Airways, and ďŹ nds out how he is taking the airline to new heights and why nothing will get in the way of his aircraft shopping spree

CONTENTS BMME5:mar09 04/03/2009 15:38 Page 12

CONTENTS BUSINESS TECHNOLOGY

EXECUTIVE INTERVIEWS

Grand designs

136

96 Steve Leyland, Polycom 100 Khaldoun Al Shamaa, Dani Diab, Emirates Computers 108 David Allinson, Opennet 114 R. Shankar, Ramco Systems 127 Kevin Ducksbury, Air Partner plc

INDUSTRY INSIGHT 80 Benny Vogels, Fluke Networks 92 Anthony Church, CommSoft 102 Raed Hijer, AMD

76 Wise Investments Banking IT under the spotlight with SABB CIO Arslan Hussain

ROUNDTABLES 82 Unified communications: The future beckons By Frost & Sullivan’s Lavanya Palani Batcha

90 Cutting costs through conferencing How to beat the economic downturn through virtual communications

Fraser Thomas

60 The worst case scenario, Acronis, Stonesoft Corporation and Wipro Technologies 84 Next generation communications, Adobe Systems, Microsoft Gulf and ShoreTel

56 The power of technology ENOC’s Sina Khoory discusses the importance of IT for a group that spans 30 active subsidiaries and joint ventures

94 Smart thinking A look at a Dubai-based developer’s plans for Europe’s next technology hotspot

66 Manning the defences 98 Keeping your data ‘green’

IT security, data management and phishing threats, according to Dubai Bank’s Hariharan Iyer

By Aberdeen Group’s Jeffrey Hill

110 Customer satisfaction 72 Lockdown The so-called ‘rock star’ of the security industry, Bruce Schneier, reveals his thoughts on current security trends

Bo Lykkegaard reveals his CRM predictions

112 The changing face of CRM Wise investments

By Michael Thomas

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CONTENTS BMME5:mar09 04/03/2009 15:50 Page 14

CONTENTS LEADERSHIP, LIFESTYLE AND EXECUTIVE TRAVEL

ASK THE EXPERT

128

54 Per Rank, Netop 68 Fraser Thomas, eSecure Solutions 70 Mike Khattab, Vision Solutions 78 Haitham Abdou, International Turnkey Solutions 132 Greg Thomas, PrivatAir 134 Xavier Hay, Eurocopter

104 The end of an era Saudi Aramco’s former CEO, Abdallah S. Jum’ah, reﬂects on his 14 years at the helm of the world’s largest oil company Turbulent times

116 Making waves The end of an era

REGULARS

104

Sample the high life at Oman’s most luxurious real estate development

120 Ocean dreams Island Global Yachting’s Michael Horrigan on why boats are still big business in the GCC

124 The business of success We put Ammar Balkar, co-founder and CEO of the Middle East Business Aviation Association (MEBAA), in the hotseat

128 Turbulent times Airbus Middle East President Habib Fekih on how his company will weather the economic storm

136 Grand designs A look at Dubai International Airport’s new Terminal 3 development

152

156

158

18 The brief 20 Insight 22 Frontline 28 In my view 146 Leadership 148 Business doctor 150 On the shelf 152 City guide 154 The knowledge 156 Objects of desire 158 Hot wheels 160 Final word

140 People power Emirates’ Sophia Panayiotou discusses the ‘three Rs’ – recruitment, retention and reward

144 Automatic for the people The changing face of HR with Jacqueline Kuhn

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CREDITS BMME5:feb09 04/03/2009 14:22 Page 16

27-29 October 2009 The Ritz-Carlton, Sharq Village, Doha, Qatar

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THE BRIEF ANALYSIS

THE PROPERTY GAME Property prices have descended rapidly in the UAE as economic conditions worsen. BM reports on the unprecedented reversal in the sector’s fortunes. IT WASN’T SO LONG AGO that property was considered one of the safest investments to make in the UAE. Demand for real estate vastly outstripped supply and offplan properties often tripled in value before a single brick had been laid. Speculation was rife that the coun-

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try’s property bubble would eventually burst and that sky high prices would crash once properties under construction were completed. At the time, however, property experts were quick to silence these sceptics. The CEO and President of Omniyat Holdings and Omniyat

Properties, one of the UAE’s leading Estate market in Dubai is protected property developers, told reporters from whatever ﬂuctuations are takin August that he believed ing place in oil prices. This demand for property trend will continue deReal estate will continue to outspite the fact that the prices in Abu Dhabi strip supply for at oil prices are expecthas dropped by least the next two ed to fall in the short years and that the and medium term.” market would remain But late last on average buoyant well into the year the cracks in next decade. Meanwhile a Dubai’s property market press release issued by Emirates began to show as oil prices went Real Estate earlier in the year into freefall and the global ecoclaimed: “The growth of the Real nomic downturn put the brakes

20%

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THE BRIEF ANALYSIS

NEWS IN PICTURES on foreign investment in the relivered later than 2011 prices were gion. In October, one of the relikely to fall up to 10 percent gion’s leading private developers, below their original prices. Damac, made 200 staff redunAccording to a report by dant. In December Nakheel, deMorgan Stanley, residential propveloper of Dubai’s iconic Palm erty prices have fallen by 25 perdevelopments made 500 of its cent since peaking last staff redundant. Soon afterSeptember. It found that real eswards Tameer, laid off 350 emtate prices in Abu Dhabi had ployees. And Omniyat – so dropped by 20 percent on averconfident about the market earliage, and prices of villas and aper that year – cut 69 jobs. partments in Dubai had News of project fallen by 26 percent Residential delays began to filand 25 percent reproperty prices in the ter through – culspectively. UAE have fallen by minating in a “Anecdotal evireport released by dence suggests Proleads in sharp falls in transsince peaking last September February – which action volumes in the claims that an astoundfourth quarter due to deing 53 percent of the UAE’s 1,289 teriorating economic conditions, construction projects has been the disappearance of speculative put on hold. The report claims buying and the lack of financthat of the $1.3 trillion-strong ining.” One of the worst hit properdustry, only $698 billiion is still in ties was the Aldar’s Al Raha operation on active construction Beach development which had projects. Around 180 of the proexperienced a 30 percent drop. jects have been suspended comPrices had also fallen in the pletely and, projected cash flow rental market, according to the for the industry will drop by 43 report, which found that rents percent in the first quarter of were down seven percent in 2009. Nevertheless, the report December and the cost of renting stated, the majority of the proa villa had fallen by 10 percent. jects that have been put on hold The Morgan Stanley report will be resumed once the marsums up the views of many ket recovers. property experts when it says In the meantime, however, that as a whole the UAE’s propproperty prices in the UAE have erty sector had suffered “a plunged to unforeseen lows, creworse than expected” blow ating, against all expectations, a from the global financial crisis. buyer’s market. The correction in the market A report published last month that was expected once long by Landmark Advisory revealed awaited projects were complete that house prices in the UAE capihas happened far earlier than tal had fallen by 25 percent since expected. And it is impossible peaking in the third quarter of to predict whether the property 2008. It went on to say that for prices will ever return to the properties that were due to be deboomtime levels of early 2008.

A dangerous dust storm hits a Kuwaiti highway in February, reaching speeds of 85km/h

25%

Bahraini women hold posters, which reads, “No to Political Naturalisation” during a rally in Manama to protest against the government’s naturalisation policies

Saudi traders look at white pigeons during an auction in Riyadh. Buyers come from all over the region to buy and sell the many unusual looking birds Omani camel jockeys compete in the 2009 Muscat festival in Muscat, Oman

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INSIGHT

TRANSPORT

BANKING AND FINANCE A US$100 MILLION FUND targeting Abu Dhabi’s real estate sector has been set up by a London investment ﬁrm. The Lewis Charles Securities Limited Abu Dhabi fund aims to take advantage of the population boom in the UAE capital which has led to a housing supply shortage. It hopes to raise US$100 million from investors.

SOME OF THE MIDDLE EAST’S biggest carriers are slashing fares in a bid to beat falling passenger numbers. Both Emirates Airline and Etihad Airways have announced savings amidst fears of a major travel slump in 2009. The latest cuts were announced by Etihad, which has slashed fares on routes from the UAE to Europe, Africa, North American, Asia and the Middle East by 35 to 40 percent. Emirates has cut fares on routes by 85 percent.

KUWAIT’S NEWEST AIRLINE, the luxury carrier Wataniya Airways, has been launched and will be flying to Dubai, Cairo, Bahrain and Beirut. A specially designed luxury terminal has been designed for first class passengers of the airline travelling from Kuwait. Meanwhile Premium Economy passengers benefit from a valet parking facility under Sheikh Saad Terminal and check in at a separate counter.

CONSTRUCTION

MEDIA AND MARKETING SKY NEWS IS TO OPEN its ﬁrst bureau in Dubai. The ofﬁce, in Dubai’s Media City district, will include two permanent members of staff and a producer and cameraman. The broadcaster’s Dubai correspondent will be Ashish Joshi. Adrian Wells, head of foreign news at Sky, said he was keen to provide stronger coverage of the UAE.

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MASHREQ, THE SECOND LARGEST bank in the UAE, has axed around 175 of its staff in the region. It blamed the slowdown in market activity for its decision and has declined to reveal the exact number of jobs it has cut in the region. The total is believed to represent four percent of its global workforce. A statement from the bank read: “Mashreq has made this decision with deep regret, but has moved swiftly to respond to the challenges of the year ahead. We will be providing compensation to the affected employees as well as advice and counsel. These steps are part of a strategy to maintain our strong levels of performance and proﬁtability and remain focused on gearing the business around the needs and activities of customers.”

ADVERTISING SPEND in the Middle East was hit hard by the economic downturn in the last quarter of 2008 according to research by the Pan Arab Gulf Research Centre. Its ﬁgures show that spend in the UAE’s property and ﬁnance sectors dropped by US$80 million in October 2008 to US$25 million in December.

FIVE COMPANIES have been shortlisted to bid for a US$2.7 billion project to build a highway linking Abu Dhabi, Saudi Arabia and Qatar. Work on the MafraqGhweifat highway is due to start in the fourth quarter of 2009 and the building contract is expected to be awarded in the second quarter. The ﬁve short listed international consortia bidding for the lucrative contract include Autostrade Per I’Italia SPA of Italy, Bouygues Travaux Publics of France, China Communications Construction Company, Macquarie Capital Group of Australia and Austria’s Strabag Societas Europaea.

NAKHEEL HAS PUT PLANS to build four theme parks on one of its palm shaped islands on hold for 12 months. The parks due to be built on the Palm Jebel Ali in partnership with Bush Entertainment Corporation (BEC), included a Sea World Centre and Discovery Cove park and were part of the Worlds of Discovery Dubai project. The ﬁrst phase of the project, SeaWorld and Aquatica, was originally scheduled to open in December 2012 and phase two, Busch Gardens and Discovery Cove, were due to open in 2015.

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INSIGHT INDUSTRY FOCUS

STRANGE BUT TRUE

NOT ALL INDUSTRIES are facing a ferred choice for companies in the renegative impact from the economic gion. Its report revealed that digital downturn in the GCC, according to media would play a part in 90 percent Booz & Company. It has of regional marketing campublished a report paigns in the coming year. Digital media claiming that beHowever, it warned this will play a part in cause of the downcould be hampered by turn spend on the fact that there is a online advertising in lack of digital media of marketers’ the region will soar brands in the region. It campaigners by between 25 and 35 also pointed out that only percent. The report states 25 percent of marketers conthat because online advertising is a sidered themselves to be knowledgable cheaper medium than television enough about digital media to be able and print, it is taking over as the pre- to properly take advantage of it.

90%

HOT TOPIC

72% of UAE residents are kept from spending time with their families because of traffic congestion Source: survey by YouGov Siraj

NEWS IN NUM8ERS

US$50 billion

Amount the GCC needs to invest in power in the next 10 years, according to the PenWell Corporation

50%: growth in Porsche Dubai last December compared to the same month in 2007

sales in

Travel sickness HOTEL AND AIRLINE OPERATORS could suffer among the biggest losses in the GCC as a result of the economic slump. Already cracks in the hospitality sector in the UAE are beginning to show with both Jumeirah and the luxury hotel Atlantis having announced job cuts. Jumeirah, the region’s biggest hotel operator which employs around 11,500 people, told the UAE daily newspaper The National, that it was plan-

ning to cut jobs. A spokesperson said: “Jumeirah’s management met to set up a restructuring plan, which is a process that will take place at the group and corporate level. The company expects that the number of staff will be reduced, which reﬂects the current economic conditions.” Meanwhile, the Atlantis hotel, which launched with a US$20 million lavish party last year, has announced that 70 staff will lose their jobs.

US$14.31 million Net loss posted by Commercial Bank of Kuwait in the fourth quarter of 2008

2010: New Deadline

for

expatriate professionals to register for the

national ID card in the UAE. The original deadline was December 31st 2008 www.busmanagementme.com

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FRONTLINE

NEXT GENERATION OF VISITOR MANAGEMENT IS HERE SCHEDULED FOR RELEASE in March, Cardax FT Visitor Management functionality provides extensive visitor pre-registration and receptionist visitor management. For many organisations, managing the access of temporary visitors can be a time consuming, costly and error-prone process, potentially compromising site security. In many log-book based visitor management systems, receptionists receiving a sudden inﬂux of visitors can be overloaded and miss vital steps in the process, or visitors overdue to leave a site may go unnoticed. More recently, many computer based visitor management systems have automated most visitor management tasks, but fail to fully integrate with a site’s existing security management system, leaving potential security gaps. New visitor management functionality within the Cardax FT access control and intruder alarms system delivers a highly conﬁgurable, secure, and easy to use solution. Upcoming Cardax FT Visitor Management functionality features: Simple, convenient and network friendly client-server architecture Extensive pre-registration and receptionist visitor management interface Quick and accurate individual and group visitor processing – less data entry Support for single, multiple or multi-tenanted receptions Configurable, user friendly interface Receptionist overrides (e.g. lockdown, silent alarms) Support for visitor badge printing, photo capture and access card assignment Quick and easy visitor and host reporting options Visitor management fully integrated with your existing Cardax FT security platform For more information, visit www.cardax.com

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HEALTHCARE FLOURISHING IN THE GULF HEALTH IS BIG BUSINESS, especially in the Gulf. Even during an economic crisis described as being outside the experience of anyone working in business today in impact and scale, Arab Health attracted tens of thousands of delegates from over 65 countries with more than 2200 companies exhibiting and another 200 turned away. Arab Health takes place in Dubai at the end of January each year and is already the second biggest event of its kind in the world. Not surprising when the estimated US$74 billion annual market for hospital equipment and service companies in the GCC countries is growing at 16 percent per annum. The Arab Health Congress covers 16 parallel conferences and attracts over 5000 delegates. Speakers include awardwinning clinical researchers, industry leaders and future-gazers who predict how the changes which advanced technology and medical innovation will affect healthcare provision over the next 10 years. Traditionally, the demand for healthcare increases during a recession so the challenge for the public

PROJECT LOWDOWN

sector providers will be to deliver more effective healthcare for less cost. Performance improvement will be a common theme as managers and clinicians work together to make the budget stretch. The private sector will also need to respond to the increased demand created both by the growing populations of the Gulf countries but also the introduction of health insurance schemes requiring patients to seek treatment where prices are competitive and quality is not compromised. With the buying power of health insurance, patients will not tolerate poor standards and the funding agencies won’t accept high costs. Building a successful healthcare business in the expanding Gulf market requires considerable expertise to avoid the pitfalls of over-provision, low quality care and high running costs. If nothing else, Arab Health demonstrated that, despite the global ﬁnancial downturn, the appetite to succeed is stronger than ever. For more information, visit www.paconsulting.com

King Abdullah Sports City YOU’VE HEARD OF DUBAI SPORTS CITY. Well now another project has been unveiled that will rival even that. The US$4 billion King Abdullah Sports City project will incorporate ﬁve major sporting venues and will aim to attract international sports events to the Kingdom. It will be built on a site north of Jeddah and will include a specialist hospital to treat athletes, indoor stadiums and youth hostels. The project was originally going to be located in southern Jeddah on a one million square metre plot.

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FRONTLINE BACK-OFFICE COMING TO THE FORE

BROADLY SPEAKING

IN THESE DAYS OF TRADING SOPHISTICATION, market volatility and heightened risk, the emphasis on operational efficiency is propelling back-office systems to the forefront of investment managers’ best practice requirements. Yet implementation of robust, functionally-rich platforms remains patchy across the Middle East. Many investment houses still rely on rudimentary self-built systems, often based on Excel spreadsheets. And while investment management subsidiaries of large banks may have more sophisticated infrastructures, frequently they are in-house built or legacy systems that lack the functionality to support today’s trading environments. Increasingly though, a comprehensive best-of-breed platform, incorporating integrated portfolio management and reporting capabilities, is essential. For example, in recent years various electronic exchanges have been established in the region. But most were designed to support a retail model with pure beneficial ownership, with the exchanges also providing the custody function, rather than independent custodian banks acting as intermediaries. As a result, wealth managers need direct connectivity to the exchanges, with systems to handle reconciliations and reporting. Saudi Arabia is a case in point. The granting of more banking licenses has led to new investment houses being created to cater to the large pool of high net worth individuals. However, because there aren’t the custodians to shoulder much of that operational burden, wealth managers require sophisticated technology capabilities that span portfolio management, supply of net asset value calculations of funds, shareholder registration, and coverage of all asset classes including private equity and real estate if they are to succeed there. Likewise, for wealth managers across the region success will depend on the quality of their client service. Add in stricter compliance requirements, including better management of operational risk, and it is clear that those wealth managers that invest today in the tools to control their costs and risks, and provide exemplary client service, will be the success stories of tomorrow. www.advent.com +971 4 3199 089

LIMITED AVAILABILITY of affordable high quality broadband is hampering the development of digital media in the Arab world according to the Arab Media Outlook 2008 to 2010 report. It states that that this limited availability has

hindered the growth of mobile technology which allows journalists to upload information from their camera phones directly into online newsrooms. The report went on to say that new developments in digital media and mobile broadband would present the best opportunities for the development of digital media in the Middle East. According to the report the delivery of content to mobile internet connected devices, such as mobile phones, was the most signiﬁcant advancement in digital media in the region – particularly content delivered to those in the 15 to 25-year-old age range.

A GONG FOR FIRM BEHIND ‘TREND-SETTING PRODUCT’ uct,” said Andrew Pery, Chief Marketing Ofﬁcer at KOFAX PLC, the leading provider of intelligent Kofax. “This recognition underscores Kofax’s ongocapture and exchange solutions, has aning success in providing customers with the most nounced that its information capture software innovative and robust capture solutions. We has been recognised on KMWorld’s list of look forward to continuing as the in‘Trend-Setting Products’. This presti“We are dustry’s global capture market gious list features products that honoured that leader and trend-setter.” Along specialise in the knowledge with recognition in the ‘Trendmanagement industry and have Setting Products’ list, Kofax was exhibited superior usability, has included also named in KMWorld’s ‘100 ﬂexibility and adoption rate, and Kofax Capture 8.0 as a trend-setting Companies That Matter in offer a strong contribution to the product” Knowledge Management’. The market through their solution. award recognises companies that Kofax Capture automates business demonstrate a commitment to innovation and processes by capturing paper and electronic enhance the knowledge management industry. documents and forms in a digital format; transKMWorld is the leading information provider servforming content into accurate data; and delivering the Knowledge, Document and Content ing the resulting information to an Management systems market. organisation's business applications and repos-

KMWorld

itories. Released and re-branded in March 2008, Kofax Capture 8.0 features additional capabilities vital to business-critical applications in enterprise environments. These include a ‘disaster recovery’ function, Simple Network Management Protocol (SNMP) monitoring, heightened security options and tight integration with IBM DB2 and Oracle databases. “We are honored that KMWorld has included Kofax Capture 8.0 as a trend-setting prod-

For more information, visit www.kofax.com

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FRONTLINE

COMPANY FOCUS Drake & Scull

across the GCC. WHILE OTHER CONSTRUCTION REIt was bolstered in 2007 through LATED companies are floundering, the acquisition of Gulf Technical the UAE contractor Drake & Scull Construction Company (GTCC), which International, is enjoying a period of complements DSI’s existing MEP sercomparative prosperity and has anvice division. Indeed it was the GTCC nounced that it will be division, which won the Al creating 100 new Reem Island contract. The company’s jobs. The mechaniDIS has been so existing order book is cal, electrical and successful that it believed to be worth plumbing (MEP) will soon be the first around contractor has MEP contracting recruited 725 company to list on new staff in the the Dubai Financial last six months for its Market (DFM). Its initial regional operations and public offering (IPO) was has said it plans to take advantage of oversubscribed by 101 times and atthe abundance of talent currently tracted 45,600 applications. available in the market following reIn preparation for its listing the dundancies by other firms. company has recently made a series The firm will certainly be needof key appointments to its manageing extra staff. It was recently award- ment board. Speaking about the aped a contract to build a major pointments, DSI CEO and Vice residential project on Al Reem Chairman Khaldoun Tabari, said: Island, which is 600 metres off the “DSI is one of the strongest MEP Abu Dhabi coast. companies in the UAE. It is therefore The company’s existing order vital that as a soon to be publicly book is believed to be worth around listed company, we have the best ofUS$1.4 billion and it is currently ficers to lead it to help us achieve working on 35 lucrative projects our growth strategy.”

US$1.4 billion

A GLOBAL PERSPECTIVE In ensuring day-to-day operations at the world’s first and most iconic theme park run smoothly, Disneyland’s Ed Grier has one of the busiest jobs in America. In the latest issue of Business Management (US edition), Senior Editor Ben Thompson goes inside the Magic Kingdom to discover what makes the company tick and how Grier keeps visitors coming back for more. “The most rewarding thing for me is that everything we do here makes a visible difference to the resort,” Grier reveals. “I can look out of my window and see the impact.” To read more, go to www.busmanagement.com

LOOKING FOR CASH? RETHINK YOUR SUPPLY CHAIN THE CURRENT ECONOMIC DOWNTURN is forcing many firms to re-assess their strategies moving forward, and in these times of financial challenges, cost is the main focus. Falling consumer demand as well as less readily available credit is increasing both cost and uncertainty within the supply chain, creating operational and cost inefficiencies. Typically in tough financial times such as these, cash flow becomes more critical than ever and firms look for ways to improve their cash-to-cash cycles from bank credit to increasing credit days with their suppliers. With no foreseeable end to the economic crisis, how else can firms reduce costs whilst not compromising service levels to their end customers during these challenging times ahead? Depending on a firm’s

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long term goals there are short and long term solutions which will not only help remove some of the financial strain from the supply chain, but also improve operational efficiencies. Focusing on efficiency and strictly adhering to core competencies can help reduce unnecessary costs and exposure. On the other hand, external measures must also be conducted through high-level interviews and re-evaluating inventory and supplier needs. Contingency planning in anticipation of changing conditions and uncertainties in the market to help navigate your business through the economic storm is imperative to ensuring that your business comes out on top during the eventual upswing. For more information, visit www.maersklogistics.com

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FRONTLINE HOW CRM CAN HELP DURING THE GLOBAL ECONOMIC DOWNTURN This spans outside sales, call SMART ORGANISATIONS can centres, telemarketing operations, focus on CRM quick wins and direct marketing and internet applishort-term benefits during the current global economic downturn cations. It also equips customerfacing staff with current, while maintaining the long-term comprehensive product, special vision to enable a structured and offer and shipping data and lets phased approach that aligns with them resolve customer concerns the current business objectives efficiently in a single call and is flexible, reliable or other means of and scalable to fuCRM is not communication. In ture changes. just a technology addition, it helps The longsolution, it is a organisations to term vision understand which should focus on customers, serthe integration of that aligns a CRM tool vices, and products the CRM solution create most revenue, so efficiently with they can capitalise early on Business Intelligence (BI) any new opportunities. and Business Process and CRM is not just a technology Performance Management solution. It is a methodology that (BPPM), enterprise data warealigns a CRM tool, its customisation house and data marts. It should and implementation with the orextend into BI, analytics, hosted ganisation’s business objectives. In applications, mobile capabilities and much more. It involves the im- order to achieve quick wins to survive the current economic downplementation of a single integratturn (or even increase profitable ed system, which will allow an business) while focused on the organisation to effectively and long-term vision, smart organisaconsistently manage prospects tions can adopt the following and customers, regardless of phased and structured approach: where the interaction takes place.

‘YOU CAN QUOTE ME ON THAT’ “Bullying powers should learn how to speak correctly and be polite so Iran’s cultured and peace-loving people listen to them” Iranian President Mahmoud Ahmadinejad

methodology

“We think that even with US$50 [per barrel], we cannot really have a decent income for all [OPEC] member countries and, at the same time, reinvest for additional capacity” OPEC Secretary-General Abdalla Salem el-Badri

For more information, visit www.msdconsulting.ae

2 3 4 5

Define the organisation’s business objectives

Define the critical success factors (CSF) to achieve the objectives Define the key performance indicators (KPI) to measure your achievements Set the priorities for the quick wins considering the current economic downturn, the organisation’s differentiators, competitors and the long-term vision

“I am optimistic the [economic] crisis will teach us many lessons. We are in a better situation compared to many countries” Abdul Aziz Abdullah Al Ghurair, CEO at Mashreq

Plan the CRM quick wins solution implementation phases

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FRONTLINE PROJECT FOCUS

SAUDI ARABIA’S ECONOMIC CITIES IF YOU BUILD IT, THEY WILL COME. That’s the belief of the Saudi Government as it embarks upon one of the largest city planning initiatives ever seen. Amr al-Dabbagh has big ambitions. The Governor of the Saudi Arabian General Investment Authority (SAGIA) plans to add US$150 billion to the Kingdom’s gross domestic product, create more than 1.3 million direct jobs and ease the burden on the nation’s main centres of Riyadh, Jeddah and Dammam, where infrastructure is severely strained. How? By building a series of megacities designed to ease social pressures and develop the economy. It’s a project staggering in its size and scope. Rising out of the

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The main driver is undoubteddesert sands at six strategic localy the desire to capitalise on the tions, the so-called ‘economic Kingdom’s vast wealth and huge cities’ at Madina, Hail, Tabuk, Jizan, oil and gas reserves, and establish Ras Az Zour and Rabigh are deSaudi Arabia as a global economic signed to accelerate major regional power commensurate with development, become its abundant natural remagnets for foreign insources and key geovestment and enSAGIA plans to add graphic location at sure Saudi Arabia the gateways to is one of the most Europe, Asia and competitive nato the Kingdom’s gross Africa. “SAGIA has tions in the world. domestic product targeted three secWork is already untors in which to invest derway, and progressthe bulk of our resources: ing at a furious pace: at the these are energy, transportation ﬂagship project of King Abdullah and knowledge-based industries Economic City (KAEC) at Rabigh, (KBIs) – in our case, life sciences, for example, construction is prohealthcare, education and IT,” says ceeding round-the-clock with over al-Dabbagh. “This enables us to 13,500 professionals and skilled leverage our natural competitive workers employed on site.

US$150 billion

advantages of energy and location, and the combination of financial and human capital.” As a result, the government is establishing an integrated system of economic cities that can create a competitive environment able to provide everything, including commercial and residential land, visas, work permits, labour force, entertainment, as well as offering quality of life for the inhabitants and investors. He hopes that the megacities will help address the disparity between Saudi Arabia’s potential and its current position on the global stage. “We have a quarter of the world’s energy resources, yet host only 2.5 percent of the global energy intensive industries, which doesn’t make sense given that we are the most cost-efficient place on earth for those industries,” he explains. “Our goal now is to increase our market share in these industries to 7.5 percent by 2015, and to become one of the top one or two in approximately 10 energy intensive industries by 2020. Plastics is another example. We are again the most cost-efficient place on earth for finished plastics products, yet have only one percent of the global market share. Our goal is to increase that to 15 percent by 2020.” But these aren’t just industrial centres; like other developments such as the City of Silk project in Kuwait, Dubailand in Dubai and Masdar in Abu Dhabi, Saudi Arabia’s economic cities also aim to integrate working with living, too. Wealthier residents will have waterside villas, complete with berths for large yachts. Middle-income residents will have high-rise apartments. Other family-friendly features being promised are hospitals, a university and sports stadia. At KAEC, a

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FRONTLINE

full-scale port will handle not only the very best workers, investors freight but also some 300,000 piland industries. grims arriving by sea for the annu“In 2007 we surpassed our al Hajj, while a high-speed railway target of SR300 billion in the link between Mecca and Medina value of investment licences iswill stop at the city. sued and the economic cities repFahd al-Rasheed, CEO of the resents a good share of that KAEC project, points out that Saudi number,” explains al-Dabbagh. Arabia also needs to build six mil“We are not surprised because lion residential units in the next 12 they are the result of careful planyears in order to tackle the twin isning and strategic thinking. We sues of massive housing scarcity examined our value proposition and a huge population of and determined it was enyoung people that will ergy and location. We come of age in the then revisited one “In 2007 we next five years. To of our strategic surpassed our target of put that into perinitiatives at spective, the counSAGIA, which is try has only built regional developin the value of investment licences” five million units ment, and decided over the past six to create a product decades. The first phase of that didn’t yet exist, integrated city living in KAEC will which was integrated into the feature homes, offices, hospitals, global marketplace, which would schools and retail outlets. enable us to capitalise on our In addition to providing houscompetitive advantages, help us ing, KAEC and the other new cities to achieve our 10x10 objective are also meant to create millions of and be the ultimate living and injobs. A recent study prepared by vestment destination. the Center for Studies and “Our economic cities aren’t Research at the Eastern Province free zones, they aren’t special Chamber of Commerce and economic zones, they aren’t free Industry suggests that while trade zones; they are all of the 675,000 jobs available at the new above, plus something extra,” economic cities would require concludes al-Dabbagh. “We are moderate to high levels of skill, the creating cities with the ultimate in remaining jobs would be highly living environments and service skilled. It’s all part of SAGIA’s plan provision. And we are right on to encourage, attract and develop track in terms of development.”

SR300 billion

MIDDLE EASTERN CITIES PLAYING CATCH UP EUROPEAN CITIES DOMINATE the MIDDLE EAST SNAPSHOT worldwide rankings of locations with Quality of living regional rankings the best quality of living, according to Rank City/Country Mercer’s 2008 Quality of Living Survey. Zurich retains its 2007 title as the highest ranked city, followed Dubai 80 jointly by Vienna and Geneva, then (UAE) Vancouver and Auckland. Only two Middle Eastern cities make the top Abu Dhabi 100. The quality of living survey cov88 (UAE) ers 215 cities and is conducted to help governments and major compaManama nies place employees on internation122 (Bahrain) al assignments. The survey identiﬁes those cities with the highest personal safety ranking based on internal staKuwait City 133 (Kuwait) bility, crime, effectiveness of law enforcement and relationships with other countries. Jeddah Dubai (80) and Abu Dhabi (88) 160 (Saudi Arabia) are the Middle Eastern cities with the best quality of living followed by Manama (122) and Kuwait City 163 Riyadh (133). Out of the 25 lowest ranking (Saudi Arabia) cities, two are from the Middle East: Sana’a (207) and Baghdad (215), the city with the world’s lowest 173 Damascus quality of living and lowest levels of (Syria) personal safety. “Several regions of the Middle 176 Tehran East have beneﬁted enormously from (Iran) government investment in infrastructure, health and sanitation and are risSana’a ing up the rankings,” says Slagin 207 (Yemen) Parakatil, senior researcher at Mercer. “However, personal safety and political tensions remain stumbling blocks 215 Baghdad and account for the low ranking of (Iraq) many of the region’s cities.”

VITAL STATISTICS Internet users in the Middle East Rest of world Middle East

Source: www.internetworldstats.com

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FRONTLINE IN MY VIEW

GROWING AMBITIONS Adel Ali, CEO of Air Arabia, explains how the global economic crisis is affecting business and reveals the reasons for further expansion Open-skies policies are generating a range of significant benefits for the region. Effectively the market has been freed up – a trend that looks set to improve further. More competition has naturally led to lower prices, creating opportunities for more people to travel than ever before. The challenge remains to expand further upon current open-skies initiatives to fully liberalise and open up the aviation markets in the Middle East, cutting red tape and incentivising private-sector participation in the sector. Times have undoubtedly changed over the past 12 months. The financial turbulence currently impacting the international economy is a testament to this fact. Throughout this period Air Arabia has witnessed a sustained growth in its passenger traffic, passing the 10 million-passenger mark and posting high growth rates. The current recession is putting additional pressure on everyone in the transport sector. We are no different. However, it is the characteristics of our business model combined with the dynamics of this region that allow us to maintain good figures. While it would be imprudent to suggest that the region will be totally insulated from the global crisis, the IMF has forecast economic growth of 6.6 percent for the Gulf in 2009, compared to its previous forecast of 7.1 percent for 2008. Passenger convenience is Air Arabia’s focus, and every expansion that we embark upon is a result of this focus. Air Arabia’s growth over the past five years has been immense and filled with challenges and success. We couldn’t have reached where we are today if we didn’t come across many challenges, but we look at each challenge as an opportunity that we take advantage of. Air Arabia Maroc will be the latest member to join the Air Arabia family. It’s a new low-cost carrier based in Casablanca that will service North Africa and Europe. We intend to copy the success of the Air Arabia business model into Air Arabia Maroc and right now work is on full gear to have the airlines launched by the end of the first quarter of 2009. Expanding the fleet size is an operational need. As we enhance our network across the Middle East, North Africa, the Indian subcontinent, Eastern Europe and Central Asia, we will require additional aircraft to service these sectors. To this effect, we have recently signed a contract with Airbus for 10 additional A320 aircraft, following an earlier agreement for 34 Airbus A320 aircraft signed at the end of 2007.

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FRONTLINE WATER WORKS Arab countries need to invest up to

US$200 billion in water infrastructure

ISLAMIC DEVELOPMENT Bank estimates suggest Arab countries may need to invest up to US$200 billion in water-related infrastructure over the next 10 years in order to meet the rapidly growing demand for water and

sanitation services. It is estimated that as many as 50 million people still do not have access to safe drinking water in the Arab world, with a further 97 million lacking access to adequate sanitation, according to IDB’s website.

DID YOU KNOW? THE UAE IS RANKED as the world’s seventh biggest importer of toys. Statistics released ahead of the Middle East Toy Fair, show that the numbers of UAE toy importers rose by 4000 to 18,017 within the past year. The companies collectively imported over 100 brands of toys. Last year the UAE was eighth in the rankings but moved up one place this year. In top place is the US followed by the UK, China, Iran, India, Hong Kong, UAE, Canada, Thailand and Australia.

COMPANY INDEX Q4 2008 Companies in this issue are indexed to the first page of the article in which each is mentioned. Abu Dhabi National Hotels Company Acronis Adnec Adobe Systems Advent Air Arabia Air Partner Airbiz Airbus Middle East Al Jazeera Aldar Arab Bank Audi BBC Bloomberg Boeing Booz & Company Cardax Cisco Citi CNN International CommSoft Computer Chips and Processors ComSys

46 10,60,61 120 84,87,OBC 23,157 40 4,127 139 128 40 120 30,160 158 40 40 128 32 22,74 6 32 40 92,93 102,103 15

Condé Naste 116 Dubai Bank 66 Dubailand 32 Eekmasec 59 EFG Hermes 32 Emaar 32 Embraer 130 Emirates 46,140 Emirates Computers 8,53,99,100,101 Emirates Healthcare Holdings Limited 50 Emirates NBD 32 ENOC 56 Esecure 68,69 Etihad 46 Eurocopter 91,134,135 European Business Aviation Association 124 Fairmont 116 Feather Brooksbank 122 Fluke Networks 80,81 FlyDubai 40 Frost & Sullivan 82 FVC 13,96,97 GEMS Education 50 Global Investment House 32

Gulf Investment Corporation 32 Gulf Research Centre 32 HSBC 76 IDC 110 IMF 32 International Business Aviation Council 124 ITS 2,78,79 Invest Bank 32 Island Global Yachting 120,122 Jazeera Airways 40 Kempinski 116 Kofax 23,111 Maersk Logistics 24,106 Majid Al-Futtaim 116 Manager Forces 141,143 Mashreq 32 MEBAA 124 Mercedes-Benz 44 Merrill Lynch 32 Microsoft Gulf 84,85 MSD Consulting 25,113 Nakheel 32 National Bank of Fujairah 32 National Investment Funds Company 116

Netop IFC,17,54,55 Opennet 108,109 ORC Worldwide 32 PA Consulting 22,118 PrivitAir 132,133 Proleads 32 Ramco Systems 114,115 Rotana Hotel Management Corporation 46 SABB 76 Saudi Aramco 104 ShoreTel 84,89 Sony 156 Spring Partnerships 146 Standard & Poor's 32 Standard Chartered Bank 32 Stonesoft Corporation 60,65,IBC STR Global 32 The Wave 116 University of Wollongong 32 Varkey Group 50 Vision Solutions 70,71 Welcare 50 Wipro Technologies 60,63 Yahoo 40 YouGov Siraj 32

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COVER STORY

It was once regarded as a golden land of opportunity by expatriates who flocked there in droves to enjoy a tax-free lifestyle, lucrative career opportunities and the chance to cash in on the real estate boom. But the GCC has been dealt a devastating blow by the global economic downturn, resulting in plunging property prices, thousands of job cuts and an exodus of foreign workers. BM reports on how the GCC dream now hangs in the balance.

t is a Friday morning in February and thousands of passengers are The UAE, which accounts for around 46 percent of the GCC construcpreparing to board flights at Dubai International Airport. It is not, howtion boom, will be particularly badly affected, according to the latest reever, holidaymakers that make up the majority of the passengers search note by EFG Hermes, which says the country is experiencing a “real today, but expatriate workers heading home for good – many of whom estate crash” adding,” the full trickle-down effects of this into the real econhave fallen victim to the emirate’s dramatic reversal in fortunes. omy have yet to be fully appreciated.” Among those about to say goodbye to Dubai are Gregory Van Its gloomy outlook for the region sees the real estate and property Rensburg and his family who moved to Dubai from South Africa four slumps in the UAE extending well into 2009 and claims the fall out of this years ago. Until three weeks ago Van Rensburg worked as a sales direcwill affect the country’s broader economy for months to come. The emitor for a property company, which provided the family with subsidised rate that has been the hardest hit is Dubai. It has invested the most in convilla accommodation and paid for the children’s school fees. They struction projects and in establishing its financial sector. This has left it thought they had it made until three weeks ago when Van Rensburg was dangerously vulnerable to the economic downturn. Describing the effects told the firm could no longer keep him on: “Our whole life was in Dubai. of the downturn on the emirate, Dr Eckart Woertz, Programme Manager of Suddenly we found we had to leave, uproot Economics at the Gulf Research Centre, said: the children, and set up a new life some“In terms of how the different countries are afwhere else,” he tells BM. “We’re devastated fected, Dubai was a leader on the way up. Now because we’d imagined ourselves staying it is particularly hit on the way down because here for at least another five years. The imof its heavy reliance on the real estate sector Amount economic growth pression we’d been given when we arrived and debt financed growth.” in the GCC will slow to in was that the good times would just keep on To ease liquidity conditions in Dubai, the rolling.” UAE Central Bank has bailed out the emirate by 2009 according to the IMF It’s a story that is being retold at airports buying the first US$10 billion of a US$20 billion across the GCC. Few could have predicted the sovereign bond issued by the Dubai governimpact on the region from the global economic downturn and the dramatment. Joe Saddi, Chairman of Booz & Company and Managing Director of ic plunge in oil prices. The combination of the two factors is a perfect storm the firm’s Middle East business, said: “The biggest impact (of the downthat has dealt a major blow to the economic growth plans of governments turn) has been on Dubai. Abu Dhabi’s bailout of Dubai may not be enough across the region and the dreams of hundreds of thousands of expatriates but it is going to go a long way towards bringing the situation back to norseeking a better life in what was once regarded as a land of opportunity. mal.” The bond will enable Dubai to access funds needed to pay off US$1520 billion worth of debt this year.

3.5%

Counting the costs The International Monetary Fund (IMF) claims that economic growth across the GCC will slow to 3.5 percent this year, from 6.8 percent in 2008. It predicts that GCC governments’ revenues from oil will plunge from US$460 billion in the glory days of 2008 to US$257 billion in 2009. This is very bad news for the US$2 trillion worth of projects currently under construction in the GCC – many of which relied on oil revenues for financing and a ready supply of expatriates to work and live in them once complete. The region’s hospitality industry too will be hit hard. Across the Gulf region around US$90 billion worth of tourism-related developments are under construction – projects that now face an uncertain future.

Reversal of fortune EFG Hermes had originally forecast a 20 percent decline in property prices in Dubai this year, but is now revising this ﬁgure downwards, having witnessed falls in luxury property prices by as much as 35 to 50 percent. The impact of the downturn on Dubai’s construction sector has been the most obvious indication of how badly the UAE has been affected. Billions of dollars has been poured into projects ranging from the record breaking 818 metre high Burj Dubai skyscraper to Dubailand – a three billion square foot theme park, designed to attract 15 million tourists by 2015. But today cranes and bulldozers at building sites across the country stand idle as the cash ﬂow to see these projects transformed to bricks and mor-

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tar runs dry. A report by the Dubai-based market research ﬁrm Proleads has revealed that around 53 percent of the projects in Dubai’s US$582 billion property portfolio have been suspended. It claims that only US$698 billion is still in operation on active construction projects – in a sector worth an estimated US$1.3 trillion. Job cuts have been widespread across the real estate sector with the likes of Emaar and Nakheel announcing hundreds of redundancies. Construction workers have been the worst affected. A report by the UAE daily newspaper Emirates Business 24/7 claims that Air India and other Indian carriers were preparing to accommodate 20,000 of bulk bookings for construction workers in March and that the consulate had witnessed a doubling in

“When one industry implodes it’s not isolated, it takes many other industries with it” requests for out passes – from 200 applicants a month in 2008 to 400 a month in January 2009. These numbers will account partly for the mass exodus of expatriates that is expected from the country in 2009. At current levels, 1500 visas are cancelled every day in Dubai and the emirate’s population as a whole is expected to drop by eight percent this year. Figures released by Dubai’s Ministry of Interior Naturalisation and Residency show that 54,684 residency visas were cancelled in January 2009 compared to 29,418 in January 2008 – an 86 percent increase. Of those, the majority were for expatriates who had worked for private sector companies.

Dubai’s tourism sector has been hit hard by economic downturn

Those leaving the country are not just construction workers. The impact on the sector has sent shockwaves through the many other industries that rely on construction for business. These include media companies, which depend heavily on the real estate sector for advertising revenues, architecture and engineering firms and facilities management providers. Arab billionaire Mishal Kanoo, Deputy Chairman of the Kanoo Group says: “Obviously the industry that has been the most seriously affected is the property market. That has completely imploded in on itself. And unfortunately when one industry implodes it’s not isolated, it takes many other industries with it. One of the worst affected is the advertising industry, which had been propped up by the property industry.” After construction, the other main driver in the UAE economy is travel and tourism. Travel and tourism research firm STR Global has revealed that revenue per available room in Dubai plunged by 25.9 percent in December 2008 compared to the previous year. Overall revenue dropped by 2.2 percent in 2008 but the numbers for 2009 are expected to show an even more dramatic change. Meanwhile, hotel occupancy rates dropped by 4.9 percent in November across the UAE with occupancy rates in Dubai experiencing the biggest drop of 5.6 percent. An even more negative picture is painted by Dubai’s Ministry of Tourism, which claimed in January that hotel occupancy rates fell by 14 percent in the third quarter of 2008 compared to the same period the previous year. Banks across the UAE have suffered heavy losses as a result of the economic downturn across all sectors and have tightened lending practices as a result. Among those that have been affected are Emirates NBD, the UAE’s largest banking group, which suffered a seven percent fall in profits in 2008 compared to the previous year; National Bank of Fujairah, which posted a full year loss of US$13.7milion for 2008; Mashreq, which has cut four percent of its workforce; and Abu Dhabi-listed Invest Bank, whose prof-

Construction workers in the UAE face job losses as projects are put on hold

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EXPECTED 2009 GDP GROWTH IN THE GCC ACCORDING TO MERRILL LYNCH

nance some large-scale infrastructure projects: “The other thing to consider is bank liquidity and the extent to which they are lending to good projects like infrastructure. There are instances where we see banks being reluctant to extend large-scale ﬁnancing.”

Kuwait

-1.8 %

Oil matters

Bahrain:

PE RS IA N

+1.8 %

GU LF

Qatar

UAE

+ 5.0 %

-0.6 %

Oman:

+1.5 % Saudi Arabia

-0.2 % EA DS RE

INDIAN OCEAN

0 ml 0 km

500 1000

its dropped by a massive 98.4 percent in 2008. Describing the reaction by banks, Dr Ajit Karnick, Professor of Economics at the Dubai-based University of Wollongong, says: “Banks have become very stringent about finance as many property speculators have found themselves overstretched and have left the country. The banks are worried about the money that they have already lent and their main priority is to retrieve that. As a consequence new loans are becoming extremely difficult to obtain. Saddi adds that this more cautious approach to lending also extends to corporate finance, which is leading to reluctance on the part of banks to fi-

While the UAE is experiencing heavy losses across all industry sectors, the fact that it has worked so hard to establish sources of revenue beyond oil, could ultimately place it in a stronger position than the likes of Saudi Arabia which relies on oil almost entirely for its GDP, as Woertz of the Gulf Research Centre explains. “Bahrain and Oman will have deficits with oil below US$70, in Saudi Arabia the threshold is around US$50, which would mean a slight deficit at current price levels. The same is true for Kuwait. Only the UAE and Qatar would be able to maintain smaller surpluses with oil prices beyond US$40.” Dr Karnick adds: “In terms of how the individual countries will be affected, those that depend heavily on oil will be badly hit. For instance, 80 to 85 percent of Saudi Arabia’s GDP comes from oil.” There is debate among experts as to how badly Saudi Arabia has been affected by the downturn. In its report, EFG Hermes said it expects the Kingdom – along with Qatar – to outperform most GCC markets because of oil and gas surpluses. However, figures show that firms in the country have suffered significant losses from falling oil prices. A report by the Global Investment House revealed that overall profitability decreased by 7.6 percent in 2008 compared to in 2007 and that “the slump in crude oil prices during the fourth quarter totally reversed the outlook for the petrochemical sector”. One of the country’s biggest companies, Kingdom Holdings, posted net losses of US$8.26 billion for the fourth quarter of the 2008 financial year. Across the board, lower profit margins were posted by the cement sector, real estate, banking, petrochemical, insurance and food industries. The industri-

A Kuwaiti trader holds a wad of money during a protest outside the Kuwait Stock Exchange where share prices plunged in October

CREDIT CRUNCH:feb09 05/03/2009 08:15 Page 36

al investment sector witnessed the biggest profitability drop while the construction and hospitality sectors also suffered losses. Economic strain in the country has had a knock-on effect on the country’s property market – though less so than in the UAE. The country’s daily Saudi Gazette reported last month that the sale price of new apartments and villas in the Kingdom had fallen by around 12 percent. Meanwhile, the country’s construction secs the glitzy, tax-free Dubai lifestyle turns sour for those expats who find themselves tor has been so badly hit by the cash flow crisis that jobless and in debt, some are simply abandoning their cars at the airport and fleeing contractors have called on the government for urgent the city. Reports put the number of vehicles left in and around the airport at 3000, financial assistance. mainly luxury SUVs and saloons. Keys have been left in the ignitions, while some glove boxes Government aid will also play a large part in helpcontained maxed-out credit cards. Under local law, defaulting on debt, including bouncing a ing to ease the effects of the economic downturn on cheque, can mean prison. Not wishing to run the risk of jail, many debt-laden foreigners are Kuwait, which like Saudi is heavily dependent on oil revchoosing to leave their rented homes and cars behind before boarding flights out of Dubai. enues. The country’s government has launched a US$5 This is confirmed by Dr Ajit Karnick, Professor of Economics at the University of Wollongong billion economic rescue plan which includes state guarin Dubai. “A lot of cars have been abandoned at the airport by people who had taken out antees of up to 50 percent for any new loans given by loans to buy vehicles and had lost their jobs. Many of them just drove to the airport then left banks to local companies. It will also guarantee 50 perthe country but they are not going to come back because they have an unpaid loan against cent of all loans local banks provide to investment comtheir name.” Dr Karnick says the banks are now lumbered with thousands of cars that they panies who reschedule their debts and 25 percent of cannot sell. Police have issued warrants against the owners of the dumped vehicles, while loans issued to foreign creditors. those who choose to return risk arrest once they set foot back in Dubai. Kuwait is likely to be the first GCC country to face a full blown recession, experts, including analysts from Standard Chartered Bank, have warned, because of plans by the governsovereign wealth funds – which included investments worth US$5 billion ment to cut spending. The head of the Kuwaiti parliament’s budget comin Citibank and Merrill Lynch. mittee told reporters this month that the country would slash spending to In Kuwait it is the country’s financial sector that has been hit the hardUS$23.77 billion for the 2009/10 fiscal year, based on an initial estimate est. Investment firms make up over half of the country’s listed companies, of oil at US$35 a barrel. The country’s cash flow has also been hit by lossand have borrowed heavily to fund the country’s infrastructure projects. es of around US$30.9 billion in foreign investments, made by the country’s Both Global Investment House – Kuwait’s biggest investment bank – and

AIRPORT BECOMES VEHICLE DUMPING GROUND

SURVIVAL OF THE FITTEST? he country least affected by the economic downturn in the GCC is Qatar, according to several experts. A report published by Merrill Lynch notes that while the Qatari banking sector has tightened since the first half of 2008, banks in the country are in a “comfortable liquidity position”, and are “less exposed” to the downturn compared to the UAE. The government in the country has already taken steps to ensure the country’s financial sector remains in a strong position by forbidding local banks to extend more than 15 percent of their equity to finance real estate projects. In addition, a mandatory 35 percent deposit is required from any customer that wants to take out a mortgage. There is clear evidence too of domestic liquidity with deposits at local banks having risen by 63.6 percent in 2008. The country’s GDP is set to double within the next five years and Qatar’s economy is expected to expand by around 8.5 percent this year. The report stated that Qatar would be the fastest growing economy in the Persian Gulf as gas production in the country increases by 80 percent in the next two years. One of the main reasons for the strength of the country’s economy is the expansion of its natural gas production facilities. Qatar expects to double its exports of liquefied natural gas this year. The overall strength of the economy has led the country’s government to capitalise on the global downturn by making strategic investments overseas through its sovereign wealth fund, which is believed to be already worth around US$580 billion. It now plans to acquire at least three international blue chip companies.

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Islamic Investment Dar have called for government aid. GIH has announced that it has defaulted on most of its debt, while IID has requested US$1 billion in loans to lift itself out of debt. Meanwhile, the government-owned investment company, Gulf Investment Corporation, has had its long-term credit rating lowered by Standard & Poor’s, which cited the impact of “global and regional market conditions” as the reason behind its decision. Not surprisingly, widespread job cuts are expected across the country’s private sector and the government has warned that as many as 27,000 private sector employees could lose their jobs unless more is done to increase the value of shares in local companies. Oman, the GCC’s smallest market, only produces 750,000 barrels of oil a day so is less drastically affected by the fall in prices. Moreover its construction sector is, compared to Dubai, in its early stages and is financially supported by the government. However falling exports of petrochemicals and aluminium from the country will slow economic growth in the country to three percent in 2009, the Sultanate’s Ministry for Commerce and Industry has warned. While not on the scale experienced by Dubai, this represents a significant drop for Oman, which experienced growth of seven percent in 2008. Confusion reigns, however, over the state of the economy in Bahrain where talks to agree the country’s 2008/2009 budget collapsed in February. The Bahraini Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa has warned that plans to increase government spending in the coming year could be disastrous. “Our spending has to be decreased and any unnecessary spending during the global financial crisis will harm everyone,” he told the Gulf Daily News. Such uncertainty could damage Bahrain’s reputation as a financial pioneer in the region and could also put the country’s many construction projects in jeopardy. The original draft for the budget had included funding for all key government-backed construction projects. Already one of the country’s most high profile projects, the Al Dur power and water project, which is jointly owned by Gulf Investment Corporation of Kuwait and GDS Suez of France has been put on hold due to a tightening in the criteria of international lending practices. The country is now reported to be bracing itself for widespread job losses, particularly in the private banking and construction sectors.

In the meantime however, like all regions around the globe, the GCC countries have been forced to take any measures necessary to stem the cash flow crisis draining their economies. The economic downturn has come at the worst possible time for the GCC – and could have far reaching long-term consequences for the region. It is at a crucial stage in its development and building work is in process on major infrastructural and real estate projects and on establishing the region’s stock markets on the world economic stage. Not only are crucial sources of finance to fund these changes running dry, but the skills and experience needed to make them happen are also draining away. A survey by the international HR consultancy ORC Worldwide has found that 53 percent of GCC companies have implemented a freeze on hiring new staff and 17 percent more are planning to do so in the next 12 months. Of those surveyed, 15 percent said they had already cut jobs and a further 20 percent said they planned to in the coming months. This skills drain could represent the biggest threat to the future of the GCC – where expatriate workers make up around 40 percent of the total population – a figure that rises to 90 percent in the UAE private sector. Eventually the GCC, like the rest of the world, will recover from the economic downturn and the wheels of change and progress will pick up pace once again. But as long as the exodus of expatriates from the region continues, places like Dubai could find themselves facing a critical shortage of talent in the long term. The many expatriate workers boarding planes bound for home at the region’s airports played a crucial role in the GCC’s success story. And it’s not just their belongings that they will be taking with them but the skills and industry knowledge that the GCC will need so desperately in order to rebuild its bubble once again. n

The road ahead Just as no expert could predict the extent of the economic downturn, neither does anyone know when the economy will begin to pick up again. This hinges mainly on oil prices and it is only when these rise that the GCC too will show signs of recovery. Kanoo believes that it will be just six months before economic recovery will begin: “I’m guessing that by summer this year things will stabilise and by the fourth quarter of the year, there should be an uptake,” he says, adding: “While it lasts though I can tell you that every company will be hurt by this economic situation no matter how big or intelligent that company is.” Professor Karnik, however, argues that it won’t be for at least a year that full-blown recovery will start. “There is a general concensus that 2009 is not going to see the situation dramatically change. There’s a feeling among economists that in the second half of the year things might start to bottom out. Full-blown actual recovery is unlikely in 2009. This is more likely in 2010.”

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Talking heads We asked six experts their opinion on the economic downturn in the GCC. The talent spotter Rabea Ataya, CEO and Chairman of Bayt.com, the Middle East’s leading recruitment website: “The bayt.com November 2008 Consumer Confidence Index Survey shed some very interesting light how on how GCC residents view the economic downturn in the region. When asked ‘currently, how easy or difficult would you say it is to find a new job in the country you live in?’ 43 percent of GCC respondents, the majority, indicated there are very few jobs available and only 19 percent said there are plenty available. Moreover when asked ‘In what way do you expect availability of employment to change in a year’s time?’ the majority at 31 percent felt there would be fewer jobs available versus 28 percent who thought there would be more available. There is news of widespread job cuts and consolidation in certain sectors that have been suffering Rabea Ataya globally such as real estate and financial services. The GCC has not been immune to the woes these sectors are suffering overseas and this has probably been accentuated by the fact that these sectors in the GCC went on marked hiring splurges in 2007 and early 2008. “However, as companies trim down certain excesses to regain competitiveness on a global footing there remains a demand for seasoned staff at competitive salaries that can see these companies through the more difficult times. Today there is still a demand for top talent in most sectors, but employers are more discerning when it comes to sourcing and screening professionals and they are aware that in a market saturated with seasoned top calibre talent they can demand top qualifications at competitive salaries without having to engage in the heady price wars of 2007 and early 2008. Many companies are using this market correction as an opportunity to lay off some relatively less competitive professionals and replace them with top talent laid off from ailing companies or who are looking to relocate from overseas as a result of economic turmoil in Ajit Karnick their home countries”.

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The insider Mishal Kanoo, Arab billionaire and Deputy Chairman of the Kanoo Group, one of the largest familyowned independent groups of companies in the GCC: “We tend not to use the word recession here. We talk more about a correction. The economic downturn globally was the instigator for the economic downturn in the GCC. But it would not have affected it so badly if major issues did not exist here in the first place. The main reason why the property market imploded was that you cannot sustain year-onyear growth of 30 to 40 percent without a major correction occurring eventually. This correction would not have been as spectacular if people had been buying property for their own use rather than speculating. People’s greed got the better of them and they ended up speculating on something that was Mishal Kanoo not there. I remember someone telling me I could buy the 48th floor of the Burj Dubai for US$73 million. When things reach that point you know there’s a problem. For that price I could buy a significant building or several smaller buildings. “I actually believe that the correction in property prices is the best thing that could have happened for Dubai because now all those cowboys and fly-by-night operators will hopefully leave. We will have a few months of pain but post that – say six months down the line – those that did survive will come back in a better financial position and will have better relationships with the banks. Then the economy will start to blossom again.”

The economist Dr Ajit Karnick, Professor of Economics at the University of Wollongong in Dubai: “Construction and tourism are two of the main drivers behind the UAE economy and both have been badly affected. Hotel occupancy rates at this time of year would normally be 85 to 90 percent but this has dropped to around 60 percent and even lower. A number of major construction projects have been shelved indefinitely and that includes projects by the major players such as Nakheel and Emaar. This means that use of construction equipment has fallen steeply and cranes are sitting idle. Banks have become very stringent about finance. Previously, credit cards were being given out randomly but it is very difficult to apply for either them or for loans now. “Oil prices will affect government operations. About a month back Dubai announced its budget which showed a massive increase in spending. Since then oil prices have

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fallen and the economy has slowed even further. There really isn’t any information about where the funding for the budget is going to come from. It can only come from taxes, oil wells, borrowing or the creation of money. Each of these is problematic. For the budget to remain in balance and for the targets to be achieved revenues will have to pick up over the next 11 months.”

The researcher Dr Eckart Woertz, Programme Manager of Economics at the Gulf Research Centre: “We predict that in the GCC current account and budget surpluses will be significantly reduced or turn into deficits in some countries because of the oil price slump. Growth rates will retreat from solid single digits to only slightly positive in some cases. “Maybe some of the speculative excesses in the real estate sector and stock markets could have been avoided by more determined regulation and lending restrictions. But this is a global Eckart downturn and the possibilities of the GCC countries, whose combined GDP is comparable to that of the Netherlands, are limited. In a recession oil producers suddenly find themselves on the price-taker side and can only manage the decline by production cuts. In the long run, however, oil prices will go up again, because oil supplies in many regions of the world are declining and necessary investments in production capacity are not undertaken at current oil price levels.”

The analyst Joe

Saddi, Chairman of Booz & Company and Managing Director of the firm’s Middle East business:

“There is no part of the world that can claim to be insulated from what is happening. The International Monetary Fund forecast global GDP growth at 2.5 to three percent in 2009. This is compared to ﬁve to six percent in the MENA region, and three and four percent for GCC countries. But this depends on the oil prices. This represents a small, albeit positive growth, if you compare it to the Eurozone where most nations have slipped into recession and in the US where the economy has been shrinking. Overall, the GCC may be one of the few regions with positive growth, although it will be at a lower growth rate than the last couple of years. There will be cuts in jobs at real estate and construction companies particularly in Dubai, with projects being delayed or worse, and the ﬁnancial sector, too. However, this is not a common phenomenon across the board in the GCC. It is relatively localised and there is strong liquidity that should help the situation.

“You have to be a magician to know when the global economy is going to come out of this but when it does the demand will pick up again and this will drive oil prices up. The region is dependent upon high oil prices. Everyone in the industry agrees that anything above US$100 was driven by pure speculation. The US$40 price is driven by weaker demand from the developed countries, as well as less growth in countries like China and India. Most countries in the GCC have built up significant reserves in the past couple of years however so they should be able to weather these lower prices. GCC governments need to continue to do certain things. They need to ensure that they have strong regulation in place, ensure liquidity and possibly introduce better regulation of the real estate sector from a financing perspective in order to avoid huge speculation. They need to continue to have more transparent fiscal policies and continue to drive GDP.”

The people’s voice Woertz

Joao Neves, Regional Research Director at YouGov Siraj which carries out regular surveys of GCC residents:

“We interviewed a sample of 725 respondents for the first Reality Check survey and one of the most startling findings was that 65 percent of the respondents said they felt there was a lack of transparency in the UAE regarding the current financial situation. What is happening is that people are hearing more and more in the media and from friends and family about job losses and companies shutting down. But because there is a perceived lack of transparency they feel they are not being told the full story about what is happening with the economy here. Around 38 percent of the Reality Check respondents said the current economic environment in the UAE is making them consider the possibility of relocating to another country. “People are feeling very nervous about their job situations. They are really tightening their belts and spending their money more cautiously. Two-thirds of respondents said they were switching brands to make more economical purchases and 67 percent said they are avoiding easy credit solutions because they are concerned about debt. “When people ﬁrst started hearing about the credit crunch in America they didn’t think the Middle East would be affected so badly. But now it’s very obvious that the real estate sector and many others are really struggling and people are bracing themselves for the long term. Having said that though, 60 percent of the respondents said they felt the UAE is still in a better poJoe Saddi sition than other parts of the world.”

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AVIATION

Despite holding his own pilot’s licence, nowadays Qatar Airways CEO Akbar Al Baker is more likely to be found behind a desk than in the cockpit. But as Diana Milne discovers, he has lost nothing of his passion for the aviation industry.

here aren’t many airline bosses with the ability to fly planes as well as buy them. But Qatar Airways CEO Akbar Al Baker believes in taking a hands-on approach to running his business. As the holder of his own private pilot licence he is passionate about flying and has spearheaded Qatar Airways’ transformation from regional to international carrier. When he took up the post in 1997 Qatar Airways operated just four aircraft and flew to limited local destinations in the Middle East. Today it flies to over 80 destinations across Europe, the Middle East, Africa, South Asia, the Far East and North America and operates a fleet of 63 aircraft. But the best is yet to come for the airline, which is set to double its fleet size to 110 by 2013 and currently has over 200 aircraft worth over US$30 billion on order. On the back of these achievements, Qatar Airways has won a string of prestigious international awards including being named one of the world’s top 10 airlines in the 2008 Skytrax Awards and retaining the prestigious five-star award for excellence in customer service, and standards. Describing what makes his airline stand out from its rivals in the increasingly competitive Middle East aviation market, Al Baker says: “Within 10 years, Qatar Airways has elevated its position from a regional player into an international carrier, and is now recognised within the industry as one of the best airlines in the world. Our five-star service, attention to detail and dedication to our passengers, as well as our superior equipment and the excellent food and beverages served onboard, set us apart from other airlines, giving us a significant competitive edge.”

Going global Al Baker’s fierce ambition for the growth of the airline has played no small part in its success story. In the past two years he has embarked on a multi-billion dollar shopping spree, which included snapping up 80 Airbus A350s, 60 Boeing 787s, 29 Boeing 777s and eight Airbus 321s. These aircraft will enable Al Baker to expand Qatar Airways’ network, focusing in particular on the US where it has expanded its potential by shifting its New York operation from Newark Liberty International Airport to John F Kennedy International Airport and starting daily flights between Doha and New York. “This year will see new attractive leisure and business destinations across the globe joining our network. In addition, we will step up frequencies on various routes to increase flexibility and convenience for our valued customers. We are gearing up for the new route launch to Houston in Texas – our third destination in the US following our launches to New York and Washington last year,” says Al Baker. Asia is also an important growth area for Qatar Airways given the growth in air traffic in the region, he adds: “The expansion of our route network is always based on commercial factors. Forecasts in air traffic growth in Asia and especially China are enormous. We expect high revenues on routes serving the Asian region and, as other parts of the world have strong economic relationships with China, India and other Asian economies, we are confident of increasing ticket sales in these regions to Asia and vice versa.” With this in mind, the airline last year launched its ninth India route, from Doha to Kozhikode and also unveiled scheduled flights to Guangzhou in Southern China.

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Aviator The

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WILL THEY WON’T THEY?

Speculation is rife that Qatar Airways could soon launch a budget airline. The Middle East’s low-cost airline market is becoming increasingly competitive with carriers including Air Arabia, FlyDubai and Jazeera Airways all operating cheap flights across the region. In July 2008, following its purchase of eight Airbus A321s, Al Baker told reporters that he was ready to “launch a low-cost carrier within 90 days”. BM asked Al Baker whether he still intended to go through with his plans. “I am against the concept of low-cost carriers, but if the airline’s market share is eroded by competitors in this area, then yes, we will consider launching our own low-cost airline. To date, we do not believe low-cost is a real threat because we are a full service airline serving a niche market. Low-cost carriers have their own market niche. We believe products do all the talking. If you have a superior product on the ground and in the air, like we have, that gives us a true competitive edge.”

Blazing a trail Despite having only been in business as an international carrier for 11 years, Qatar Airways has already beaten its more established rivals on several occasions when it comes to adopting cutting edge technology and has developed a reputation for being an industry innovator. In 2006 it become the first international carrier to offer live digital television to its customers on board its A340 and A330 aircraft. In 2010 it is set to become one of the world’s first airlines to launch flights on the twin-deck A380800 ‘super jumbo’.

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The carrier is also aiming to blaze a trail when it comes to cutting carbon emissions, by becoming the world’s first airline to power its fleet using eco-friendly gas-to-liquids kerosene oil in partnership with Qatar Petroleum, Shell, Airbus, Rolls Royce and Qatar Science and Technology Park. “Qatar Airways is known for being an innovative and progressive industry leader,” says Al Baker. “We operate one of the youngest and most modern fleet of aircraft in the sky with an average age of just three years.” Describing the facilities on board the newest addition to its ﬂeet, the Boeing 777, he says: “Our new Boeing 777 aircraft offers one of the best in-ﬂight entertainment systems in the world, providing an unrivalled selection of more than 700 audio and video entertainment options.” Underpinning Qatar Airways’ expansion strategy has been a strong focus on building brand strength and increasing awareness of the Qatar Airways brand worldwide. Last year the airline unveiled a new global television, print and online advertising campaign that centered around its

“Within 10 years, Qatar Airways has elevated its position from a regional player into an international carrier, and is now recognised within the industry as one of the best airlines in the world” new tagline: The world’s five-star airline. The campaign included three television commercials that were aired on CNN International, BBC World and Al Jazeera International and a branding campaign across news websites. Describing the importance of the campaign, Al Baker says: “Our strategy is clear – to open up new routes to key business and leisure destinations worldwide from our Doha hub and to continue raising brand awareness throughout the world. As our passenger numbers are steadily growing, our marketing activities are stepped up too.” But he says he plans to pay more than just lip service to Qatar Airways’ slogan. The airline has positioned itself as one which provides a luxury service to economy as well as first and business class passengers: “We believe in offering our passengers the ultimate in comfort, whether they fly in our premium cabins or in economy class. As the Skytrax awards are based on a survey from 15 million passengers, it clearly proves that the traveling public recognises that our product is truly fivestar,” says Al Baker.

Putting Qatar on the map In a bid to reinforce this message further, Al Baker has overseen the creation of Qatar Airways’ Premium Terminal at Doha Airport – the first of its kind in the world – which features Jacuzzis and spas, video conferencing facilities and fine dining restaurants. Al Baker has also been instrumental in the development of the multi-million dollar New Doha International Airport, which is scheduled to open in 2011. The 22 square

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kilometre airport will be located to the east of the existing airport on land partly reclaimed from the Gulf and will include modifications to accommodate the new Airbus 380 and state-of-the-art passenger facilities. It will play an important part in enhancing Doha’s reputation internationally and helping to build up the city’s hospitality sector. The government of Qatar is keen to emulate the success of neighbouring GCC countries in attracting international tourists. It aims to increase its hotel capacity from 4400 rooms to 29,000 by 2012 and is developing several major projects, including the US$14 billion PearlQatar offshore residential and leisure development and Qatar Entertainment City – a 180,000 square foot development that will feature a US$275 million theme park. Qatar Airways plays a key role in helping to the country to establish itself as a world tourism destination and in turn will benefit when it achieves these aims. “As Qatar’s infrastructure develops due to the economic boom it is enjoying, we will see more travellers – and there is already evidence of this – ending their journey in Doha for business or leisure,” says Al Baker “Qatar is building its tourism infrastructure, focusing on quality, high-end tourism with excellent five-star hotels and resorts under construction, which will help boost the profile of my country in the international arena and encourage more people to visit Qatar for holidays.”

Like every country in the GCC however, Qatar faces tough challenges ahead with the global economic downturn posing a threat to the development of its real estate projects and casting doubt over projected tourist numbers. Last year Qatar Airways also faced the threat posed by rising fuel costs. Al Baker describes this threat as “a major concern for the industry” which had “a significant impact on airlines’ bottom line”. He goes on to say that these twin challenges have led the airline to implement cost cutting exercises: “Carriers are increasingly hedging their fuel in order to control their operational costs and better plan for the future. Qatar Airways also employs such strategies as it has proved to be a successful way to reduce costs and manage risks.” This optimism masks the harsh reality that Qatar Airways, like all Middle East airlines, faces a battle to survive in the year ahead. According to the International Air Transport Association (IATA) carriers in the region, stand to lose US$200 million in profits this year, with the overall loss for the global industry estimated at US$2.5 billion. These numbers are not enough to shake Al Baker’s confidence however – the airline is sticking to its ambitious targets. And if his performance since taking the helm in 1997 is anything to go by Al Baker stands a pretty good chance of weathering the storm. n

ABOUT AKBAR AL BAKER Akbar Al Baker is a graduate in economics and commerce and has worked at various levels in the Civil Aviation Directorate before becoming Qatar Airways’ CEO in 1997. Over the last decade, he has spearheaded the growth of the airline, which operated only four aircraft in a regional capacity prior to his appointment. He is also leading the development of the multi-billion dollar New Doha International Airport, which is scheduled to open in 2011. Al Baker has been a successful businessman in Doha for more than 25 years and is also CEO of several divisions of Qatar’s national airline – Qatar Airways Holidays, Qatar Aviation Services, Qatar Duty Free Company, Doha International Airport, Qatar Distribution Company and Qatar Aircraft Catering Company.

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He who dares wins

As one of the Middle Eastâ&#x20AC;&#x2122;s biggest home-grown hoteliers the Rotana Group has been instrumental in building the regionâ&#x20AC;&#x2122;s tourism industry. And as its founder Selim El Zyr tells Diana Milne, it will let nothing stand in the way of its success.

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otana is not a company that is afraid of taking risks. Among the destinations where its hotels are located are Erbil in the Kurdish area of Iraq and Khartoum in Sudan. And in December it hit the headlines by announcing plans to open a ﬁ ve star luxury hotel in Baghdad’s high security Green Zone – the only one of its kind in the war-torn city. Iraq may not be every hotelier's ﬁrst choice of location, but Rotana President and CEO Selim El Zyr sees high potential for his 225room Baghdad hotel: “It's going to be right opposite the American embassy. There are a lot of diplomats that come and go in the area and everybody that comes to Baghdad will have to stay in our hotels because the other hotels are in a very poor condition after the war he says, whilst admitting a lot of people were “astonished” by Ro-

tana’s announcement. “That is Rotana. We always go to places where nobody else goes and that is why we are pioneers in this field. We don't mind taking risks, not at all,” says El Zyr. It is a good thing that Rotana is fearless because the company is operating in a fiercely competitive environment. The tourism boom in the GCC has attracted the world’s top hospitality players and as a local company, Rotana must fight hard to stay in the top league. El Zyr believes that it is precisely the fact that Rotana is a local brand that has ensured its popularity. In a recent regional brand awareness survey it was voted number 18 in the top 100 brands in the Middle East, an accolade El Zyr is justifiably proud of: “If we remain at this level we'll be very lucky because there are some great, large brands in the survey such as Emirates Airline and Etihad Airways. The Rotana brand is associated with trust. People trust us. There are no surprises when

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COMPANY HISTORY Rotana Hotel Management Corporation (Rotana) was founded in 1992 by a partnership between, Nasser Al Nowais and Selim El Zyr, who were joined three years later by Nael Hashweh and Imad Elias. Operating as Rotana, it opened its first property in Abu Dhabi in 1993 and is today one of the leading hotel management companies within the Middle East and North Africa. Rotana’s is aggressive expansion plans have seen the company grow from two properties in 1993 to a total of 65 by 2012. The many new projects in the pipeline confirm the company’s intention to have a Rotana-managed property in all the major cities throughout the Middle East and North Africa within the next five years.

it comes to the Rotana hotels. You know what you get in advance, we deliver on our promises and this is how we are in business.” Another of the company's strengths says El Zyr is its knowledge of the Middle East market – giving it the edge over international rivals. “Our clientele knows that we are experts in the Middle East market. That is our particular selling point,” he says. The Rotana Group is also diversifying into providing unique product offerings, in particular Rayhaan – a brand of hotels which adheres to Arab cultural values and beliefs, which El Zyr says he believes has strong potential particularly in Saudi Arabia, but also in cities across the world. Indeed he goes as far as to say there is enough demand for alcohol free hotels in every city in the world: “I think that in every city there will be space for one or two of these hotels. They will be attractive to Arabs, Turks, Iranians and any people that do not consume alcohol.” Rotana has grown rapidly since it started in 1993 with just two Dubai hotels. Today its properties span the Middle East and North Africa and by 2012 it plans to have a portfolio of 65 hotels. Part of the reason behind its rapid expansion is that it has grown at the same time as the UAE has grown as a tourist destination. It has played a big part in both creating and proﬁting from the region's tourism boom and El Zyr is particularly excited about plans to develop Abu Dhabi as a global travel destination. The Abu Dhabi Tourism Authority has announced plans to open 29 additional hotels in the emirate and projects being built there include Yas Island and Saadiyat Island. Rotana will be managing 3000 of the additional rooms to be created in hotels there including a 259-room property on Yas Island. “Abu Dhabi has all it needs to be a tourist destination,” says El Zyr. “It has fantastic beaches, beautiful islands and now construction is happening to build super luxurious hotels. Abu Dhabi does not compete with Dubai – it complements it. It has more of a focus on cultural tourism and will have some of the world’s most exclusive museums.” He is all too aware, however, of the effect the global economic downturn could have on the plans for Abu Dhabi – revealing that occupancy rates at his own hotels have already dropped by up to 15 percent compared to the previous year. El Zyr says he is determined to ensure Rotana’s standards don't drop as a result: “This situation will be very challenging because when occupancy drops, rates drop and the natural result would be that quality would also suffer. What we will try to do is to avoid compromising on quality in order to ensure a better market share.” El Zyr's experience in the hospitality industry means he is keen to take a hands-on approach to running hotels and ensuring that standards are kept high. He studied at Cornell and Columbia Universities in the US then trained at L’Ecole Hóteliére de Lausanne in Switzerland. He started his career as assistant chief steward at the Waldorf Astoria in New York where a serendipitous turn of events meant he was quickly promoted to the top spot: “I was appointed as the assistant but then the chief steward ran away,” he explains. From there he worked in Madrid, Germany, Cairo, Montreal and the UAE. He set up then sold a fast food business in Lebanon then moved to Abu Dhabi to work for the Abu Dhabi National Hotels Company as manager of one of the hotels. In 1992 he and the chairman of the Abu Dhabi National Hotels Company decided to strike out alone and set up their own hotel

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business, starting with the Beach Rotana hotel in Abu Dhabi then with the Al Bustan Rotana hotel in Dubai. El Zyr is passionate about working in the hotel industry, but says

“The challenge of yesterday was how to get enough resources to manage all the hotels efficiently. The challenge of today will be how to remain in business”

he doesn’t always enjoy being a guest in his own properties: “If you asked the manager of the best hotel in the world if he’d like to stay there, he’d say ‘no get me out of there, I don’t want to stay there’.” He’s the first to admit that his is a “dream job” by most people’s standards and says his favourite hotels to stay at if he is off duty are those run by the Four Seasons or Six Senses groups, or his original training ground the Waldorf Astoria in New York. But he knows that the year ahead will be tough with tourist numbers hit hard by the global economic downturn: “The challenge of yesterday was how to get enough resources to manage all the hotels efficiently. The challenge of today will be how to remain in business, to retain market share and to stay profitable in the economic conditions that are prevailing in the world.”

Erbil (Iraq)

Khartoum (Sudan)

Al Ain (UAE)

Abu Dhabi (UAE)

Dubai (UAE)

Fujairah (UAE)

Sharjah (UAE)

Kuwait City (Kuwait)

Beirut (Lebanon)

Damascus (Syria)

Sharm El Sheikh (Eygpt)

Hurghada (Egypt)

Selim El Zyr

3 3

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EDUCATION

Life lessons From humble beginnings, with a single school in Dubai, GEMS Education has grown into a multi-million dollar global business teaching 85,000 children in 100 schools worldwide. Diana Milne meets Chairman Sunny Varkey to find out the lessons he has learnt in business and in life.

ou would expect the boss of a multi-million dollar business to have been a model student during his school days. But in the case of Sunny Varkey, Chairman of GEMS Education, you would be wrong. In fact, Varkey didn’t do much studying at all when he was at school – a factor that ironically, inspired his choice of a career in education. “I was a good student but I didn’t like to study much. I was more of a hands-on businessperson, an entrepreneur, and that’s why I have a passion to build good schools,” he says. While he is all too happy to admit his own failings as a student, Varkey is determined to provide inspirational

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learning environments for the 85,000 students taught in GEMS schools worldwide. Varkey’s parents, who were both teachers, sowed the seeds for the foundation of the company when they opened Our Own English High School in 1968 after arriving in Dubai from Kerala in India to start a new life. The school faced the threat of closure when Varkey’s parents were ordered by the government to either build better, purpose-built premises or shut down. At that time, Varkey was a fledgling entrepreneur and pitched in by investing in a new facility for the school which he went on

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to manage. He hasn’t looked back since. Today the company manages a network of 100 international schools across the Middle East, Africa and Europe – which Varkey says set new standards in education and facilities: “Our philosophy is to ensure that every parent gets good value for their money and that every child gets a good education. Good quality forms the backbone of everything we do. We are trying to make a difference in the way schools are built. We want to make the environment very different, exciting and interesting.”

Daring to be different Varkey’s disappointing experiences as a schoolboy in UK boarding schools have driven his desire to create schools that children want to learn in. “In a certain way, seeing some of the good schools in England made me want to go further and do better. I want to be innovative and think outside the box,” he says.

Varkey has taken this concept one step further with the creation of the ﬁrst GEMS World Academy, which was built in the Al Barsha area of Dubai at a cost of US$20 million. The school is a far cry from anything parents will remember from their schooldays and features a 400m athletics track, 660 seat auditorium, and Discovery World – a high tech zone with a robotics lab, planetarium, design and technology study and art studio. There is even a catwalk for aspiring fashionistas and a roof top Peace Garden. Describing the school, which will now be emulated across the UAE, Varkey says: “The facilities are absolutely superb. The whole campus has been designed to be very exciting. There is even an observatory and planetarium.” GEMS World Academy is clearly catering to the high end education market – with fees believed to range from US$14,400 to US$25,050 a year. Within the GEMS network however, there are different levels of schools in different price brackets and Varkey insists his aim is to provide education aimed at children from a range of backgrounds:

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“We at GEMS lead the pack as the largest operator of private schools in the world for kids from three to 18 and we also offer different models from mid market to premium plus, at different price points. This doesn’t exist in many countries, especially in Dubai. What we provide allows parents, depending on their financial capability, to choose a school for a child without compromising on quality. This works in the same way as airlines and hotels where products are offered at different price levels.”

Counting the costs Despite its commitment to price variation, however, the company has recently attracted controversy by announcing a 90 percent price hike at a Dubai school, the Dubai Modern High School – a move which has sparked protests amongst parents, 98 percent of whom have responded to a survey saying they are unwilling to pay the increased fees and will be looking for alternative schools for their children. At the time of the announcement, a statement from the company claimed it was forced to increase its fees because of an increase in rent that had forced it to relocate the school to a different area of Dubai. This situation relects the fact that GEMS – like all companies in the UAE – faces tough challenges ahead. The exodus of expatriates from the country could put an end to the long waiting lists it has boasted in the past and the drying up of credit availability places a question mark over its ambitious plans to build more GEMS World Academy schools. As Varkey points out, running GEMS Education is akin to running any large business. Indeed he compares it to a hotel or aviation business. “Of course as industries they are different but the philosophy of branding and quality assurance is probably the same. Both models provide economies of scale and ensure that they provide a minimum level of service that is associated with the brand. We at GEMS are totally customer driven and we package our education with hospitality.” These comparisons mean GEMS Education faces many of the same challenges as fellow companies in the corporate world – including, in the Middle East in particular, manpower shortages. Varkey is aiming to combat this problem by improving the environment in which the teachers operate and by starting a teaching awards event to increase staff morale. The company is also planning to set up teaching training academies in the region and to boost in-house staff training.

Pastures new Varkey, like the bosses of airlines and hotel operators, harbours global ambitions and has already succeeded in extending the GEMS network of schools across the world: “Our aim is to be in almost every country as we go forward. We’ll be like a hotel chain that has a hotel in almost every country in the world”. He goes on to say that is he keen to strengthen GEMS Education’s presence in Europe, particularly in the UK where he believes his schools have the potential to compete with the UK’s top public schools. “One area we are looking into is the UK market, where it’s about time the UK government started giving choice to parents in terms of more private schools, the right ones, the right models, and at no cost to the gov-

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Sunny Varkey, founder and Chairman of GEMS Education ernment. “We have about 11 schools in the UK but mostly these are ones we took over from existing schools. What we are looking for are greenfield sites, so we can build some schools from scratch like the ones we have in Dubai.” Varkey’s business acumen does not stop at the education sector. GEMS Education is part of the Varkey Group, which he chairs and which also includes Emirates Healthcare Holdings Limited, which runs the Welcare and City Hospitals and clinics across the UAE. He says he has no intention, however, of branching into new sectors, having chosen his specialisms wisely, in view of current economic conditions: “The two businesses that are almost recession-proof during the financial tsunami are healthcare and education,” he says. “So in terms of investment I think people should look at education and healthcare as good businesses today.” He adds that he plans to focus primarily on education, admitting: “I like to be master of what I do. So I’m sticking to education as my main business.” Varkey’s considerable achievements were recently recognised when he was awarded India’s Padmashri award, which is given to those who have achieved outstanding contributions in education and social service. He has certainly come a long way from the reluctant schoolboy – and for the thousands of budding entrepreneurs being taught in GEMS schools across the world, there can be no better inspiration than Varkey himself. n

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ASK THE EXPERT

Safe and sound solutions Netop’s Per Rank asks whether remote control software can put your data at risk?

hen you are stuck with an IT problem, you are frustrated – not productive. That is why you want help here and now, and that is why remote control software has been such a successful tool in the IT service industry. With remote control software the IT supporter can take control over your computer and work on it as if he was sitting in front of it. Companies taking advantage of remote control technology have saved tremendous amounts of time, money, and resources by eliminating the need for IT staff to travel, reducing system down time, and improving the efﬁciency of the IT organisation.

A security price There are many beneﬁts to gain from remote control software but by its very nature remote control can jeopardise your IT security. As remote control software works over your local network, or the internet, there is always the risk of sniffing of passwords from an established remote control session, brute force attacks on password protected remote control software, and so on. In fact, a recent survey showed that 42 percent of data breaches involved the use of some remote control software (Verizon Business RISK Team 2008 Data Breach Investigations Report).

“A recent survey showed that 42 percent of data breaches involved the use of some remote control software” Does that mean that all remote control software is inherently a security risk and you should avoid using it? No, just like you do not disconnect from the internet because of the risk of virus attacks. The beneﬁts of remote control sim-

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Per Rank, Director of Sales EMEA, Netop Business Solutions A/S, has over 20 years of experience with remote control software, including 13 years with Netop. Starting in sales, he moved on to play an instrumental role in developing the award-winning Netop products as Head of Product Management. Per Rank is also a member of the board of directors.

ply outweigh the potential risk and there are measures you can take to minimise the risk, such as changing the default ports, using rolebased access profiles, etc. However, just like you invest in anti-virus software it is also imperative to carefully consider the security aspects of your remote control solution. A four-layered remote control security model is necessary because a truly secure remote control solution will address who can do what, where and when. And when the remote control session is finished it should be able to document what actually took place in the session. The questions you should be asking are: • How does the IT supporter identify himself to the user computer? Remote control products differ on what criteria you can enforce, some use only passwords, others need user acceptance, which is not good for servers. The best solutions will offer you multiple access criteria including integration with directory services, smart cards or token-based authentication. • Can you define what different users are allowed to do? Users should not be treated equally when it comes to security. An administrator is typically given more rights than a support rep, and often it is necessary to limit the rights of external consultants when giving remote control access to servers. That is why

you must be able to give different rights to different groups. • Can you manage security from a central server? If security settings are managed on the local user computer it becomes a difficult task to change settings even in relatively small networks. A centrally-managed user access rights solution will enable you to change the settings for thousands of computers without having to configure each user computer individually. • Do you have full range documentation? With extensive logging and video recording of sessions, you will know exactly what happened and when. Did the help desk employee delete that important sales file while assisting the sales clerk with his internet connection? Who remotely accessed the confidential medical records on Saturday night? These are questions you would want to be able to answer. • Does it have industry encryption? The best solutions have 256-bit AES encryption and dynamic key exchange using the DiffieHellman method with key lengths up to 2048 bits. These are the criteria you should look for in a remote control solution if IT support is not going to put your data security at risk. For more information, please visit www.netop.com

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ENERGY

The

power of

technology

Established just 16 years ago, Dubai government-owned Emirates National Oil Company (ENOC) has rapidly flourished into a diversified group with international interests. And a vital cog in ENOC’s operations is information technology, as BM discovers during an interview with Group IT Manager Sina Khoory.

nside Sina Khoory’s office a polished glass trophy sits proudly on a shelf. This prestigious award was given recently by the IT Governance Assurance Forum (ITGAF) – a non-profit organisation created by the Dubai government to assist and promote the development of IT governance practices. As you would expect, the achievement means a great deal to this softly spoken IT chief who is responsible for the technology and systems across the energy group’s vast operations, spanning 30 active subsidiaries and joint ventures. Khoory, who exudes a calm but assured demeanour, describes the award as “not easy to win” and adds that it was recognition of ENOC’s hard work with the group’s IT systems. “It came at the right time and was a reward for the five-year effort by ENOC’s IT department in pursuing and maintaining our governance management systems,” he explains whilst glancing at the prize. “It is not the ultimate goal for us but it indicates that we are moving in the right direction, we are mature enough, and it pushes us for further improvement.” This is not the first time Khoory has got his hands on such a coveted prize; his previous employer the Department of Health and Medical Services (DOHMS), a government-controlled department heavily reliant upon technology, had won last year ‘s Cisco Innovation award. As IT Director, he was instrumental in executing and running the networking and information systems integration of Dubai’s four main hospitals and 20 other primary healthcare centres with the DOHMS online platform. It was last April that Khoory, who has been an IT professional since he graduated from university 18 years ago, made the switch from healthcare to energy after nine years at DOHMS.

A key component Like many industries, an energy group the size of ENOC has seen IT become intrinsically linked with its operations; indeed you get the impression from speaking to Khoory that it has become the beating heart of the organisation. Since 2000 the group has been making signiﬁcant overhauls of

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systems and the technology infrastructure and Khoory argues that the energy industry itself would be paralysed without IT running 24/7 behind the scenes. “Oil and gas businesses rely heavily on the systems that constantly produce accurate data to support diversiﬁed and dynamic activities, especially in our group. We have lots of different subsidiaries and operating companies working in different types of business – everything from reﬁning to retail to shipping to bunkering and more. The volume and speed of data required to operate this business is huge and we require complex analytics to make decisions and to do our day-to-day jobs.” Getting an overview of these diverse operations is key, Khoory notes. “You have to understand the dynamics of the various sites that

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ABOUT ENOC Established in 1993

we service and how technology can be an enabler of business success for each one of them.” One part of the business that Khoory describes as “especially complex” is the retail operations. In fact, when he joined ENOC he inventoried the information systems portfolio and discovered that almost all of the group’s operations touch the retail arm business in one way or another. The group has a network of 170 ENOC Retail and EPPCO service stations dotted across Dubai and the Northern Emirates, employing 3500 staff. More than 100,000 customers stop by to ﬁll up their vehicles, use the car wash, purchase groceries or use other services on offer at the retail sites every day. These customers generate around 300,000 transactions per day or 110 million a year. “At these sites we have all kinds of technologies and an interfacing portfolio of systems. We

Has 30 subsidiaries and joint ventures

The brand is visible in 20 countries

“Oil and gas businesses rely heavily on the systems that constantly produce accurate data to support diversified and dynamic activities, especially in our group” have fuel pump technologies, car wash facilities, the point of sale (POS), the payment gateways – including payment technology for utility bills and road tolls and so on,” Khoory explains. “There are plans to implement RFID (radio frequency identiﬁcation) technologies to combat loyalty card fraud, too.” With all this technology, it comes as no surprise to learn that ENOC is gathering and managing data every minute, of every hour, of every day.

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“The complexity of the customer volume and ensuring that your data is always available for decision-making is a big issue for us.” So are there other challenges that he faces at ENOC? Khoory quickly responds: “Retaining high calibre technical resources in a competitive market like Dubai, as well as maintaining the overall incurring costs of IT on the organisation are challenges.”

Global networks Another issue for an IT manger like Khoory is the nature of the ENOC group’s international mix of business operations. Centralised platforms are key here. “We are servicing broad entities in Djibouti, Singapore and in the future Morocco and Saudi Arabia, where people will use the centralised information platforms to do their day-to-day business – all over the internet through secure channels,” Khoory explains. And like many organisations today, ENOC embraces staff mobility by opening the network through a secure virtual private network (VPN) so staff can work from home and other locations off site. The infrastructure in place enables staff to work abroad, too.

“No system is 100 percent security proof and there is always risk taking versus the business benefits you gain from opening up a remote system”

Despite this flexibility for staff across the group, you cannot ignore the pertinent issue of security as the danger of networks being breached intensifies due to remote working. Indeed, defining your company’s perimeter is becoming all the more difficult with staff logging into the network on laptops and other mobile devices from different locations. Khoory suggests you have to weight up the risks the rewards. “We try to balance the business needs and the security consciousness. No system is 100 percent security proof and there is always risk taking versus the business benefits you gain from opening up a remote system. This is very important because if an organisation becomes paranoid then even printing out data from the system and taking it home is a breach in security and difficult to control.” He adds: “We take the industry-standard measures at all levels and in all aspects of our work. This can include investing a little bit more in certain security tools and preventative software to allow the business people to work from any place in the world.” Security aside, right now, and for the immediate future, improvement is paramount. A determined Khoory says he and his team won’t be resting on their laurels after the ITGAF award because they have a clear agenda of improving and redesigning internal processes according to industry-standard frameworks. “For the next year we have performance targets that have to be met here as we streamline documents and re-analyse eight internal processes. We have to make sure they are aligned with the framework, train our internal resources, implement them, and measure it all at the end of this year.” He concludes: “We are always looking to improve – we will never reach the maximum that we can achieve.”

Sina Khoory and ENOC CEO Saeed Abdullah Khoory with the IT Governance Assurance Forum (ITGAF) award

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We offer a diverse range of unlimited wireless solutions • Wireless Building Automation • Wireless Security & Safety • Wireless ICT (Information Communication Technology) • Wireless Entertainment Solutions Areas of Applications • Parking Lots • Gas Stations • Freeways • Schools • Marinas • Shopping Malls

• Construction Sites • Power Plants • Airports • Water Treatment Plants • Oil & Gas Pipelines • Property Management

Contact: EEKMASEC Systems UK Ltd Global Operations Emaar Business Park Building No. 2, 5th ﬂoor, The Greens. Dubai – UAE

Tel: +971 4 4224571 Mob: +971 50 8819225 Fax: +971 4 4224572 Email: operations@eekmasec.com Website: www.eekmasec.com

Working week is from Sunday - Thursday, from 09:30 am - 5.30pm with Friday & Saturday as the weekend. We are ahead of the UK by 3 hours summer and 4 hours winter time.

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ROUNDTABLE

The worst case scenario Business continuity has risen to prominence in recent years as multinational companies appreciate the need to invest in sound planning strategies should the worst happen. BM gathered three experts to discover what Middle East businesses can do to mitigate the threats that could de-rail operations.

Hamid Boughazi is the Middle East and Gulf Region Area Manager for Stonesoft Corporation. A graduate from Algiers University for Science & Technology (USTHB), Boughazi has worked as CIO at National Mapping Agency, as Presales Engineer and Project Manager at Digital Equipment Corporation and Schlumberger, and as Public Sector Lead at Microsoft.

BM. Disaster recovery/business continuity planning has come to the fore in recent years. What has driven its importance for organisations? Laurent Dedenis. The driving force for the need for disaster recovery planning in recent years has been two fold. First, data is increasingly becoming one of an organisation’s most valued assets. The reliance on critical enterprise software applications such as email, CRM, and workgroup collaboration tools is resulting in the rapid growth of data across all enterprises. Secondly, the retention of this increasing amount of data is fast becoming a requirement in all organisations. Government regulations, as well as company policies requiring data preservation, are expanding in tandem with the proportion of data that must be archived. Both these factors in conjunction with each other mean that organisations are pushing business continuity to the top of their agendas.

Prasenjit Saha is Vice President and Global Head of Solutions at Wipro Technologies. He has 18 years’ experience that includes heading practice groups, consulting, managing software projects and development and technical support and pre-sales. Saha co-founded Wipro’s security practice in 1997.

With over 15 years’ experience in startup management, Laurent Dedenis, Vice Present EMEA, Acronis, is responsible for driving growth in EMEA and oversees distribution strategy and sales and marketing. Dedenis joined Acronis in 2004, establishing its Singapore office. He was previously general manager of Microsoft Solomon Software Asia.

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Prasenjit Saha. Catastrophic events such as 9/11 in the US or 26/11 in India have convinced the business community that business continuity planning is a key priority and must be addressed immediately. Moreover, BCP/DRP (business continuity planning/disaster recovery planning) is being mandated by several regulations in the ﬁnancial environment – SEC (US), MAS (Singapore), Bank Nagara (Malaysia), RBI (India), to mention a few. The operational factors which are bringing business disruptions into the limelight include: • Global business chains – increasing the risk of disruption. • Round-the-clock operations, again resulting in greater risk of disruption. • A volatile, geo-political environment. • Increasing customer requirements (to comply to their BCP). • Moreover, the emergence of gaps in traditional BCP, such as lack of long-term disruption coverage within the plans, require a refocus.

“Catastrophic events such as 9/11 in the US or 26/11 in India have convinced the business community that business continuity planning is a key priority and must be addressed immediately” Prasenjit Saha

BM. What are the common threats that organisations face today, and are there any unique issues for the Middle East? PS. As mentioned before, the emerging threats include cyber and physical terrorism, increasingly harsh natural environment (New Orleans floods, Australian bush fires), pandemic risks, communication and technology failures, and so on. Suddenly, the path to continuity seems like a minefield, fraught with hidden dangers at every step. The volatile geo-political environment in the Middle East makes the region a special risk which requires careful planning to mitigate risks.

“People often think of natural disasters, wars and terrorism as the most common threats. However, sometimes just a combination of smaller incidents may cause major problems” Hamid Boughaz Hamid Boughazi. More and more data is being stored in the data centres and the data has become crucial also for the business continuity. At the same time, for security and cost reasons, data storage is getting centralised and more consolidated, which means that the importance of the data has increased. Along with globalisation and the internet, companies need to access data continuously from all over the globe in order to keep themselves ahead of their competitors. Information cannot be unavailable even for a short period of time and this has raised the need for faster and more automated recovery solutions.

HB. People often think of natural disasters, wars and terrorism as the most common threats. However, sometimes just a combination of smaller incidents may cause major problems. For example, a temporary loss of electricity, or an accidental cutting of an underwater backbone network cable, together with a human conﬁguration error may lead to a situation where data or services are inaccessible for a very long time. We have even heard stories about incidents where a simple paper clip under a keyboard button has paralysed a whole railway system for several hours. LD. The threat of natural disasters will always prevail, as will the fact that hardware will age, and with that comes the danger that systems will crash and data will be lost. However, another threat is fast emerging. In addition to the massive amounts of data stored on corporate servers, users’ workstations – desktop and laptop computers – also represent a major source of corporate data storage. Industry estimates indicate that 60 percent of all the data stored by corporations is held on users’ computers.

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This means that in many cases an IT department will not necessarily have direct control of a user’s system in order to back it up on a regular basis. In order to ensure that a backup is made, the IT manager must not only pre-schedule the backup, but must also be able to provide a location for that backup to go if the data resides on a laptop or computer that is not connected to the corporate network. Therefore, users within organisations are fast becoming a big threat to company data. BM. What is the likely barrier stopping management from putting adequate plans in place; is it costs, apathy or a combination of reasons? HB. Most likely, the most common reason is that disaster recovery/ business continuity people are not able to communicate the benefits of their work in terms that business people understand. The business people see just huge amount of costs that do not seem to be related or have any effect on running the actual business. The business people can understand ROI calculations, but disaster recovery/business continuity ROI calculations have many variables that are either very difficult to valuate in advance or their probability of realisation is very small. This means that accurate ROI payback calculations often cannot be established with any degree of certainty. It is more realistic to use a justification strategy based on a balanced set of quantifiable returns and risk reductions, as well as unquantifiable expected value. Disaster recovery/business continuity specialists should strive to capture the unquantifiable benefits in a clear, concise manner to effectively communicate it to the business decision-makers. And even when this is done, the risks are often underestimated, compared to the costs of the solutions. People often also tend to trust the currently used technology too much and deny or downplay the possibility of disasters happening to them. LD. Most companies now recognise the need to have effective business continuity plans in place. Even if companies are under pressure to make budget cuts, few will reduce spending on their disaster recovery solutions. People realise that without their data, companies cannot function. In fact, as the credit crunch bites companies who are desperate to conserve budgets will try to stretch the life out of their existing hardware. In order to survive, it is critical that they underpin this approach with a sound backup and recovery strategy. Relying on ageing hardware without ‘life insurance’ can result in disaster.

“Even if companies are under pressure to make budget cuts, few will reduce spending on their disaster recovery solutions. People realise that without their data, companies cannot function” Laurent Dedenis PS. I see this as a combination of multiple aspects. Traditionally, business continuity management has taken a backseat to business imperatives – both from a cost as well as management ‘bandwidth’ point of view. However, the recent focus on preparedness against

critical disaster scenarios requires a changed mindset and approach to manage the ‘unacceptable’ risks to business continuity. BM. How do you see this whole issue intensifying in the future? LD. Many users treat their storage space like petrol. They know that the resource will run out but they continue to consume it at a vast rate in denial that it is limited. However, in today’s climate people can no longer justify the budget to quench this thirst for storage capacity. Customers need help in prioritising data and managing growth. The cost of storage could prove prohibitive to a company’s success, therefore the adoption of solutions to help reduce the cost and rate of storage could provide critical in 2009. PS. Business continuity planning and disaster recovery planning will be mandatory in many areas, such as utilities, telecoms, banking and other critical sectors. Indeed, analysts predict that BCP will be accepted as a cost to doing business and will be required to be embedded in every business process. It will evolve from a competitive advantage to a ‘utility’ status, which means that any business without a demonsratably sound BCP/DRP will lose investor conﬁdence. HB. Companies will become more dependent on continuous access to networks and data in the future, but fortunately, technology is also developing at the same time. For example, virtualisation allows companies to use old, but still good and operational, server hardware in disaster recovery sites, thus lowering the costs of establishing and running them. In the future we will see simpler and more robust solutions which are easier to adapt for users’ needs. The high-availability and disaster recovery will also become standard features, like they are already in some products.

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BANK SECURITY

Manning the defences Being on top of the risks posed to your business is mission-critical, none more so than for the banking giants, says Hariharan Iyer, Head of the Information Security at Dubai Bank.

lose to Dubai’s World Trade Centre, just off the city’s gleaming ﬁnancial hub on Sheikh Zayed Road, you will ﬁnd the home of Dubai Bank. It is here that Hariharan Iyer is busy managing all of the information security risks and threats thrown at this Shariah-compliant lender. For any bank, whether it is headquartered in Dubai, Denmark or Djibouti, the burgeoning arena of information security has crept into every aspect of its operations. There are swathes of information swishing about in banking systems that needs to be protected from both outsiders, and corrupt insiders too. “Staying ahead of the bad guys is always a challenge,” Iyer reveals philosophically whilst leaning back in his leather chair, “but as an information security professional, the objective is keeping the distance between us and them to a minimum.” For him, the need for a holistic view of the bank’s business is critical, not just desirable. “The key to good security is to have good knowledge of

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business processes.” This can lead to sound decision-making. “With our technical teams and business process understanding, we can make critical decisions look very simple and easy to manage.” Iyer draws upon his wealth of information security experience to keep the defences tight but he highlights a list of obstacles that his department has to deal with. “Some of the challenges we have to face include awareness coverage, control enforcement alignment to the dynamics of business process and technology, physical security gaps, and source data protection in the domain of unstructured data.” He goes on to say that the strategy normally adopted to mitigate threats at Dubai Bank is control layering. “Every system architecture and business process is exposed with control layers for protection. The risk assessment methodology reviews this control layer and states the weakness based on the layer, so that the team can focus on improving a respective layer’s controls.”

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Founded in 2002, Dubai Bank was the ﬁrst institution in the Middle East to incorporate information security into the risk management group. Iyer, who has worked for the bank for three years, is there to review risks, security assessments, business continuity, physical security concerns, and more. Indeed, his 16-year working career has been to establish business-agile technology and security solutions. Iyer says that he and his team at Dubai Bank adapt to the business of risk and manage it for the “interests of the business”.

Risks During BM’s meeting with Iyer he identifies four common security risks for the banks today. These include unencrypted data being stored or shipped, warehoused data or information being available for unauthorised users, unmanaged file servers and having an unauthorised function or module in the system available without any controls due to access profiles. As you would expect, protecting bank and customer data is one of his top priorities. “Data is an important business for any bank in the world; they use it from initiation to monitoring and reporting, as well for many critical decisions. Data exists in many forms within a bank.” But it’s not just outside threats; risks can stem from your own employees too. With storage devices like memory sticks and diminutive hard drives being able to hold everHariharan Iyer more information, preventing staff from removing critical data from your site is a serious concern. It creates a headache for CISOs the world over but can be controlled by internal policies, suggests Iyer. A similar concern is staff working remotely and the risk of data being lost or stolen. “Yes, this is a concern,” Iyer confirms, “but the boundaries have widened and the controls or protection strategies cannot be laid with just the consideration of external and internal perimeter definitions. The basic ingredient is in the definition of controls, by reviewing the source of the threats.” He says data, processing and usage visibility is a threat source. “The associated controls of these threat sources are considered for risk reviews and the information gathered on visibility is the key to deterrents. An example is a customer making an online transaction and using a branch to execute a transfer concurrently. He continues: “In order to have successful control measures in place, the information security team needs to have know-how of business processes and usage of technology solutions.”

Hooks A real headache in recent years has been the explosion in phishing, as criminals look to prey on the gullibility of customers with the phoney emails purporting to be from their bank. They click on a link to a fake site impersonating their bank, update some personal details and their accounts are subsequently raided. In the last issue of BM we heard how National Bank of Kuwait CISO Tamer Gamali dealt with a recent phishing scam aimed at the lender’s customers. It’s a growing concern for banks in the region as the fraudsters increasingly dangle their bait for new victims in different parts of the world. “Yes, phishing is a concern.” Iyer remarks. “We mark this threat source as ‘behaviours’ but we have a lot to do in this area, especially when it comes to customer literacy and the culture of gathering in-

“Until all the banks in the region unite together to discuss their issues and work for a common goal on security, issues will always exist”

formation from them.” He adds: “All the banks should work together in combating this risk. The desire is to have a government body that is influential in combating such threats. We as banks can be a part of this to create customer protection that, in turn, provides safeguards for banks. Until then, this region will be attractive for such threats.” One expert on the subject is David Jevans, Chairman of the AntiPhishing Working Group (APWG). He says that during the next 12 months the gangs are going to become more determined and devious than ever: “We expect that the current global financial crisis will continue to give phishers new ways to create believable social engineering attacks to steal account credentials and to spread crimeware.” He goes on to say: “In the fourth quarter of 2008 there were numerous attacks against customers of major financial institutions that were being acquired or were in the news receiving government aid . In 2009 we can expect an increase in money mule recruitment scams, where criminals recruit unemployed consumers to act as online funds transfer agents, or to reship goods that were purchased using stolen credit card numbers.” In the meantime, Iyer says collaboration between the financial institutions in the Gulf is needed to tackle all security threats, not just phishing. “Until all the banks in the region unite together to discuss their issues and work for a common goal on security, issues will always exist.”

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ASK THE EXPERT

SAFETY IN NUMBERS eSecure Solutions’ Fraser Thomas discusses how the business-critical function of secure user-identification can create a competitive advantage for organisations.

he ability to provide access to systems, services, and confidential and personal information is business critical. To compete in today’s multi-tasking environment it is a requirement to provide secure access for competitive advantage. While technological advances have been made to frustrate hackers from accessing enterprise systems, until now little progress has been made on the weakest link in many secure access systems – the user authentication processes. Historically, this creates a trail of weak spots, rising costs, hassle for users and an administrative nightmare, which has been at best a penetrable hole to core systems. With Swivel’s award-winning PINsafe solution, the ability to take advantage of the freedom endowed when secure authentication works simply and effectively isn’t an unobtainable dream, but a reality. Reliable and resilient, PINsafe is effectual and cost effective. Simple in its execution from deployment to end-user engagement, PINsafe showcases that technology doesn’t have to be complicated to be successful. PINsafe offers a wide range of authentication models. The use of the patented one-time code extraction protocol means that PINsafe can offer both single and multi-channel and single and multi-factor authentication solutions where: • The user only ever needs to remember a simple four digit PIN • The PIN number is never entered • The OTC changes with each authentication • Different interfaces can be added as requirements change

Fraser Thomas, Director of Business Development at eSecure Solutions, has worked in systems development for almost 30 years on four continents, including 17 years in the US as Head of Retail Banking Systems at both Continental Bank in Chicago and Key Bank in Cleveland. He holds a Mathematics degree from the University of the West of England, and an MBA from Case Western Reserve University in Cleveland, Ohio.

ble with Windows and Linux-based operating systems. Secure, simple two-factor authentication provides freedom from a token made easy by the experts at Swivel.

The principles It provides a full range of user interface options as standard and all are included within the basic license cost. These can be assigned to each user in line with corporate policies and access requirements. Simple to integrate into any environment, PINsafe can be deployed as software only or as an appliance and is fully compati-

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PINsafe is a multi-factor authentication system. The core of the solution is the Swivel onetime code (OTC) extraction protocol whereby a user is sent a security string, the user then combines this security string with their PIN number to derive a one-time code. They then use this one-time code to authenticate themselves.

The strength of this system is that the user needs both the security string and their PIN in order to authenticate. The one-time code extraction protocol is simple to use, the PIN determines which characters are to be used and in which order, for the one-time code. PINs can be from four digits to 10 digits long. Security strings can be letters, numbers or a mixture of both. For instance, you are issued 2-4-6-8 as your PIN and during a login attempt the system generates the following security string: 51-7-3-9-2-0-6-4-8. Your PIN, 2-4-6-8, denotes the position of the numbers that comprise the one-time code: second, fourth, sixth and eight. By taking the numbers that correspond to these positions, you can extract the valid code for that login session out of the security string thusly: 1-3-2-6. This approach gives the following advantages: • The one-time code that the user enters is different for every authentication, which provides defence against key-logging attacks, and many simple man-in-the-middle and phishing attacks. • The user never enters their PIN to authenticate, again providing defence against the attacks listed above. • As authentication requires two elements, the security string can be sent via a different channel to the authentication request, providing defence against man-in-the-middle attacks. • The delivery of the security string can be tied to a speciﬁc device, such as a mobile phone, providing a two-factor authentication solution. The beauty of this basic model is that it can be implemented in a number of ways to give different user experiences and different strengths of authentication. For example, the security string can be displayed as an obfuscated (TURing) image on a VPN logon page or delivered via a text message to a user's mobile phone.

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ASK THE EXPERT

Planning for every eventuality Mike Khattab gives BM the lowdown on ensuring that your critical data can be fully recovered should the worst happen.

MIKE KHATTAB

ompanies compelled to minimise downtime, as well as the data loss incurred during downtime events, usually consider implementing advanced data protection solutions such as high availability, clustering, data replication, and others. These solutions typically replicate a production environment to a second backup server in real-time (normally located offsite, some distance from the production data centre), and enable you to switch the protected computing environments to the backup server in the event of a failure or other loss of the production server environments. Ironically, one of the few downsides of these technologies is what makes them so good: They replicate data quickly and do so most faithfully. In other words, if a record or ﬁle in the protected production environment is accidentally deleted or corrupted this same error is rapidly and faithfully replicated to the backup environment. And now two problems exist: Until recently, the options for recovering accidentally deleted or corrupted data were limited and usually required the manual re-entry of

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transactions and even a tape restore. Fortunately, a recent technology innovation provides an alternative. Continuous data protection (CDP) allows companies to recover a version of data at a point in time; for instance, just prior to the accidental deletion or virus corruption. Plus, this recovery can be done on a ﬁle or even a record level. This earlier version of the data can then be quickly integrated to the existing production environment to undo the problem.

tween recovery points. How CDP does this has much to do with its architecture and how it’s configured. With this, it is important to note the difference between ‘true CDP’ and ‘near CDP’ solutions when evaluating your data protection strategy. True CDP captures every data write and transfers them to a secondary disk. It enables a data undo by allowing recovery to any point in time. This is especially beneficial for a data corruption issue, such as a virus. With true CDP, you can identify a tainted email, for example, then roll back to a point just prior to the time the email was received. On the other hand, near-CDP differs in that you can only recover to specific points in time. For example, it will copy data when a file is saved or closed so the recovery point is only to the last known saved file. In some cases this could be several hours or more. In high transaction environments or environments with rigid compliance or governance regulations, this may not be sufficient. When an enhanced data protection technology, such as high availability or replication, is combined with CDP, the issue of data corruption is no longer a problem, thus eliminating one of the few vulnerabilities of these advanced data protection solutions. CDP enables you to simply return to the point in time that was just previous to the deletion or corruption. This combination provides seamless protection against data loss, data corruption and other types of application downtime.

Final thought Solutions CDP works continuously to track the realtime replication of your critical data which gives nearly an infinite range of recovery points unlike other technologies that count hours be-

Mike Khattab is VP of Sales, Growth Markets at Vision Solutions, a global provider of high availability, CDP and clustering solutions for IBM i (i5/OS) and AIX environments on IBM Power Systems. Khattab has extensive experience in the technical and practical application of business continuity and recovery strategies.

One final consideration about CDP is that IT managers know that most data recovery requests are for relatively recent data, and that there is a direct correlation between the age of data and the possibility that it would be required for restore purposes. Since most restore requests are driven by issues such as an inadvertently deleted file or data that was somehow corrupted, typically these problems are discovered within several hours or at most a few days from when they first occur resulting in restore requests for more recent data. Having the ability to quickly ‘rewind’ data to any known point in time, without having to find and restore data from tape can be an invaluable tool in the arsenal of an IT manager. For mote information, see www.visionsolutions.com

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SECURITY

LOCK DOWN The so-called ‘rock star’ of the security industry, Bruce Schneier, exclusively reveals his controversial views on current security issues. BM. You’re on record criticising post 9/11 airport security measures as little more than window dressing and have claimed they don’t actually make passengers safer. Do you see any similarities to this situation and the steps ﬁnancial companies take to protect their customers? Bruce Schneier. The phrase I use is ‘security theatre’, and one of the reasons we fall for it in airline security is that attacks are very, very rare. Security theatre is exposed when it’s obvious

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that it’s not working, and there simply isn’t the attack data to assess the effectiveness of bag screening, liquid conﬁscation, photo ID checks and other useless security measures. Financial fraud is different, because there is a measurable crime rate that reacts as security countermeasures are applied. Financial companies know what is and isn’t working. They may decide not to tell their customers and keep up a charade of security theater, but that only works

in the short term. So while there certainly is security theatre in the financial industry, it won’t last. People will, for example, eventually figure out that two-factor authentication doesn’t reduce identity theft and fraud. BM. What do you see as the key security issues currently facing financial institutions and their customers? BS. Crime. Crime, crime, crime. Crime in the

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WORMHOLE: SECURITY IN ACTION n recent weeks a worm, a malicious software programme, has swept through corporate, educational and public computer networks around the world. Known as Conficker or Downadup, it is spread by a recently discovered Microsoft Windows vulnerability, by guessing network passwords and by hand-carried consumer gadgets like USB keys. Experts say it is the worst infection since the Slammer worm exploded through the internet in January 2003, and it may have infected as many as nine million personal computers around the world. Worms like Conficker not only ricochet around the internet at lightning speed, they harness infected computers into unified systems called botnets, which can then accept programming instructions from their masters. Many computer users may not notice that their machines have been infected, and computer security researchers said they were waiting for the

form of fraud. It may come with the fancy name of identity theft, but it’s really just fraud due to impersonation. That’s the key issue, and it’s not changing. The tactics of fraud might change – phishing, pharming, key logging, social engineering, password guessing, whatever – as security measures make some tactics harder and others easier, but the underlying issue is constant. BM. Are customers’ concerns about online security matched by that of their banks and credit providers or is there any disconnect with what consumers want and what companies are prepared to do? BS. There is always a mismatch, and you can easily see it when you look at where the liabilities are. If financial institutions manage to pass the cost of fraud onto consumers, then of course the consumers will want more recourse than the banks provide. Think of a situation where someone steals a customer’s password, breaks into a customer’s account, and steals money. It’s far cheaper for the bank to foist the cost of that fraud onto the consumer. But the consumer is perfectly right when he says: ‘What do you mean, it’s my fault? I wasn’t involved.’ The best way to mitigate security risks is to have the entity best situated to mitigate the risk be responsible for the risk. Customers can’t improve a bank’s computer security, so it makes no sense to give them the risk. The bank can improve se-

instructions to materialise, to determine what impact the botnet will have on PC users. It might operate in the background, using the infected computer to send spam or infect other computers, or it might steal the PC user’s personal information. Microsoft released an emergency patch to defend the Windows operating systems against this vulnerability in October 2008, yet the worm has continued to spread even as the level of warnings has grown in recent weeks. Earlier this month, security researchers at Qualys, a Silicon Valley security firm, estimated that about 30 percent of Windows-based computers attached to the internet remain vulnerable to infection because they have not been updated with the patch, despite the fact that it was made available in October last year. The firm’s estimate is based on a survey of nine million internet addresses.

curity, so it should be responsible for the risk, regardless of who is at fault. Think about credit card security. In the UK the law states that customers are only responsible for the ﬁrst £50 of card-present fraud, and not at all for card-not-present fraud, even if they were at fault. That law has done more to improve credit card security than anything else.

regularly, but honestly, I think we’re going to see more of the same for the foreseeable future. BM. Does the increased ubiquity of online commerce mean that resolving new security threats is a purely technological issue or are there other aspects to consider? BS. Mitigating security threats is never a purely

“The tactics of fraud might change as security measures make some tactics harder and others easier, but the underlying issue is constant” BM. What needs to be done to truly create an environment where customers are protected from threats such as identity theft? Are banks and other ﬁnancial institutions capable of achieving this on their own or will outside inﬂuence be required? BS. It’s easy. Make banks responsible for all the costs of identity theft. Once you set the economic incentives properly, the marketplace will come up with all sorts of technical and procedural solutions. BM. Do you see any particularly striking new security threats emerging at the moment? BS. No. I’m asked to make predictions like this

Bruce Schneier is an internationally renowned security technologist and author. Described by The Economist as a ‘security guru,’ he is best known as a refreshingly candid and lucid security critic and commentator. The best selling author of eight books, he has written articles and commentary that have appeared in numerous prominent publications.

technological issue. Security always involves people – people doing the attacking, and people as the victims – so security will always have a people component. And actually, one of the reasons online crime is so successful is that so much security tries to take people out of the equation. Technology can do a lot to improve security, but it can only augment what people do, not replace them. BM. Do you think the war on phishing is winnable? And if so, how? BS. It’s not a war on phishing, it’s a war on fraud. Phishing is just a tactic, and if you concentrate your effort on defeating that particular tactic – something I agree is possible but will take a great deal of hard work and coordination – the criminals will just move to another tactic. If we’re ever going to truly reduce fraud, we need to look beyond tactics and deal with the economic motivations of both the criminals and the victims.

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BANKING TECHNOLOGY

BM meets Arslan Hussain, Chief Information Officer for SABB (The Saudi British Bank) to talk budgets in an economic downturn, new business channels and how the role of an IT head has evolved.

WISE

INVESTMENTS

alk to most CIOs today and they will tell you that the role of an IT chief is light years removed from the early days when they were labelled as nerdy ‘techies’ tinkering away in the bowels of an organisation. Nowadays, heads of IT have taken their seats in the C-suite as the job has morphed into a key strategic position that’s in tune with your business’ operations and its customers. This is especially so in a tech-heavy industry like banking. “Gone are the days when we would talk purely technology and we would be order takers, as I call it,” SABB’s CIO Arslan Hussain explains. “We are now deﬁnitely more in partnership with the business and we have to understand it. We have to put ourselves in the shoes of the business and look at it from different perspectives.” Of course, the ﬁnancial services industry is a unique sector, being so heavily dependent upon technology and systems for in-house operations and the all-important customers. Arslan says the banking industry is becoming evermore serviceorientated as opposed to “just delivering systems and applications because the business asks for it”. And the banks in this part of the world are hungry for new business and retaining existing customers so are rolling out new channels. The Middle East is a growth region for banking, as Arslan discovered 10 months ago when he swapped the Windy City (Chicago) for the hot and vibrant city of Riyadh in the Kingdom of Saudi Arabia. Arslan had been Director of Business Systems for HSBC Technology and Services North America and decided to up sticks and move half way around the world to become CIO for SABB which is 40 percent owned by HSBC. SABB, which has a heritage stretching back 30 years, is the third largest bank in the Kingdom with 100 branches and 450 ATMs. Arslan is responsible for running SABB’s entire technology function, from customer and staff facing applications and the bank’s kingdom-wide telecommunication network, to the bank’s core systems.

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Being part of HSBC means that SABB has evolved into a technology-driven bank with a wealth of IT power to leverage from. HSBC has around 20,000 developers working on systems that are built once and deployed many times across the group. “The applications are built by what we call the HSBC Software House, which is based globally in Canada, and they are deployed across different regions and countries,” Arslan explains. “The goal is to standardise process and technology to enable business with SABB to be simple, intuitive, driven by the customer and 24/7 self-service, leading to enhanced / better customer experience.”

this piece of technology can do for the customer, their eyes light up and they are willing to invest in it. That’s where the CIOs or technology leaders come into play because it is about understanding the business and showing the business how technology will add value to the business and once they get that, they are fully on board.”

Developments

Challenges Since arriving in Saudi Arabia Arslan has become all too aware of a major challenge facing the IT sector: The shortage of talent. The Gulf depends heavily on an inﬂux of skilled expatriate workers but the Kingdom has Saudisation laws that have to be adhered to. This creates problems for a CIO like Arslan when looking to ﬁll positions. “Saudisation is a good thing for the country,” he notes, “but in the near-term this creates challenges for IT departments, who are being asked to deliver the quality technology solutions within accelerated timeframe and reduced budgets.” Another concern is the reliability of the telecommunication infrastructure in the region as providers try to keep pace with the evolution of new technologies. In the West, reliability is expected but for the Gulf there are still issues that need to be addressed. “We do experience occasional outages.” Arslan concedes. “We assume from a US or European perspective that our networks, telecoms and data lines run 24/7, 365 days a year. For the most part, that is the case. However, the Kingdom and other countries in the Middle East are fairly new establishments with new infrastructures; they are still in the growth phase.” Indeed, there are isolated areas where SABB is looking to build branches as part of an expansion push, creating more infrastructure challenges. Aside from these challenges, there is the other issue for some CIOs in trying to convince management to invest in new technologies. Indeed, the relationship between a CIO and CFO is sometimes portrayed as a strained one; the CFO keeping a tight grip on the purse strings as the CIO desperately tries to explain how a new all singing, all dancing technology will transform operations. The notion that CIOs are from Mars and CFOs from Venus springs to mind. Contrary to this belief, Arslan says that management at SABB are extremely receptive to new ideas and technologies to improve customer experience while fostering growth. “The support that I have seen from the management, including the SABB board, is phenomenal,” he reveals enthusiastically. “Once they understand what

Arslan says one key technology that got his leadership excited is the prospect of mobile banking. At the moment this is a limited offering restricted to SMS but plans are in the pipeline for an interactive mobile channel to be launched by the end of the year. “We are looking at allowing customers to interact with us as they would do sitting in front of their computer or by visiting a branch. It’s a powerful channel that brings the bank to your pocket while allowing us to tap into different market segments – a much younger market segment across the board.” As you would expect, SABB offers online banking too as it looks to expand its channels for customers. The way we bank is changing, Arslan remarks. “It is no longer the case that customers wait for the branch to open at nine o’clock and have to transact between opening hours,” he notes. “They will use an ATM, go on the internet, or use a call centre or bank through their mobile phones.” Although mobile banking is a channel that Arslan is excited about deploying, he has to contend with the fact that the global recession is beginning to hit the Gulf. Companies are laying off staff and budgets are being slashed. However, this CIO says he is not being asked to cut IT budgets, but rather “do more with less”. “We are trying to keep costs ﬂat because IT is the largest spend for most organisations, especially within banking because we are heavily automated and dependent upon technology.” SABB’s IT spend is up 10 percent on last year but this additional spend is being ploughed into new technologies. “Right now the rule of thumb is that we either reduce costs by the investment we have made or you bring in double the revenue over a period of time.” He continues: “It is being measured in terms of the positive impact technology can have, either through reducing costs or increasing revenue and bringing in new business. We need to be really focusing on investing in technology in areas that you really believe there will be either a reduction in costs or increased revenues. This will come by providing a better and consistent customer experience.” For Arslan, the right technology is a sound investment. “We see investment in the right technology as our strategy for future market growth,” he concludes.

“The goal is to standardise process and technology to enable business with SABB to be simple, intuitive, driven by the customer and 24/7 selfservice, leading to enhanced customer experience”

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ITS (ATE):5oct

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ASK THE EXPERT

The success story of Islamic banking Shariah compliant banking has grown into a multi-billion dollar industry in the space of just 20 years. Haitham Abdou offers his thoughts on what the future holds.

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 to these products due to the principles of Islamic banking that dictate risk-sharing and no interest policies.

Challenges Despite the immense potential of Islamic banking and ﬁnancial products, there are numerous challenges that the industry faces. As a

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Haitham Abdou, Group Director of Marketing at International Turnkey Solutions, has over 13 years’ experience in the banking 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.

result of accelerated globalisation and fierce competition between Islamic and conventional banks, Shariah compliant providers 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. 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 provide technology that allows 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 80 banks and financial institutions operating worldwide utilise ITS’ banking solutions. Currently, the ITS Islamic banking solution processes an average of one million 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 (Islamic windows). 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.

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INDUSTRY INSIGHT

Optimising performance while maximising budgets In this period of economic uncertainty, Benny Vogels explains how organisations can optimise IT budgets and strengthen service levels. or IT organisations today, the challenge of being asked to do more with less is thriving. Poor performance of networks and applications can drastically impact success by adding unnecessary cost, increasing risk because of degradation or downtime and limiting the performance of staff and customers throughout the organisation. A recent survey found that 50 percent of those questioned report that application performance issues are causing lost revenue opportunities. Some indicate there is up to a nine percent revenue impact from poorly performing applications. A successful IT organisation will optimise network and application performance while maximising overall resources. Here are some best practices on how IT budgets can be optimised while service quality can be improved at the same time, focusing on some of the key components for service delivery.

Optimising bandwidth: Instead of just adding bandwidth to solve a performance issue, it makes more sense to take a closer look at what is actually causing the heavy load on the WAN. Understanding if the traffic is business critical, rogue or recreational can reduce the overall cost for an organisation and improve quality by eliminating unnecessary traffic. Understand impact of applications and network: A bad practice is separating the application and network teams. Network and application performance is not mutually exclusive – they are intertwined. It is very important to understand how apps impact the network and vice versa. Improve staff efficiency: For many organisations, a high percentage of time is spent firefighting issues, especially remotely. When IT staff are asked to cut budgets or employees, making the existing IT staff more efficient will have a positive impact on the business.

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In relation to the second point, closer collaboration between IT teams makes all members a lot more efficient. Plan for the future: While today’s performance is critical, planning for the future will have a drastic impact on success by reducing the last-minute changes or firefighting problems that could have been avoided.

Benny Vogels is the European Marketing Manager for the performance management solutions at Fluke Networks EMEA. Vogels has been with Fluke Networks since 1997. Prior to this, he worked in software development and network management. Based in Egelsbach, Germany, Vogels has more than 15 years of experience in the IT industry.

Fluke Networks has been an industry leader in managing network and application performance for major enterprises worldwide. With the performance management focus, Fluke Networks customers can follow best practices and greatly improve overall service quality while optimising resources. A performance management platform should give you the granular visibility to understand how much bandwidth is used at any given time and across every location. In addition, it has to show network operations how the bandwidth is used. Having this information is vital when it comes to optimising bandwidth. It helps to eliminate unwanted traffic from the network or moving high volume processes to non-working hours. IT personnel should leverage trending and reporting to optimise bandwidth – add where needed, and reduce where over-provisioned. Since bandwidth usage and application performance are typically closely related, understanding the impact of network usage on applications and vice versa is essential. Therefore, a performance platform should be able to correlate both measurements. This is a paramount in the industry that enables the IT department to really understand the root causes of performance issues and improve service quality, not to mention the positive effect on the collaboration between IT teams (network, application, server teams). Imagine the reduction in time to resolution if the problem ownership is immediately clear. This will greatly reduce the mean time to repair and dramatically increase staff efficiency. To understand the need of future requirements, users must understand the current status of the infrastructure and track trends to where the organisation must grow. The comprehensive view of application and network performance with historical, current and trending views allows organisations to properly plan for the future. By optimising bandwidth resources, improving staff efficiency, and planning for the future, organisations can maximise IT budgets, especially in these difficult economic times. Make sure that your company is part of the 50 percent, not suffering up to nine percent revenue loss due to IT performance issues. Optimise performance while maximising budgets.

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UNIFIED COMMUNICATIONS FOCUS

Unified Communications:

The Future Beckons Lavanya Palani Batcha of Frost & Sullivan discusses the latest trends in unified communications. Emergence of UC Enterprise communications is increasingly being considered as a means to achieve several critical objectives in an enterprise. Increasing productivity, higher efficiency, faster turnaround times, enhanced client interaction, quicker ROIs, and significant reduction in longterm costs are some of these mission-critical objectives. In trying to achieve these business goals, enterprises need to overcome several limiting factors such as cut-throat competition, multiplicity of devices, communication over multiple remote locations, lack of infrastructure, unsatisfied clients, and even the current state of the economy. Advancements in technology, products, and applications, and the growth of Internet Protocol (IP) networks have given birth to the unified communications (UC) story, which is considered by many as an integral platform in the future of enterprise communications. It is anticipated that unified communications will alleviate many of the issues and bottlenecks that afflict enterprise communications today and indeed, chart the course for an enhanced communications scenario in the enterprise.

Unified communications defined The proliferation and adoption of the IP telephony platform by enterprises serves as the principal thrust for unified communications. In the simplest of terms unified communications is the convergence of voice, data, and video networks on an IP system. This convergence becomes even more relevant in this day and age because of the diversity of devices, networks, and media available. Frost & Sullivan’s unified communications definition and framework includes a wide range of applications as explained below: • Enterprise telephony: Includes KTS, WPBX, PBX, IP-PBX systems, IP phones, and digital phones. • Email: Includes e-mail and related calendaring software licenses. • Unified client: Includes software clients, which provide instant messag-

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ing capabilities and/or the ability to launch other unified communications applications such as IP Telephony and conferencing and collaboration with presence awareness • Unified messaging: Includes applications which integrate the storage and accessibility of voice, fax, and email messages into a single mailbox, which can be accessed through email, telephone, web browser or a unified client. It also includes sales of voicemail systems as they form an addressable opportunity for unified messaging solutions. • Conferencing and collaboration: Includes audio, video, and web conferencing, and collaboration tools that enable the communications and sharing of information, files, and presentations in real time.

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• Presence: Includes middleware applications, which provide a realtime status indicator of a user’s ability and willingness to communicate through different communication tools within a network or enables integration of multiple unified communications applications. It also includes all-in-one application servers, which provide presence, instant messaging, call management, and conferencing and collaboration capabilities on one platform. • Mobility: Includes middleware applications and soft clients, which enable the delivery of corporate desktop and voice communications through mobile devices. • Contact center applications: Such as Automatic Call Dialing (ACD), Interactive Voice Response (IVR), Computer Telephony Integration (CTI). • Outbound and multimedia systems: Includes product license sales of customer facing applications in the contact center.

application for the hotel’s mobile staff, and other innovative facilities are expected to prove to be features offering immense benefits. Let’s consider another example of a manufacturing enterprise setup spread across the globe; the various locations catering to different business functions within the enterprise. With the need to reduce carbon footprints, this manufacturing setup could meet its objectives by deploying unified communications applications such as video-conferencing. With the ability to connect several locations in real-time, thereby providing the enterprise with a reliable collaboration tool, it is expected to result in a satisfying communication experience whilst saving time and costs significantly.

Emerging trends

The integration of unified communications and critical enterprise business processes such as CRM, ERP, etc., is seen as a development, Several of these applications have been in existence albeit in silos, which would enable enterprise customers to view unified communicaas enterprises implement specific applications as per their current need. tions as a significant value proposition. However, it is anticipated that these enterprisIn the context of contact cenes would advance to further augment their uniters, the deployment of unified fied communications experience in the future. communications can result in a marked improvement in the productivity of the agents. They would have the provisions to be seamlessly connected through voice, video, IM, and email to their supervisors and associates on one side and customers on the other. These inherent advantages of unified communications are likely to facilitate the agents to perform multi-tasking. If agents can significantly diminish the time taken for their transactions, then it presents Potential across industries a case where the investment in the Enterprises that have offices across multitechnology can be justified. ple locations with a large mobile workforce Unified communications in the needing real-time collaboration between cuscontact center can enable higher tomers, colleagues, business partners, etc., efficiency and quicker responses are likely to enjoy the best use of unified comfrom the agents and this entails Lavanya Palani Batcha, is Research Analystmunications. Industries that generally have an the ultimate ROI benefit. for Information and Communication Technology inclination towards the use of high-end techPractice, South Asia and Middle East. nology are also expected to be able to gauge In conclusion

“The proliferation and adoption of the IP telephony platform by enterprises serves as the principal thrust for unified communications”

the underlying long-term benefits of implementing unified communications in their premises. The potential for the adoption of unified communications exists across industry verticals such as manufacturing, hospitality, aviation, etc. The requirements for each vertical are unique and the essence of unified communications is such that it can cater to a specific need in each of them. The hospitality segment, constantly in search of avenues for greater customer satisfaction, is likely to benefit greatly from unified communications. Rich interactive user experience provided by IP telephony, the seamless voice and data connectivity through the mobility

Considering the economic slowdown today, enterprises are focusing on optimising costs and unified communications has the potential to be one of the key methods to significantly reduce long-term costs associated with communications and travel. In the bargain, the enterprise is also expected to achieve favorable ROI as well as higher goals such as increases in productivity and efficiency. Whatever may be the size of the enterprise, the business processes, the nature of its workforce, or even its fortune in a sluggish market, it is definitely worth understanding unified communications and how it can be leveraged for the wellbeing of the enterprise. n

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ROUNDTABLE

NEXT GENERATION COMMUNICATIONS

In these tough economic times eagle-eyed bosses are looking to slash costs wherever possible. So could unified communications improve efficiency, reduce overheads and even shrink your carbon footprint? We sought the views of three industry insiders – Adobe Systems’ Andrew Lindstrom, Microsoft Gulf’s Shahab Ahmed and Mark Swendsen from ShoreTel. give them more for less. That’s why many of them are turning to ShoBM. In these difficult economic times, how can organisations achieve reTel to help them cut costs and better weather the economic crisis. their business goals and reduce costs through the adoption of UC ShoreTel UC starts from the position of making businesses more solutions? nimble, productive and efficient through smarter use of technology. Shahab Ahmed. Software-based unified communications (UC) soluOur bundled CEBP (computer-enabled tions offer organisations the flexibility to colbusiness processes) make users more laborate and share information at lower operating productive and our unique, distributed costs. It allows companies to reduce costs such as architecture dramatically reduces costs travel and telecoms by giving workers on-demand in the most expensive of places: recurring voice, email and audio/video conferencing opphone, mobile and network charges tions. It allows productivity savings by integrating communication tools within the existing desktop Andrew Lindstrom. Unified communicaand enterprise productivity infrastructure. In order to help businesses overcome comtions promises to change the way people munication challenges, Microsoft has recently work, increase productivity and foster released Office Communication Server release 2 greater collaboration. The convergence of which positions Microsoft as a market leader in voice, video and data communication serSHAHAB AHMED communications platform technology. Microsoft’s vices on a shared IP-based infrastructure unified communications platform brings together may offer organisations significant gains email, voice, presence, instant messaging, audio/video conferencing in business productivity by removing latency in communications – and on-demand communications tools that allow organisations to between customers and service providers, between team members, adopt cutting edge communication solutions quickly, easily and at a and with partners and consultants. However, there are challenges to fraction of the cost of traditional legacy communication systems. finding and deploying a single communications solution that suits all

“It is important to cut costs with intelligence, and the IT infrastructure can function as a significant tool in keeping costs down while also enabling acceleration of the core business”

Mark Swendsen. As businesses attempt to control capital spending, they are looking harder for enterprise communications solutions that

constituents and ﬁts how they work. It is unlikely that a single packaged application will be able to act as an adequate console for all communications channels, including critical channels such as voice, chat,

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Mark Swendsen is Shoretel’s Managing Director for Europe, Middle East and Africa (EMEA). Leveraging his extensive knowledge of ShoreTel’s enterprise IP telephony solutions, Swendsen is spearheading ShoreTel’s growth in EMEA. Specifically, he is focused on working closely with ShoreTel’s partner ecosystem to achieve world-class customer satisfaction across the region.

In 2001, Andrew Lindstrom joined Adobe Systems as Country Manager for South Africa. After he had filled this role for two years, Adobe expanded his portfolio to include Africa and the Indian Ocean Islands and then later the entire MEA region. After the acquisition of Macromedia, his region expanded again to include the Mediterranean region.

and email that allow for little down time – at least in the near term. For organisations ready to build a roadmap to unified communications, Adobe recommends an incremental approach, relying on today’s bestin-class applications and a multi-channel collaboration solution. To formulate and execute a UC strategy, CXOs and IT managers need to understand how team members are collaborating within their organisations today in terms of modes of communication, cultural preferences and tools. In addition, they must consider the risk that deploying a single application will disrupt the existing flow of information and impede effective collaboration, which may far outweigh any advantages conferred by the new solution. To be successful, a UC strategy must focus on the applications enabled by UC technology: collaboration and knowledge sharing. To avoid the pitfall of deploying yet another communications silo in the enterprise, you must first understand the collaboration needs of each department or business unit, then build a roadmap to meet those requirements. Finally, build a strong user adoption plan. BM. How are your solutions helping organisations make better use of communications today and in the future? AL. It is important to highlight the potential pitfalls of deploying a UC solution, outline critical points to consider when devising a long-term

Shahab Ahmed is Business Group Leader, Information Worker Group for Microsoft Gulf. Ahmed, joined Microsoft Corp. in 2005 in Redmond, USA, where he held a variety of leadership roles in product management and engineering. He has a Bachelor’s degree in IT and an MBA from Minnesota State University.

strategy, and suggest ‘quick wins’ organisations can try on their way to a fully-fledged UC solution. For instance, Adobe Acrobat Connect Pro software can fill gaps in your communications capabilities today, and it can run with existing technologies without requiring an overhaul of critical systems such as voice or instant messaging (IM) platforms. Since it does not require the displacement of existing technologies, Acrobat Connect Pro is uniquely positioned to help companies capture the benefits of UC today, without the potential downsides of a ‘rip-and-replace’ solution. Adobe Acrobat Connect Pro is a complete web communications and collaboration application suite that enables live, interactive web meetings; virtual classes; on-demand presentations and courses; and real-time and asynchronous group collaboration. It supports your UC strategy by providing a platform that can be tailored to the collaboration needs of each department, that can be deployed quickly, and that fits within a best practices approach. MS. Today, we find ourselves in one of the toughest economic climates we have seen for a long time, and as such, organisations need to find ways of becoming more efficient and taking costs out of their businesses. Communications is a key driver of organisational efficiency and an area that ShoreTel excels in. Our solutions bring together all

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the various disparate communications systems within an organisation and ensure a single, consistent and easy-to-use interface for users. By improving communications at the personal level we know that companies who embrace this technology will become leaner and more efﬁcient and the overall effect on a business can be signiﬁcant. We couple this with easy to use management tools and an architecture that is unique in our industry. ShoreTel can deliver solutions that demonstrate a rapid ROI and as such we are currently the fastest growing UC company in the world.

at Microsoft we are saving millions of dollars annually in travel and productivity costs by leveraging audio/video conferencing and collaboration tools to conduct business on a worldwide basis. Our customers are particularly excited to use the presence functionality within Ofﬁce Communications Server. It provides a kind of built-in intelligence for communications through the ability to check into co-workers’ availability and determine the optimal way to connect with them. Without this capability, communications can be a lottery, so the ability to put daily interactions on a tighter, more efﬁ cient footing is a major draw.

“Unlike many other regional markets, the Middle East is very progressive in its thinking about leading with technology. This disposition eliminates many of the hurdles that we see in other markets, which are often paralysed by legacy investments or lack of infrastructure”

SA. During these economic times it is very important for businesses to stay close to their employees and customers. Companies that intelligently reduce costs and invest wisely can secure an offensive position, whereas those who adopt a more defensive position will be at the mercy of the more dynamic, MARK forward-thinking companies. It is important to cut costs with intelligence, and the IT infrastructure can function as a signiﬁcant tool in keeping costs down while also enabling acceleration of the core business. Microsoft’s collaborative technology offerings give businesses a platform to invite stakeholders to actively engage and partner with them anytime, anywhere and via any device.

“To formulate and execute a UC strategy, CXOs and IT managers need to understand how team members are collaborating within their organisations today in terms of modes of communication, cultural preferences and tools” ANDREW LINDSTROM

BM. Mobility is of the utmost importance for businesses, with staff travelling all over the world but still needing to stay in touch with colleagues and clients. How is UC playing its part in mobile working? SA. Unified communications provides workers with the ability to connect and communicate anytime, anywhere. Microsoft’s solution allows employees to communicate and collaborate quickly and efficiently from their workspaces via email and voice while being in separate locations across the world. The ability to integrate with mobile phones is a key capability that thousands of people are benefiting from today as workforces become more mobile. With many companies restricting travel during these tough times, audio and video conferencing is increasingly becoming the most important communication mechanism, as it helps companies maintain the needed level of customer-facing and internal communications and still achieve cost reduction plans. Like many of our customers,

MS. Mobility is unified communications; we need to move away from just thinking about mobile phones as we discuss mobility, although that is certainly a SWENDSEN deep aspect in a real UC environment. The ability to work in a collaborative environment anytime, anywhere, across any medium – that is the essence of mobility, and that is where companies can most dramatically see reductions of costs and increases in productivity. Think of the long-term implications of mobility; if the two highest traditional costs in a company are employees and office space, mobility leverages the investment in people and reduces the need for traditional office space. BM. Do you see the Middle East as a growth region and are there any challenges that have to be overcome before widespread UC can be adopted? MS. Most definitely – the Middle East is a key market for ShoreTel and one which we are focusing on and investing in very heavily. Furthermore, unlike many other regional markets, the Middle East is very progressive in its thinking about leading with technology. This disposition eliminates many of the hurdles that we see in other markets, which are often paralysed by legacy investments or lack of infrastructure. As part of our investment in the market, we have recently announced two key distributor contracts in the region that will allow us to scale out business quickly and bring the ShoreTel success story to the region. SA. There are certain areas where enterprises in the Middle East are early adopters of technology, whereas in other areas they lag behind. In the Gulf region, for example, there is a fertile environment for the leapfrogging of legacy technologies, where we find companies embracing innovative business models and technologies like UC to drive their business goals. Therefore, we find that enterprises in some cases have adopted technologies much sooner than those elsewhere in the US or Europe. Current technology trends that are seeing rapid growth in enterprise IT are collaboration, virtualisation and video. However, while there is a good level of deployment, there is still room for optimum utilisation of technology.

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ANALYST VIEWPOINT

The new breed of web and video conferencing tools now offer improved price performance while delivering a high quality experience that includes high definition video, live chat, and rich multimedia experience. Telepresence, considered the high end of the conferencing market, offers an immersive visual communications room where participants can have eye-toeye contact through use of multiple large video screens, careful design and implementation of furniture and critical audio video sub systems. Cisco and HP are positioning telepresence as the wave of the future, pouring millions of dollars into development and marketing. Attractive ROI offered by the current crop of conferencing tools will serve as a big driver. Audio, web and video conferencing usage is expected to go up as a result of massive layoffs and a hiring freeze Roopam Jain, Principal Analyst for unified communications at that will require workers to do more with Frost & Sullivan, explains how communication technologies are less, an area where conferencing and colhelping companies to get through difficult times. laboration investments are immediately justified. As IT budgets across enterprises conomic conditions around the globe and rising environmental of all sizes get slashed in preparation for a tough 2009, conferencing may be a concerns are creating a groundswell in demand for collaboration. business that will help ride through the economic downturn, bringing identifiAs organisations look at ways to survive during the recession, cost able cost savings to companies who deploy it. control is becoming a top priority. To fight the economic headwinds, several businesses have put strict travel mandates in place. Going green is big Business travel has already experienced the biggest nosedive in five years acBesides the economic downturn, another factor that has thrown the cording to the International Air Transport Assocation. While fuel prices have limelight on conferencing is green initiatives. Environmental, social and good come down significantly over the last few months, a bigger push to reduce governance policies are driving end users as well as IT to have a big focus on travel costs and a sustainable interest in reducing carbon footprint means peoadopting green products. While green is not a new subject, the amount of atple are looking to communicate and collaborate by tention it has received throughout this year is unprecealternative means. dented. The green movement is having a viral effect with Since joining Frost & Sullivan in August 1999, companies making new announcements to increase Roopam Jain has completed several A high growth industry their commitment to green, nearly every day. Concerted research studies and consulting projects on Conferencing technologies have received efforts in the future to reduce dependence on foreign oil audio, web and video conferencing markets. increasing attention over the past few weeks and increasing energy efficiency will continue to bring She also tracks developments in the fast and months. Revenues from conferencing sysforth the advantages of using conferencing by traveling evolving unified communications market and tems and services, a US$6.6 billion industry, less, working remotely, and reducing pollution. its impact on real time collaboration. Jain has are forecast to reach US$11.9 billion in five Conferencing and collaboration vendors are bankreceived acclaim for her research through years. The overall collaboration industry has ing big on the bottom line impact the technology has on articles and quotes published in Business received a boost from recent macro environthe environment. The combined effects of vendors pushWeek, CIO, CNN Money, Dow Jones News ment factors – globalisation, the ongoing reing the green benefits and the impending arrival of regService, InfoWorld, IT Week, Network World, cession and a rise in remote workers. Use of ulations for energy requirements is making this a hot Newsweek, PC World, USA Today, and Wall conferencing can have a direct impact on retopic for corporate governance and for end users that Street Journal. ducing travel costs while increasing efficiency. want to proactively contribute to the environment. Implementing solutions such as web conferHowever, the label ‘green IT’ can become hyped and encing, video conferencing and telepresence allows people to hold overused by vendors as a way to push new products and services. meetings in real time over IP networks letting them share data, ‘Greenwashing’ will become a concern among users. Customers will keep PowerPoint slides, live video, and audio. an eye on companies that are talking the talk not walking the walk.

CUTTING COSTS THROUGH CONFERENCING

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INDUSTRY INSIGHT

Real world applications How to get a handle on your communications costs and staff productivity, according to Anthony Church. fter salaries, overall communication costs are often the largest single office expense. CommSoft has developed a range of software solutions that analyse communication costs and staff productivity. CommsOffice from CommSoft is a telephony management and reporting solution that gives companies the ability to track and control telephone usage throughout their organisation. Groups or agent activity can be measured with live telephony statistics, helping you to make accurate decisions about requirements for your business. You can even analyse data traffic, bandwidth usage, websites visited and email activity to get the true picture of communications utilisation. CommSoft were the first in the industry to integrate call management and call recording in one package, as far back as 2004. Customers can run a telephony activity report and play back the associated recording from the speaker icon in that report. We supply unlimited client licenses for search, playback and reporting at no extra cost. Our entire range is modular: Purchase CommsOffice reporting and add our new PA Operator Console or add CTI Screen Pop as a module – all applications in our range work from one database. The interface is MS Outlook in style, which makes our software familiar and easy to use. We are effectively a ‘one stop shop’ for communications management software solutions.

Record and playback

is customer service. In challenging times, customer retention is of vital importance. Your customers expect the best service and what better demonstration, than having a customer service agent greet you personally and recall notes or details of your last conversation? The new Personal Assistant CTI screen pop module from CommSoft delivers that functionality. The entire business beneﬁts from CommsOfﬁce reporting mean that managers can examine staff productivity, call volumes, abandoned calls that equate to lost business, outbound call activity versus targets. We were innovators in the provision of true live call statistics and we bought wallboards and agent features into the small to medium contact centre for a fraction of the cost of traditional wallboard technology, which was prohibitively expensive for the SMEs in the past.

Anthony Church, Managing Director of CommSoft, has over 20 years of management and sales experience. Church was previously MD of a major software business, selling telephony management software and CRM solutions to various organisations. He has also worked in the UK voice and data channel. His interests include guitars, cars and worldwide travel.

Across the board All kinds of departments in a business beneﬁt from implementation of Commsoft products, including the receptionist who loves the new Personal Assistant Operator Console software that provides single and multi-site operator call handling from any networked PC. Another key department to beneﬁt from the implementation of CommSoft applications

The ultimate product for any business to implement however is call recording. What better way to see who said what, when and how? Any business that takes orders over the phone is subject to disputes over orders unless they have call recording in place and disputes cost time and money to resolve. Another key ROI argument for call recording includes compliance with industry regulations particularly in the ﬁnance sector. It is always good practice to record all calls into and out of a business, for customer service, training purposes, resolving disputes or simply to protect the business and staff from abuse. All of our products, including the entrylevel software, can be run across multiple sites and with CommSoft you have a winning range of solutions that deliver true management information. Our products work with most telephone systems sold around the world and we have very close ties with Panasonic in Europe and the USA. We are the innovators at CommSoft because we are in touch with customer needs because we have worked in the commercial world for many years. We approach new product development from a purely ‘real world’ perspective, we look to develop applications that we would want to use as managers in business. Our interface can be understood and used by everyone in a business, from the receptionist to an IT Manager or a CFO.

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INFRASTRUCTURE

SMART THINKING

Malta could be Europe’s next IT hotspot thanks to a high tech business park which is being built there by Dubai-based developers SmartCity. Diana Milne meets CEO Fareed Abdulrahman to find out more.

t’s not often that a European government calls on the expertise of a Dubai-based company to build a major infrastructure project. But as one of the pioneers behind the transformation of Dubai, SmartCity, a joint venture between TECOM and Sama Dubai, is now in a position where it can import knowledge from East to West. Having successfully set up the high tech free zones, Dubai Internet City, Dubai Media City and Dubai Knowledge Village, the company is now working with the Maltese government to create the US$269 million SmartCity Malta project. Described as a “knowledge based township”, SmartCity Malta will create 5600 jobs and once completed in 2021 will be the Mediterranean’s leading ICT and media cluster and the country’s largest foreign investment. As well as offering office space to ICT and media companies, it will include homes, hotels, conference facilities and retail units. But why Malta? SmartCity’s CEO Fareed Abdulrahman explains that the country was chosen because of its location and its potential for growth. “We have two models that we look at when we choose any location. One is the Dubai model in terms of location. If you look at Dubai today we always say it’s the bridge between West and East. Malta is the bridge between the south of Europe and North Africa. Location-wise it’s perfect and it’s also very close to the Middle East. The second factor is the soft infrastructure and Malta has the soft infrastructure to attract people. It’s a very safe place. The lifestyle is great. It’s so peaceful, it’s very safe. It’s very similar to Dubai. And I like the system. Despite being a small Island it is ranked number three in terms of eGovernment

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in the EU. So this creates a good environment for the businessman, the investor and for companies.” Abdulrahman goes on to say that the jobs created by the project will create opportunities for Malta’s skilled IT professionals, who often move overseas for work because of a shortage of positions in their home country. The aim of the project is to boost the Maltese job market by four percent, making it the biggest job creator in Malta’s history. Of the jobs that will be created, 65 percent will be new jobs in knowledge-based industries. “Although Malta has qualified people they always go somewhere else. You find them in the UK and in Australia especially,” says Abdulrahman. “We will be looking to attract back some of the Maltese talent that has left the island to work in other markets. Many industry experts in Malta have expressed concerns over the flight of scientific and technological talent. This project will contribute towards reversing that trend.” However, in order to create job opportunities in Malta, Abdulrahman must succeed in attracting IT companies to set up headquarters within the SmartCity cluster. He says one way to do this will be to encourage these companies to use SmartCity Malta as the base for their North African operations, given the country’s proximity to the continent. “We are aiming to attract IT companies that are looking for an office location in Europe that is cost effective for them. But we are also looking to tap into business in North Africa. SmartCity Malta will create the ideal infrastructure, support systems, environment and lifestyle for ICT and the people working in the industry. When it comes to the multinationals we want to be their first choice for this.”

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Abdulrahman says he also hopes to attract homegrown Middle Eastern ICT and media companies to set up operations in SmartCity Malta, as part of their international expansion strategies. “Today we have the advantage of being able to tap into almost 4300 companies in Dubai Internet City and see what their growth and expansion plans are – especially when it comes to small to medium-sized companies. The larger anchor companies we have in Dubai include IBM, Cisco and Microsoft and obviously their focus is on being in Europe rather than in the Middle East, so there is that advantage too.” While keen to emulate the success of its Middle East developments in the creation of SmartCity Malta, Abdulrahman acknowledges that his company will face different challenges when it comes to its first European project. One of these will be the fact that it will be required to form agreements with local telecoms and IT companies to built a communications infrastructure and provide services to residents of the cluster. “We are not looking at SmartCity in terms of providing the telecommunications services. Instead we will be talking to the operators at that location to get the best services for our clients.” SmartCity will also have to be responsible for providing housing and other facilities for residents within the Maltese development – whereas in Dubai this was provided by local developers. As well as office buildings the Maltese project will also include shopping boulevards, residential units and landscaped recreational areas. “We never worried about who would come up with housing facilities, retail outlets and hotel facilities in Dubai Internet City,” says Abdulrahman. “We knew what developments were being built around the cluster and that they would provide all the necessary facilities to our business partners. In Malta we will take responsibility for creating a city that people can both live and work in.” The company aims to make the city as energy efficient as possible and has carried out an extensive Environmental Impact Assessment (EIA) to ensure it meets European environmental regulations and is in accordance with LEED (Leadership in Energy Efficient Development) standards. This is due to conclude with the carrying out of a traffic impact study of the project in accordance with LEED standards. While in the Middle East the concept of creating a self-contained ‘city’ from scratch in a relatively remote location is a familiar one, SmartCity Malta will be the first of its kind in the country, creating infrastructural challenges for the company. However, Abdulrahman says he believes Dubai and Malta share similar aspirations and that based on this he expects the European project to emulate the success of its Middle Eastern counterparts. “In terms of strategic location, size, connectivity, access to key markets and high tourism orientation, Malta and Dubai share a natural affinity. They have similar knowledge-economy aspirations. Malta’s vision for knowledge-based development finds a parallel in Dubai’s strategic plans to develop itself into a knowledge-based economy.” Abdulrahman believes that the aspirations of the Maltese government and its desire to establish a strong knowledge-based economy mean the financial pressures currently facing European companies will not affect the success of

the SmartCity project. Moreover, he believes that IT companies are relatively insulated from the pressures posed by the credit crunch, “IT business will not stop. It might reduce but it will not stop. There are a lot of mergers happening in some other industries but I’ve not seen mergers in IT. Instead these companies will move to other locations that are more cost effective.” SmartCity’s international expansion strategy certainly doesn’t stop at Malta. The company has ambitious plans to create a global network of SmartCities in different locations worldwide. With this in mind, it is hoping to develop SmartCity Kochi in partnership with the government of Kerala on a 246-hecactre site outside the city. The project, for which the company is still seeking approval, will create 90,000 jobs and will become the focus for knowledge-based industries in India. Abdulrahman says that the company also sees high potential for SmartCity projects in Asia Pacific as well as in North Africa. “Asia Pacific, we strongly believe, has huge potential. There is an availability of talent and a diversity of industries there. Gaming, for instance, is huge.” He adds that the

Fareed Abdulrahman is the CEO of SmartCity and a board member of SmartCity Malta and SmartCity Kochi. He is also in charge of the expansion of TECOM’s offices internationally. In this role, Abdulrahman sets strategic objectives for the SmartCity brand and the execution of each project. He spearheads efforts to identify and develop opportunities for expanding the global SmartCity network along the lines of Dubai Internet City, Dubai Media City and Dubai Knowledge Village.

company believes it is important to target French and Spanish-speaking companies. “Business doesn’t just happen in one language. There are other languages which are very much used. I’m talking about French. How to tackle the French-speaking companies. There is also the Spanish-speaking business and we very much want to address those customers.” He is highly conﬁdent that SmartCity Malta will succeed, basing his assumption on the success of the original SmartCity – Dubai Internet City. The project has achieved success beyond his original expectations, he admits: “I didn’t expect it to be such a success, I’ll be honest. And especially because the time when it started was when the whole dot.com bust happened. There are two main reasons why I think it was so successful. The primary reason is because of Dubai – the location of Dubai and how the Dubai system has worked. The second reason is that Dubai Internet City, which was ready in 365 days, has created new standards that have made it the benchmark for all projects in Dubai since 2000. The team behind this project and the leadership of the country were the reasons behind this success.” And while there may be big differences between the UAE and Malta, for both countries the SmartCity concept represents a new level of infrastructure and the opportunity to kickstart an IT industry with huge potential.

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EXECUTIVE INTERVIEW

THE BENEFITS OF COLLABORATION TECHNOLOGIES Greater flexibility over when and where staff work could offer you a competitive advantage in the jobs market. Steve Leyland explains how. BM. What are the benefits for companies looking to enable a more dispersed workforce in order to improve both their bottom line and their environmental footprint? Steve Leyland. Companies want solutions that yield very significant cost savings whilst allowing the reduction of travel-related carbon footprint. Allowing your workers to work from the location they choose, close to customers, and in a manner that is sympathetic to the family and caring responsibilities is important. The daily slog along the highways and city streets to the office is becoming more and more unattractive, and with the advent of new technologies, more and more unnecessary. Now, the most progressive, and the most attractive companies (from an employee’s perspective), allow this sort of flexibility and gain great benefits in recruiting and retaining the best talent. The tools that Polycom provides allow the flexibility that many organisations and their staff demand, whilst providing the means for team relations to be built so that the team continues at high performance, despite the barriers of distance. Some large organisations have started to factor in the attendance rate of staff at the office when planning their real estate, and are finding that office space requirements, and of course car parking space requirements, can be reduced when you drive up the percentage of people who can work remotely from the office. BM. What solutions does Polycom provide to those organisations struggling to reduce costs and environmental impact? SL. Polycom is unique in its breadth of solutions to allow teams within organisations to work together regardless of location. The Polycom offer starts with the great voice products, offering much improved voice quality compared to normal telephones. We can then introduce a high definition video component to the solution, whilst maintaining the ease of use of the tele-

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you have in your hand, you can participate in the meeting and share your expertise over distance.

Steve Leyland is Polycom’s VP for EMEA and is responsible for strategy, development, sales, marketing and operations. Leyland is a long-term industry veteran with 30 years’ experience in computing and telecommunications spanning both Europe and the US. He has held senior management positions in engineering, marketing and sales throughout his career.

phone. We can support the largest meetings, with hundreds of people joining a call, and our solutions will allow a mix of voice only and video participants in a meeting, so that no matter where you are, or what communication device

BM. Can you give some examples of companies using your solutions to reduce cost? SL. One interesting example is from the UK where the customer was concerned about the level of travel between their UK ofﬁces, the lost productivity and their travel-related carbon footprint. Through the use of conferencing technology, they have taken many tens of tonnes of carbon from their footprint whilst providing a 150 man-week productivity gain from a small deployment of solutions. That’s three man-years of productivity gained by the organisation, while a conservative estimate of the value would be in the range of US$300,000 to US$400,000. We think it is clear that the solutions have an increasingly signiﬁcant part to play in today’s business climate, where particularly the conservation of cash whilst still chasing business growth is a primary concern. Couple this focus with the requirement for an environmentally sustainable implementation of business practices, and the case for examining the Polycom solutions becomes even more compelling. BM. Getting people to use the technology appears to be a challenge so how have you addressed this? SL. We have literally made it as easy to use as a telephone. We have engineered our phones and video conferencing systems to allow a user to start a video conference as a simple phone call, and for the phones to then invite the user to add video, if they wish. As an added bonus, the voice quality increases at the same time. For those people who want to have absolutely no interaction with the technology, we also have a solution. Polycom can now set up the whole conference remotely for the user, so that user does not have to touch a single button, and the only skill required to attend the conference is finding a seat.

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ANALYST VIEWPOINT

Keeping your data ‘green’

are dynamically allocated storage capacity on the basis of need, is another way to increase capacity utilisation and infrastructure utilisation. Using storage tiers is another way to increase utilisation. In fact, one of the reasons IT organisations implement Information Lifecycle Management policies is to codify the movement from one storage tier to another. Once transactional data has lost its currency, the data needs to be moved to lower cost, lower-performance storage. In an ideal world, we would have a good understanding of what data needs to be retained, say for regulatory purposes, and for how long. Such knowledge would make buying storage more predictable, but the current ﬂood of information generated by knowledge workers in organisations of every size makes it unlikely that companies will stop or even slow adding capacity.

Monitoring

Even though the data centre is a conspicuous consumer of power and cooling, most IT departments don’t see the utility bill – often that bill goes to another part of the organisation. This practice is changing however, as inherently green thing to do because fewer better methods of monitoring consumption by servers means lower power consumption and servers and storage becomes available. It is lower requirements for cooling, but it is also estimated that only 40 percent of the power the right thing to do for cost and managecoming into the data center actually gets used ment reasons. Server virtualby servers, but rising energy isation is also about prices and the threat of global increasing overall infrastrucrecession is forcing compature efficiency, and perhaps nies to take another look at even more importantly, servconsumption throughout the er utilisation. Servers are freorganisation. Efficient use of quently over-provisioned to the infrastructure not only support applications (for exhelps control costs, but it also ample, database) that are increases manageability. the amount of data centre transactional in nature – lots Organisations don’t start power that actually gets used by servers of record writing and reading out being efficient; it takes a requires a robust server and commitment at all levels to fast storage to maintain acwork towards efficiency. As ceptable performance. As a result, storage with a green initiative, the company needs to capacity often becomes underutilised, the implement a purposeful strategy of increasing opposite of what we would wish for in an efutilisation of existing resources. IT organisaficient infrastructure model. tions need to incorporate the company’s So, consolidation of applications on virtual strategic initiatives and goals into their infraservers is a good way to break the IT practice of structure planning, acquisition and retirement ‘one application per server’ and thus increase activities. In this way, IT not only makes a suboverall utilisation. Thin provisioning of storage, stantial contribution to the company’s green in which allocation of storage is controlled by a initiatives, but it also enjoys the resulting efsoftware storage manager so that applications ficiency and cost savings.

By Jeffrey Hill, Senior Research Analyst for Data Management and Storage at Aberdeen Group.

ne of the most compelling aspects of ‘going green’ for many companies is that the kinds of activities that support sustainability also support increasing efficiency, using resources, and lowering overall infrastructure costs. This fortunate coincidence of objectives makes introducing greener concepts into an organisation much easier, even for people who are ‘doubtful’ about the substantive benefits. For example, recycling has tangible benefits beyond helping to decrease the amount of plastic and glass under landfills. I visited a foundry that machined brass and copper fittings in the early 1970s and was amazed how much usable material was reclaimed on the floor. Back then, the primary aim was to reuse costly materials in the manufacturing process; now the primary motive might be to reuse materials and meet corporate or stakeholder expectations for green. Both goals nicely coincide with saving money.

Virtualisation This fortunate coincidence of green goals is highly apparent in IT organisations and data centres around the world. Consolidation of applications and servers through virtualisation is an

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THE RIGHT SOLUTION BM speaks with Khaldoun Al Shamaa, Marketing and Business Development Director, Emirates Computers (EC) and the company’s GM and VP in Abu Dhabi, Dani Diab, to get their views on the Middle East market. BM. How does EC feel about the Middle East market and the opportunities it presents? Dani Diab. Over the years, ICT has become both pervasive and mainstream which represents a unique opportunity for a broad-focus company like Emirates Computers: • Gulf consumers are very savvy and rely heavily on technology for better communication, access to information and entertainment. EC’s Smart Living solutions give users the ability to strike a balance between leisure and work in a manner suiting individual preferences. • Enterprises and government bodies appreciate “quality” and “support” over initial costs, and rely heavily on technology to support their growth and expansion plans. Judging by what enterprises in the Gulf have set out to achieve, and the fact that ICT is integral to their plans, the outlook seems quite strong. BM. In what way do converged data, voice and media networks support these solutions? Khaldoun Al Shamaa.Convergence is all about consolidation of existing resources and therefore helps control costs and reduce environmental impact by helping companies do more with less – which is an important aspect of Smart Living Solutions. Also, convergence enables simplicity and practicality while improving the overall security and connectivity of systems, people and processes. BM. How can businesses beneﬁt from these solutions in terms of video conferencing and uniﬁed communications solutions? KS. Basically, it’s a combination of business advantage and environmental efficiency. TelePresence enables ‘live’, face-to-face communications with virtual meeting experiences so you can communicate with people from across the globe as if you’re in the same room – enabling accurate business decisions without expensive travel. Unified communications provide a single network to empower the organisa-

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Dani Diab tion with a host of technologies including IP Telephony, rich media conferencing, IM, presence, mobility and unified messaging. So employees don’t waste money with toll calls and can reach each other and information quickly – in effect improving productivity and lowering costs. BM. How would these solutions benefit companies to face the economic crisis? KS. Smart Solutions effectively lower operational expenditures and provide a higher ROI in relatively short periods – so companies can make the most of what they have and cut out extras without affecting the bottom line. In terms of cost-efficiency, one should think about a faster ROI, rather than focus on the actual cost. That’s because the idea is to enable sensible choices that help save money and cut costs quickly – not to simply pinch pennies by avoiding investment in the right solutions. BM. How does Emirates Computers feel about the Saudi Arabian market? DD. Over the last few years, Saudi Arabia has made remarkable progress in different ICT fields including connectivity and access, sector reforms, national IT initiatives and e-Services. The Saudi market is undoubtedly the largest market in the region and is developing at an unprecedented rate. Saudi Arabia accounts for almost 50 percent of the

Khaldoun Al Shamaa region's IT spend and the demand for related IT services is increasing rapidly. BM. How has e2 progressed since its inception? DD. We launched e2 last year during Gitex and in our very first year of operations, we have achieved so much. We sincerely thank our customers and partners for helping us get here. We can also attribute our performance to the growth and development that is happening in Saudi. Customers are looking for best-in-class technologies and services and we were able to meet their requirements with the help of our global vendor partners such as Dell, Cisco, EMC, Oracle and Sun. Emirates Computers’ knowledge and expertise in the IT services field also helped us win some major contracts. BM. How does e2 view its success and what are its future anticipations? DD. e2 covers all the regions in Saudi and offers end-to-end solutions catering to both enterprises and SMBs. In our first year of operations, we were able to capitalise on Alesayi’s strong local market presence and experience in Saudi as well as Emirates Computers’ track record for implementing some of the largest projects in the region. We are pleased with our achievements this year and look forward to surpassing our record next year.

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The core of the matter AMD’s Raed Hijer gives BM the lowdown on the processing power behind data-intensive industries today.

igh Performance Computing (HPC) applications entail solving complex scientific and engineering problems. The petroleum industry, in particular, is an example of an HPC area where massive amounts of data is required to be processed efficiently. The oil exploration process usually involves seismic acquisition, processing and imaging. The process is then continued by analysing an excess of terabytes of data, which is a time and resource-intensive process. This type of application and other compute-intensive applications are addressed by High Performance Computing (HPC) supercomputers or cluster-based computers. These systems often deploy hundreds of thousands of CPU cores and involve efficient architecture to handle the compute-intensive and high memory bandwidth requirement with minimal latency. Built on AMD’s unmatched Direct Connect Architecture which helps eliminate the bottlenecks associated with front-side bus architectures, Quad-Core AMD Opteron processors deliver the world-class performance, scalability and overall system efficiency necessary to power the world’s largest high-performance computing (HPC) systems. Additionally, AMD technology for these highly advanced systems provides the customers with much-needed energy efficiency in the form of performance-per-watt and innovative processorlevel power management features such as AMD CoolCore Technology and Independent Dynamic Core Technology. With total cost of ownership (TCO) in mind, AMD Opteron processors can be deployed on the same infrastructure and same thermal from one generation to the next. This enables the customers to adopt new technologies based on the next generation Opteron without the hassle of redesigning the data centre space, power and cooling requirements. As an example, customers can migrate from Dual Core Opteron processors to Quad Core Opteron processors with the same rack space and power require-

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Raed Hijer is a Senior Field Application Engineer with Advanced Micro Devices (AMD), Inc. in Dubai. Prior to joining AMD, he worked for IBM in North Carolina in a variety of roles including desktop motherboard development, product engineering technical lead, and system lead engineer. While working at IBM, he published several papers and patents in the areas of image processing, pattern recognition, neural networks and PCB design.

ments needed to power and cool the rack. By so doing, they are able to double the number of cores in the same infrastructure. The TOP500 list ranks the world's 500 fastest high performance computers. Seven of the top 10 in the list, including the top two, leverage the balanced platform of AMD Direct Connect Architecture. The list reafﬁrms AMD’s leadership and the tremendous performance capability that HPC customers have enjoyed for years. Last year, the petaﬂop barrier was broken by both IBM’s ‘Roadrunner’ supercomputer at Los Alamos National Labs and Cray’s XT4 and XT5 ‘Jaguar’ supercomputer at Oak Ridge National Laboratory. While the former supercomputer adopts a heterogeneous architecture

based on AMD Opteron and IBM PowerXCell processors, the latter is considered the first ever wholly x86-based supercomputer to achieve such a performance milestone. The ‘Jaguar’ supercomputer runs on over 45,000 Quad-Core AMD Opteron processors. The petaflop milestone is significant in terms of solving problems that were never possible before. It reduces dramatically the computational time. It could produce results in a week that used to take 20 years just a decade ago. In oil and gas applications, this could enable processing of the seismic data several times faster than a year before. In addition to seven of the premium top 10, AMD Opteron processors have helped catapult 53 other global supercomputers on the TOP500 to new heights of HPC performance. The list highlights industries of all types that are harnessing AMD’s world-class computing capability including IT service providers, financial institutions, automotive design, and researchers in energy, geology, meteorology, social sciences, astronomy and many other disciplines. Recently, AMD announced widespread availability of its 45nm Quad-Core AMD Opteron processors, codenamed ‘Shanghai.’ These latest Quad-Core AMD Opteron processors already hold multiple HPC workload-related performance records including: • 34 percent higher floating point throughput performance than the competition on SPECfp_rate2006 for two-socket servers. • 51 percent more memory bandwidth performance than the competition on STREAM benchmarks for two-socket servers. • Approximately 65 percent faster job runs than the competition on FLUENT 12 beta (ANSYS) for two-socket servers. • More than 30 percent better performance than the competition on LSDYNA MPP971s for two-socket servers. www.amd.com/hpc

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EXPERT OPINION

THE END OF AN ERA After 14 years as head of Saudi Aramco, the world’s biggest oil company, Abdallah S. Jum’ah has handed over the reins to his successor Khalid Al-Falith. Here Jum’ah reflects on his time in charge and his predictions for the future of Saudi Aramco and the world energy sector. 104

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hese past few weeks have been a time for me to reflect on the past, to take stock of the present, and to consider the future prospects for my industry, and indeed for the world around me. I would like to share some of my thoughts and perspectives on oil and energy and their linkage with future economic prosperity. These are issues that are of significance not only to people within our industry. Rather, petroleum matters to everyone on the planet, because it is present in every facet of our societies and our economies. It allows us to transport people and materials, it helps us grow our food, heal the sick, manufacture goods, and make our surroundings safer, more vibrant and more comfortable. Energy and economic activity are inextricably linked, and because petroleum empowers just about every other industry on Earth, it fuels the growth and development of our economies, powers the prosperity of our societies, and helps raise the living standards of billions of our fellow human beings. In today’s world, there is very little that doesn’t work, function or move without petroleum, and oil is truly the lifeblood of our modern civilization. That’s one reason why it is vital to remember that for all the talk about the rise of alternative fuels and the much-heralded “end of oil,” the International Energy Agency predicts that fossil fuels will continue to meet four-fifths of the world’s total energy needs in 2030. The IEA also forecasts an average one percent annual increase in demand for oil over the next 20 odd years, with total global oil consumption growing from roughly 85 million barrels per day (bpd) last year to 106 million bpd in 2030. It’s worth noting that the OECD’s share of petroleum demand will decrease significantly over that period, from 57 to 43 percent, largely as a result of strong demand growth in emerging markets rather than a decrease in consumption in developed economies.

to offset the natural decline in oil ﬁelds through new production capacity usually receives scant attention. It is demand growth, which attracts greater interest, but in reality both these aspects are equally important.

The cycle of change The current shift toward national oil companies as upstream powerhouses will continue, with NOCs supplying four out of every five additional barrels of oil the global economy will require, in keeping with their larger reserve portfolios and their younger fields. At the same time, non-conventional oil and natural gas liquids will make increasingly large contributions to the world’s total supply of oil – a trend which is set to continue and which I believe will both allay fears of shortages and further consolidate oil’s place in the global energy mix. Of course, there is also a need for timely and focused investments elsewhere along the petroleum value chain, particularly in the areas of refining, shipping and transportation. Unfortunately, it looks like the swings between boom and bust and over-capacity usually followed by under-investment in certain sectors of the oil industry that we’ve seen in the past will also be present in the future, resulting in continued cyclicality. The need for financial outlays is pretty obvious, and in some ways they are relatively straightforward— notwithstanding the extreme price volatility we’ve witnessed recently, the current level of uncertainty in the global economy, and the demand destruction in some major markets. However, we must not forget the need for sustained investment in other equally important areas, which are essential success drivers for our business, and without which our industry’s ability to remain the foremost suppliers of energy to the wider world would be jeopardised.

Vital investments Investing in the future of oil Most of the talk about peak oil has died down in the wake of the prevailing financial and economic crisis and the oil prices falling by over two-thirds from the peak of nearly US$150 a barrel not too long ago. Suddenly, instead of oil resource and supply shortages, we hear the talk of a glut; such is the cyclical nature of the oil industry. Oil is here to stay. But far from preserving the status quo or resting on our laurels as an industry, growth in oil demand over the long-term coupled with depletion of fields already in production – especially in non-OPEC countries – will require substantial and sustained investments in the years and decades ahead. In fact, it is estimated that the oil industry will require some US$6 trillion of investment between now and 2030 in order to meet forecast demand. Fully 80 percent of that US$6 trillion total will need to go to the upstream exploration and production sector, with the IEA estimating that a total of 64 million bpd of capacity will need to be developed by 2030 to meet demand growth while offsetting declines in existing fields. I would note that the issue of the sizeable investments essential

The first area requiring investment is research and technology development. I believe that technological advancements in upstream applications and operations will enable us to find and produce more oil more efficiently, and to effectively prolong the productive life of

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our reservoirs even as they open up new frontiers for exploration and development. However, technology also has enormous potential to boost other aspects of our companies’ activities, whether in the midstream and downstream segments of the business, or in enhancing our reliability through the more effective monitoring and maintenance of plants and equipment. Such technological advances–whether revolutionary step-changes or incremental improvements–are hard-won and require continued efforts. However, I believe the wider world needs to understand the degree to which we are investing in R&D as an industry and its importance, because this aspect of our business may not be readily apparent. Even more important are our investments in our people, whether cultivating a new generation of petroleum engineers and professionals, or ensuring that our existing workforces have the skills and knowledge to thrive in an increasingly complex operating and business environment. The popular image of the petroleum business is largely comprised of “big iron”: drilling rigs, pipelines, refineries, supertankers and the like, and they certainly are an important part of what we do. But we as an industry, often prefer to stress the technological sophistication of our operations. For me, petroleum is still primarily about people: the dedicated men and women who plan, build, operate and maintain that massive infrastructure, who develop and deploy the high-tech tools, and whose talents and dedication are essential to providing energy to the world. Our industry is currently facing a number of human resource challenges, however, and many companies find themselves caught between a retirement bulge, which will see the departure of many of their most experienced personnel, and a very young workforce that is not yet sufficiently experienced. This results in a critical shortage of people in the middle experience group, who have gained adequate know-how to get the job done and will

be with us over the coming decades. Add in the need for employees who are technologically savvy, committed to self-development and life-long learning, and open to innovative ideas and rapid change, and the need for investments in our people is equally clear.

Taking responsibility The third area where we need to invest time, effort and resources is environmental stewardship and the protection of natural ecosystems wherever we operate. Efforts in this area can often be integrated with other investments: for example, conducting environmental impact assessments before building new facilities and designing those plants and installations to be environmentally sound, configuring new refining capacity to produce cleaner and greener petroleum products, and inculcating care and concern for the environment among our employees. However, there are also important investments to be made in specific areas like the de-sulfurisation of whole crudes and products, cleaner burning fuels, and next-generation internal combustion engines, including new fuel formulations consistent with the needs of such new engine technologies – most of which we are pursuing at Saudi Aramco. No country on earth – including Saudi Arabia – is now or will be ‘energy independent’ and it is important to recognise that we all function within the same interconnected worldwide energy system. Leaving aside the issues of cross-border investments and financing, technology transfer, and the sourcing of goods, equipment and expertise, crude oil itself is a fungible commodity traded in global markets – and as we have seen over the last year, petroleum price volatility and its economic impact respect no national boundaries. So producer or consumer, NOC (national oil company) or IOC (international oil company), small nation or large, developed economy or emerging market, we all sail in the same boat when it comes to our collective energy future.

ABDALLAH S. JUM’AH ON LEADERSHIP “Early in the years I became president, I was asked what I wanted to be known for at the time of my retirement, and my answer was, ‘I want to be known as the one who let the genie out of the bottle in an ethical manner.’ That meant encouraging and capturing the ideas and initiatives of our people, and then applying them to our work and our operations.” “To my mind, principle in business comes down to simply this: Identify your responsibilities as an organisation or a company and make only those commitments that you are confident you can keep. The issue of defining your organisation’s responsibilities is one that fascinates me and that has played an important role in my time as head of Saudi Aramco.” “If innovation is the motor that keeps an organisation moving forward through both choppy seas and still, then insight is the ability to look all around and make sense of those waters, charting dangerous rocks and reefs and identifying where the passage will be smoothest.”

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Keeping your options open We ask David Allinson whether open source is the answer for IT in the face of the economic crisis? BM. What do you think is the main challenge facing CIOs in the face of the economic crisis? David Allinson. The obvious answer is that most CIOs will have a lot less to spend in 2009. In the US, where the crisis ﬁrst hit, a CIO Survey conducted late last year showed that approximately 60 percent of those quizzed were re-evaluating budgets, re-negotiating contracts and putting those projects deemed non essential on hold. Data on the Middle East is much harder to come by but there is a general consensus that spending is down and CIOs are being more cautious with budgets. BM. How can open source help in such a situation? DA. The most obvious area to look at is at the operating system and platform level. If a company was looking at a Database or ERP system from one of the proprietary vendors

hardware resources and allowing a number of applications to share servers. Red Hat offers products that include virtualisation with the base operating system at no extra charge. With their acquisition of Qumranet, you will soon be able to virtualise your desktops, too. You may previously have been planning to purchase virtualisation software from VMWare, but by opting to use Red Hat, you save again. BM. What about other open source offerings ? DA. While previously open source software might have been looked upon with some suspicion by corporate decision makers, today there are around 500 commercially supported open source projects. In the database area alone, there are products in use in corporate production environments such as MySQL, PostgreSQL and Ingres. There is also Zenoss in system management, Digium/

user can go on-line at any time and will get the response and support from a community that is very active on-line. For Red Hat specifically, as its master distributor in the Middle East and North Africa region (MENA), Opennet operates the Red Hat Middle East support centre. We also operate a Middle East training centre in Dubai where your own support staff can achieve RHCE or RHCT certification instructed by fully accredited Red Hat instructors. BM. Where do you see most of the activity in open source in 2009? DA. Up to this point in time we have mainly seen the growth of Linux running proprietary software solutions as a means of reducing platform costs and improving IT flexibility and this will continue. However, looking at the scale of the economic downturn I think 2009 could well herald the wider consideration and implementation of open source software to realise significant cost savings available in many application areas.

“Data on the Middle East is much harder to come by but there is a general consensus that spending is down and CIOs are being more cautious with budgets” like SAP or Oracle they might have been planning on a proprietary hardware solution running a variant of Unix. By replacing the platform with an Intel or AMD system and replacing the OS with Red Hat Linux there are immediate cost beneﬁts. Moving to Linux is also an easy transition for existing Unix skilled technical staff. Additionally, it allows you to expand systems incrementally rather than having to factor capacity into your hardware purchase immediately. BM. Are there any other beneﬁts from using Red Hat as the platform of choice? DA. Yes, if you are looking at virtualising your environment to make the best use of existing

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Asterik in telephony, Jaspersoft in business intelligence, SugarCRM and Compiere in the CRM and ERP space and Zimbra for messaging and collaboration. If you are looking at a major in-house development project, you now have options such as Red Hat’s JBoss, an open source alternative to Websphere and Web Logic. All can offer signiﬁcant cost savings over their proprietary counterparts. BM. Initial cost saving is one thing but what about ongoing support? DA. Clearly quality and availability of support is of major concern to corporate decision makers. One of the biggest advantages of open source is the community itself. A

David Allinson is General Manager of Opennet MEA, responsible for directing their growth as an open source software and services company primarily focused on Red Hat products. Opennet is the Red Hat master distributor for the Middle East and North Africa and also operates the Red Hat Middle East support centre. For further information, please email: david@opennet.ae

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ANALYST VIEWPOINT

Customer satisfaction Bo Lykkegaard, Programme Manager for European Enterprise Applications at IDC, reveals his CRM predictions. he field of Customer Relationship Management (CRM) has had a turbulent life over the past 15 years, since Tom Siebel founded Siebel and began to elevate what used to be contact managers for sales people into broader enterprise solutions for customer management. After experiencing meteoric growth rates during the 1990s, the global CRM market declined significantly during the 2002 and 2003 period as a result of the dot.com collapse and highly publicised CRM failures. Today, CRM is on the rise again. Current customer adoption is mainly driven by three key factors. Firstly, new delivery and licensing models, known as ‘software as a service’ and pioneered by Salesforce.com, shorten global implementations from years to months, reduce upfront cost and risk due to the monthly subscription model, and enable faster product development cycles because the developers control the deployment environment. A second driver is the improved user interface, emulating design principles of familiar user interfaces such as Microsoft Outlook and benefiting from dot.com innovations such as task-based and proceduredriven user interaction, similar to when making a book purchase at Amazon.com. A third driver is built-in integration between CRM and industry-specific applications, for example customer service, billing, and service provisioning for telecommunications companies or sales and marketing tied into trade promotions management for consumer packaged good vendors. Such integration supports extensive business process automation and improves decision-making capabilities.

Direction Where will CRM go from here? IDC certainly believes the three factors mentioned above will continue to drive CRM adoption. However, four additional factors will boost CRM demand further over the next three years: Social CRM: Social CRM is the expression of the Web 2.0 innovations such as blogs, wikis, and user ratings into an enterprise CRM context. Consider the sales representative querying his/her CRM application to scan social networking sites to assemble a personal proﬁle of a new, customer decision maker prior to a critical meeting.

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Or imagine a customer portal where customers can post new ideas or requests and promote/demote the ideas of other customers. Or a selforganising sales/marketing intranet where all collateral is displayed in order of usage, ratings, and age. At a time in which lack of end-user adoption remains the number one threat to CRM success, social CRM represents a very valuable way to increase employee productivity and CRM usage at the same time. Upgradeable customisation: Some say the days of custom-built CRM systems are over. IDC tends to agree with that when it comes to core components such as pipeline management, contact management, campaign management, and so on. However, a large proportion of companies have CRM needs that are unique and critical to their organisation. New CRM applications will offer customisation extensions, built-in development frameworks, and standardised web services interfaces that will greatly simplify the addition of industry-specific extensions to support the needs of, say, the subscriber management of a publishing house or an auto-service membership association. Since the customisation is carried out within the CRM application framework, the customisations are easily upgradeable. Mobile CRM: The idea of employees accessing their CRM application from a mobile device has been around for a while. However, recent innovations in mobile computing such Bo Lykkegaard as mobile broadband, RIM Blackberry, and the Apple iPhone, will turn the dormant vision of mobile CRM into reality. Service technicians, travelling sales representatives, and consumers are examples of key CRM users that are typically not carrying a laptop or PC. Virtual suites and ecosystems: Customers do not want to tie best-of-breed CRM applications together with back office applications and industry-specific applications. This means that best-ofbreed CRM applications will increasingly be consumed as part of larger, pre-integrated offerings. The ‘virtual suite’ is one way to create such larger solutions, in which SOA technologies are used to integrate what used to be stand-alone CRM applications with other enterprise applications. Oracle, Infor, CDC, and Sage are following this approach. Other vendors are relying on ecosystems in which vendors pre-integrate complimentary solutions, such as Salesforce's AppExchange and SAP's Business Process Platform. Bo Lykkegaard is Programme Manager at IDC for the European Enterprise Applications research, market analysis, and related consulting. He focuses on the composition and developments of the Western European applications software market, in particular ERP, CRM, HR, and payroll applications.

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COMMENT

The changing face of CRM There are a multitude of factors driving CRM growth, but none has been as effective as SaaS. By Michael Thomas

ccording to Datamonitor, the research, data and analytic company, the CRM market is set to double to about US$6.6 billion with a growth rate of 10.5 percent through 2012. This growth is due to a number of factors such as penetration in new vertical markets and the ease, and ﬂexibility, of deployment. In 2007, Gartner stated the CRM market was on pace to exceed US$7.4 billion. Growth is positive, especially for CRM vendors, and it reveals that companies are now embracing the essential need to become better at managing all of their relationships, and do a better job of looking after their current customers in addition to trying to find new ones.

“Customer loyalty is not the measurement that it has always been and can be easily swayed and revoked based on good, bad and indifferent experiences” Having an efficient CRM solution will always be a requirement, but the work is dependent on the effective balance of people to adopt and use the solution, efficient processes to follow, and an adaptive technology to enable it to work together. There are a multitude of factors driving CRM growth but none has been as effective as on-demand applications also known as software as a service (SaaS).

SaaS SaaS alone represents more than US$1 billion in CRM revenue and continues to rise as more companies embrace the beneﬁts of this platform.

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CRM solutions delivered this way have changed the landscape and allowed more companies access to world-class solutions. Paced by the success of CRM leader salesforce.com, 80 percent of CRM solutions have SaaS as a delivery mechanism. Here are a few factors as to why the SaaS model is preferred: Cost – the lower cost of deployment as well as lowering risk has aided in the success of SaaS solutions. The pay as you go model has made it easier for companies wanting to lower the cost of ownership. The SaaS model has sliced the up and running time by 50 percent, eliminating the need for the usual 18-24 month implementation, and upgrades are transparent. Ease of use – SaaS CRM solutions are not only easier to configure but easier for the end user, causing them to embrace and utilise the tools more. The integration of the CRM solution with popular tools such as Microsoft Outlook or other e-marketing solutions assists in positive adoption – a key factor in the success of CRM implementations. Flexibility – The deliverability of SaaS over the internet allows access virtually anywhere. The whole movement of web-enabled applications, coupled with service-oriented architecture (SOA), allows a multitude of configurable solutions that will aid in collaboration with other applications, giving companies a holistic view of the health and efficiency of their business.

Web 2.0 and customer experience management While positive growth in web-enabled CRM systems has made it easier for companies to manage their relationships, it has also changed the way that prospects and customers interact with companies. Web 2.0 strategies and technologies have made this interface bi-directional,

meaningful and relevant. Consumer generated media such as blogs, podcasts, social networking as well as solutions such as YouTube has given a global voice to the customer that cannot be ignored. This has given rise to a new term, customer experience management, which allows the experience a customer has with your company to be expressed – good, bad or indifferent. Companies cannot control what is being expressed about them, but by managing this exchange they can react, learn and adjust accordingly. The power shift has changed and staying on top of this change will require new ways of handling customer interactions. The key to managing all of this is the ability to capture and measure it. Customer loyalty is not the measurement that it has always been and can be easily swayed and revoked based on good, bad and indifferent experiences. All of this is placing emphasis on the next phase of CRM – what some are calling CRM 2.0. Regardless of how CRM is deﬁned it will always be the underlying foundation of managing relationships. Executive support, strategic process planning and user adoption will always be the deﬁning factor of success, rather than the technology chosen.

About Michael Thomas Michael W. Thomas is National President of the CRM Association (www.crmassociation.org). In 2004 he received the CRM Magazine’s Most influential CRM Leader Award. He co-hosts the radio show “Technology for Business Sake” www.businesstechnologyradio.com and his CRM Blog can be seen at www.crm2.blogspot.com.

At MSD Consulting (FZE), we transform IT to Innovative Technology MSD Consulting (FZE) is an IT management and consulting services firm, advising in the areas of IT service management, IT strategy planning, project management and systems integration and developing innovative and customized solutions. We build teams of professionals from many disciplines and backgrounds to design and deliver innovative, comprehensive and customizable solutions and consulting services for our clients to transform the performance of their organization, align their IT services to the world best practices and achieve their business objectives. Our teams work with IT leading vendors, our clients and their staff to deliver the best solution to integrate IT services for our clients.

CLIENTS CALL ON US WHEN THEY WANT: • Independent advice and consulting • To transform their IT services • An innovative solution • A highly committed team of professionals • A highly responsive approach • Delivery of well managed services • Achievement of measured results

For more information on our services, please contact us at MSD Consulting (FZE) P.O. Box 121880, Sharjah United Arab Emirates Tel: +971 6 5576128

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EXECUTIVE INTERVIEW

Enterprise-wide solutions R. Shankar, Vice President for Middle East and Africa Operations at Ramco Systems, talks about how organisations in the Gulf can streamline operations with IT-led business consulting. BM. How in demand are business consultancy services in the current economic climate? R. Shankar. We still see niche opportunities for those operating in this space despite the global recession. It is very clear that companies are dramatically cutting costs and are in no mood to invest or overhaul their processes or infrastructures unless assured cost reductions drive such initiatives. Traditional consultancy firms will of course be challenged. Customers will expect a new phase of knowledge-driven, proven expertise with referenceable implementations from their solution providers. The solution providers should have walked the talk, and should be able to demonstrate that their services have led to distinct business benefits for their customers even in difficult times. However, even in these adverse scenarios there is a silver lining; companies are consolidating their positions and we have already witnessed some major mergers and acquisitions happening across industries. This has opened up a new stream of opportunities in IT-led business consulting. Ramco is a leading player in this domain and has proven experience in providing business process and infrastructure consulting that facilitates better business integration and efficient utilisation of resources. BM. How can enterprise solutions enable companies to streamline their operations? RS. Enterprise solutions integrate diverse business processes across departments onto a single enterprise-wide information system. Enterprise solutions help enterprises improve performance and streamline their operations by delivering the intelligence that decision-makers need to review cost and revenue patterns, resources (man, machine, money) optimisation and productivity, and customers’ behavior and by enabling change in the way people, processes and technology work together to deliver legendary customer experiences. Enterprise solutions are must-have tools to run operations efficiently, more than ever, in today’s tough circumstances. Enterprise

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solutions enable companies to keep their business processes flexible and nimble as per the market needs and at the same time facilitate enhanced profitability. With rich and proven expertise in providing enterprise solutions for over a decade, Ramco has stood by its promise of creating enduring value for its customers. This is evident from its marquee list of global customers. BM. What are the benefits to companies of contracting outsourcing services companies to carry out back office processes, IT and other parts of their operations ? RS. Companies need to prudently re-assign their resources to address their core business requirements differently in this flux-driven

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

scenario. This is one of the key reasons for outsourcing supporting functions and processes to experts. Other drivers include cost savings, cost restructuring, improving quality, knowledge and operational expertise. Take the example of managed payroll services provided by IT service providers including Ramco. Typically, human capital-intensive organisations find it difficult over time to maintain burgeoning records of their employees, since this requires huge capital and time, apart from large headcount for HR functions like recruitment processes, employee queries, statutory compliances, timely full and final settlements, timely reimbursements, leave management, and so on. Many businesses worldwide are turning to payroll outsourcing as a means of improving the accuracy, efficiency and legal compliance of their payroll process. BM. Does Ramco provide contract outsourcing services in the MENA region? RS. Yes. Apart from other services, we are rapidly gaining traction in the managed payroll services space. Ramco’s expertise in managed payroll services is the outcome of more than 10 years’ experience in the international HCM Application space. HR managers by outsourcing the cumbersome, but essential payroll management to Ramco, can benefit from Ramco’s own payroll engine, which is being deployed currently at over 700 locations processing pay slips for in excess of 800,000 customer employees worldwide. Assured of multi-directional, multi-level security, the solution can literally be accessed anytime - anywhere by the authorised users as it is a browser-based application and does not require any component to be installed on users’ machines. Also, Ramco provides help desks using various channels including an onsite helpdesk (after the payslip disbursal on a monthly basis), dedicated phone lines and email support and online support using a web ticket system. Our customers achieve substantial transformation of their business processes and cost savings within a very short while of engaging Ramco.

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PROPERTY

Oman may not share the same glitzy reputation as its GCC neighbours but it is slowly emerging as the next tourism and real estate hot spot in the region. Diana Milne meets one of the pioneers behind its transformation, Nick Smith, CEO of The Wave.

rtists’ impressions of luxury property developments are a familiar sight in the GCC – with each claiming to offer a lifestyle more idyllic than any other. Outside, skyscrapers crowd the skylines of the region’s cities as developers clamour to outdo each other with bigger and better towers as they pull out all the stops to attract customers. But, until recently, one corner of the GCC had remained relatively untouched by the property boom – Oman. Although it is just a three-hour drive from the UAE, the country has been insulated from the dramatic changes taking place in the neighbouring country and has retained a strong local flavour. Traditional fishing villages still dot the country’s coastline and its roads, many of which wind through spectacular Nick Smith mountain ranges, remain refreshingly free of traffic jams. Gulf neighbours regard the country’s capital Muscat as a peaceful weekend retreat, and even though it features a shopping mall, cinema and all the conveniences associated with a modern city – the main attraction remains the traditional covered souq.

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The next big thing These qualities have not escaped the attention of hotel and real estate developers, particularly since 2006 when a law was passed allowing foreigners to buy freehold properties in developments classed as Intergrated Tourism Complexes in Muscat and the Greater Muscat area. Oman is some way behind its Gulf neighbours when it come to the property boom – but already it is being heralded as the next big thing by developers – not least the creators of Oman’s ﬁrst luxury freehold development – The Wave. The project, which has won a string of awards, including Best Luxury Development by Homes Overseas magazine and four CNBC Arabian Property Awards, is being developed jointly by Oman’s Waterfront Investments, representing the Government of the Sultanate of Oman, National Investment Funds Company and the UAE’s Majid AlFuttaim group. Situated in the heart of Muscat, it will feature 4000 homes, including apartments, villas and townhouses, two luxury hotels managed by the Kempinski and Fairmont groups, a marina, and a golf course de-

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What is The Wave? The Wave, Muscat, is the first major integrated resort and residential development to be undertaken in the Greater Muscat region. Once complete, it will be a fully master planned community, occupying a magnificent site with over six km of natural beachfront. Part of the planned development is a Greg Norman signature golf course, as well as a harbour front village located around a 300-berth Marina. The architectural style of The Wave, Muscat, will be in keeping with Omani heritage and will create an authentic and welcoming flavour to all residents and visitors. The tourism component will contain at least three hotels and waterfront retail with an al fresco ambience. The residential component will encompass a mix of quality villas, townhouses and apartments – some of which will be waterfront and beachfront. There will be no highrise towers and the project has been planned with a special emphasis on creating a relaxing and comfortable environment with footpaths, public open spaces and water views. All residents will live within a few hundred metres of the beach or prime waterfront areas. The site is approximately 2.5 million square metres in size.

signed by Greg Norman. And while all this may sound like a far cry from Oman’s traditional values, The Wave CEO Nick Smith says the developers were determined to create a project in keeping with the more low key ambience of the area: “One of reasons why the project is so successful is because it is built on a human scale rather than being on a frighteningly huge scale. There are no towers. The tallest building is six-storeys high and most of the villas are just two storeys. We have used indigenous plants in the landscaping and worked hard to create a sense of community. Our ﬁrst residents moved in and have already shared Christmas and New Years Eve parties here. When they arrived we said the new heart of Muscat had started beating.” Smith says that of the residents that have purchased properties at The Wave, 75 percent are already living in Muscat – showing there is strong demand from the local market for such a development. The development has also attracted strong interest from golfers keen to live a stone’s throw from one of the world’s best golf courses: “I think the Middle East is becoming a golﬁng hub particularly in the winter time,” he says. “There is one golf course under construction here and we have another one which should be starting construction next year. Both will attract not just property buyers but those that want a two-centre holiday in Dubai and Oman or Abu Dhabi and Oman. Being built around a marina, the development is also designed to attract boat owners.”

Survival of the fittest Not surprisingly, Smith says property sales have slowed down in recent months as a result of the global economic downturn. As a property developer however, he believes the current situation will result in long-

term benefits for the industry and is already resulting in more serious long-term buyers of its properties at The Wave: “There is still a lot of interest here and people are still buying, albeit at a slower rate than they were last year. Prices have hardened. I think previously there was a lot of speculation in the market but has now largely disappeared. In other words, what you’re getting now is genuine longer-term investors and genuine end users. People actually want to live in the properties they are buying.” He goes on to say that the central location of the development has helped to make it attractive to prospective buyers: “The development sits within the boundaries of Muscat and it’s just five minutes from the airport and ten minutes away from the major shopping centre.” This also means that it has had minimum environmental impact on the surrounding area, he adds: “The fact that we’re not stuck on a beach a million miles from anywhere means we don’t have to worry too much about our effect on the environment.” The success of the project is also down largely to Oman’s emergence as a tourist destination and to the development of property laws making it possible for foreigners to invest in properties in the country. Although the country’s tourism industry has developed at a much slower rate than that of the neighbouring UAE, it is rapidly gaining a reputation as a high class holiday destination which was voted among the 10 best world tourist destinations for 2008 by Condé Nast Traveller for the second year running and has attracted several international luxury hotel operators. Also in the pipeline is the expansion of Muscat’s airport, which will increase its annual handling capacity from three million passengers to 48 million by 2050. Work on the ﬁrst phase, which will increase capacity to 12 million passen-

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Oman is establishing itself as an award winning tourist destination

gers will be complete in two years. Work is also underway to increase capacity at Salalah Airport in the south of the country from two million to 10 million passengers a year. “Oman seems to be on most tour operators’ radars now,” says Smith. “Combined with the natural beauty of the country, the big mountains, the desert and the culture, it is the jewel of Arabia. And we think those attractions really help to attract more buyers.” Smith hopes The Wave will help tap into the burgeoning tourism industry with the two luxury hotels it will be featuring and a third which is in the planning stages: “The reason why we chose the Kempinski and Fairmont hotels is because they are extremely good ﬁve star luxury brands. Kempinski is actually the oldest hotel group in the world and the Fairmont is really well known for its brands, particularly in the US. We think both brands will help to bring in a US market and a European market and will increase links with those parts of the world. They are also new to Oman so their worldwide networks will help to bring additional tourism to the country. In the foreseeable future there will be another hotel but it’s much further down the bill programme and we’re not anticipating signing that deal for another year or two.”

Healthy competition Oman’s emergence as a world-renowned tourist destination means that The Wave’s developers could soon face competition from rival projects. Smith says, however, that he welcomes the competition as it can only mean good things for the residents of The Wave: “There have been a few other integrated tourism complexes that have now been given consent. That’s of great benefit for us – it means our residents can pop out and use the facilities that are just down the road.” The first phase of The Wave has been finished on target with around 20 of the villas completed and if all goes to plan, another 200 residents will move in next year. The fact that The Wave is coming together and even boasts its own community of residents gives it the edge over similar Gulf developments that remain for now, just artists’ impressions, says Smith: “There are a lot of schemes out here that are computer generated and are never really going to happen. Our customers are moving in, it’s really happening.”

Foreign ownership rights at The Wave: Omanis have always enjoyed full freehold title rights. In February 2006, His Majesty Sultan Qaboos bin Said promulgated a law through Royal Decree 12/2006 for freehold ownership for all, clearing the way for expatriates and foreign nationals to own real estate in “Integrated Tourism Complexes”. The Wave is one of the first developments to have been given this status and has officially been granted the right to offer full freehold property rights to all buyers. Owners will be required to pay the land registry charge, which is levied on all property purchased in Oman and is a fee charged by the Ministry of Housing to cover administration costs. This charge is set by the government and is currently three percent of the purchase price. As in all property purchases in Oman, this charge will apply to purchases at The Wave, Muscat.

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YACHTING

OCEAN DREAMS

Harsh global economic conditions have affected even super yacht owners, putting luxury marina projects in jeopardy. But that has done nothing to dent the confidence of Michael Horrigan of Island Global Yachting (IGY) who tells Diana Milne why boats are still big business in the Middle East.

iven that he is in charge of developing the Middle East’s most luxurious marinas, you’d be forgiven for thinking Michael Horrigan was a sailing man. Not so, he tells me as we sit in the sunshine overlooking IGY’s most recently completed project, Festival Marina, in Dubai. In fact, enjoying a cold drink on deck is about as far as Horrigan’s enjoyment of sailing goes. “I’m more of the cold beer on the deck looking out at the boats type rather than the down there with a rope in my hand running up the sail type,” he admits, adding “I was brought into the company not because of my afﬁnity with the boating lifestyle but because my experience of working in hospitality, in architectural and urban planning roles.” While Horrigan may not be familiar with the workings of a main sail, his background in hospitality has been a crucial factor in his success as CEO for IGY in the Middle East and Europe. The company’s aim is to create, then manage the world’s most luxurious marinas and to date its portfolio includes developments in the Americas, the Caribbean, the Mediterranean, and of course the Middle East where it has four projects: Al Seef Marina, Anchor Marina, Dubai Maritime City and Festival Marina.

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Feeling the pinch Back in August the company issued a press release stating ambitious targets to build 20,000 berths in Dubai over the next ﬁve years and to create 1500 jobs in the emirate. It’s a claim no company would make in today’s economic climate and I ask Horrigan whether the downturn being experienced in the GCC has forced IGY to adjust its forecasts: “I don’t think the numbers in 2009 will be anything like what we projected in the middle of 2008,” he says of IGY’s August 2008 published targets. “It’s not so much the demand that will be affected,” he says. “It’s not like you can decide you’ll stop mooring your boat. But the constraints on funding for new projects to get the construction projects underway is limited right around the world at the moment and all of the new projects coming on line rely on project funding.” He goes on to say however that the long waiting lists for marina berths at IGY’s latest Dubai project, Anchor Marina at Nakheel’s Palm Jumeirah, are indicative of the strength of demand for such developments in the region: “We’re heavily oversubscribed. We have three times the amount of people ready to commit for the berths as we have berths available. So the demand is incredibly high.

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We’re not seeing any reduction at all in the larger boat market. It’s as strong as ever and the market demographically doesn’t seem to be as affected as you might think from the economic conditions. The small to mid-sized boats could be affected but the waiting list in the Middle East for good marina berths is so high that it will be a while before we even absorb that waiting list, let alone worry about a growth in the demand.”

Service matters This demand is driven not just by the shortage of marina berthing space in the region, but by the level of service and amenities that IGY provides, says Horrigan. It aims to provide service to its customers along the same lines as those they would receive at a five star hotel: “Our company motto is ‘arriving is just the beginning’ so our approach is that from the minute you arrive in your car from then on it’s just a great experience. There’s a valet service for the cars, assistance in moving out to the boats. You can order meals on the boats and have them delivered – it’s just really creating something that doesn’t exist anywhere else in the world. I think the important thing for us about Anchor Marina is that it’s really creating a new benchmark in the industry in Dubai and in the region as a whole.” He bases his confidence in demand at the marina on the success of IGY’s other global projects. The company’s portfolio boasts some of the world’s finest marina facilities, including the Montauk Yacht Club in Long Island New York and Marina Cabo San Lucas in Mexico. It has 11 marinas in the Caribbean including the prestigious Rodney Bay Marina in St Lucia. Upcoming projects include the Yacht Haven Grande in Anguilla which is set to open later this year, and Beef Island Marina in Tortola. In Europe it is focusing on Eastern Europe and in 2008 announced the launch of the Mandalina Mega-yacht Marina in Croatia – the country’s first mega-yacht marina in the coastal town of Sibenik. “In 2008 there was a very strong expansion for us in the Eastern Mediterranean,” explains Horrigan, whose office in Dubai also oversees the company’s European operations. “We’ve very involved in the growth of Mediterranean facilities in Croatia, Turkey and Greece.”

Going forwards His primary focus for 2009, however, is the Middle East where he plans to expand outside the UAE to the take advantage of lucrative opportunities in neighbouring GCC countries. “We’ve heavily involved in Middle East sectors such as Bahrain, Oman, Qatar and places like that. We’re also in discussions in India,” he goes on to reveal. “So I think 2009 will be more about this region because Europe is reasonably well established for now.”

Career Michael Horrigan is Chief Executive Officer of Middle East and Europe and is responsible for marina and related upland real estate design and development for all projects. His 32-year career includes 14 years with Bovis Lend Lease in a range of roles across five different countries. Prior to IGY he was Project Director on the Shoreline Apartments on The Palm Jumeirah, Dubai. Previously, he was Senior VP and Project Director for several international project management companies operating throughout the US, the Far East and Middle East.

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ABOUT IGY The company was founded in 2005 by Andrew L. Farkas and focuses on acquiring, controlling, and/or servicing luxury yacht marinas and the surrounding upland real estate properties to create and maintain world-class yachting lifestyle destinations. Island Global Yachting marinas operate under the signature Yacht Haven Grande collection and the IGY series brands, as well as several private labels. Headquartered in Fort Lauderdale, Florida, IGY also has offices in New York, Barcelona, St. Thomas, and Dubai. Through IGY, Island Capital Group has created one of the world’s premier brands for mega-yacht and luxury yacht facilities and services.

Another reason why IGY must strengthen its focus on the Middle East this year is that the market is becoming increasingly competitive in the region, with several other developers having announced marina developments as part of other real estate projects. Aldar, for instance, has announced plans to build around 3500 yacht berths in 14 marinas across the UAE. Meanwhile, in 2008 Emaar opened the Dubai Marina Yacht Club at the Dubai Marina and work is underway by Abu Dhabi National Exhibitions Company (ADNEC) on the emirate’s new Marina Zone. Horrigan is so confident in IGY’s ability to beat the competition that says he believes boat owners based at rival marinas will want to shift to IGY’s facilities: “Because of the way other marinas are configured and the facilities that are provided I think there will be a lot of people that will want to move their boats to Anchor Marina. Trying to move your boat around the congested narrow manoeuvring areas can be difficult. Anchor is going to be a nicer place to be and a nicer place to move and manoeuvre around.” Horrigan also says he is sure that Anchor Marina’s location will give it the edge. The development will be the ﬁrst marina on the Palm Jumeirah and will feature two clubhouses, one on Anchor Marina East and the other on Anchor Marina West and high tech speciﬁcations such as LED illumination, underwater lighting, wireless internet connections and concierge services.

“I think the marina’s positioning on the Palm Jumeirah gives it an advantages over and above its facilities alone. It’s in an amazing location with the wonderful villas on one side and the marina apartment towers on the other. And in technical terms it’s a fantastic place to have your boat.” The location of the marina allows IGY to target not just boating enthusiasts but those, like Horrigan himself, who just enjoy the lifestyle. This creates strong demand for residential properties and means that retail and food and beverage outlets generate high levels of revenue. Alongside the Anchor Marina will be Marina Residences, the six residential towers facing the marina with access to a private promenade, which are being marketed alongside Anchor Marina: “The value of residential villas and apartments are deﬁnitely higher when associated with marina facilities because of the whole marine lifestyle that comes with them. Equally, you ﬁnd that rental in retail shops and revenue through food and beverage outlets is reciprocally higher in that marina lifestyle environment. There’s a huge number of people that just enjoy getting down onto the concourse to wander around amongst the boats, to do a bit of shopping.” It is the lifestyle offered by its marina projects that Horrigan hopes will see IGY through the stormy seas of the credit crunch. He may not be able to sail a boat but his business acumen and huge confidence in the success of the project will ensure the company pulls out all the stops to stay on course.

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BUSINESS TRAVEL

Business jet travel has exploded in popularity in the GCC and the sector is expected to be worth US$1 billion by 2012. BM asks Ammar Balkar, co-founder and CEO of the Middle East Business Aviation Association (MEBAA), why.

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BM. MEBAA has increased its member database significantly in the last six to 12 months. What in your opinion, is the reason for this success? Ammar Balkar. Between 1975 till 1998 there was only one operator in the ME and the GCC, today there are about 14 operators in the UAE alone. The market was up by more than 30 percent from 276 to 359 jets and turboprops over 12 months between 2007 and 2008. Saudi Arabia tops the region with 114 aircraft. The UAE had the sharpest growth, up 40 percent from 54 to 78 aircraft, up to US$500 million worth of charter flights in 2007. Massive growth is predicted over the next five years worth up to US$1 billion by 2012 with a yearly growth rate of 15-20 percent. The business aviation sector in the Middle East and the GCC region will more than double in the next six years. The total number of operators of business jets worldwide has been estimated at 17,993 in 2007 and it has been estimated that the total business jets in Asia and the Middle East was around 1043 in 2007. MEBAA was established in 2006 to promote safety, security, efficiency and expansion throughout the region's business aviation sector. The right mix of strategy, vision, mission, values and the active contribution of the founding members addressing the hot topics of the region has created this success. BM. How is MEBAA reaching out to the international business community in order to bring business to the Middle East? AB. Today, MEBAA boasts over 110 members worldwide including charter operators, FBOs, vendors of spare parts, insurance and finance, legal advisors and the media. For many of our members, the prime benefits are networking opportunities, but mediation and representation are also important going forward. Membership is expected to rise to over 300 by 2012. Being a member of the International Business Aviation Council (IBAC) and networking with industry leaders enables us to reach the international business community. BM. In 2007/2008 several business class only airlines – Maxjet, EOS and Silverjet – collapsed. What do you think were the reasons for these failures and what can your members do to ensure they remain profitable – particularly given current economic conditions? AB. I can’t speak on behalf of these companies because they are scheduled airlines and are not considered part of the business aviation industry. Lowering your prices is not a guarantee to stay competitive or remain profitable. This is not a price-driven but a value/service-conscious market. I believe that companies that can offer true value-for-money, reliability, integrity and quality will succeed over their competitors. BM. How is the aviation industry in the Middle East being affected by the global economic downturn? AB. In my personal opinion, the economic downturn could affect our industry either up or down. The current global situation is bound to affect the GCC/ME countries but when, how long and how strong the effect will be is yet to be seen. More owners/operators of aircraft in the US are bound to be looking for a home base in the Middle East, Russia and Brazil just to name but a few. High demand has been seen on the light jets and the mid-size jets as clients become more careful about their spending hence downgrading from big to small. However the off balance sheet clients have made a life style decision to use private jets and they are not willing to go back to commuting otherwise

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BM. The Middle East commercial airline sector has been affected by a shortage of pilots – is the business aviation sector similarly affected? AB. Little over three months ago, I would have said that yes, most definitely, there was a shortage. But now that is not the case and the scenario has changed, since the number of CVs received here in the region from pilots applying for jobs has significantly increased. However, with regards to sourcing professional trained pilots to run a VIP charter operation – there are a few challenges that set us apart from commercial airlines. Several key points must be taken into consideration upon hiring, such as a pilot’s type and class-rating for the specific aircraft type, JAR or CAR OPS certified, and advanced people skills ranging from management and leadership to customer communication skills and administrative skills.

MEBAA’S OBJECTIVES FOR 2009 • Establish a data bank for gathering useful and relevant industry data to achieve an effective means for communicating and sharing perspectives and best practices. • Help MEBAA members to obtain access to airspace and airports (Open-Sky Policy). • To be a focal point for representing the region’s business aviation community and creating an overall positive environment for regional and international business. • Take on a regional leadership role and liaise with government and businesses to facilitate operating

AMMAR BALKAR

“Currently, there is still a serious lack of dedicated airport infrastructure and handling-agent monopolies need to be broken up to ensure better service levels”

procedures and standardise regulations affecting business aviation. • Communicate with other business aviation associations and gain world wide recognition through IBAC – the International Business Aviation Council. • To address and work on some of the hot topics and challenges concerning business aviation in the region.

BM. What would you say is the ME business aviation sector’s main customer base at present? AB. Most aviation companies, brokers and operator have a particular niche market offering a range of services from the low-end to the high-end market, such as: VVIP, royalty, heads of state, diplomats and government ofﬁcials; corporate executives of multinational corporations and regional executives; celebrities from the sports and entertainment industry next to wealthy individuals and their families; high-end leisure travellers; seasonal and group Charter (Haj & Umrah); air ambulance and Medevac. BM. How is MEBAA working to improve technical support and maintenance services for the business aviation sector in the region? AB. A couple of years back, regional government authorities hadn’t really anticipated this increase in such a short period of time. Operators struggled with maintenance providers. Handling was also limited and monopolised at many airports in the region. Airports were also very limited. Today there are still no dedicated airports for private jet aircraft movement and operators have to use international airports – which means that sometimes they have no slots for landing and take off. This has not been a major problem so far but we anticipate an issue in the next four or ﬁve years with the increased number of private jets. Currently, there is still a serious lack of dedicated airport infrastructure and handling-agent monopolies need to be broken up to ensure better service levels. However, the UAE government is committed to supporting in-

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dustry demands and appealed to industry players to be ﬂexible in a changing current climate. MEBAA is meeting with several regional government authorities to discuss these issues and we have been invited to submit our reports and proposals. We have worked very hard with the Abu Dhabi Airport in keeping Al Bateen Airport – the old international airport – and converting it into a purely business jet airport. A good example of the outcomes achievable by a strong industry body is the recent agreement reached with the Bahraini government, which allows for blanket yearly air clearance for all MEBAA members.

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EXECUTIVE INTERVIEW

Up, up and away We hear from Kevin Ducksbury on how private jet travel can save passengers precious time.

BM. What is the driving force behind the use of chartered aircraft today and what are the tangible benefits for customers? Kevin Ducksbury. Key drivers behind Air Partner’s business growth are globalisation, an increasing value placed on time and the ongoing deterioration of the scheduled air experience. Unprecedented wealth generated over the last 15 years has increased the customer base for jets. The mass commoditisation of commercial flying and heightened security at airports has enabled private jet charter to offer clients a more practical and efficient way of getting from A to B. Many Air Partner customers are cash-rich but time-poor and time wasted at airports can impact business results. When you fly private, boarding times are reduced to less than 10 minutes and you can arrive at your destination of choice, on a bespoke schedule, having flown with exactly who you want in the cabin with you. Air Partner’s global network of offices and its 250 trained aviation staff ensure that clients’ needs are always catered for – no matter what the location or time. BM. What’s the state of the chartered aircraft industry in the Middle East – is it a boom region? KD. The current state of the Middle Eastern charter market remains a buoyant one. In particular, the private jet market has seen phenomenal

“Many Air Partner customers are cashrich but time-poor and time wasted at airports can impact business results” growth over the last three to five years and whilst it remains to be seen what the true global economic long-term effects will be, all indications are that the region will still see significant growth in 2009 with figures being reported of a 15 to 20 percent year-on-year increase. We are currently seeing many manufacturers and operators moving aircraft from Europe and the US into the Middle East in an attempt to capitalise on the opportunities still available in the market, which in itself is creating markets and opportunities not seen elsewhere. Naturally, this is good for the charter industry and the aviation sector as a whole. BM. Do you foresee the economic downturn affecting business in the Middle East, and the world as a whole? How do you plan to weather the financial storm?

KD. Air Partner plc. performed exceptionally well in the financial year to 31 July 2008, delivering a greater number of flights than ever before. Drivers of this performance included the group’s broad diversity brought about by Air Partner’s 22 offices spanning the Middle East, Europe, Asia and North America; a client base spread across governments, corporates and HNWs; and a full range of services ranging from commercial jet, private jet and freight charter to emergency planning. However, the business environment clearly changed in the last quarter of 2008, resulting in a total loss of confidence across the wider economy and financial markets. Air Partner has consistently invested in its staff, systems and infrastructures and this discipline will assist the group in providing a client service of the highest quality during these unprecedented times of economic fragility. Moreover, the global malaise may yet present established businesses with new opportunities within their sector; Air Partner, which has a 50-year trading record, annual sales of UK£250 million and a Royal Warrant from Queen Elizabeth II, has emerged from previous economic downturns having grown its market position. n

Kevin Ducksbury was appointed Director of Middle East and Asia for Air Partner plc. in August 2008, based in Dubai. Previously, as International Business Development Manager, he supervised the management of the company’s offices in Italy, Spain and Switzerland and was responsible for expanding its core business into new European territories. Ducksbury joined Air Partner in 1998 as a broker in its UK Commercial Jets division and rose through the ranks to be appointed a Director in 2007 when he joined the Group Core Trading Board. For more information, see www.airpartner.com

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AVIATION

TIMES In 2008 Airbus Middle East was flooded with orders for new aircraft from regional carriers. Today, it could face an uncertain future as the economic downturn in the GCC worsens. Diana Milne meets Airbus ME President Habib Fekih to find out his forecast for the year ahead.

his is not an easy year in which to be an aircraft manufacturer as Airbus Middle East President Habib Fekih is well aware. When BM met him at his offices in Dubai in November he was optimistic on the outlook for his business, claiming the firm was prepared for the anticipated drop in demand and that “the orders will come but at a later stage”. He described the situation in 2009 as “manageable” and said the firm expected to produce around the same amount of aircrafts as in 2008. Three months on, with the full force of the global economic downturn having hit home even to businesses in the GCC, Fekih has been forced to admit that Airbus Middle East is likely to suffer a major slump in sales in 2009. At a recent news conference in Dubai he told reporters that he ex-

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pects the ﬁrm to sell 50 percent less aircraft in 2009 than in 2008 – 100 compared to 239. Speaking at the event he said: “We don’t expect to do the same number this year. If we do around 100 sales we will be more than happy and that’s enough.”

Success story If Fekih sounds relatively upbeat about the situation it’s because the slump follows two years of spectacular growth for the company, fuelled by a surge in demand for air travel to and from the Middle East region and multimillion dollar orders from the region’s carriers. According to Fekih, Airbus catered to 60 to 70 percent of the demand for additional aircraft in the region in 2008. He says: “The air trafﬁc in the Middle East region has grown

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very rapidly in the past few years. This is faster than international norms. We have in the region the world’s most dynamic economies and air travel in 2008 was fuelled by high levels of infrastructure development, investment, double digit growth rates and rising levels of consumer spending.” To meet this demand the company opened a new materials and logistics centre in the Dubai Airport Free Zone last April which covers over 3700

“Air travel is a cyclical business. If the slowdown of the real economy continues and the recession proves to be more severe than expected then we will have to review our plans” square metres of space and stocks over 5000 parts and 43,000 items available for distribution at any time. The company experienced particular success last year with sales of the Airbus A380 – the double-deck, wide-body, four-engine plane that is currently the largest passenger aircraft in the world. It provides seating for 525

people in a three-class configuration, and was first operated by Emirates Airline, Qantas and Singapore Airlines. To date, in the Middle East 58 have been ordered by Emirates Airline, 10 by Etihad and five by Qatar. “The introduction of the A380 in the region has been very successful,” says Fekih. “Our passengers are happy with the maintenance, performance and fuel burn of the aircraft which is greener, cleaner, quieter and smarter. Passengers can really feel the difference, even those on the ground. We’ve been amazed by some of the comments we’ve received from people living close to airports who described the aircraft as very quiet.”

Growing pains The explosion in the growth of air travel to and from the Middle East and the aircraft shopping sprees by the region’s carriers, have created a new challenge for that aviation industry – a shortage of qualified pilots to actually fly the planes. A report by A.T Kearney last year claimed that the growth in passenger traffic in the Middle East – up 18.1 percent at the time when the report was published – was placing a huge strain on airlines who were not able to recruit pilots fast enough to meet demand. The report went on to claim that by 2020 the amount of pilots needed in the region would increase by 75 percent. Airbus has resolved to tackle the problem – which could ultimately affect its own sales – by setting up pilot training facilities in the GCC with a particular focus on training GCC nationals as pilots.

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ABOUT AIRBUS MIDDLE EAST “The region has been growing at a double digit growth rate in terms of trafﬁc so the requirement for aircraft capacity is so huge that you have to hire hundreds of pilots every year,” says Fekih. Hundreds of pilots don’t exist in the region and that’s why companies are hiring expats from all over the world. We need to develop the ability of the region to cope with this demand by hiring nationals from the region and that’s why we need to develop this training facility.” Demand for pilots is also fuelled by the growth in the corporate and private jet business in the GCC which is currently growing by 18 percent annually and which is expected to be worth around US$800 million by 2012. In 2008, aircraft manufacturers were expected to sell over 1250 private jets compared to 1138 in 2007. This has led Airbus Middle East to locate its worldwide corporate jets manufacturing facility in Dubai. “We believe Dubai is well positioned to cover our business worldwide and it’s a good place for connections and for maintenance and operations facilities,” suggests Fekih of the move. Fekih says he is all too aware of the pitfalls of working in an industry that is as cyclical as aviation, with success very much dependent on the strength of the global economy: “Air travel is a cyclical business. If the slowdown of the real economy continues and the recession proves to be more severe than expected then we will have to review our plans. Likewise, it could be that the recession is mild and there will be some sort of rebound in the real economy. In which case we’ll have to adapt and maybe increase our production again.” But, having experienced a surge in demand in the Middle East in 2008, he hopes the cycle will come full circle once again. n

he Airbus Middle East subsidiary is headquartered in the Dubai Airport Free Zone, and supports the Airbus presence in Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the United Arab Emirates, as well as Yemen, Egypt, Palestine, Jordan, Syria, Lebanon, Iraq, Iran, Afghanistan, Pakistan, Bangladesh, Sri Lanka and the Maldives. This facility is in charge of all commercial activities for the region – including marketing, sales, contracts and customer relations – as well as all customer service activities from spare parts to technical support and training. A training centre operated jointly offers one multifunction training device (MTFD) and full-flight simulators for the A330/A340 and A320. Flight crew courses are offered by a team of eight training captains. Airbus has enjoyed a long-standing relationship with airlines of the Middle East and is proud of the role its jetliner product line has played in the development of these fast-growing carriers. In many cases, Airbus aircraft are the cornerstone of these airlines’ fleet expansion and modernisation. To support the growing Airbus presence the Middle East, a material and logistics centre was opened in Dubai in April 2008. Located on a 5100 square metre site in the Dubai Airport Free Zone, this facility stocks parts made by Airbus and major equipment suppliers. The centre has direct access to the airport apron for maximum shipping speed and efficiency.

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ASK THE EXPERT

Getting private jet charter right With private jet travel on the up, Greg Thomas, CEO of PrivatAir, lifts the lid on the advantages of chartering your own aircraft. hese days many travellers are re-evaluating their travel options, forcing them to think smarter about why, when and how they travel. Some companies and individuals may have recently decided to sell their own aircraft, due to the economic downturn. Others may find the current route slashing and capacity reduction policies adopted by many of the world’s commercial airlines have led to greater inconveniences and unnecessary delays in their travel plans. Either way, private charter is now proving to be the alternative. With charter air travel, you control your schedule, giving you the freedom to plan a trip around your own needs and nobody else’s. You can also control the cost. Since rates differ according to the aircraft type and performance capabilities, you pay only for the size of aircraft that you need on each particular journey, taking into account factors such as the number of passengers, distance to be travelled, amount of baggage and required services on-board. For the benefit of those readers new to jet charter, aircraft are typically chartered on a flight-hour basis, with extras such as landing fees, basic catering and any crew travel expenses, such as hotel rooms, supplementary to this.

Spoilt for choice Charter operators come in many different shapes and sizes. Full-service operators have diverse ﬂeets, sizeable infrastructures, and a professional staff of aviation management professionals, meteorologists, security personnel, maintenance staff, customer service

representatives and trip planners. Many small operators own a single aircraft and charter it to offset the costs of ownership. Negatives regarding charter are generally associated with these smaller providers, who may lack consistency and quality in delivery, service and aircraft availability. Using a large or well-established charter provider usually eliminates many of those issues. The private aviation industry has grown rapidly during the last few years, spawning the emergence of a significant number of charter brokers – basically sales people who have access to multiple charter operators. If you choose to use a broker, choose wisely. In many cases, a broker’s profession is not aviation; it’s sales, and there have been many instances of disreputable brokers that prey on uneducated buyers. They may not know anything about the aircraft they are proffering, or the operator’s maintenance and safety record, or the training standards of the pilots. To ensure that you are working with a trustworthy broker, confirm their aviation experience before even asking for a quotation. Qualified brokers are experienced aviation professionals linked to a reliable charter operator, complete with the appropriate Joint Aviation Authorities (JAA) or Federal Aviation Authorities (FAA) certifications. The more well-established operators may also be skilled brokers, as they have a network of additional aircraft available to them through partner operator networks.

Cost effective I often get asked at what stage chartering a jet becomes a costeffective solution to travel. There is never a single, correct answer to this, as it really depends on each individual’s reasons for chartering a jet in the first instance. However, from a financial perspective, companies and individuals who fly up to 200 hours per year typically find chartering makes the most financial sense. On the other hand, many flyers find that chartering also makes sense for them in much higher usage or as a supplement to other forms of flying. For whatever reason you decide to charter a private jet, there’s no doubt about the benefits it brings in the form of efficiency, convenience and security. It enables business to keep up with the increasingly global nature of the marketplace, and it allows individuals to travel in a safer, more secure, time-optimised fashion. However, as with any other form of investment, it is worth ensuring that you do it right and, while it is true that compromise is part of life, it shouldn’t be a part of private air travel.

Greg Thomas joined PrivatAir in 1994 as General Counsel and as Secretary of the Board of Directors. In 1998 he became a Member of the executive committee of the board, and was appointed COO in December 2000 and CEO in February 2003. Thomas is also one of the board directors of Geneva Airport and a member of the EBAA board of governors.

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ASK THE EXPERT

Taking flight Business leaders are increasingly opting to take to the skies in a helicopter for a speedy and convenient journey, says Eurocopter’s Xavier Hay.

elicopters are not competing with aircraft in the business aviation market, instead they are complementing the business jet service, as they are the vital component to the last leg of a client’s journey. Across the UAE and Qatar, for example, civil aviation is becoming more developed and the helicopter has become the link needed for shuttling people between cities and airports. There is little point in an owner or a corporate travel operator spending US$50 million on a time-saving business jet and then expecting clients to sit in the Dubai trafﬁc when leaving the airport.

“Across the UAE more and more events, particularly sporting events, are being held, which has created a need for this type of helicopter”

which has created a need for this type of helicopter. The 350B3 has a very stable platform and a low vibration level, which creates better results from live filming equipment. We have also seen a major need for helicopters in emergency medical services (EMS) across the region. We pioneered the Fenestron system, which enhances the safety of a helicopter by enabling it to glide and be controlled at low altitudes. We have also advanced the use of composite materials like carbon fibre. This contributes to lower maintenance costs by reducing the risk of the helicopter’s blades cracking and corroding over time. In addition, environmental advancements are being made. Noise pollution has been improved by the development of a silent rotor system. The EC130 and 135 are below the recommended ICAO levels for noise emission and we are working closely with engine manufacturers to improve the fuel efficiency of all our models. All-weather-flight capabilities are also being looked at, so that areas across the region which currently have difficulty receiving helicopters can be accessed more easily, using newly developed avionic systems that are integrated into the helicopter’s cockpit. Of course, the industry has to be very cautious of the economic slowdown and we are waiting to see what the impact will be in the UAE and the Middle East region as a whole. There will inevitably be some level of impact, but even if the business aviation sector is affected we are optimistic for the future. n

Historically, the region was oriented towards the governmental market and for the past three decades this has been true. But since 2000, we have seen a growth in civilian operations, primarily for tourism and corporate travel. In the Arab world, out of the 650 Xavier Hay, VP of Middle East and helicopters in operation, roughly 15 percent of the total fleet Africa Sales and Customer Relations is controlled by helicopters used for VIP and corporate purat Eurocopter, was appointed to this poses, which is quite significant. strategic position in 2001 to lead a It is true that in some countries use of civilian helicopters dynamic team of 25 managers. Hay, is non-existent, but in the UAE it is a growing market, partic46, is passionate about aeronautics ularly in Abu Dhabi and Dubai. In the Gulf, Eurocopter sells and is a graduate of a French most of its models for VIP and corporate use into the UAE marBusiness School. ket. This is in line with expansion of companies such as Dubai Air Wing or Falcon Aviation. A popular model is the Dauphin N3; it has capacity for five to 10 passengers. Falcon also extensively operates the EC130, which has a silent rotor and is ideal for shuttling passengers between these two cities or flying over the Palm and The World. The EC155 has a larger cabin than the other models, but is also becoming popular for use in the business aviation sector. And very soon the EC135 Hermès – a top-notch combination of elegance and technology – will also be available in the UAE. Additional new streams of business are emerging too. For instance, Helidubai, a prime VIP helicopter service provider in the Middle East, recently purchased the 350B3, which integrates filming technology on board. Across the UAE more and more events, particularly sporting events, are being held,

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AVIATION FOCUS

GRAND DESIGNS

Entrance to Dubai international Airport’s Terminal 3

Terminal 3 at Dubai International Airport is one of the biggest and most ambitious projects in the history of civil aviation, aiming to boost annual capacity at the airport to around 65 million passengers. BM investigates exactly what was involved to get the new terminal up to scratch. he exclusive Emirates airline terminal at Dubai International Airport opened its doors on the 14th October 2008 with flights to and from the GCC and the Americas. It was a historic moment for the airport, which was unsurprising considering that the mega project required the excavation of over 10 million cubic metres of earth (enough to fill 4000 Olympic swimming pools), 2.4 million cubic metres of concrete and 483,000 tonnes of steel. The US$4.5 billion facility is huge, with movement around the airport’s six floors, most of them underground, facilitated by 157 lifts, 97 escalators, 82 moving walkways, 27 truck lifts and eight ‘sky trains’ that can handle 47 people each. The car park is equivalent to 33 football fields, while the departures area at level three is more than 515,000 square metres – the size of 94 football fields. As the world’s fastest growing airport, the new terminal is the latest impressive transport infrastructure in the region, and is a stateof-the-art facility for Emirates airline. “Emirates Terminal 3 offers our passengers an even better travel experience than Terminal 1,” explains Sheikh Ahmed bin Saeed Al Maktoum, Emirates CEO. “There is a greater choice of restaurants and retail outlets, larger seating areas and larger lounges with a greater range of amenities for our Premium passengers, plus other facilities including spas and hotels.”

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A hotel is located centrally within the terminal and features a wide range of dining options as well as a health club including a gym, jacuzzi and swimming pool. The concourse features 14 restaurants, premium airport lounges, shops and a spa. There is also a huge duty free area covering 8000 square metres, including departures, arrivals and landside shops. Although the terminal is currently up and running, it won’t be until Concourse 3 is built that the project will be completely ﬁnished; currently it is scheduled to come on stream in 2011. The concourse will be purpose-built for Airbus A380 operations, with a total of 18 gates serving the super jumbos, each with a double decker air bridge, so that passengers can board directly onto the upper and lower levels of the aircraft.

Design From 2011, the terminal is expected to cater for around 43 million passengers annually and Dubai International Airport as a whole is expected to see around 65 million passengers per year. But what has gone on behind the scenes to make this impressive new infrastructure possible? “An additional facility was necessary to accommodate the increasing number of passengers travelling through Dubai Interna-

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AVIATION FOCUS

GRAND DESIGNS

Entrance to Dubai International Airport’s Terminal 3

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Business class lounge

Check-in hall

tional and our desire to continuously improve the levels of service to our customers,” explains Paul Griffiths, CEO of Dubai Airports. “The design was based on the demands of growth and this was prepared in close consultation with Emirates. The layout of the concourse was influenced by the limited footprint of the site and the close proximity of runways and taxiways, which had to be kept open during the construction phase.” Terminal 3 is currently the largest underground passenger terminal in the world, with its roof forming the apron and taxiways for the planes. With the design came enormous structural challenges due to the deep excavation and high water table. Management played a key role in the timely supply of ready-mix concrete that had to be maintained, as well as dealing with the structural steel that to be fabricated off site as well as on site in order to cope with the demands of the plan. “A grid work of pumps was retained to maintain the water table at a low level and permit the construction activities below the level of the natural water table. A sacrificial diaphragm wall has to be maintained to permit the execution of the massive retaining wall and permit regular airport operations beyond the construction boundaries,” explains Griffiths. “And of course, all this had to take place in the midst of a fully operational, 24/7 international airport.” And with rising passenger numbers comes the challenge of how to implement an increasingly rigorous and effective security focus, without extending the intrusiveness of the security process to the customer. “Technology certainly plays a major part in this”, says Griffiths, who has sought to combine a number of individual processes,

Elevators opposite waterfall feature

PASSENGER NUMBERS UP DESPITE SLUMP Despite the global economic downturn, the number of passengers passing though Dubai International Airport increased nine percent in 2008 compared to the previous year. August was the busiest month in terms of passenger traffic with 3.36 million passengers, while February recorded the highest growth rate at 18.83 percent.

such as check-in, baggage handling, security screening and immigration processing into an integrated customer facing single process. “This process will help speed customers through the formalities of air travel in the minimum of time, whilst still completing all the necessary procedures to an even higher standard than today. We are working with technology integration partners to ﬁnd ways of learning from other industries how this might be best achieved, and we will be testing some of these new techniques in the near future.”

Technology In order to ensure that the technologies the airport is integrating dovetail with the technologies the airlines themselves are integrating, detailed co-ordination meetings were held with all the end-users, who were involved from the beginning of the design process, choosing everything from the technologies to the equipment.

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The exchange of information took place on a regular basis in order a big difference to the overall customer satisfaction levels. “There to ensure compatibility between the two, and a series of exhaustive is always room for improvement and, as other airports work hard to tests were also conducted under the simulated operating conditions improve their customer satisfaction scores, we must try even harder to ensure that everything worked together exactly as intended. if we want to keep pace with the best examples of passenger service “We relied on close consultation with the airlines to ensure that the enhancement.” technical architecture was compatible with both legacy systems and future technologies that were likely to be used within the aviation Economic conditions industry,” says Griffiths. While Terminal 3 has been up and running for some time now For anyone planning to build or upgrade an airport, co-ordinating there is no doubt that the tough economic conditions will affect the operations and simplifying processes airport as a whole. “Whilst this is a challengwhile delivering better service is a huge ing environment, demand for our services BY NUMBERS challenge, and in no project was this remains strong,” says Sheikh Ahmed. “Levels more true than at Terminal 3 – particularly of demand do of course vary from route to US$4.5 billion to build considering the high numbers of passenroute and we are addressing this by moving 20 million extra passengers annually gers. “A robust plan is essential,” says different sized aircraft between routes to Griffiths, “as is an open, highly commuensure we operate as efficiently as possible. 10 million cubic metres of soil nicative environment where everyone is We are already a highly efficient, profitable 2.4 million cubic metres of concrete prepared to share information and adapt carrier, with a lean, robust business model, 33,000 tonnes of structural steel their plans accordingly. We had to make and a young fleet (with an average age of certain compromises during the conjust 67 months) of fuel efficient, eco-friendly 8000 square metres of retail space struction to both the programme and the aircraft. As such, we are in a good position to 450 tonnes of reinforcement operation, but at all times we made sure weather the current difficulties in the global that we maintained the highest levels of economy.” 157 lifts safety and security and minimised the As for the future, it has been revealed 97 escalators impact to the customer.” that planning has begun to bring a fourth 82 moving walkways Griffiths goes on to explain that the terminal to Dubai International Airport. number of staff was also increased to “We are currently preparing a master plan 30 self-check in counters assist passengers in moving through the for Dubai Airports to ensure that we make 27 truck lifts existing facilities, as a record number of the best use of the available space we have passengers were accommodated during within the airport perimeter,” explains Grif8 ‘sky trains’ the summer of 2008. At the same time fiths. “Several schemes are under consid3 fully-equipped spa facilities Griffiths managed to improve levels of eration, which include the possibility of a ‘on time’ performance and eased the fourth terminal, but these are all undergoing 2 indoor Zen gardens journey through the airport, which made a detailed review.”

ENVIRONMENTAL CONSIDERATIONS A primary consideration for operators of infrastructure projects, regardless of their size, is to mitigate any impacts on the local environment. Terminal 3 was no exception. The design and construction of the passenger terminal and concourse was executed with a high level of environmental awareness demonstrated by a number of initiatives, including: • The use of energy efficient lighting control systems to minimise electricity consumption throughout the building • The use of occupation sensors to switch off lighting when areas of the terminal are not occupied • Standby power systems making use of sealed DC batteries, which minimise the impact on the environment

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• The elimination of diesel powered systems such as pumps and generators • The use of non-hazardous refrigerant products in all air conditioning and chilling plants • The use of clean agent fire protection systems such as FM200 • The prevention of any chemical discharge into the public sewerage network • The filtering of kitchen waste and other areas such as car parks to prevent substances such as oils and fats from being discharged into the public sewerage network • The prevention of hot air and gases being discharged from the terminal into the open air.

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HUMAN RESOURCES

f 300,000 job applications landed on your HR department’s doormat in the space of 12 months it would be safe to assume that you were doing something right as a company. This avalanche of CVs that arrived for Emirates in 2008 illustrates just how high the group, and especially its airline business, has soared since it was launched in 1985 with just two aircraft. Today, it’s an instantly recognisable global brand with a ﬂeet of 113 aircraft ﬂying to 100 destinations in 60 countries. “Dubai as a destination is a big name and Emirates is big as an employment brand,” suggests a buoyant Sophia Panayiotou, the groups SVP of HR Business Support. “We use our name to our advantage and this helps us to recruit people.” Indeed, the Dubai lifestyle is a big draw for candidates and gives the business an upper hand in the air travel industry. With the group spreading its wings into new regions of the world and other sectors like the luxury hotel and resort business, a unique mix of nationalities and cultures have been recruited. “We have 156 nationalities working here at Emirates, almost as many nationalities as the United Nations,” Panayiotou jokes. “This makes an interesting culture mix and this diversity across the group, not just the airline, creates challenges. But because Emirates has been so visionary and grown so far, people have thrived on this, creating a sense of culture and a desire for them to do better.”

Selection process The desire to do better will be particularly apparent as the global recession bites. Air travel is one industry that will have to ﬁght tooth and nail to remain proﬁtable but how will these challenges affect staff recruitment and retention? Panayiotou, a British national who joined the company in 1993, says Emirates used to recruit from the traditional markets like the UK, Australia or the US but it is increasingly looking to emerging regions like Eastern Europe. Due to the economic climate she notes that more applications are landing in the HR wing’s in-tray and less staff are choosing to leave; a perfect blend it would seem. Panayiotou is bullish about the situation: “To bring people in at this current time is not a problem. From a retention point of view we are able to keep people and develop good staff during these times – we need to keep the high performers and manage out the poor ones.” Of 300,000 applications, the check-in desk staff and cabin crew are the most sough-after positions. Last year, Emirates was employing, on average, 90 additional cabin crew per week. “For cabin crew positions we have made DVDs so they can see what the job and lifestyle is like in Dubai. We really do try and create awareness of the brand.” But while ‘front of shop’ jobs like cabin crew and check-in staff are oversubscribed, Emirates has pressed home the need to expand the number of

PEOPLE POWER

Global giant Emirates has people queuing around the block to join its 39,000-stong global workforce. To find out why the group is such a popular employer and to discuss Emirates’ approach to the ‘three Rs’ – recruitment, retention and reward – BM’s Joaquím Schmidt catches up with Sophia Panayiotou, SVP of HR Business Support.

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people who keep the planes in the air – engineers and mechanics. The slump in the aviation industry following the 9/11 terror attacks led to a fall in the recruitment of engineers and mechanics but this shortfall is now being felt by the major carriers since air travel picked up again. Emirates expects to operate 400 aircraft by 2025 so these ‘back room’ staff will be vital. In the next four years, aircraft engineers will expand by 30 percent and mechanics by 50 percent, an HR executive from the group was quoted as saying recently. For Panayiotou, the beneﬁts are clear: “If we make an investment in engineers this will see us in good stead for the future. We realise that we are struggling to bring people in with engineering skills which is why we have apprenticeship engineering programmes for both UAE nationals and expats.”

Career ladder Of course, staff training and development is crucial to mention Emirates’ sustained growth through 2009 and beyond. The group takes a long-term view with regards to recruitment and retention. “We have a very good selection process in place when we look at recruiting people to try and get the right people who we can develop and retain,” says Panayiotou. “It is important not to just get people in who can do the job for now but to look at developing them for the future.” To aid with training and staff education, Emirates has a state-of-the-art aviation college, which has become a source of skilled aviation professionals, including air traffic controllers, aircraft engineers, electronics engineers, flight dispatchers and tourism specialists. The Emirates Aviation College in Dubai offers a diverse range of vocational and academic programmes in the fields of aerospace engineering, aeronautical engineering, electronics and computer engineering, business management, air transport management and travel, and tourism management. There are MBA programmes, too. “We are looking to use the vocational side more and we hope that will make the difference for Emirates and set us apart from the others,” Panayiotou explains. Once in a job, employees have the option to try out different roles, offering them an insight into how different parts of the business work. It also prepares them for a position in the future. “People may not be promoted straight away but they move laterally so they can develop and become multi-skilled to prepare them for a bigger role later. Our finance department is currently running a job rotation programme.” When looking for a suitable

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candidate for a particular position, Panayiotou says the company’s first preference is to look within. She goes on to say: “We look at key managers in the company that we think we can develop and train in different skills before they move up in the company.” Of course, one key reason for the 300,000 job applications last year is the benefits dished out to employees. Indeed, Emirates prides itself on its perks, which Panayiotou describes as “absolutely fantastic”. But it’s not just the upper echelons of the business that land the spoils; junior staff also receive attractive packages. For instance, senior management are given free accommodation but this option has been extended so that lower level employees get the choice. “Junior staff now get this options because the cost of living here in Dubai is a problem for some,” Panayiotou remarks. On top of this, some people are covered for health and schooling, along with the Emirates Group Provident Scheme – a fund providing end of service benefits for employees. But while Emirates offers attractive packages, the unadvertised benefits get trumpeted not nearly The Emirates Aviation College enough, says Panayiotou. “We are in Dubai excellent at looking after people but this is sometimes forgotten. We have a very good welfare system in place so that if people have deaths in the family or medical emergencies we have procedures and people in place to assist; this isn’t a figure you can put a price on.” She notes how the group is considerate when it comes to staff requesting flexible working. “We have realised that we need to be more flexible with staff hours and although we don’t have an exact policy on this, we are certainly working on it. Also, we never used to have a maternity policy for cabin crew; before they used to have to resign when they got pregnant. Now they can go off and we can later train them and they can come back to work.” She adds: “We have had to do these things because we have to move with the times. Sometimes it has been slower and more frustrating than I would have hoped but I think we have made progress.” Panayiotou suggests that Emirates has moved “ahead of the UAE” in terms of its HR practices. “I was invited to a meeting recently to discuss the introduction of part-timers in the UAE, but we are already using part-timers because we are ahead of the game and ahead of the UAE in some respects.” Given these achievements it looks as if the competition could be left trailing in Emirates’ wake.

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HR TECHNOLOGY

IT has the potential to transform HR into a genuine strategic business partner. But only if those involved stand up and make their voices heard, says Jacqueline Kuhn.

echnology is affecting every aspect of business and HR is no exception. Here the central role is in helping HR understand what the workforce is, what they’re doing, and being able to better leverage and manage that. We have gone beyond the basic of just tracking who the people are. Talent management is everywhere and applications are doing everything from screening people with assessments to tracking all their current and former job history. People are doing very thorough performance assessments and technology is allowing them to store it all in one place and report on it and get a really good picture of talent. Probably the biggest change is just how technology is helping HR manage the people assets of a company, which are the most valuable assets it has. Recruitment, performance management and compensation management are the three key areas being reshaped by IT. Web-based, self-service manager/employee access analytics are really on the forefront in HR. Not just pulling out reports, but really giving HR the tools to be able to analyse and create the kinds of charts and graphs and information that senior man-

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agement is looking for. It’s gone beyond just the report list of who you are and what job code you have. Technology aside, HR still has some way to go before it gets the kind of respect form management that other areas of the business command. It’s getting better and the HR leaders that can talk business language are

“Too many HR people are doing things for HR’s sake, not for the business’ sake” deﬁnitely being seen as more bottom line. But unfortunately I don’t think that HR overall really has a business mindset. Too many HR people are doing things for HR’s sake, not for the business’ sake. For example if you’re looking at implementing a performance management technology, too many HR leaders are trying to justify implementing the technology because it will help them manage the performance process. It would be far better to ap-

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proach from the angle of helping business understand who their good performers are so it can make sure it’s leveraging the right assets. An area that is very much on the increase and one which holds great potential for HR is Web 2.0 and social networking technologies. These tools can be internal or external, but they give people unparalleled opportunity to connect with each other. People can find out what their contemporaries are doing and share tips that enable them to get a head start on projects they are planning. I hate to say it, being a consultant myself, but there’s a lot of networking you can do with your peers that may help you reduce some of your consulting overhead. Internally too, this technology can really help the employees of a company. They can be much more efﬁcient and effective and leverage some standards and best practices that much more quickly. I’ve seen a couple of companies doing this very effectively. Both IBM and OfﬁceMax are using these kind of technologies to create internal employee communities. Letting employees create their own social communities to feel connected has a big effect. Even if they are using company tools for things that are not necessarily ‘business related’, such as a company golf league, it gives them the opportunity to communicate with each other and really talk to each other and really feel connected. HR embracing those tools and embracing communities that way, will go a long way in employee retention and satisfaction, even helping diversity in some areas. It gives employee groups like LGBT communities a place where they can share experiences and advice. Those are the kinds of things that HR can do to help the employee have a better experience not just productivity-wise but personally as well. And of course that feeds back into the company itself: if you’ve got a happier workforce who are more engaged and connected with the workplace and their colleagues that has a positive impact on the company. That is really important to the younger generation of worker that is out there.

UNDERSTANDING THE HUMAN SUPPLY CHAIN t the root of it is a good understanding of exactly what your people costs are. If you can get even a broad brush understanding of what your human supply chain is, and then apply technology, that is going to help you manage the costs of that human supply chain. If you can improve that chain then you can definitely get real ROI. Let’s say you are a manufacturing company and you make a product. The human supply chain around making that product is the people who recruit the people to make the product, the people that market the product and the people who distribute and sell the product. You need to know what all the human costs of running the business are. Then you can identify what those costs are, and then show how technology will help you manage parts of that supply chain. Maybe you can and either – and if you may not be able to reduce costs, maybe you can reduce time and time may reduce costs. Maybe it’s a matter of getting a better person in that can do the job better and – one percent instead of two. But what HR doesn’t seem to take is a financial perspective on the human costs across the business, from an end-to-end cycle, and how much does it really cost us to do what we do with the people that we have. And that is what’s going to take HR to be able to get real ROI from technology.

They don’t want to work somewhere where they aren’t connected. They’re used to being connected at all times and they want to work at a company where they feel that they’re being treated well and that they’re enjoying their work. If they’re not enjoying their work they’re just not going to stay. The real downside is that HR is not always on the forefront of bringing in technology. Often the impetus is coming from operations and HR is almost just along for the ride. You can see this in the communication area, with Web 2.0 technologies and things such as Microsoft Sharepoint. I see a lot of corporate communications departments IT departments actually owning some of those projects where HR would really beneﬁt from being in the driving seat. They allow you to reach out to your people and there are so many ways HR can leverage those kinds of tools for employee retention, education, training and communication. But I don’t see the trend where HR is leading those charges. They may be a part of it but it often happens because IT wants to upgrade its overall portal for the company and then HR gets a piece of it.

Jacqueline Kuhn is Chair of the Board of the International Association for Human Resource Information Management (IHRIM). Kuhn has over 20 years in the Human Resources and IT professions with focus on delivery of HR solutions through technology enablement. Her scope of expertise includes HR technology strategy, software selection, implementation, application management, sales and account management. Kuhn has worked in management positions in HR and Technology for RR Donnelley & Sons, Computer Science Corporation (CSC), Moore North America, Sears and OfficeMax and is currently President of Kuhn Consulting Group, LLC a firm specialising in consulting services for HR Technology.

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LEADERSHIP The cycle of grief

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The key to handling redundancy. By Gareth Chick, Director of Spring Partnerships.

he true extent of the financial crisis is still unfolding. News of redundancies and acquisitions are fast becoming the daily norm. But, what impact will these events have on employees and managers who remain in these ‘troubled’ companies? How will companies pick themselves up and re-engage and motivate their staff in the wake of such events? Too many companies who have recently been acquired or had to make large scale redundancies spend time wallowing in their troubles and mourning their losses, with managers too quick to apologise and justify tough decisions on issues such as staff redundancies. Whilst managers need to be professional and humane in their decision making, to get a business back on track it is essential that they make these tough decisions quickly and then regroup in order to re-motivate staff, look to the future and embrace the changes taking place. Making staff redundant is probably the hardest element of managing staff, but it is often essential for business survival. The truth is that in companies large and small, managers handle the process of redundancy badly. They fail to communicate the situation appropriately, often neglect the wellbeing of staff leaving and do not re-engage with remaining staff quickly enough so they are left feeling fl at, fearful and unmotivated, which in the long run, impacts productivity. Basic lessons to learn include firstly not over-apologising for the decision. People will understand that it is in the best interests of the company and the future of employment for the majority who remain. Next, managers should pay meticulous attention to the manner of communication. No employee should hear the news second hand and managers must do whatever it takes to communicate with any number of people on any number of sites as quickly as possible. Managers should never underestimate the personal relief employees will be feeling that it was someone else and not them

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that was made redundant, or the degree to which they will need to get active again to make the whole exercise worthwhile. The best way they can honour their ex-colleagues is to make the company successful as quickly as possible. Standing around grieving does no one any good and guilt on the part of the leaders serves no purpose whatsoever. Employees will want to look to the future so it is essential that managers re-focus on building the business and talking about the future in a positive way. The key to handling redundancy successfully is also recognising that there is a psychological process that every person or business faced with big changes has to undergo in order to fully accept that change. It is the ‘the cycle of grief’ change model, discovered originally by Elizabeth Kubler Ross. It recognises the different stages that people go through to come round to accepting a dramatic change in their lives, and is relevant for any situation where people suffer trauma as a result of an unexpected event. The cycle moves from shock and denial, anger and depression, through to dialogue and negotiation and ﬁnally acceptance. As managers leading people through redundancy whether they are leaving or staying, you should remember that staff will be moving through this cycle. This will not only encourage you to empathise with them, but makes your role as a manager more clear. You need to move your employees through the cycle to reach the ﬁnal stage of acceptance quickly, which is when the business will get back on track.

Gareth Chick is Director of Spring Partnerships, a fast growing UK business consultancy based in Buckinghamshire which he co-founded in 2003. Its clients include Carlsberg, Disney, GE Healthcare and Nestlé.

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So what is the cycle of grief and how does it work? Gareth Chick explains.

The cycle starts with the immediate emotional reaction to the news with SHOCK and DENIAL. People in shock do not process information correctly and go into immediate denial. As a manager delivering the news, you need to keep the message simple and actually quite brutal. The clearer the message, the sooner they will hear it. Watch out for denial and keep countering it by repeating the news.

Remember that in employment situations, this depression and detachment does not last long. People eventually get fed up of feeling low, and it only takes Acceptance one person, one leader-for-a-day, within the group to stand up one day and say ‘come on guys, let’s get on with it’, and the cohort is ready to move. A good manager will spot the leader for that stage and encourage them. They then move on to ACCEPTANCE and this is when your business will be ready to move forward.

The next frustrating stage is DEPRESSION and DETACHMENT. Yes, that’s right – we’ve just got people all positive about the parts of the new plan that they can Depression and own and design, Detachment feeling quite smug that the ﬁght’s over, and then suddenly they all go quiet. They look defeated, beaten and down. Don’t be phased by this stage. Give people a little space; empathise and listen; then let the ﬁnal stage of the cycle run its course.

Shock and Denial

Once the person is ready to move out of denial, they move into ANGER. This is natural, even if they agree with the decision. They are angry because their life has been disrupted and they are now out of control. Someone is to blame. So as a manager you will be blamed; the company will surely be blamed. Don’t argue. Instead let them express their anger. Empathise with them; tell them you understand and that it’s ok for Anger them to be angry.

DIALOGUE and BARGAINING is the next stage in the cycle. This is the employees’ way of taking control back. Whilst they might still be quite emotional, they will now be more rational Dialogue and open to debating. Manand bargaining agers need to do two things – ﬁrst of all NOT go back on any element of the original decision, however appealing it might be given how reasonable the employee is being. Secondly, ﬁnd some positive elements of the future to allow the remaining employees to start owning and designing. This starts the process of giving back some control and therefore embedding the acceptance.

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BUSINESS DOCTOR

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Executive coach Frances White answers your business dilemmas.

De ar Bu sin ess Doctor, ea ger to bre ak I am a rec en t gra du ate wh o is or. Bu t I am in to th e fi na nc ial servic es sect st th e fa ct th at fa cin g m an y hu rdl es - not lea s aro un d. th ere sim ply are n’t en ou gh job an d ha ve do ne an I ha ve a de gre e in ec on om ics t ba nk in Du ba i bu t in terns hi p for an in vestm en po sts is fi erc e an d th e co mp etiti on for gra du ate e m ea ns I am be in g m y lac k of prac tic al expe rie nc os t ju ni or po sit ion s. tu rn ed aw ay from ev en th e m do th e job – stron g nuI be lie ve I ha ve th e ab ili ty to litera cy, good ne got iat ion m eri ca l sk ill s, a hi gh lev el of at ac ross to poten tia l sk ill s etc. Bu t ho w ca n I get th to hi re m e wh en I am em ployers an d pe rsu ad e th em expe rie nc ed pe op le? co mp etin g wi th so m an y m ore Re ga rd s, Sa rah Ch arl eston Du ba i, U AE.

succe success. Did you make contacts at that bank whom you ccan contact for advice or a reference? If not, do that. S So the real question is, how can you distinguish yourself from others in order to start the career you yours seek? seek The answer is – you will need to do two things. One is to continue to apply for the roles you want and pres present yourself and your skills in such a way as to mak you stand out from the pack. This is all about make havi impact – knowing your customer and what having im is important to them, presenting yourself in such a way as to meet those important criteria. You say you hav good skills; perhaps you need to sharpen your have sal skills in order to sell yourself more effectively. sales Wh Whatever you are doing, it is not working; you need a to alter your sales strategy. The second is to get some practical work experie rience. It may not be in the role you want or even th kind of organisation that you most want; but the so some work experience in another industry sector w give you some additional credibility and will kn knowledge. This may well distinguish you from th pack. Who knows, you may ﬁnd you enjoy the the n role and are successful! new

Dear Sarah,

our assessment of the current situation is that competition for jobs is ﬁerce, which is true. You are competing with others who have at least as many skills and qualiﬁcations as you do. You lack practical work experience which will give others an important edge. Businesses are sensible to recruit the most experienced people from a large selection available. Your internship gives you at least some experience and whilst there, you should have developed your network. Networking is probably the most important skill for any individual who wants career

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“Networking is probably the most important skill for any individual who wants career success”

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De ar Bu sin ess Doctor, wi th an in te rn aI am cu rren tly em pl oyed e job cu ts in th e wa ke tio na l ba nk th at ha s m ad in g 52 ye ars of age, I of th e ec on om ic cri si s. Be at I wi ll not be able am espec ia lly w orrie d th m ad e re du ndan t. to get an ot he r job if I am ha ve co ns id ere d app roa ch I am so co nc erne d th at I se in g to ta ke a pa y cu t in ca in g m y em pl oyer an d offer of be in g ke pt on. I co ul d ces an ch y m e as cre in ll th is wi d ou tli ne to m y m an ager an ns er nc co y m ess pr ex al so in g to th e organ isa tio n. br I ve lie be I at th e lu va th e id ea or sh ou ld I Do yo u th in k th is is a go od e wh at ha pp en s? ke ep qu iet an d wa it to se Re ga rd s, Qu en tin Brow n Ba hrai n

paralysed with fear. Who would you rather keep in your business; one who is demonstrating with a positive outlook that they can face challenges (just the kind of energy you DO need in a tough market) or someone who seems paralysed with fear about the future and is therefore probably being less productive, less innovative, less decisive? Stay positive, look for how you can help your business even more to be successful and know that you are earning your salary. Act like the successful and productive employee that you are and keep your concerns to yourself – ﬁnd other ways to manage any anxiety. Coaching is a great way to help you to stay focused on what matters and not obsess about what might go wrong.

“Your very best strategy is to have a positive outlook”

Dear Quentin,

he very best way to remain valued within any business environment, is to deliver exceptionally good performance year after year. That is what organisations most want; it is also what makes life good for your boss. Be low maintenance and add high value to your boss’s area and he/ she will be happy to keep you employed. You say that job cuts have been made already – so your role has not been considered to be redundant, it is seen to add value, which is good. Businesses do not make people redundant who are just expensive. They make roles redundant which they honestly consider are not adding value – or at least not adding enough value to justify the expense of the headcount. It is not personal, nor is it what most managers wish to have to do. Yet it is part of a natural business cycle. Your very best strategy is to have a positive outlook, to be optimistic. A recent McKinsey study suggested that optimists see life more realistically and show conﬁdence that they can deal with life’s challenges, whilst pessimists tend to become

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IN REVIEW ON THE SHELF

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BM takes a look at what the latest corporate book releases have to offer.

Richard Branson, Business Stripped Bare Adventures of a Global Entrepreneur International businessman and Chairman of the Virgin Group Sir Richard Branson knows a thing or two about turning ﬂedgling companies into global brands. Indeed, he is the only person to have built eight billion-dollar companies from scratch in eight different sectors. This 342-page book guides you through how Sir Richard manages though a crisis, the qualities he looks for when hiring and the inside track behind his success stories (as well as setbacks) to date. It’s a thought-provoking guide for CEOs, managers on the ﬁrst rung of the ladder or the budding entrepreneur inside all of us. BM says: Sir Richard provides a candid, and sometimes egotistical, account of his successes – from Virgin Mobile to the launch of Virgin Galactic. A real page-turner and highly recommended.

The Green Guide For Business The ultimate environment handbook for businesses of all sizes, by Chris Goodall A whole heap of businesses claim to be ‘green’ but how much of this is true is anyone’s guess. Slashing carbon footprint is about more than just switching to a few low-energy light bulbs – it’s about changing your whole mindset. Author Chris Goodall, an expert on climate change solutions, guides you through cutting carbon and costs with advice on everything from ‘green’ computing and data centres to recycling and reducing ofﬁce travel. It also features scores of case studies to help you learn from other people’s successes and mistakes. BM says: An informative book that illustrates how making a few simple changes can have a massive impact on your carbon output. A good read.

Total Leadership Be a Better Leader, Have a Richer Life, by Stewart Friedman The more you strive to win at work, the more you have to sacrifice performance and satisfaction in the other dimensions of your life. Not according to Wharton professor Stewart Friedman. His Total Leadership programme has shown that success at work is actually enhanced if you embrace a fulfilling personal life too. Friedman explains that leadership can – and must – be learned by offering step-by-step instructions, engaging examples and hands-on tools in order to achieve higher levels of performance in all areas of life. BM says: Applying a new method of thinking, Friedman offers a completely different guidebook to becoming a better leader. Total Leadership suggests both an innovative and sustainable model for leadership that can benefit every facet of life.

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CITY GUIDE Bangkok

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Bangkok is a buzzing metropolis and an assault on the senses for a first-time visitor. BM checks out what the Thai capital has to offer both day and night.

Time: +7hrs GMT | Currency: Baht | Dialling code: + 66 | Airport code: BKK

About With a population of more than eight million, Bangkok is Thailand’s largest city and one of the most popular destinations in Southeast Asia for overseas visitors. Thailand has been dubbed the ‘land of smiles’ and Bangkok is no different so expect a warm and friendly welcome on your visit. Famed for its stunning temples and traditional architecture blended with modern skyscrapers, Thailand is a unique location with plenty to see and do. However, the city’s hot and humid conditions can be too much for some so be prepared.

Getting around Bangkok’s gridlocked roads are legendary so the clean and modern Skytrain, which whizzes around the city and provides a welcome respite from the searing heat outside, is a great alternative. It is inexpensive and covers a good part of the city, although the network is earmarked for expansion. Another option is to do what the locals do and travel by water taxi. For a few baht you can take a boat along the main Chao Phraya River and stop off at a number of key tourist attractions. If you have to go by road, ﬂag down a taxi – the city is full of them and they are cheap. If you are feeling adventurous, hop into the back of a three-wheeled tuk tuk for a noisy and dusty, but exhilarating ride through the streets.

From the airport Opened in 2006, Bangkok’s Suvarnabhumi International Airport became the main hub, replacing Don Mueang. Located in the Bang Phli district about 25 km east of downtown Bangkok, Suvarnabhumi is an ultra-modern airport and one of the busiest in the region. For transfers to your hotel, the Suvarnabhumi Airport Express – a high-speed rail link due to be completed later this year – will offer a fast and convenient journey into the centre of the capital. Until then you will have to make do with the airport buses or numerous taxis hawking for your custom outside the main terminal. When taking a taxi, insist that the meter is switched on and expect to pay around B500 (about US$14) to the centre.

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Wat Pho, also known as Reclining Buddha

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Relax Getting out and about on the streets is the best way to really absorb the sights, sounds smells that make Bangkok a unique destination. It’s famed for its tasty street and sm food, which is both cheap and tasty, while its night markets sell everything from food fake designer handbags to charred-locusts. The national sport of Thailand is Muay Thai, kickboxing to the rest of us. Regular bouts take place at an atmosphereT charged Lumpini Stadium. If you are not into raw pugilism, take a daytrip to the traditional floating market where you can find Thais paddling flat boats filled with fresh produce. Don’t forget to haggle hard. At the end of a packed day of sightseeing venture up to the Sirocco Sky Bar for a breathtaking view of the teeming city below.

Fast Fact

n) ar (Songkra Thai New Ye ar ye y er ev is celebrated to April 15. from April 13 e the locals Expect to se ch other ea g dousin ﬂour. in water and

Grand Palace

See

A must see for any visitor is a trip to the Grand Palace – a huge complex of buildings that served as the ofﬁcial residence of the Kings of Thailand from the 18th century onwards. Its stunning architecture houses the Temple of the Emerald Buddha – Thailand’s most sacred site. A strict dress code applies: Men must wear long trousers and shirts with sleeves; women should be moderately dressed and both sexes should wear closed shoes. Other impressive sights across town include Wat Pho, home of the 46 metre-long, gold-plated Reclining Buddha, Wat Intharawihan (Standing Buddha) and the Temple of Dawn. In fact, Bangkok boasts more than 400 temples dotted around the city.

Eat Bed Supperclub One of Bangkok’s hippest restaurants and bars with its minimalist interior and ultra-futuristic décor, including beds suspended from the walls. Set dinners: B1850 (US$52) Friday and Saturday. B1450 (US$41) other nights Vertigo Grill & Moon Bar Perched 61 ﬂoors above the Bangkok streets, this open-air restaurant is the place for that special meal. But make sure you have a head for heights. Four courses: B2700 (US$76) per person

Sleep Peninsula Bangkok Located on the banks of the Chao Phraya River, this 39-storey, ﬁve star hotel includes six dining outlets, a 60-metre pool, tennis court and access to the Thai Club golf course. A helipad on the roof awaits airport transfers for those wishing to experience a birds-eye-view tour of the capital. Rooms: 370 Rates: Around B10,500 (US$300) a night Mandarin Oriental Hotel This colonial-style hotel has been a favourite of the elite since 1876. Indeed, all 393 rooms are assigned with personal butlers. In 2006, the Mandarin Oriental underwent a face-lift with its new spa touted as one of the best in the world. Facilities have been updated to include a large gym, tennis and squash courts and two outdoor swimming pools. Rooms: 393 Rates: Around B15,000 (US$427) a night

DOS AND DON’TS • Thais do not normally shake hands when they greet each other, but instead press their palms together in a prayer-like gesture called ‘wai’. • Make sure you barter hard when buying souvenirs, especially in the touristy parts of town. • Don’t insult the monarchy. Thais love their king and any disrespect shown to the Royal Family is seriously frowned upon. • It is considered rude to show the soles of your feet or use your foot for pointing.

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THE KNOWLEDGE Selecting the right club The lowdown on the finest golf clubs the UAE has to offer.

Abu Dhabi Golf Club Situated just a 10 minute drive from Abu Dhabi Airport, the Abu Dhabi Golf Club offers one of the most luxurious golf experiences in the Middle East. It is managed by luxury golf management brand, Troon Golf, and features a 27hole 162-hectare course and a striking club house designed in the shape of a falcon, which includes an executive meeting room and sports and ﬁtness club with an outdoor free-form swimming pool. The course, which was designed by Peter Harradine, is described as tough but a “fair challenge” and is the home of the PGA European Tour Abu Dhabi Golf Championship.

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Dubai Creek Golf and Yacht Club This club hosts the Dubai Desert Classic and Dubai Ladies Masters and boasts two of the city’s ﬁnest must-see courses – the Majlis and the Faldo, as well as a nine-hole, a par 3 course, the golf academy, a variety of restaurants and bars, gymnasium and tropical swimming pool. The Majlis has been named among the world’s top 100 golf courses in a survey conducted by inﬂuential US-based magazine Golf Digest while the Faldo was redesigned by the legend Nick Faldo himself. This unique course combines stunning visual design with the nuances and challenges of any championship course in just the right measure.

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Jumeirah Golf Estates, Dubai Jumeirah Golf Estates, which will play host to the Dubai World Championship in November, is set to become one of the world’s premier golf course communities. Featuring four courses inspired by the natural elements of Fire, Earth, Wind and Water, it has been designed by the likes of golﬁng legends,Greg Norman, former world number one Vijay Singh; European Ryder Cup hero Sergio Garcia; and “the father of modern course design”, Pete Dye. The courses will be surrounded by individually designed neighbourhoods – featuring luxury villas and appartments and there will be plenty to entertain non golfers, including the Chris Evert Tennis Academy, two Jamie Oliver restaurants, gymnasiums and ﬁtness centres.

The Montgomerie, Dubai Dubai’s championship golf course, designed by Colin Montgomerie in association with Desmond Muirhead, covers 265 acres, consisting of 123 acres of turf, 14 man-made lakes, 93 acres of landscaped gardens and 81 large bunkers. The Montgomerie, Dubai offers two very different seasons of golf. During winter, the golf course is over-seeded whilst the summer season has the course back to a full stand of Bermuda grass. The turf growth is vigorous during the summer, resulting in a very challenging rough. Management say it is comparable to the world’s best courses and caters to golfers from all corners of the globe.

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OBJECTS OF DESIRE Forget bulky laptops

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2009 is the year of the netbook.

ombining lightweight and compact with power and usability is the magic formula that manufacturers strive to achieve with their portable computers. Netbooks achieve this by offering almost all of the features of a fully-fledged laptop in a smaller pack-

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age. Sony is the latest company to throw its hat into the ring with its Vaio ‘P-series’ of netbooks that feature a traditional clam shell design and are small enough to fit in a jacket pocket, albeit a rather deep one. Available in four colours, the ultra-slim Sony P tips the scales at a feather-light 638 grams. It has a crystal clear 1600x768

resolution, eight-inch widescreen display (no more scrolling horizontally to view web pages) and is powered by a 1.33GHz Intel Atom processor. It houses a 60GB hard drive and 2GB or RAM but best of all, it comes with a full-size keyboard, perfect for all your typing needs. Prices start at around US$899.

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HOT WHEELS Revving up

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Audi gets faster with this issue’s star car.

erman carmaker Audi has unveiled its highest performance car yet – the muscle-bound R8 V10. This latest beefed up version of the lightning-quick R8 boasts a Lamborghini-sourced V10 engine that kicks out a whopping 525 bhp. A sophisticated quattro-all wheel-drive system ensures that all that power is channelled to the tyres with the maximum efficiency, which is reassuring to know. Subtle changes from its baby brother (R8) include duel oval exhaust outlets, bigger brakes, unique LED headlights, a rear diffuser, and larger side intakes. These increased intakes give the car a more beastly stance but this doesn’t detract from the R8’s good looks – similar to when Brad Pitt bulked up for the film Fight Club. Audi claim the V10 will fire you from 0-62mph in 3.9 seconds before hurtling to a top speed of 196mph. It will hit the German market this Spring with a price tag of US$180,000.

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FINAL WORD By Arab Bank’s Tony Marcello

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Maintaining sustainability in the face of economic downturn.

ou cannot pick up a newspaper, listen to a newscast or have a conversation with a colleague or friend, without the topic turning to the financial crisis that in 2008 saw the world’s economies undergo substantial upheaval. We are in the grip of a global recession, where brands that were household names have gone into liquidation, unemployment is rising and confidence is at an all time low. Financial institutions have been the hardest hit with liquidity drying up, asset values deteriorating and overall ‘value’ destroyed. Many banks, particularly those in the US and Europe have failed, and those that have survived have scaled back, seeking to stabilise their balance sheets as liquidity has become of paramount importance. Some institutions have restructured and consolidated their businesses to significantly reduce costs and some are still scaling back their activity as the downturn continues to eat into profitability and capital. During the first nine months of 2008, Gulf banks continued to exhibit strong asset quality and profitability due to the unprecedented surge in oil prices seen in 2007 and early 2008. However, it was not enough to stave off the effects of the financial crisis, and the fourth quarter proved challenging for most. Echoing what has happened with western financial institutions, many of the region’s banks have already been hit by declining real estate and equities asset values with further problems expected as clients default on loans. The region faces a difficult operating environment with the liquidity squeeze weighing in on performance, business opportunities reducing in line with a slowdown in the economy and growth in deposits failing to keep up with

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the increase in demand for liquidity. So how can banks remain sustainable?

GCC for 2009 estimated at 4.2 percent. This makes the region rank on the higher end of the range for other emerging markets reﬂecting its resilience to external crises even among emerging markets. Furthermore, the economic structure of the region’s countries witnessed dramatic changes; the windfall oil revenues resulting from the oil price boom in the past four years have been used more wisely by oil exporting countries in the region compared to previous booms.

Core values

Improving liquidity The drying up of liquidity is prompting several Gulf banks to switch their focus from investment and wholesale banking to retail, in an effort to shore up deposits and counterbalance over lending. Many banks are taking measure of their inter-bank lending percentages and are trying to ﬁnd strategic and innovative ways to reduce their loan to deposit ratios. Additionally, the enormous budget and current account surpluses of the six GCC countries, which were estimated at US$1.5 trillion at the end of June 2008, coupled with the interventionist nature of their governments could ensure that the ﬁnancial sector is shored up and prevent the collapse of any key banks. GDP growth outlook is still strong in the

GCC banks have historically followed a highly prudent banking and credit strategy, not only in terms of carefully assessing lending risks and in extending loans (low non-performing loans percentage), but more importantly in ensuring the safety and security of customers’ and shareholders’ interests. Their treasury placement philosophy has always been conservative, tending to steer clear of highly leveraged speculative trades or hybrid products that involve creative accounting. As a result, the region is better positioned to weather the effects of the global ﬁnancial crisis versus other markets.

Tony Marcello is the Global Treasurer at Arab Bank. His previous positions include: Treasurer for UniCredit Group, Global Treasurer at General Electric Company (GE) and GE Insurance, in addition to working in fixed income and money markets for UBS, NatWest Markets and Yamaichi International.

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