Business Management Middle East Issue 6

REBUILDING www.busmanagementme.com • Q3 2009

IRAQ After decades of wars, sanctions and tyrannous rule, Iraq is crying out for foreign investment.

But is the country really open for business?

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PLUS Drake & Scull CEO Khaldoun Tabari COVER.indd 1

Nakheel Hotels CEO Joe Sita

Al Islami CEO Saleh Abdullah Lootah 18/6/09 10:15:54

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Editor’s note 3

The sleeping giant Iraq’s efforts to rebuild its economy should serve as an inspiration to us all.

I

f you told your colleagues today that you were travelling to Iraq for business they would probably tell you to stay at home.

Most people associate the war-torn country with only one thing – danger.

The name conjures up images of tanks, debris and armed troops – a far cry from the shopping malls and skyscrapers of the GCC. But while it’s true that the security situation there remains highly volatile, there’s another side to Iraq that, ironically, makes it a far more lucrative prospect for foreign investors than its richer neighbours: oil.

Nobody knows the true extent of the country’s oil reserves because only 17 of the 80 known fields have actually been explored.

Current estimates are that Iraq has reserves of

“Foreign companies have a strong and competitive wish to invest in Iraq and the government has put forward facilities to encourage this” Mohamad El-Tai, CEO of Iraqi satellite television broadcaster Al Fayhaa (Page 22)

115 billion barrels, but some say it could be as much as 200 billion. This means that Iraq has become a magnet for foreign investors eager to stake their claim in the country’s black gold rush.

Before business can begin however, the rebuilding of the country’s infrastructure and the modernising of its banking, transport and technology system must be undertaken. In this month’s cover story we report on the efforts that are being made to rebuild Iraq’s shattered economy and meet the people involved. Their stories are inspiring and demonstrate true determination and persistence in the face of huge obstacles. The success of their plans depend on two factors: peace and continued foreign investment – US$500 billion-worth by 2015 if the Iraq National Investment Commission has its

way. The latter looks likely, with foreign companies already clamouring to win lucrative oil contracts. There is no guarantee however that further instability won’t damage the country’s fragile efforts at recovery. Let’s hope that Iraq is given the time and space it so needs to realise its true potential as a giant on the world business stage.

“We are expecting to achieve 25 percent growth this year and that’s going to come from acquisitions and from introducing ourselves to new markets such as Libya and Jordan” Khaldoun Tabari, CEO of Drake & Scull International (Page 32)

“We wouldn’t say we are the silver bullet but if people are not travelling to make business deals then deals don’t happen, which contributes to the economic slowdown” Andrew Cowen, CEO of Jazeera Airways (Page 42)

Diana Milne Editor

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Contents www.busmanagementme.com

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Rebuilding Iraq With green shoots of peace and stability sprouting, the Iraqi government is beckoning foreign companies and investors to resuscitate the nation and unlock its riches. Is now the time to ďŹ nally put Iraq on the business map?

94 The luxury collection We enter the ďŹ ve-star world of Joe Sita, CEO of Nakheel Hotels

22 32

42 Cheap thrills Jazeera Airways CEO Andrew Cowen on why his low-cost carrier is conquering the Middle East budget aviation sector

First off the blocks How impeccable timing has turned Drake & Scull International into a multimillion dollar success story

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92

Darren Burrows

124

124

Dr Dirk Oevermann

38 A recipe for success

Dr Russell C. Gomersall

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

We report on Al Islami Foods’ success in the global halal food market

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The future of CRM

frastructure development is more important than ever in a tight economy

72 Lessons in business 48 Qatar Calling Qtel’s CIO reveals its aim to become one of the world’s top 20 telecoms companies by 2020

56 Shifting the security landscape With Ovum’s Graham Titterington

61 New age disaster planning Will BCM strategies have to change in today’s economic climate?

62 A human fit David Lacey explains the importance of managing the human factor in information security

66 Cerf’s up Google’s internet pioneer Vint Cerf on why in-

EXECUTIVE INTERVIEW 80 Hazem Elmalla, Advent Software 92 Darren Burrows, Create-Comply 98 Thomas Senger, Kofax 110 Rajesh Hari Parsad, SugarCRM 124 Dr Dirk Oevermann and Dr Russell C. Gomersall, IDS Scheer 130 Nadeem Ahmad, Manager Forces

Difficult times call for new approaches. For IT, that means getting out of the back office and talking business, says Gulf International Bank CIO Seb Kacary

81 Risk/reward David Samuels on managing risk in a global financial meltdown

82 A family affair BM reports on a new study into the future of family run firms in the GCC

88 Playing by the rules

ASK THE EXPERT

With Carole Stern Switzer, President of the Open Compliance and Ethics Group

64 Mohammad Mobasseri, Comguard FZ-LLC

100 The future of CRM The growing demand for CRM applications

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INDUSTRY INSIGHT 60 Vim Vithaldas, Datapoint 78 Haitham Abdou, ITS 102 Roland Rott, Exact Software

108 The marketing guru

IN THE BACK

Using technology to win customers, even in a downturn

Moscow

112 On the right track How Italian supercar maker Lamborghini will drive demand for fast cars in a downturn

HEAD TO HEAD 52 Information security

PROJECT FOCUS 70 Skip Williams, KingsBridge Disaster Recovery 86 Nate Pruitt, NetSimplicity

118 United we stand Khalid Al-Falih, Saudi Aramco’s new President and CEO, gives an insight into the future of energy and his company’s relationship with the US

138 12 The brief 14 Business round-up 20 In my view 134 Leadership 136 On the shelf 138 City guide 140 The knowledge 142 Hot Wheels 144 Objects of desire

126 Getting better Kelli Kolsrud sheds some light on the state of corporate wellness

132 The art of e-learning 104 Brands with bottle Behind the scenes at Aujan Industries, the makers of the Middle East’s most popular drink

Find out how developing a strategy for e-learning is the only way to provide ROI

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Risk/reward

38

United we stand

118

Saleh Abdullah Lootah

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GREAT EXPECTATIONS As oil prices inch back up towards 2008 levels the mood is lifting across the GCC

THE BRIEF

THE GCC MAY STILL be reeling from the shock of the economic downturn hitting its markets, but according to a survey by the HR consultancy Mercer, the future of the region is bright.

More than anything, the survey of 67 companies reflects the GCC business leaders’ belief that economic recovery in the region is imminent. Indeed, 73 percent of those surveyed revealed they had set targets for higher or similar

growth in 2009 compared to 2008. the economic downturn are very And so confident are these compamuch being felt in the region, nies, that 94 percent claim 42 percent of those surthey believe they will veyed claimed they meet their targets. planned to inMercer’s survey crease their of those surveyed concentrated on six headcount in revealed they had set targets for topics: business re2009 while the higher, or similar sults, talent managemajority – 60 pergrowth ment, incentives, cent – said they headcount levels, salaries would increase their and training and development. headcount during 2010, some Despite the fact that the effects of by as much as 10 percent.

73%

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Frontline THE BRIEF

13 Employees too are looking on the seeing in pockets for a little while, bright side, according to a survey and it’s good to know that our surby the news website arabianbusivey results are backing that up.” ness.com. Its most recent salary The survey also indicates a survey found that more than a positive and proactive approach third of GCC employees expect to on the part of Middle East compaget a pay rise this year. Survey parnies with regards to using the ecoticipants from Oman were particunomic downturn as an larly upbeat in their outlook with opportunity to recruit talented 55 percent indicating that they exstaff. One in 10 of those surveyed pected a big increase in their pay said the crisis had given them an packet. In Qatar, 47 percent said opportunity to attract talent from they expected a pay rise while competitors when previously this 20 percent of them expected an had not been a viable option. This, increase of at least five percent. claims Mercer, is also further eviKuwait had the highest number dence that companies are planof people at 23 percent, who ning ahead for when economic said they expected to reconditions improve. Over ceive a pay hike of three quarters of the between five and companies said the nine percent. downturn had not of those surveyed claimed they The survey affected their view planned to increase shows a clear corthat recruitment of their headcount relation between talented staff was a in 2009 how badly countries high priority. Indeed, have been affected by the 81 percent said they downturn and how optimistic viewed talent management as their residents are. In the UAE, more important or as important as where the effects of the downturn before the crisis. Bob Schuetz, a have seen property prices crash senior partner in Mercer’s GCC opby 50 percent since peaking last eration, said: “We’ve spoken to a August, 35 percent of residents number of leading companies said they did not expect to refrom around the Gulf who are ceive any pay rise at all, while an looking to adopt a more long-term equal number said they did not HR strategy to secure their comexpect to receive a rise. pany’s future, attract and retain GCC residents have good reatalent in key positions and ensure son to feel positive: oil prices have an ongoing pipeline of talent for hit the US$72 a barrel mark and core skills and leadership develOPEC has predicted a reduction in opment. All of these actions are oil stocks by the end of the year. essential to keep ahead of the Meanwhile June saw UAE ficompetition as they move out of nancial markets rally to a seventhese unprecedented times and month high on the strengths of this survey supports the notion these oil prices. that more companies than not see The light is shining bright at the pivotal role HR plays in both the end of the tunnel for GCC resibeing competitive today and dents, but with the strength of planting the foundations for future the economy so dependent on growth and success.” that of the West as demand deBut it’s not just employers that termines oil prices, the situation are feeling positive about the future will always be a volatile one. of the GCC economy in 2009.

NEWS IN PICTURES

US PRESIDENT Barack Obama tours the Sphinx and the Great Pyramids in Giza Egypt after delivering a much anticipated address on American Foreign Policy at Cairo University.

42%

Bassam Gazal, Mercer’s Survey Project Leader, said the results display a shared sense of confidence amongst GCC-based companies: “This is demonstrated not only by the strong business targets, but also in retention and recruitment plans. Our survey tells us that there is a quiet and determined confidence here in the GCC now, about the rest of the year and into next year and beyond. It’s something we’ve been

A PROTESTER holds a slogan during a rally in the Iranian capital Tehran following the re-election of Mahmoud Ahmadinejad.

FRENCH PRESIDENT Nicolas Sarkozy inspects UAE and French Navy forces during the opening of the new French navy base in Abu Dhabi.

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BUSINESS ROUNDUP

UAE

KUWAIT

SAUDI ARABIA

PROPERTY PRICESin Dubai will drop a further 15 to 20 percentand won’t bottom out until the end of the year, according to Deutsche Bank. A research note issued by the bank estimates that prices have dropped by 50 percentsince peaking last year, while the market has come down 30 percent.“We expect UAE property prices to decline another 15 to 20 percentfrom current levels and only bottom by year end,” the team of analysts wrote. They based their forecast on an exodus of expatriate workers and the amount of new supply entering the market this year. The findings contradict those of HSBC, which claimed in May that real estate prices were stabilising.

THERE ARE SIGNS of economic recovery in Kuwait where real estate transactions rose by eight percent in April, according to the National Bank of Kuwait. In its latest economic brief it said the rise in sales was led by the commercial sector, where transactions surged by 51 percent. Overall real estate transactions in the country are down by 54 percent compared to the previous year, with the biggest impact seen in residential sales, which suffered an eight percent drop.

SAUDI ARABIA has retained its crown as the world’s top oil producer in BP’s annual rankings. The Statistical Review of World Energy report estimated the Kingdom’s untapped reserves at 264.1 million barrels at the end of last year. It claimed that Saudi Arabia pumped 10.846 million barrels per day last year, beating Russia, which pumped 9.886 million barrels per day.

Meanwhile the UAE slipped down a place in the rankings and was overtaken by Venezuela. The latter’s reserves accounted for 7.9 percent of the world’s total oil produced, while the UAE accounted for 7.8 percent of global reserves.

UAE-based conglomerate MAG has revealed plans to buy tyre company Continental’s Clairoix plant in northern France. It submitted a letter of intent to Continental and revealed plans to produce three million tyres a year with around half of the plant’s current workforce. Continental’s decision to close the plant prompted a series of protests from Clairoix workers who were told the move would eliminate 1,120 jobs.

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BUSINESS ROUNDUP

QATAR A NEW POWER PLANT in Qatar will almost double the country’s electricity generation capacity.

The plant, which is being built by energy giant Ras Girtas, will be completed in 2012 and will also increase desalinated water generation by 33 percent. Speaking at a meeting of private sector companies in Doha, Qatar’s Deputy Prime Minister and Minister for Energy and Industry, Abdullah bin Hamad al-Attiyah, said the new plant would be a major development in the region’s utilities sector. At the same meeting he said he expected the Qatari economy to grow significantly despite the global recession.

The first tenants of Qatar’s US$2.6 billion Energy City development will move there in 2010.

The company’s Chief Executive, Hesham Al-Emadi told Reuters that the infrastructure of the project was 70 percent complete and that 25 to 50 percent of construction contracts would be awarded by the end of the year.

IRAQ IRAQ’S SOUTH OIL COMPANY has revealed plans to boost output from its southern fields by up to 500,000 barrels per day by 2011. The new head of the company, Fayad al-Neman, told the Reuters news service that the company was in talks with foreign firms, including Haliburton, Schlumberger, Baker Hughes and Weatherford International to help it meet its target. Iraq has the world’s third largest oil reserves and its southern oil fields currently account for 80 percent of the country’s production capacity.

At the end of June the government is expected to announce the names of companies that have won bids to develop six of the country’s largest oilfields.

OMAN AN OMANI investment fund has signed the largest real estate deal of the year in the UK capital, according to property consultants Asteco. A spokesman for the company said the Oman Investment Fund had purchased 75 percent of Bishops Square, a central London office development, for US$703 million.

Foreign investment accounted for 40 percent of real estate transactions in London in 2009 according to Asteco – many of which were by Middle East based investment funds. The second largest was by the Abu Dhabi Investment Council which bought a 50 percent stake of the Meadowhall Shopping Centre in the north of England.

New employment opportunities are to be created for Omani nationals as part of the diversification of the country’s economy, according to a research note by Standard Chartered Bank. The diversification plans announced by the government include plans to reduce the country’s dependence on the oil sector from 41.5 percent of GDP in 2007, to nine percent of GDP in 2020. One of the key drivers behind these changes would be the doubling of income from the industrial sector increasing its contribution to GDP from 14.3 percent in 2007 to 29 percent in 2008.

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PROJECT FOCUS

DESERT BLOOM THE MASDAR HEADQUARTERS, Compared with typical mixeduse buildings of the same currently under construction in size, Masdar HQ will consume the sands outside Abu Dhabi, 70 percent less water. will go beyond zero net energy: “The Masdar Headquarters it will be the world’s first mixedwill set a new paradigm for the use, large-scale positive energy way buildings are designed, building. And it will utilise pioneering technology to get there. constructed and inhabited,” says Gordon Gill, partner at arThe design takes it cue chitecture firm AS+GG, the from centuries of indigenous company behind the dearchitecture, marrying sign. “The project historically sucThe project represents the cessful building represents the perfect integrastrategies for tion of architecthe climate integration of ture and with the latest architecture and engineering, retechnology and engineering sulting in a dynaminnovative buildic, inviting building that ing systems – includoutperforms any other strucing some developed especially ture of its type in the world.” for the project. The design in“As a positive energy comcludes numerous systems that plex, the project will have a farwill generate a surplus of the building’s energy, eliminate car- reaching influence on the buildings of tomorrow,” adds bon emissions and reduce liqAS+GG’s Adrian Smith. uid and solid waste. The Masdar City will be concomplex will utilise sustainable structed over seven phases and materials and feature integratis due to be completed by 2016. ed wind turbines, outdoor air quality monitors and one of the The headquarters building is part of phase one and will be world’s largest building-intecompleted by the end of 2010. grated solar energy arrays.

perfect

The personal rapid transit system, consisting of 3000 electric cars operating on a recyclable lithiumcadmium battery, will transport people around the car-free city.

Most of the roadways are housed in underground tunnels.

The layer of glass that covers the building’s exterior reflects the heat of the sun whilst allowing for natural light. The north-south orientation of the structure also helps protect inhabitants from the glare of the sun.

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Frontline PROJECT FOCUS

The building will use its own wastewater to irrigate several lush gardens situated throughout the complex. In turn, the plants and trees help provide shade, keep the building cool and absorb carbon dioxide.

Wind towers – one of the building’s references to traditional Islamic architecture – exhaust warm air, help naturally ventilate the building, and bring cool air up through the subterranean levels of the city below.

17

At 75,000 square feet, the onepiece roof – made up of a steel trellis covered with photovoltaic cells – represents one of the largest solar arrays in the world and will provide enough power to build the rest of the building.

Narrow, canopied streets provide shade and funnel cooling breezes, reducing the temperature to a manageable 20˚C. Meanwhile, the network of subterranean tunnels serve as passenger walkways to the underground transit system.

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Upfront 18

INSIGHT

THE CUTTING EDGE Latest release of Cardax FT, v5.21, underpins new Pelco and Schindler HLIs CARDAX FT V5.21, the latest release from Gallagher Security Management Systems (GSMS), supports two new high level interfaces with leading imaging and elevator brands Pelco and Schindler. The new Pelco Endura Platform High Level DVR Interface (scheduled release, November 2008) allows Pelco DVR recorded video to be associated with alarms in Cardax FT Command Centre. In addition, it supports: Transfer of Pelco Endura alarms to Cardax FT, via a high level interface, for management from the Cardax FT Alarm Viewer Sending a camera to a preset or initiating a camera tour, in response to Cardax FT event or alarms Viewing of live video in Cardax FT from Pelco Endura platform cameras The Cardax FT / Pelco HLI supports Pelco Endura Platform API Specification v1.0.7.00 and has been tested on and is compatible with Pelco Endura WS5000 running version 01.05.0036 and Pelco Endura DVR running version 01.05.3035-EE-3037. The Schindler-Miconics Elevator Interface supports the following: Automated synchronisation of cardholders from Cardax FT to the SchindlerID server database Logging of all elevator events in the Cardax FT Event Log Allows Cardax readers to be used at elevator terminals to identify the cardholder to the Schindler system This interface has been tested and is compatible with Cardax FT Command Centre vEL5.20.xxx (or later version) and Microsoft Windows XP Professional, Service Pack 3 and SchindlerID v1.1.296.1. Enhancements to core Cardax FT system functionality delivered in v5.21 include: Configurable pick-list Alarm Notes which can now be pre-configured Mifare Smartcards – advanced security enhancement. Mifare Smartcards store a cardholder’s relevant access control information securely in an encrypted sector of the card chip’s memory Activity Report enhancements deliver the ability to report on activities over the last ‘x’ number of hours Unlocked Doors Report - This gives the operator an instant view of all potentially unsecure doors on a site Sagem Fingerprint integration – user interface enhancements For more information, please visit www.cardax.com

GLOBAL PERSPECTIVE The month of May saw the launch of BM’s new sister magazine Business Management Europe, with one of the cover articles featuring an exclusive interview with Rio Tinto’s CEO for Energy, PRESTON CHIARO. Speaking at their London headquarters, an ebullient Chiaro revealed that being at the sharp end of the company’s global operations is where he feels most at home. “Visiting the mines is one of my favourite parts of the job. I like to see the equipment working and I like to see, literally, the shovel contacting the coalface – that’s the fun part of the job.”

To see more about Rio Tinto’s global ambitions, go to www.bme.eu.com

‘YOU CAN QUOTE ME ON THAT’ “No-one could have predicted the scale of the worldwide recession which is now impacting every country on earth” Sheikh Ahmed bin Saeed Al-Maktoum, CEO and Chairman of the Emirates Group

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Upfront INSIGHT

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OPEN SOURCE: BIG FEATURES, SMALL PRICE

SOFTWARE AS A SERVICE

A few years ago, the only choice for small businesses wanting to digitise their operations, was to either run legitimate or pirated versions of proprietary software. Open source is today in a position to challenge proprietary software in the small business arena.

AGAINST THE BACKDROP of the current ecoetary software is slick and polished. Care must be nomic climate, with increased costs in running a taken when choosing any software solution. business and real estate coming at a premium, Open source code is typically high quality. the region’s small and medium-sized businessIt lets you avoid licensing fees and most impores (SMBs) need to operate more effitantly, you can lift the hood and fix any bits ciently than ever before. While that come loose. Red Hat is one of Red Hat certain costs cannot be avoidthe pioneers as far as the open is one of the ed, such as the need for a source movement is concerned. minimal IT infrastructure, With open source, you can do business incorporation pretty much anything you can as far as the open source movement costs, and so on, costs spent do with commercial products, is concerned on software applications and but with added advantages. In parespecially operating systems, can ticular, today’s companies are looking indeed be controlled. for operational efficiencies without comproIf you are looking at operating costs, open mising the quality of solutions. In our discussource offers the least expensive computing envi- sions with industry analysts, we see open ronment for a small business. One might argue source solutions gaining adoption across small that the quality of open source software varies businesses in the region. The results speak for from excellent to pre-alpha – the same can indeed themselves, open source is viable, particularly be said of proprietary (and expensive) software. when an offering is integrated, optimised, certiJust take a look at some of the bargain bins at the fied and supported by proven industry leaders local technology superstore if you think all propri- such as Red Hat.

pioneers

THE DREADED ‘R’ word is all around and it is no different in Middle East. The debate between analysts seems to be on the severity and timeline. The knee-jerk reaction in today’s financial climate is to make deep cuts in operating expenses. CFOs and CEOs are challenged by an environment where you need unprecedented control over your company to project and protect growth but optimise costs at the same time.

Long known for their entrepreneurial spirit and innovation, the business owners in the Middle East are faced with a tough task in this uncertain economy regarding their business automation projects. They are not keen to invest in large ERP installations, which require large capex expenditures. Neither are they ready for six- to eight-month installation time periods.

Given this scenario, the one thing all experts agree on is that the arrival of the concept of Software as a Service (SaaS) and this is here to stay. SaaS or the on-demand or pay-as-you-use model has been around for more than 10 years now and offers a reliable solution to the present day challenges and is one of the fastest growing trends in the IT industry.

Some of the areas to which SaaS is applicable include:

CRM/ERP

TALENT CRUNCH

HR MANAGEMENT

26%

China

15%

India

14%

North America Western Europe Southeast Asia Eastern Europe Central/South America Russia GCC/MENA Other

4% 3%

9% 9%

MARKETS EXPECTED to see the greatest need for new staffing talent in the secondhalf of 2009

PROJECT MANAGEMENT BUSINESS INTELLIGENCE IDEA/INNOVATION MANAGEMENT Some of the areas wherein the leading CIOs and the CEOs need to focus on when evaluating a SaaS based solution are financial stability of the vendor, completeness of the solution, SLA and flexibility of the organisation to meet the budget requirements.

After being the leading SaaS player in India, Proquest Solutions now wants to offer the Middle East market the SaaS benefit and help the business owners beat the ‘R’ blues. There’s nothing like a recession to focus the mind on practicality over ideology and we hope the Middle East management is listening.

8% 6% 6% Source: Association of Executive Search Consultants

For more information, contact Biswas Nair, Managing Director Proquest Solutions Pvt Ltd on +91 9766313300 or email biswas@proquestsolutions.com

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Frontline 20 DR SULAIMAN AL FAHIM of Hydra Properties on the lessons he has learnt in life and business One effect of the global downturn on the real estate sector is that property buyers and investors will become more discerning in their choices. They will search the market for properties that will give them the best returns on their investment and ask for more value for their hard earned money.

If you are a property developer and you do not challenge yourself to present a unique value proposition to your customers then what good have you done? If you do not innovate and exercise creativity and resourcefulness, you will be just one of many. If you want the market to know who you are and what you can accomplish you have to show it exactly what you are capable of.

If there is a time to act on saving the environment, it is now. This is something that cannot be put on hold because sooner or later the effects will come back to us. A commitment to sustainable development is a significant investment that Hydra Properties makes with every project that it launches to ensure that we and many generations after us will have a bright future and a balanced eco-system.

Capital will always be attracted to areas where stability, security, and growth potential exists.

Businesses should be ready to exploit every possible opportunity. That’s why we see investments by big names in the Levant, North Africa, other GCC states, the Indian sub-continent and elsewhere.

You need to diversify your portfolio so that it can withstand any unforeseen circumstances. If a downturn hits one market, our developments in other places will remain safe and unscathed. We launch projects abroad because we acknowledge the fact that apart from the UAE, there are other destinations that can offer strong investment returns for us and our clients.

Before I launched Hydra Properties I realised there were five key people I needed to hire. Choosing these five people would be my five most important business decisions. For each of the five jobs I interviewed 100 people. And it took forever – around 250 solid hours of interviewing people.

IN MY VIEW

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Upfront COMPANY INDEX

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CALL TRACKING AT ITS BEST

ideal for call and contact centres. The CommsOffice Enterprise version offers all of the above plus additionCOMMSOFT RMS (relationship management solual data traffic reports to show web sites visited, bandtions) develops market leading management infor- width usage and PC activity. mation software to enable analysis of CommSoft RMS has added an innovative new call telephone system usage, staff recording product to their portfolio for 2009: productivity and communi- CommsOffice Voice, a recording and reporting solution cations costs in a busiwith a low price tag and the same award winning interness. The CommsOffice face. To provide best value to customers, CommSoft portfolio includes RMS voice recording solutions have an ‘all in’ price CommsOffice telephony which includes a high spec server PC, all required hardreporting: users can run ex- ware and unlimited client licences for search and playtension, trunk, department, back at no extra cost. The entire range is modular: agent or direct dial in repurchase CommsOffice reporting and add the new ports and then they can filter by CommsOffice Operator Console or add CommsOffice cost of call, duration of call, time peri- CTI Screen Pop and Dial as a module – all applications od and numerous other criteria to in the range work from one database and use one inget the required management interface. CommSoft RMS is actively seeking resellers formation in the form of graphs, and distributors in the Middle East region. For telephocharts and reports. Also added ny or data resellers/distributors looking to earn great in 2009, CommsOffice Pro margins, a partnership with CommSoft RMS reprewhich delivers live telesents an exciting opportunity. CommSoft RMS offers phony statistics, agent technical accreditation, sales training, marketing mateperformance reports rials and all of the tools required to add value to every and wallboard tiles telephone system or data solution sale.

DON’T MISS...

22 REBUILDING IRAQ How the economy in war-torn Iraq is finally on the road to recovery

COMPANY INDEX Q3 2009

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

Advent Software 11, 80 Air Arabia 42 Air Partner IFC Airbiz 9 Al Islami Foods 38 American Chamber of Commerce in Iraq 22 Arab Air Carriers Association 22 Archos 144 Aujan Industries 104 Austrian Airlines 22 Bahrain Air 42 BCI 61 Blue Coat 52, 53, IBC bmi 22 Booz & Company 82 B-Plan Information Systems 22 Cadbury 104 Cardax 18, 58 Centre for Global Energy Studies 22 Chrysler 112 Coca-Cola 104 Commguard 64, 65

Commsoft 7, 21 Creat-Compy 46, 90, 92 Datapoint 60 Dow Chemical 118 Dubai TechiPark 38 DVB Bank 42 easyHotel 96 Exact Software 102, 103 Ferrari 112 flydubai 42 Frake & Skull International 32 Frost & Sullivan 79, 100 General Motors 22 Google 66 GTCC 32 Guinness 104 Gulf International Bank 72 Hinterland Travel 22 HIS Global Insight 22 Hydra Properties 20 IDS Scheer 68, 124, 125 International Monetary Fund 22 iPod 104

Iraq Stock Exchange 22 Iraqi Airways 22 ISIT 52, 55 ITS 4, 76, 78 Jaguar 122, OBC Jazeera Airways 42 Kerzner International 96

Proquest Solutions 19, 37 QE2 Enterprises 96 Rafidain Bank 22 Redhat 19, 84 Rio Tinto 18 Rotana 22 Royal Dutch Shell 118 KFC 38 Saudi Aramco 118 Kier Construction 22 SIT 116 KingsBridge Disaster Recovery 70 Sony 144 Kofax 2, 98, 99 Sugar CRM 110, 111 Lamborghini 112 Tad Logistics 137 Manager Forces 129, 130, 131 TAUSPACE 110 McDonald’s 38 Trade Bank of Iraq 22 Mercedes 30 Misys 22 Naizak 50, 133 Nakheel Hotels 96 National Bank of Kuwait 42 NetSimplicity 86, 87 Nokia 144 Ovum 56 Panasonic 144

THE LUXURY COLLECTION BM speaks exclusively to Joe Sita, CEO of Nakheel Hotels

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HOT WHEELS Take a ride in the latest Lotus model

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REBUILDING

IRAQ

It’s a fractured and fragile country scarred by bloody wars, the shackles of sanctions and a despotic regime. But with green shoots of peace and stability sprouting, the Iraqi government is beckoning foreign companies and investors to resuscitate the nation and unlock its riches. There’s no doubt this is the land of opportunity – but is now the time to finally put Iraq on the business map?

BY JULIAN ROGERS n unassuming blue Arabic and English sign hangs from the facade of a non-descript building in the now thriving Karrada district of the Iraqi capital, Baghdad. Inside, captivated brokers and investors gaze up at one of the 46-inch plasma TV screens flashing up ‘buy’ and ‘sell’ prices for abbreviated stock codes. A couple of grey-haired gentlemen gesticulate at the screen while others babble into their mobile phones. The stock exchange, a microcosm of capitalism and free enterprise the world over, has entered a new era in Iraq with the introduction of an electronic trading system – the first of its kind in the country and another milestone towards this nation’s gradual recovery.

Until recently, prices at the Iraq Stock Exchange (ISX) were adjusted using primitive white boards and marker pens, and a traditional open outcry system. With the new fangled technology, trades are executed in minutes instead of the two weeks and more it took for stock certificates to be issued under the manual method. “My first baby was establishing this stock exchange in 2004 but my second baby has been getting the electronic trading system,” the exchange’s CEO, Taha Ahmed Abdul Salam, reveals proudly with a broad smile.

A total of 91 Iraqi companies are registered with the bourse, but for the time being the shares of just three banks and two hotels can be bought and sold using the new platform. Around US$270 million was traded last year – a miniscule amount compared to colossal fi-

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nancial centres like London or New York. Nevertheless, foreign investors (deterred by the old paper system) are now much more willing to take a punt on Iraqi stocks, says Salam. “I have investors from the US, Canada, Europe, as well as Arabs in the region and Iraqis living abroad, who have told me directly that they are very interested in Iraqi stocks now that we have this automation.”

Granted, the ISX going digital may seem a pretty insignificant development when you assess the destruction and carnage that this country has endured after decades of bloody wars, crippling sanctions and tyrannous rule. However, Iraq looks to be finally turning the corner as a new dawn beckons in this land of opportunity. This is a nation that boasts a skilled and educated workforce, gargantuan oil and gas reserves and land ripe for agriculture. It’s a young nation, too, with 40 percent of its 28 million people under 15 years of age. Indeed, Iraq has the raw ingredients to resurrect itself into a prosperous and influential country in the region. And there has been no shortage of companies from all four corners of the globe eyeing up a slice of this juicy pie as the country begins to stabilise. Americans, Chinese, Russian, French, South Koreans, Brazilians, Australians and a whole heap more are vying for, or have already landed, lucrative contracts to build and repair the full gamut of sectors, such as healthcare, energy, transport, education, construction and telecoms, as well as rejuvenate basic services like waste management, electricity and water supplies.

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Hussein al-Uzri, Chairman and President of Trade Bank of Iraq (set to the current leasehold arrangement) in a bid to make investment in up in 2003 to facilitate reconstruction and international trade), says the crumbling country a more attractive prospect. now is the time for investors to come to the country. “Iraq is open for business because most of the country is now quite safe and the time is Risk-reward ratio right – we are also seeing Iraqi investors bringing their money back to Despite its obvious opportunities for big business, Iraq isn’t withthe country. Iraq hasn’t had investment in infrastructure and industry out its problems and any would-be investor is more than aware of this. for the past 20 years because of the sanctions so we need hundred of For starters, the regulatory and legal framework of the Investment Law billions of dollars.”

2006 appears fuzzy and vague in places to say the least, while governUK-based Kier Construction assisted in building a port in the ment agencies and ministries don’t always sing from the same hymn south of the country back in the 1980s. Managing Director Phil Cave sheet when enforcing the laws. Also, the security situation, although travelled to Iraq in April to assess opportunities and now feels the vastly improved compared to the bloodbath witnessed just a few years time is right for his firm to return. “There is definitely a change in the ago, spiked again in April and May with a spate of deadly suicide bombair and, notwithstanding recent incidents, the ings. Bureaucratic red tape can prove a parsecurity situation has significantly improved ticularly vexing obstacle for foreign companies over the last year. They are determined to unfamiliar with doing business in the Middle move the country forward and have the means East; and Iraq has sustained a significant to underpin their priorities. It is evident that ‘brain drain’ with skilled professionals either the government is working to overcome actual killed in the conflict or choosing to flee abroad of Iraq’s population is and perceived challenges.” to escape the bloodshed. Then there are pracunder 15 years of age. Its Iraq itself is shelling out US$15 billion this tical problems like unreliable telecommunicamedian age is just 20.4 year on modernising its civil infrastructure, tions and a sporadic electricity supply, which but the fly the ointment is crude oil prices are hardly conducive to a quick recovery.

– tumbling around US$100 from last sum“Essential services have not improved mer’s record high. The sky-high price was seen as an oil bonanza much,” concedes Mohamad El-Tai, CEO of Iraqi satellite TV broadcaster that would provide an additional boost to state budgets. The subAl Fayhaa. “Electricity is still unstable and shut off several times a day, sequent nosedive forced overall 2009 spending plans to be slashed which constitutes a significant problem affecting many aspects of the from US$80 billion to less than US$60 billion, with some officials lives of Iraqis.” Indeed, estimates suggest Iraq will need an additional panicking about the country’s future spending power. The downturn 20,000 megawatts of electricity to repair the country and provide power is another reason why the Iraqi National Investment Commission is for new homes and businesses. It currently produces 6750 megawatts looking to attract US$500 billion of foreign investment by 2015. It of intermittent supplies but a slump in oil revenues has left a US$2 bilcould include overseas firms being allowed to own land (as opposed lion shortfall in the budget assigned to develop power supplies.

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Oil accounts for a mammoth 95 percent of Iraq’s revenues

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The Iraq Stock Exchange is looking to attract foreign investment with its new automated system

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Putting the troubles to one side, El-Tai believes investment opportunities for overseas firms, particularly those involved in oil and gas, outstrip those of Iraq’s neighbours in the region. “Iraq is TIMOTHY MILLS former President of the American a promising market with numerous Chamber of Commerce in Iraq and a practising investment opportunities,” he asinternational lawyer serts enthusiastically. “The foreign companies have a strong and competitive wish to invest in Iraq and the government has put forward contracts, do the Amerifacilities to encourage this.” He is also upbeat about the country’s cans feel any resentment? future when asked to gaze into his metaphorical crystal ball. “I am “There is a window open optimistic, despite the difficulties that Iraq and Iraqis are facing at for all international compresent. I believe the tremendous riches of Iraq – be it oil, gas or other panies,” Mills responds minerals, agriculture and water resources – will enable the rebuilding diplomatically.

“When of the country very quickly.” you go to Iraq and speak As the spearhead in the invasion of Iraq in 2003, the United States to officials they might say they want an American company to carry out has benefited the most from lucrative contracts. Indeed, some US$2 a US$50-100 million project to rebuild a refinery or electric power stabillion of American contracts have been signed with over 5000 private tion. But if a US company won’t come and do it they will just find another equity firms in the last three years alone. Timothy Mills, former Presifirm from France, Russia, China or wherever, that will. The need to find dent of the American Chamber of Commerce in Iraq and a practising companies to do these Iraqi government projects always persists.” international lawyer, has seen with his own eyes compatriots working As well as government projects, Mills notes that many US compato rebuild the country. Speaking to Business Management from Washnies who came over in the initial reconstruction phase have branched ington prior to his latest departure for Iraq (his 111th visit since July out into the private sector. He says car giant General Motors (GM) 2003), Mills says the country’s redevelopment is a bright light amid the originally set up a maintenance facility in Iraq to service the tens of global economic gloom. “The attractiveness of business opportunities thousands of vehicles flooding in for the reconstruction effort but has has increased as other areas of the world have retracted, but whether since looked elsewhere for private contracts. It’s a similar situation or not to work in Iraq comes down to a risk versus benefit calculation for with construction equipment manufacturer Caterpillar. But whether many company bosses.” But with thousands of companies from counyou are rebuilding an oil refinery or installing software for a telecoms tries that played no part in the 2003 invasion awarded reconstruction contract, Mills stresses the need for businesses to do their homework

“There is a window open for all international companies”

Iraqi Airways is soaring again with new scheduled routes and destinations, including Europe

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first or face failure. “If US companies have not been working in Iraq, either with the government or the private sector, then there needs to be a serious adjustment of the business model and they need to do due diligence. It also means finding trusted Iraqi partners to do business with and navigate the local nuances.”

allows citizens and companies to store, transfer and invest their earnings.” Without reliable voice, postal or internet communications it has been very hard for any bank HQs to standardise – Rafidain is essentially a group of 155 individual banks all operating with unique procedures and systems, and most banks are in a similar situation. Being a government-controlled bank it is sitting on a cash mountain of US$15 billion, which proves extremely hard to manage and invest without electronic clearing and a core banking system. “Every government Money matters account is held with Rafidain Bank so once Rafidain Although most industries are starts working, Iraq will start working,” Hargreaves creaking, one sector lagging light explains. years behind its peers in the region Dubai-based Roy Froud is Head of the MEA region is banking. In Iraq cash is king, with for Misys Banking, a global application and services people forced to hoard wads of company involved in upgrading and centralising opdinars because the banking system erations at four Iraqi institutions. He believes Iraq’s is so antiquated. Transactions are lenders could eventually “leapfrog” other banks in the carried out manually, branches can’t Middle East with modernisation. He’s also an advocate communicate electronically with of companies setting up in the region and building up one another and ATMs are virtually a reputation and trust with customers. “Clearly banks non-existent. Paying for goods and here don’t want to deal with companies flying in from services with credit cards is a nascent the West, dropping software on them and then flying payment option, too. Shirko Abid, an home again. They want partners who are committed to Iraqi Kurd and Chairman of B-Plan the region and committed to them as customers, and MOHAMAD EL-TAI CEO of Iraqi satellite TV broadcaster Al Fayhaa Information Systems, is introducing companies with Arabic skills and the right people to a much-needed electronic clearing implement solutions.” system across state-owned Rafidain One of Misys’s clients includes al-Uzri’s Trade Bank Bank’s 155 branches (55 in Baghdad). With the new system Abid says of Iraq. He describes Iraq as being seriously “underbanked” when companies will be able to pay salaries directly into employees’ bank assessing the condition of the financial sector. “Iraq has less than accounts, money can be transferred between branches and even with600 branches countrywide, which is very low compared to regional drawn from Rafidain’s seven outlets abroad. countries,” he remarks. “Iraqis would be encouraged to have bank acRafidain, which holds 45 percent of the country’s financial assets, counts if there were better services, better returns on their deposits used to stand proud as the Middle East’s largest bank before falling and good credit policies to allow the banks to lend.” Al-Uzri is also a into a decrepit state. Laurence Hargreaves, B-Plan’s Project Co-ordiproponent of the banks playing a much more significant role in the nator on the ground, is candid in his assessment of the archaic state of economy and in terms of Iraq’s GDP. the banking industry. “Rafidain struggles to function without a banking system to manage its 4.5 million accounts,” he explains. “There is no communication system to enable any of the branches to communicate to HQ, money can’t be transferred between branches and no unified products can be offered. The legacy of Saddam Hussein’s regime and the two wars have left gaping holes in the balance sheets that need to be filled.” Trying to repair the situation was taxing in the years following the fall of Saddam, suggests Hargreaves. “Until recently, the security situation meant HUSSEIN AL-UZRI that installations of such large new systems couldn’t be Chairman and President of achieved and banks have had to ‘make do’ with an incomTrade Bank of Iraq patible range of legacy systems.”

For Hargreaves, a reliable and trustworthy banking system is one of the most basic requirements for building a secure and prosperous state. “Many people find it hard to comprehend that a country does not have a system that

“Electricity is still unstable and shut off several times a day”

“We are seeing Iraqi investors bring their money back to the country”

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“The reserves are not exaggerated – they are huge, and I am optimistic that this figure will be higher than 115 billion barrels” MANOUCHEHR TAKIN Senior Analyst at the Centre for Global Energy Studies

Crude awakening Of course when it comes to GDP, Iraq’s most prized and coveted asset is its enormous energy reserves. The ramshackle oil sector brings in a mammoth 95 percent of the earnings for a country with perhaps the largest unexploited energy resources in the world. Iraq’s official reserves are around 115 billion barrels (the third largest in the world) but this is based on archaic 2D seismic surveying. Ambitious estimates by industry insiders triple the outdated reserve figure, partly because only 17 of the 80 known fields have been significantly tapped for oil. If the ambitious estimates turn out to be true, Iraq would catapult to the top of the production league table, ahead of neighbour Saudi Arabia. “The reserves are not exaggerated – they are huge, and I am optimistic that this figure will be higher than 115 billion barrels,” suggests Manouchehr Takin, Senior Analyst at the Centre for Global Energy Studies. “Some think it could be 200 billion or higher but these amounts are just estimates.” With rock-bottom extraction costs, thought to be as low as US$2 per barrel, and more than a third of reserves lying just 600 metres below the earth’s surface, you can just imagine the dollar signs fl ashing in the eyes of the bosses of the foreign oil majors. It’s a tantalising prospect, according to Takin: “Why go to harsh and inhospitable places in the world like the Arctic? It really is entering the unknown and despite all the costs that are incurred, you are not guaranteed to find oil. In Iraq the costs are low and the fields are already there.”

Iraq currently pumps around 2.4 million barrels a day (bpd), of which 1.8 million is exported. But although the industry overall is seriously dilapidated, Oil Minister Hussein al-Shahristani is confident that output can be ramped up to an ambitious six million bpd, although he openly admits that US$50 billion will be needed to achieve this, along with the help and technical know-how of the international oil companies (IOCs). But there are still stumbling blocks: the long-awaited

hydrocarbon law, a bone of contention between political factions, has been deadlocked for two years, the industry itself is in dire need of a skilled workforce and technology to boost production, while many facilities and pipelines have been sabotaged or damaged. “I would say the oil industry is on its feet at the moment but the question is what needs to be done to get it to a brisk walk?” says Mills. “Iraq needs to rehabilitate refineries, explore new reservoirs and then extend the pipeline and port capabilities in order to export, so the IOCs will be key because this needs significant investment.”

Meanwhile, the autonomous Kurdistan has signed contacts with overseas oil companies to extract hydrocarbons, much to the anger of Al-Shahristani who has branded these deals as “illegal”. Tensions

GREASY PALMS atchdog group Transparency International ranks Iraq as the world’s third-most corrupt country behind lawless Somalia and dictatorial Burma.

Since the 2003 invasion Iraq has been dogged by accusations of dishonest business practices, including allegations that government workers absconded with billions of dollars planned for reconstruction, military supplies and food. Two years ago, the former head of the country’s anticorruption commission, Radhi al-Radhi, suggested that some US$8 billion had disappeared. Iraq’s anti-corruption committee investigated 12,000 complaints of government corruption and discovered the worst departments are the ministries of interior, finance, defence, education and health. However, the committee admits that the investigation barely scratches the surface of what goes on. Iraq’s image has also been tarnished by the recent resignation of Trade Minister Abdel Falah al-Sudani amid allegations of corruption and embezzlement linked to the nation's food assistance programme. Meanwhile, Prime Minister Nouri al-Maliki admits that his country cannot prosper until widespread corruption is snuffed out – a seemingly impossible task as it stands.

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‘NOTHING TO DECLARE’

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t may not be the obvious destination for European and North American sun-seekers, but a trickle of tourists are tentatively venturing into Iraq to discover its unique culture and stunning archaeological sites firsthand.

Bizarrely, for US$220 a night newlyweds can even spend their honeymoon in the late Saddam Hussein’s bed at his former palace south of Baghdad. Geoff Hann, owner and Managing Director of Hinterland Travel, recently returned from a 15-day tour of the country accompanying eight American, Canadian and British tourists. He says curiosity fuels visitors’ decisions to go: “Iraq has been in the news so much over the past few years so people want to come and see things for themselves, as well as take in the archaeological and Islamic history.”

This was Hann’s first organised tour since a self-imposed hiatus in 2003.

“We stopped going because of the kidnappings and killings so this trip was a learning curve for us.” For Hann and his group, fears over security and getting bogged down in administrative matters were the biggest headaches but he insists that these issues didn’t spoil the trip. “The clients were prepared to put up with anything,” he recalls, “And they needed to be because the infrastructure is quite bad and the checkpoints can be extreme at times, which leads to delays.” Hann says the trip was an overall success and has a second tour earmarked for October.

world.” Security costs for IOCs and contractors with a significant physical footprint run in the range of US$8000 to US$10,000 a day, according to Ciszuk.

A large proportion of the recent bombings in Iraq have targeted oil installations. With the IOCs on their way in, there are serious concerns that a deadly bombing and kidnapping campaign could surface. “You have to analyse it on a case-by-case basis; structure your business plan accordingly with respect to your security precautions and security costs,” is Mills’ advice to foreign oil firms. “In vast reaches of Iraq the environment is what the military would call permissive. The military itself does not wear military gear and has declared these areas as safe, particularly such areas as Najaf, the south, Kurdistan and areas of Baghdad.”

The sky’s the limit Any oilman entering the country will invariably do so by air. And one of the most vital aspects of the recovery effort will be the expansion of routes and regional airports, together with improved security at Baghdad International Airport (previously known as Saddam International Airport). This gateway to the country was an important travel hub in the Middle East in its heyday before UN sanctions were imposed during the 1991 Gulf War. The national carrier, Iraqi Airways, used to fly to destinations all over the world until the embargo forced the fleet, with their distinctive green and white livery, to languish on runways and in hangers for 12 years, like relics of a bygone era. Baghdad and other Iraqi cities were scrubbed from destination boards in most major overseas airports, too.

Recently however, several of Europe’s major airlines have tentatively expressed an interest to resume flights. British carrier bmi says it is “ready and willing” to begin services between London Heathrow and Baghdad by summer 2010, which would be the first commercial flights between the two countries since the Gulf War. The only direct link currently between Iraq and Europe is provided by Austrian Airlines.

Iraqi Airways is soaring again too, with new planes on order and new routes planned. It recently launched a scheduled flight to Stockholm, Sweden, and plans are in the pipeline for other European and Middle East destinations. Improved technology and facilities are being installed at the capital’s airport, too. Abdul Wahab Teffaha, Secretary General of the Arab Air Carriers Organisation (AACO), is buoyant about Iraqi Airways’ future. “I believe the foundation is there for a successful and powerful airline that will make its mark on the air transport scene in the Arab world. Iraq is a rich country that is also extremely rich in culture and historical heritage, as well as having a large diaspora.”

The International Monetary Fund predicts

6.8% growth for Iraq in 2009

Tourist Tina Townsend snaps away during a visit to the Cross-Sabers Monument in Baghdad’s Green Zone between Iraq’s leaders and the Kurdistan Regional Government (KRG) are strained to say the least. For the time being, the IOCs are busy preparing and submitting their final bids to the Iraqi oil ministry for the technical service contract (TSC) award ceremony at the end of June.

Those that land the highly sought-after contacts will be weighing up the costs versus the risks of venturing into the unknown. “Business in Iraq for oil and gas companies remains far from straightforward,” explains IHS Global Insight’s Senior Analyst, Samuel Ciszuk. “Despite the dramatic improvement in security over the past two years, Iraq still remains one of the most unsafe business environments in the

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“You cannot deny that there are business opportunities and attractions [in Iraq] so there will be traffic” ABDUL WAHAB TEFFAHA Secretary General of the Arab Air Carriers Organisation (AACO)

Teffaha goes on to say: “You cannot deny that there are business opportunities and attractions so there will be traffic. It will not be like the Big Bang but gradually, however long it takes, Iraqi Airways will get out of this situation.”

Apart from improving security, Teffaha is perturbed by the dearth of trained aviation personnel in the country and says it could very well bring the industry down to earth with a bump. “They need to plug the gap after being isolated for 35 years because of wars, embargoes and working in a very precarious situation,” he notes, “but before this Iraqi Airways had an excellent engineering base and a modern fleet.”

It’s the same for the airport, says Teffaha. “Baghdad International Airport was a state-of-the-art airport when it was built and although new equipment can be easily purchased it is more about the people who will be needed.”

Those business chiefs brave enough to venture into Iraq through Baghdad International Airport after the coalition forces toppled Saddam were all too aware of the problems awaiting them. Even before passengers touched down on Iraqi soil the aircraft would land using a steep corkscrew manoeuvre in a bid to avoid rocket attacks from surface-to-air heat seeking missiles. Then once through customs they had to negotiate the 12km stretch of road into the city that gained the notorious tag of the most dangerous stretch of highway in the world – a white-knuckle ride avoiding roadside bombs, insurgents blowing themselves up and the common-or-garden drive-by shooting. Many high-ranking officials and VIPs sought the sanctuary of the heavily fortifi ed Green Zone by means of helicopter. Others stumped up as much as US$3000 for a ride in an armoured car to their hotel.

Today, the situation is much safer but with increasing numbers of executives, contractors and government officials flooding in, the dilemma of where to stay is proving rather a headache.

Iraq needs tens of thousands of additional hotel rooms to cope with the influx but this will take time. Luxury hotel group Rotana is already devel-

oping a hotel in the Kurdish area of Erbil but has announced its intentions to open a fi ve-star development opposite the American Embassy inside Baghdad’s Green Zone. The move left people in the industry “astonished”, says President and CEO Selim El Zyr. “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.” . Rotana, which manages a portfolio of 67 properties across Middle East, says its 250-room Baghdad hotel, due to open in early 2012, will cater to diplomats and visiting businessmen. As well as the British and Australian embassies, the new US embassy is located inside the zone and is the largest (the size of Vatican City) and most expensive in the world. Up to 5500 Americans and Iraqis work and live there, although more than half are security professionals.

Apart from hotels and accommodation for foreign workers and visitors, there is a chronic shortage of housing. It’s thought that Iraq needs between two and three million new housing units. This could lead to a whopping US$35 billion of foreign investment in real estate for 2009, according to US-based Dunia Frontier Consultants. Likewise, Mills suggests this shortage will fuel a sharp upswing in construction projects: “You will eventually see a building boom because there is a need for several million housing units and there is the development of a nascent mortgage industry to support this.” He even foresees Dubai-esque development. “Over the next five to 15 years the capital will be redeveloped and you will see a core of office towers in downtown Baghdad – similar to Sheikh Zayed Road in Dubai.” Quite whether Baghdad will ever be lined with shiny skyscrapers piercing the clouds remains uncertain. But there is no getting away from the fact that 10 years from now the capital and country could be unrecognisable. With coalition troops withdrawing and investment pouring in, Iraq is coming off its life support machine, but the crux of Iraq’s recovery will depend on longterm peace and the government being able to squeeze every drop of profit out of its abundant natural resources. And, of course, drumming up the right levels of foreign investment. “Iraq has potential to become either the second or even the most vibrant economy in the Middle East,” suggest Mills. Watch this space.

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CONSTRUCTION

FIRST OFF

THE BLOCKS

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From the moment it touched down in Dubai in the 1970s, Drake & Scull International has appeared untouchable, raking in a series of lucrative contracts that saw it become the first specialist contractor to list on the Dubai Financial Market last year. Diana Milne meets CEO Khaldoun Tabari, and tries to find a chink in his armour.

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hen it comes to timing, Drake & Scull International is bang on the mark. The mechanical engineering contractor was the first on the scene in Dubai, arriving in 1973 just in time for the start of the country’s dramatic transformation from desert outpost to global giant. Last July, 35 years on, it launched an IPO on the Dubai Financial Market, which was 101 times oversubscribed and raked in US$325 million for the company. Unbeknown at the time to Drake & Scull, it narrowly missing coinciding the launch of its IPO with the sudden downturn in the UAE economy, which would have resulted in a very different outcome for the facilities management aficionado. “The IPO has been exciting because it was so timely,” says Drake & Scull CEO Khaldoun Tabari. “Right now the market is prohibitive in the sense that there is no money out there,” he goes on to say, adding that the company has, as a result, shifted its focus away from Dubai to other parts of the GCC, in particular Abu Dhabi and Saudi Arabia. “Two or three years ago we had a boom in Dubai but now it has come down and it has levelled off,” he says.

Dubai-based Drake & Scull is one of the biggest beneficiaries of that boom – with an order book currently estimated to be worth over US$1.4 billion. It is working on 35 projects and in the first quarter of this year its first quarter profit rose

A sample of the GCC projects Drake & Scull International has worked on

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ABOUT DRAKE & SCULL Drake & Scull International is an integrated end-to-end by a massive 162 percent compared to the previous year, to US$21.2 milservice provider in the field of electrical and mechanical lion. To date it has worked primarily in the UAE on iconic projects that have engineering and has provided solutions to customers since recently included Dubai Festival City, Jumeirah Beach Residence, Zayed its inception in the UAE in 1966. Its expertise in mechanical, University and Rashid Hospital. And despite the downturn, the orders keep electrical and plumbing (MEP) contracting spans from flooding in; in May it was awarded the US$62 million mechanical electrical providing complete solutions through design and and plumbing (MEP) contract for the Kingdom of Sheba build to Engineering, Procurement and development on the Palm Jumeirah bringing the total Construction (EPC), and civil contracting value of its projects there to over US$380 million. In the services across the UAE as well as “Libya is an same month its civil contracting subsidiary, Gulf Technical Infrastructure, Water & Power (IWP) solutions emerging market.

Construction Company (GTCC), was awarded a US$27 miland across the Middle East and North Africa.

It has been in lion MEP contract for the Mangrove Place project on Al isolation for some Reem Island in Abu Dhabi.

Exiting the comfort zone

time because of the sanctions that were put on it. These have now been lifted”

While its luck hasn’t run out yet, timing-wise, Tabari says he knows it’s time for the company to change its strategy and seek opportunities outside its domestic market. The GCC construction industry has been dealt a harsh blow from the global economic downturn with some estimating the total value of the industry has more than halved from US$1.5 trillion in July 2008. It is time for Drake & Scull to identify where the next big opportunities will be and to ensure it beats the competition to get a place there. One of those countries is Libya. It hopes to set up an office there by the third quarter of this year, pending board approval, and Tabari describes the potential in the country as “humungous”.

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“Libya is an emerging market. It has been in isolation for some time because of the sanctions that were put on it. These have now been lifted. There are a lot of foreign and private investors already there. It is a little bit risky but things are getting clearer and we believe the potential there is humungous because of the lack of infrastructure of any kind there, whether it’s water, power, schools, hospitals.

So there is huge potential for contractors from anywhere there.” Saudi Arabia will also be an important market for Drake & Scull International going forward, says Tabari who describes how the country shares Libya’s lack of infrastructure – a gap his company hopes to fill: “We are looking at projects in Saudi Arabia related to colleges and healthcare. There’s a lot of

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work going on out there and for us it’s only a matter of time. We are putting in a lot of effort then hopefully we will achieve success there. It’s a country which is going to spend a lot of money on infrastructure such as hospitals, schools, water and power, which is mainly our business.” The company also has projects in the pipeline in Jordan and, further afield, in Thailand.

Tabari acknowledges however that regional and global expansion won’t be easy particularly due to the logistical challenges of recruiting enough manpower to work on the projects and shifting that manpower across different sites: “It’s difficult to get countries’ permission to move workers from one area to the next. In the UAE we take it for granted. We’ve got the people, we get a job, we man it and we do the work.

But when you go to work, for instance in Qatar, you have to start all over again. You might be able to transport senior management, say ten or 15 people. But contracting needs thousands of workers.” He goes on to say that exiting its domestic market will mean the company won’t enjoy the financial advantages of being a domestic company that it has enjoyed on its home turf: “Anytime you go to a new country and you ask for credit it becomes difficult and it favours the contractors locally if they are available. Fortunately [in the UAE] we as Drake & Scull have special abilities which makes life easier for us, Being for instance in high rise buildings or having built so many water treatment plants or district cooling plants. We have the edge over the local contractors who haven’t done it.”

Infrastructure focus As well as shifting country focus Drake & Scull is also focussing on different areas of work as the downturn reduces demand for what has traditionally been its core business, MEP. As demand for this relies on new building projects, Tabari says he expects turnover from this to reduce in 2009. However he says there will be increased demand for Infrastructure, Water and Power (IWP) from less developed countries like Libya and Saudi Arabia which face increasing demand for facilities to support their growing urban populations.

“I would say the IWP division, power, water treatment plants, and district cooling plants, are the most significant parts of the business going forward and will give us the turnover and growth that we need. In terms of normal MEP work, I think in Dubai that is going south. In other words there aren’t many buildings being built. You are not going to find any buildings that are seven storeys tall coming up, at least not at the rate that they used to. So the MEP division that we have will definitely lose turnover but this will be more than compensated for by the growth we are seeing in IWP.” He goes on to say that Drake & Scull’s acquisition of civil contracting firm GTCC in 2007 – which led to the subsidiary’s turnover increasing from US$13 million in 2005 to over US$108 million

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in 2008 – has proved a considerable advantage in the IWP area: “For water treatment plants and sewage treatment plants for instance, you need a civil contractor to do the infrastructure around that. The two go hand in hand and our acquisition of GTCC is right now complimenting our delivery mechanism by actually doing the project management for us on contracts for projects such as district cooling plants.”

Acquisition spree Drake & Scull now hopes to emulate the success of the GTCC acquisition by making further strategic purchases of GCC based companies. Tabari reveals that the company is currently in negotiations to acquire four companies in Saudi Arabia, Qatar and Oman: “They are basically in our line of business. One is a civil construction company to help us in our infrastructure projects. Strategically we feel that infrastructure is one of the main areas for our expansion going forwards. That’s why we are pushing hard on that front.” He goes on to say that the company

PEOPLE POWER Khaldoun Tabari, on how loyal employees have contributed to the Drake & Scull success story: “We have great people on board here and of course a long history of being in Abu Dhabi since 1966 and Dubai since 1973. The average person has been with us for over 20 years. That’s a lot for the Middle East. And especially considering that this whole boom is a recent one. So we have plenty of people that are committed to the vision and the strategy that we have mapped out for the company.”

hopes to complete the transactions in the third quarter of the year: “We are currently doing due diligence – financial and legal. We already have board approval to go ahead, subject to finalising all these issues. Then we will bring this to the board and hopefully by the third quarter we will have these companies under our wing.” These acquisitions form part of Drake & Scull’s strategy to achieve 25 percent growth in profits and revenue this year. “I think I have stated before to many people that we are expecting to achieve 25 percent growth this year and that’s going to come from acquisitions and from introducing ourselves to new markets such as Libya and Jordan,” says Tabari. “I think Drake & Scull has a fantastic future ahead of it and that is just the beginning.” It’s a sharp departure from the company’s 40 to 60 percent growth last year, but still a highly ambitious target given the economic conditions in the region. Let’s hope, that on this occasion Drake & Scull’s timing isn’t wrong.

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FOOD PRODUCTION

“What we are trying to do here is change the perception of Islam in the eyes of the world”

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A recipe for success Al Islami Foods has ventured out of its domestic market and is hoping to tap into the US$600 billion global halal food industry. Diana Milne asks CEO Saleh Abdullah Lootah how it is faring on the international circuit.

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alal food is no longer a niche market. With 1.8 billion Muslims living worldwide it is a US$600 billion industry that is thought to account for 12 percent of the global trade in food products. Top of the halal game in the Middle East is Al Islami, which since the 1970s has produced and sold halal meat and dairy products across the region and now the world. In 2007 it reported an increase in sales of 40 percent and this year, despite tough economic conditions, it is opening a US$16 million state of the art 8000 square metre factory in Dubai’s Techno Park. This increased production capacity will help the company to achieve its aim of a US$1 billion surge in sales by 2011.

Spreading the word While these figures speak volumes about the company, CEO Saleh Abdullah Lootah says he believes the real mark of Al Islami’s success is the impact it has had on public perceptions of halal food. Outlining what for him is a labour of love, Lootah says: “What we are trying to do here is change the perception of Islam in the eyes of the world. It’s a big challenge we’ve set ourselves. But we have to do it because governments, individuals and businesses all have a responsibility to change the perception of Islam, which it has not been perceived properly in the eyes of the world. When you mention Islam or a Muslim product people tend to perceive it as either backward or not up to the mark.” Part of the problem, says Lootah, is that the halal food that has been available for worldwide consumers has not been of a high enough quality.

This is something Al Islami plans to change by selling its products across Europe, and has already established a presence in the UK. Lootah hopes to now target the French and German markets: “There is huge potential for halal food in Europe. But the consumers have never been served properly in terms of products. We provide halal that

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ence then a trade convention to tell everyone we’re here and we mean business.”

The expansion of Al Islami’s business across different territories means that now is the time for the company to ensure that it has standardised systems and procedures in place across its operations. Lootah says it is currently engaged in setting up these processes, both on the technical and commercial sides of the business: “We want to make sure that we have solid standards, processes and procedures which can be followed and implemented in all of the countries where we operate. On the technical side this means logistics, warehousing and distribution and on the commercial side, it’s marketing, merchandising and point of sale materials. It will make our lives much easier if we don’t have to re-invent the wheel everyday.” is the best in terms of variety, standards, quality and taste.” He goes on to say that Al Islami is in the “penetration phase” in Europe – and is currently in the process of placing its products with supermarket chains and setting up distribution networks.

Home base Al Islami’s efforts to penetrate the European market go hand-in-hand with its continuing march across its primary market, the GCC, which it hopes will be the main driver behind its $1 billion increase in sales. Lootah says it is particularly keen to penetrate the Saudi market where it is currently also in the preliminary stages of selling its products through local supermarkets. He does not foresee, however, that the country will be an easy one in which to establish a business, despite the huge demand there for halal products: “There is huge potential in Saudi Arabia. It is one of the biggest markets, I see, in the GCC. The problem is that it’s not an easy market – it is a tough one to operate in. The competition is very tough and it is not like Dubai where you can come and do your business easily. There is a lot of paperwork and logistics involved in setting up there. But whoever manages it will take a major market share.” At present, however, he admits Al Islami has not yet cracked the market – or properly announced its presence there: “We are not excellent in Saudi. We have not seen the growth we want to see because we have not invested enough in terms of marketing. We need to make sure the product is in all the supermarkets and make sure the distribution is happening. Then we will do our big bang activities which start with a press confer-

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The sweet taste of success: a selection of Al Islami’s products

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Branching out Another reason why Al Islami must standardise its processes is that it is also diversifying its product range and setting up stand-alone outlets rather than relying on supermarket sales. In the GCC it is concentrating on a chain of fast food outlets it acquired two years ago called Al Arooj Fresh, which it hopes, says Lootah, will rival multi-national chains across the region. There are 16 currently in the UAE, two in Lebanon and Oman and Al Islami plans another 10 branches this year. “We want to bring some-

“Obesity has been increasing in the GCC and everybody has a responsibility to tackle the problem – producers, government regulators and stakeholders” thing that can compete with the multi-national companies. I’m talking about companies like KFC and McDonald’s. I think that we provide something unique and different to what other people offer. We are working very hard on a facelift of the brand, changing the management and setting up standardised systems. We will open branches wherever the company’s products are sold today.” In a separate project, Al Islami is also setting up hot dog stands across the UAE at schools, airports, and shopping centres.

As well as tackling the fast food market Al Islami’s next big area for expansion is stand-alone butcher shops. It is currently setting up shops within supermarkets, leasing the space there and exclusively selling its own products. “At the moment the concept is a shop within a shop,” says Lootah. “We’re hoping in the future to have standalone butcher shops.”

The strategy now, says Lootah is to bring all its business into each market it enters: “Wherever we grow we’ll be growing with all the different businesses we have. The decision will not be if we should bring that business to the market, it will be when.”

Ironically, given Al Islami’s push into the fast food market, it is very involved in campaigns to reduce obesity in the GCC as part of its corporate responsibility strategy. Last year it launched the Good Food for Better Life marketing campaign, which included the setting up of an anti-obesity forum and advertising campaigns around nutrition and healthy eating and the promotion of Al Islami’s halal production methods. “Obesity has been increasing in the GCC and everybody has a responsibility to tackle the problem – producers, government regulators and stakeholders. We need to discuss the issue openly and come up with recommendations on how we can avoid these problems. We want to make sure we have given something back to society,” says Lootah.

This philosophy goes back to Al Islami’s aim not just to change people’s eating habits but to change hearts and minds. But as demand for halal food grows worldwide there’s not getting away from the fact that Al Islami is on the cusp of becoming a key player in a multi-billion dollar industry. n

The launch of the Al Islami Meat Shop chain

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AVIATION

Cheap thrills Accounting for just five percent of all air transport in the Middle East, the budget sector has the potential to reach new heights. Andrew Cowen, CEO of rising star Jazeera Airways, is confident his business can capture a greater market share in these turbulent economic times as passengers give legacy carriers the cold shoulder in favour of budget alternatives.

BY JULIAN ROGERS

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ow-cost, low-frills air travel is a somewhat nascent market that is gradually filling a void in the Gulf’s aviation industry. For years, legacy carriers ruled the skies until a wealthy investor and successful businessman stumped up the cash to get a budget airline off the ground in Kuwait. Founded in 2004 by Chairman Marwan Boodai, Jazeera Airways was the first privately-owned airline in the Middle East, ending a 50-year dominance in Kuwait held by national carrier Kuwait Airways. The results have been impressive too: Kuwait Stock Exchange-listed (KSE) Jazeera has flown 3.6 million passengers since it first took off in 2005, while profits soared last year by 94 percent to US$15.3 million compared to 2007. It boasts a fleet of eight leather-seated Airbus A320s flying to 29 destinations in 16 countries from hubs in Kuwait and Dubai, but will take delivery of another 32 aircraft between now and 2014. With this aggressive growth strategy it is little wonder that Jazeera is perceived as being a catalyst for popularising budget air travel in the region.

“This is an airline that is maturing and expanding,” CEO Andrew Cowen states confidently during an interview at his office in Kuwait. Cowen arrived six months ago to take up the newly created position after Boodai decided to relinquish the duel Chairman/CEO role. “I previously built an airline [Sama] up from scratch in

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Saudi Arabia and took it as far as I could,” says Cowen, “So Marwan wanted me to take over the day-to-day management of Jazeera and take the company through the next stage of its development.” Cowen, who describes Boodai as a “serial entrepreneur”, says the Chairman’s investments [under the Boodai Group umbrella] are about identifying gaps in markets. “The low cost business model was spreading across the world so he though ‘why not the Middle East’?” According to Cowen, his Chairman quickly cottoned on to the fact that the aviation industry in Kuwait was ripe for liberalisation and it seems investors were falling over themselves for a piece of the action, too. Boodai raised US$34 million through an initial public offering (IPO) that was oversubscribed 12 times. At the time, one in 25 Kuwaiti citizens owned a slice of the company.

Reaching for the stars Even after Jazeera’s rapid ascent and last year’s impressive results, Cowen still aims to be flying 60 percent more passengers this summer compared the same period in 2008. “Although that might seem very aggressive growth, we are playing to consumer concerns that they need to watch their money a bit more,” he remarks.

“Given these more uncertain times, we think the business model is particularly attractive and resilient and we hope to gain from this through significant growth and market share.” Indeed, with a global downturn exerting a vice-like grip on

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“The management team was able to ride the economic buffeting that we saw last year with fuel prices, which led to the profits we announced” business budgets the corporate bean counters are looking to save dinars and dirhams where they can. Jazeera, which aims to crowbar passengers away from the more expensive legacy rivals, has secured a number of corporate contracts for air travel, including National Bank of Kuwait. “We are seeing an awful lot of companies who have cut back on travel, but with their essential travel they are looking to book with Jazeera. With business travel bans and consumers looking to make their travel budgets go further, they perhaps find lower fares that much more attractive.” He goes on to say: “We wouldn’t say that we are the silver bullet but, if people are not travelling to make business deals then deals don’t happen, which contributes to the economic slowdown.”

Jazeera recently launched ‘Happy Hour’ on its website, allowing customers to take advantage of different selected reduced fares and specific routes between 1pm and 2pm, seven days a week until summer 2010. It’s about drumming up business on the less popular flights and meeting those

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going is fuel and this past year has seen crude prices spike at US$147 a barrel before plummeting more than US$100 in the space of a few months. Cowen says abolishing the surcharge was more sensible than slashing fares and confusing customers. The price of oil currently hovers around the US$60 mark but Cowen admits that a prolonged rise above US$65 could see the surcharge reintroduced.

However, to protect itself from a repeat of last summer’s crude price surge Jazeera has a 25 percent hedging requirement for the second quarter. “We want to protect ourselves against another oil spike so we have cautiously gone back into the hedging market.” Cowen explains. “I say cautiously because we are trying to avoid any speculative aspect as this is about limiting the business risk.” He describes hedging as a “doubleedged sword” when discussing how a number of airlines paid the price for wrongly hedging at the top of the spike. “They lost sight of the downside and took quite a financial hit. We think we have quite a robust hedging strategy and we try to take as much human guesswork out of it as possible and look at the momentum of prices and so on.” For the time being opinion remains divided on where crude prices will head next.

“Clearly there is a bit going on between worldwide economic conditions and productions cuts, particularly among the OPEC members, but quite where it will end up, we don’t know, nor are we going to use guesswork.”

Another particularly astute manoeuvre by Jazeera’s management was to take financial pressure off the business and lease the jets from Sahaab Leasing, established by Jazeera Airways, DVB Bank and National Bank of Kuwait Capital.

This separates aircraft ownership from the day-today management of the business. Cowen likens this system to how some global hotel chains operate. “Intercontinental Hotels sold off all their properties to specialist asset or property management companies but still maintained the management contracts on those properties. There is recognition here that different skills are required to operate an airline versus operating and financing an asset.” The leasing decision was a shrewd move because it took costly aircraft off Jazeera’s balance sheet. The timing was excellent, according to Cowen: “When all these things came together it meant that the management team was able to ride the economic buffeting that we saw last year with fuel prices, which led to the profits we announced.”

LAST YEAR JAZEERA’S PROFITS SOARED BY

94%

ambitious passenger targets. “The reality for most airlines is that you have to work very hard to get good passenger loads and sometimes you get 24 or 48 hours before a flight and for one reason or another it is just not selling,” explains Cowen. “We only cancel flights as a last resort because it is very damaging for customer service so ‘Happy Hour’ is a way of saying that there is going to be cheap fares on a flight and passengers with time flexibility can take advantage of it, while for us it creates incremental revenue that wasn’t there before. Happy Hour has taken off very well because it suits students or someone wishing to visit a relative in Dubai, for example.”

The airline has also removed its fuel surcharge – another welcome move for customers looking to score a bargain. Any airline’s biggest out-

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Air wars While Jazeera’s profits for 2008 were impressive, Boodai and Cowen are all too aware that competition is going to intensify in the region. To reinforce this point, flydubai – a low-cost airline formed by the government of Dubai – is set to launch this summer.

The fleet will consist of just two aircraft but flydubai has made a US$4 billion firm order for 50 Boeing planes. It will join Jazeera and the likes of Sama, Air Arabia and Bahrain Air in flying to key destinations in the Middle East and North Africa. Whether or not we see more airlines, especially those privately-owned, turning up on runways depends on the GCC governments, suggests Cowen. “For more airlines to appear there has got to be aviation deregulation, says Cowen, “And places like Kuwait were very forward thinking with this by allowing Jazeera to come into being. However, it is unlikely that the current number of budget airlines will stay at the current level – there is almost certainly going to be more but how many exactly is hard to tell.”

But could the legacy carriers be about to launch a counter strike in a bid to stop their budget rivals from cornering the market? In the previous issue of BM, Qatar Airways CEO Akbar Al Baker said he was against the concept of low-cost airlines but would be forced to launch a budget business if Qatar Airways’ market share became significantly eroded. Time will tell if the turbulent economic conditions hasten this decision.

However, with two thirds of the people currently residing in Gulf states registered as expatriates and for-

eigners, air travel can only blossom – especially low-cost travel. Cowen is relishing the opportunities that lie ahead. “There is still a huge amount of opportunity for this airline because low-cost penetration is only around five percent of the market in the Middle East,” he explains. “In Europe this figure is 25-30 percent so there is no reason in my mind why we can’t see the same level of growth for the low-cost model – not least in the current economic conditions. It comes back to businessmen and women, or Joe Public, looking to reduce their costs. Budget airlines facilitate this and so help keep the economy moving,” he concludes.

THE SERIAL ENTREPRENEUR Marwan Boodai, founder and Chairman of Jazeera Airways does more than just oversee a burgeoning airline business. His family-owned Boodai Corporation is a Kuwait-based group of diverse companies involved in engineering, transport, construction, logistics, energy, shipping and more. The group was established in the mid1950s to supply equipment to the oil exploration industry but quickly diversified into one of Kuwait’s most dynamic corporations. With a 3500-strong workforce, the group has a strong presence in the Middle East and has offices in Europe and Japan.

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QATAR CALLING

TELECOMS

Qtel (Qatar Telecom) provides coverage to over 560 million people in 17 countries and has 57.5 million subscribers. BM hears from Head of IT Salman Al Mannai to find out how technology will help it to reach its aim of becoming one of the world’s top 20 technology companies by 2020.

How is IT helping Qtel to meet its business objectives?

Salman Al Mannai. There is no doubt that the major acquisitions, we have made over the past few years have enriched our IT experience.

This is evident in the way IT is directed today versus the way IT was used to do business four years ago. There is a paradigm shift in IT operations and IT approach towards addressing the various needs of both internal customers and external customers. Because the telecoms market in the region is opening up Qtel IT has gained new insights and experience through its interaction with other Qtel subsidiaries operating in these markets. At the same time, IT is contributing to the advancement of IT operations in other Qtel subsidiaries through the many Centres of Excellence (CoEs) established within the group.

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How high a priority is IT given by the management of the organisation?

SAM. IT is right at the heart of Qtel’s main operations, hence it is always given a high priority at all times. From an organisational structure point of view IT maintains a strong relationship with the core business units at all levels. When I first joined the organisation in 1989 the IT structure was very simple and there were just four of us working in the department. At that time it was described as Data Processing and was actually part of the finance department. Today we are very much linked to the business. Previously, if we went to the management and said we needed to spend some money on an IT project they asked a thousand questions. At that time people didn’t understand the business value of spending money on IT. Nowadays

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Salman Al Mannai

it’s the other way around. They come to us with the money and tell us to spend it. Our aim is to become more of an innovation centre, which suggests ways that IT can be used to improve the way we do business, and not just to develop modules for projects.

What new technologies is Qtel now planning to introduce to its customers and which do you foresee will be the most successful?

SAM. At the moment the biggest project we are working on is putting our services for our customers online and developing the self-

that our online services will be the most successful. We are trying to come up with different ideas. We don’t want to copy what everybody else is doing, we want to be more innovative and capture the customers from the heart. My anticipation is that going online will be our most successful project. We have also set up an Oracle CRM system.

We had some basic CRM systems in the past but today, in view of the competition, we find its more challenging to maintain customers with the systems that we have today. We are trying to develop a complete framework when it comes to CRM.

service concept. This would mean customers would no longer have to visit out stores to receive these services– they could just access them easily online. My anticipation is that this will be our most successful project yet. As well as improving services for our customers ,another reason why we are doing this is to prepare ourselves for more competition in the market. This will come not just from Vodafone operations in Qatar but from Zain, Orascom and Etisalat. Their target is the same – to capture customers online. My anticipation is

What new technology is Qtel planning to deploy to improve the efficiency of the organisation?

SAM. We are currently working on server consolidation and virtualisation. The more services you add on the business side, the more the complexity of the IT side increases. Because of this we have had to think about getting our house in order otherwise IT becomes messier, more complex to deal with and causes services to deteriorate.

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SAM. Just like any other telecoms operator, the magnitude of information we are required to process and maintain is very large, hence we have applied the proper technologies that can assist us in achieving our goals for maintaining the information. The challenge does not stop here however, as the business is growing exponentially. Despite the economical recession, we always find ourselves demanding more.

We deployed SAN (Storage Area Network) fi ve years ago along with the right quantity of processing power required. We are currently moving towards consolidation and virtualisation of the servers to minimise the systems management effort.

Shoveling such a large amount of data requires the right network architecture which is why we adopted the SONA (Service Oriented Network Architecture) whereby, the IT infrastructure is segmented in such way that the right service is deployed within the right domain to the right user segment at the right bandwidth. We are still pursuing new technologies in that regard in order to maintain an edge over the competition, which is an ongoing challenge. In terms of storage we started with megabytes then gigabytes and today we’re talking about terabytes. I’m not sure what comes next. Another challenge is that things change very rapidly. Coping with these changes is becoming more challenging than adding storage.

In order to do this we are trying to improve on our processes so that things won’t be delayed and to unify our IT systems so that they are common to all business operations. We are trying to come up with some standardised applications for standardised IT services across the group. But I don’t think we are going to see something tangible in the next two years. When you talk about consolidating IT systems, there is a cultural side to it. People do things differently in some markets where people operate. One of the most successful technology deployments we have had was the deployment of a Service Orientated Network architecture from Cisco.

How much is being invested to improve Qtel’s IT systems?

SAM. On the technical side IT makes up 20 percent of Qtel’s total domestic capital expendi-

How big an issue is IT security for Qtel and how is it combating this?

SAM. Confidentiality of information is not just an IT matter, it is engraved in Qtel’s policies. Gaining customers’ confidence implies that all information pertaining to customers must be maintained with a great deal of confidentiality. We also worry about how solid our systems are when it comes to performing against any malicious hacking attempts, and hence a reasonable degree of protection has been applied, that we review regularly. We have also recently awarded the ISO27001 certification that we are planning to maintain and enhance for a long time.

“In terms of storage we started with megabytes then gigabytes and today we’re talking about terabytes. I’m not sure what comes next”

ture budget. This is substantial compared to 20 years ago when we used to spend peanuts. Today we spend almost 2000 percent what we used to spend in the past.

What systems does Qtel have in place to successfully and securely store the large quantities of customer data it holds?

What business continuity challenges does the company face?

SAM. The main challenge we face is that the business is so dynamic. Things change so quickly and this always puts pressure on the IT resource to meet these ever changing demands. Often as the business changes, projects are no longer available and new projects come on board in their place. These projects span multiple systems and some of those systems are not part of our disaster recovery plan (DRP). This is going to be our weakest link so we ensure that we regularly revisit our DRP and make the necessary changes to it to include those new projects and systems. We also have to ensure that the people working in other parts of the organisation are aware of the importance of the DRP and this has to be addressed as new projects come on board.

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HEAD TO HEAD DISCUSSION

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security safety net Blue Coat’s Nigel Hawthorn and ISIT AE’s Mahesh Vaidya give their verdict on what Middle East companies can do to protect themselves against cyber threats.

IT security is a key aspect of most organisations today. Could more be done by businesses in the Middle East to protect themselves and their networks?

Mahesh Vaidya. None of us would want our company making headlines for the wrong reasons, especially regarding a breach of extremely sensitive information. These breaches can be extremely expensive and even embarrassing. There have been very well publicised incidents of these breaches in the Middle East in recent times.

The Middle East might be slightly behind the Western world in implementing sophisticated information storage and security solutions.

It is still seen as a technological issue in several companies and processes and people related aspects within the IT function are not given due importance. However, the situation is changing and the banking industry is ahead in terms of having a better understanding of information, storage and security. In the absence of any regulations this issue is likely to continue as an afterthought for most organisations.

Nigel Hawthorn. Initial security threats were aimed broadly worldwide and they were often targeted at US internet users.

Now we are seeing threats that are ever

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more specific and addressed to individuals or specific organisations and countries, including in the Middle East. We can’t assume ‘it’s not happening here’ and turn our heads away from the problem. Middle Eastern organisations need to look at phishing and spyware as well as hackers. Many threats are based on financial gain and as the world economy stumbles, more people may be drawn to internet-based fraud, and so the threats increase.

What would you say are the main challenges organisations face today when keeping networks secure and warding off dangers?

NH. There’s been a lot of talk about hackers getting into organisations and outsiders are certainly a problem. However as we know, most fraud is conducted with the knowledge of someone inside the organisation. We need to ensure that we don’t allow disgruntled employees to cause damage to the organisation or external attackers to use lax security or social attacks to hit at our weakest point.

It’s amazing how successful a phone call saying ‘this is the head office IT group, we have heard of problems with your network access, can you tell me your password please?’, can be. So organisations need Mahesh Vaidya to train staff to recognise the potential

“The banking industry is ahead in terms of having a better understanding of information, storage and security”

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Blue Coat’s Nigel Hawthorn has over 25 years experience of computers, security and networking.

He has a strong technical background, has presented at security, e-commerce and networking forums in over 50 countries and contributed to a number of computing books on protocols and security.

“Most fraud is conducted with the knowledge of someone inside the organisation” Nigel Hawthorn threats as well as introducing policies and technology that can look for inappropriate use of data or accessing applications or websites that may harbour threats.

MV. IT governance, risk and compliance, confidential data leakages, unauthorised intrusions, viruses and worms still continue to be a problem.

Incorrect/incomplete processes and limited end user awareness is also a problem in several companies. ISIT is adept in the use of information security standards, such as ISO 27001 and having a thorough understanding of these guidelines helps us to position ourselves as a trusted advisor to our customers and to help them overcome these challenges.

How can companies protect themselves in today’s climate where storage devices are becoming smaller and the risk of staff walking off with confidential data is growing?

MV. We have a set of data loss prevention (DLP) solutions, which are creating quite a vibe in the market, especially in a business climate where lay-offs are commonplace. DLP technology, for example, can monitor and sometimes block employees as they try to send, modify or copy potentially sensitive data. We also have a range of solutions for remotely backing up data even over low bandwidth links using technologies like deduplication and encryption. Data on laptops can also be configured to selfdestruct in the case of theft of the device, hence minimising the risk of data loss.

NH. Remote workers can use similar technologies to those inside the organisation (such as web filtering against phishing sites and downloading spyware), in addition technologies that lock down PCs and restrict the use of RAM sticks and even remote printing

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can be implemented. But before that, the organisation needs to define policies about who can access what types of data and (as before) train staff to recognise the dangers lurking on the web.

Do you have a recent example of where your services were implemented successfully for an organisation in the Middle East and what the outcome was for the client?

NH. One interesting example is Woods Bagot, the architects who designed Dubai Waterfront properties, who used Blue Coat’s WAN optimisation solutions to allow employees to share content globally. They reduced WAN bandwidth by 60 percent while speeding up delivery of Microsoft Sharepoint 300 times and CAD files 50 times. A further unplanned benefit was management meetings, which can be conducted via videoconference, saving US$120,000 in travel costs (and a lot of wasted travel time) each time senior management meet.

MV. Yes, we have recently completed an Information Security Management System (ISMS) audit for a large enterprise in Abu Dhabi. This helped in uncovering gaps in both technical and non-technical aspects affecting the security of the company and developing a roadmap towards implementation of a secure information infrastructure. Tools like the risk radar charts and heat maps helped to depict their security landscape in an easy to understand but comprehensive manner. We also implemented the first electronic tape vaulting solution for a major bank in the UAE. The backup data is electronically moved between sites using sophisticated inline deduplication technology. This eliminated the risk of physically moving tapes between sites. We have also implemented a ‘storage as a service’ solution for another financial institution whereby they are backing up remotely to our partner data centre. This helped them eliminate the exorbitant costs of disaster recovery by having their data in an extremely secure location with the highest SLA’s but in a very cost effective manner with a pay as you go subscription based model.

Mahesh Vaidya, CEO of ISIT AE has two decades of experience in the industry and has been a pioneer in bringing innovative solutions to the Middle East to help customers store and secure their digital assets. He is also the Chairman on the SNIA Europe ME committee.

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ANALYST VIEWPOINT

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SHIFTING SECURITY LANDSCAPE Graham Titterington, Principal Analyst at Ovum, dissects the latest trends in IT security.

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T security remains a hot topic for businesses and IT professionals alike. It has consistently been close to the top of the league table of IT managers’ concerns and it is evolving at a rapid rate.

The IT security industry is developing new types of products and services in response to new business requirements and the deteriorating threat scenario, while changing how it delivers them.

We will look at these factors in turn.

Business requirements The loudest call from business to the industry has been for help in meeting the myriad range of legal, regulatory and compliance demands it faces. These require a business to secure its information, and to be able to show that its information is secure. The Payment Card Industry (PCI) standard has had a particularly large impact because it affects every organisation that handles payment cards (that is virtually every organisation) whereas other regula-

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tions have been more limited in their scope. The walls around a business are coming down. More business is being done over the internet, as opposed to simply using it to communicate and supply information. Internet-facing processes are performing automated transactions without human involvement. Employees are spending more time working outside company premises. Telephone calls often go over the internet and mingle with data traffic. Web 2.0 technologies are making it possible for outsiders to work with corporate data systems in a more interactive way, and to push data into these systems. The challenges of Web 2.0 are still not fully understood. Businesses are also becoming more concerned about the damage that can be done to their commercial operations and reputations through data leakage, or indeed by any visible security failure. These risks are increased by the poor economic climate in which cutbacks can disrupt operations and lead to demoralised or disaffected staff.

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• Security audit services: ‘Penetration testing’ services in which the service provider tests its client’s defences by simulated attacks, are required by the PCI standard and are therefore a growing area of activity.

• Activity audit and log analysis: You cannot eliminate all security breaches, but you can detect them when they occur. Computer systems produce log files containing millions of events each day.

Automated tools can sift and correlate these and show what has

A hostile world

The world, which is here represented by the internet, is a hostile place. Hacking has been transformed from a kind of sporting contest into a mainstream criminal activity driven by financial gain. The cyber criminal world is large and highly organised. There is really no such thing as cyber crime, but rather the criminals have found new ways to perpetrate lots of old world crimes on a larger scale. Law enforcement is hampered by the technical complexity of detection, the speed at which the criminals can change their strategy, “It is not surprising that the need to satisfy and the international nature of much of the activity. external regulators, to adopt new technology Attacks are growing exponentially in both volume and without incurring undue risk, and to stand up to sophistication.

The defence

more ferocious attacks is driving the security industry to offer new types of products”

It is not surprising that the need to satisfy external regulators, to adopt new technology without incurring undue risk, and to stand up to more ferocious attacks is driving the security industry to offer new types of products. The days when security could be equated to a firewall and an anti-virus product are sadly long gone.

The ‘hot’ areas where interest is growing most rapidly are: • Data leakage protection: Technology that detects, blocks or controls sensitive information that is moving around or leaving corporate networks. While most data leakage incidents are caused by mistakes rather than malicious intent, the consequences are often similar.

• Application protection: The opening up of IT systems to external use is causing the focus of protection to shift from the network to applica-

happened at a meaningful level, as well as raising alerts in real-time.

These tools are enjoying increased use, both as a specific requirement of some compliance regimes and as the ultimate check on information security.

Delivering information security

The evolution of the supply side of the industry is as rapid as its products. Maturity is bringing commoditisation to the more established product areas such as network protection and anti-malware.

An extreme example of this is Microsoft’s intention to make some of its anti-malware products free. The vendors are consolidating and we expect to see acceleration in this process in response to the economic Graham Titterington is a Principal Analyst at Ovum, downturn. Security is moving out of specialising in business continuity, IT security, and its silo and over the last few years we information storage. With 30 years of experience in the IT have seen the big IT vendors buying industry, Titterington has contributed to a wide range of companies to increase their range Ovum research including taking leading roles in producing of security offerings. This is largely reports on identity management, web services security, the result of realising that secubusiness continuity, networked storage and e-business rity depends on good management security. practices in the wider sense and it is therefore sensible to integrate security planning into IT management.

This view is consistent with leading management frameworks such tions, data and servers. Application protection is being enhanced both as ITIL and COBIT. Finally we are seeing a trend to deliver security by placing greater attention on developing applications that are inheras a service rather than by selling software products or hardware ently secure, and by using an ‘application firewall’ to filter communicaappliances. Remotely managed services are provided by the security tions going in and out of the application. SQL Injection attacks through vendors, but will increasingly be delivered by ISPs and telcos. They database applications to steal corporate data are still one of the hackers’ provide pools of expertise and economies of scale, although at the favourite weapons. Applications can be made more secure by improved lower end of the scale this comes at the expense of fl exibility. development processes such as those that have been published by leading ISVs, by using code analysis tools to check for bad coding practices, and by adding security testing to the pre-delivery QA procedures.

• Protecting mobile devices that have been lost, including laptops: Two complementary approaches are enhanced access control and encrypting data that is stored locally on the device – and indeed on removable media.

The future Economic crises always increase the rate of change as we shall see in the security sector. However in a hostile world the demand for security can only increase and we will continue to see rapid innovation from a shrinking supplier base.

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INDUSTRY INSIGHT

The latest authentication technologies bring major security and business benefits says Vim Vithaldas of Datapoint.

Voice biometrics and voice analytics – the road ahead atapoint’s expertise lies in using voice biometrics and analytics to enable security strategies designed to eliminate fraudulent commercial activities such as identity theft, credit card fraud and money laundering. Security services such as the police, Ministry of Defence and border controls also benefit from these technologies by using them for security clearance and tracking the voice component of phone calls and video footage for content analysis and identity verification.

Voice biometrics is unique within the broader family of biometrics technologies in that the person being authenticated does not need to be present for the purpose of identification and verification. This makes it a perfect solution for any organisation that needs to allow employees, partners and customers convenient but secure access to confidential data. For those with the need to develop the highest level of security such as banks, voice biometrics is a key component in striking the right balance between risk and customer convenience. Speech analytics is another powerful voice- based solution that has transformational potential for any organisation that needs to identify and respond to the embedded intelligence usually locked within call recordings that are typically collected in customer service or security environments.

Phonetics-based speech analytics has the ability to process recordings at extraordinary speed and therefore opens up the opportunity for extensive mining of archival material to pinpoint any combination of keywords that are contained in the voice records.

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Voice biometrics and the finance sector Customers wishing to enquire and obtain information from telephone banking today, have to navigate through multiple passwords and pin numbers. With voice biometrics, not only can we save call centres time and money,

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we can also ensure customers get access to their accounts efficiently and securely by using their ‘voice’ as a method of security. However, one of the most compelling value propositions in this example is the ability to wipe out identity theft and fraud.

Your voice is unique to you and there is no way you can bypass the voice biometric footprint. An annual subscription to such a system costs anything from US$1-$10 per year, which enables the system to pay for itself within months.

Voice biometrics and state security Government and security business drivers could be: • Border control & E-Gate • Stop and search • Attempts to illegally enter a country • Entry into Hajj or Umra

The benefits of voice analytics Our leading voice analytics solution has the ability to index over 38,000 hours

of audio within 24 hours. It will allow law enforcement agencies, state security, telcos and call centres to analyse all voice calls in seconds – thus, searching for key words and phrases – taking the operator/agent directly to the point in the conversation where the word/phrase was mentioned. Examples of where this could be used include: to review staff and detect business trends in an enterprise call centre; in a bank to detect why customers are closing accounts; for the purposes of state security where the police have a subject under surveillance, telephone calls can be monitored, indexed and searched for patterns of speech.

Summary Voice biometrics can be adopted by organisations wishing for higher levels of security and built around existing applications. Target markets would be banking, telco/mobile operators and web-based payment platforms – working with enterprises, oil and gas and also government.

Voice analytics is applicable to any organisation wishing to search quickly on key words or phrases in real time that could and would compromise an organisation – both internally and externally. Target markets would be government, telco/mobile operators, finance, airlines, oil and gas, legal or any organisation with high call volumes that rely on contact centres for customer engagement.

Vim Vithaldas is the Chief Executive of Datapoint.

He joined the board of Datapoint in 2003 as CFO and became the CEO in 2005. Since then, Vithaldas has grown Datapoint organically and by acquisition whereby it now is one of the largest telephony systems integrators in Europe. Vithaldas has a background in law and chartered accountancy. Prior to joining Datapoint, he was responsible for raising finance in the housing industry.

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BUSINESS CONTINUITY

New age disaster planning In the face of global economic meltdown, Business Continuity Institute (BCI) Technical Director Lyndon Bird, asks whether Business Continuity Management (BCM) strategies will have to change?

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senior BCM executive for one of the UK’s leading retailers has a comment he often uses when people like me try to make the subject too complex or too academic. He says BCM really should stand for “Basic Commonsense Management”. I have been reminded of this comment, made by Steve Mellish, Business Continuity Manager of Sainsbury’s, many times during the past few months as horror after horror has unfolded in the world’s leading financial institutions.

I am not so naive as to believe better BCM would have prevented the financial meltdown in itself, but I wonder why basic BCM principles were not adopted by organisations as part of their risk management philosophy. The reason, of course, must be that banks use risk management purely as a means of hedging financial risks whilst largely ignoring the context of those risks. After all, it takes very little financial expertise to understand that if money is loaned to people who have no means of paying it back and secure it against assets that have very little chance of realising the amount loaned on LYNDON them, there will be a problem somewhere down the line.

It also takes no great insight to understand that if you let highly intelligent but totally inexperienced mathematics graduates design a theoretical risk model that pertains to show that if you parcel up bad risk and move it around the world quickly enough it becomes safe, you might have a problem. Have top bankers, government regulators, central banks or even their political masters never played ‘pass the parcel’ or had to gently discourage their newly grown-up children when they suggest they should re-mortgage the house and gamble the proceeds on a spread betting website? Apparently not, because that is exactly what they have done in their professional lives.

Business continuity might not be as in-

tellectually challenging as risk management or as boringly grandiose as much of the box ticking that claims to be corporate governance.

However, if we believe Mr Mellish, it is doubtful if the application of basic commonsense (aka business continuity) would not have spotted these systemic problems and addressed them well before the dire financial consequences crystallised.

“BCM has everything to do with understanding your business properly” BCM is not a tangible commodity, so it can be difficult to understand the full benefits of the concept.

To see these benefits you only need to look at examples of poor planning. In the 1993 World Trade Center BIRD bombing, out of the 350 enterprises affected 150 enterprises went out of business. Years later, after 9/11 is some large businesses had learned lessons – Morgan Stanley, Cantor Fitzgerald and American Express were able to resume business quickly whilst other failed. However, what is generally forgotten about 9/11 that of all the companies affected the vast majority were small businesses relying upon the big name companies’ employees for their trade. It has been reported that of these small businesses, over 70 percent never opened again.

The same anonymous BCM global manager quoted earlier summed up an earlier attitude: “My current company is pretty enlightened in BCM terms but in one of my previous jobs at a large global investment bank, the Head of Treasury once told me not to waste his time on business continuity he said. ‘Every deal we make is worth hundreds of millions. We could make or break but we know how to manage the risks. So please do not talk to me about business continuity. I know business continuity – when the building falls over, I’ll roll my dice and make a call then!’” In a booming economy it is easy to think that sufficient resources are available to deal with anything that might happen. I don’t think many people assume that they can buy themselves out of trouble any more. When money is tight, you must not create situations in which unplanned large costs might suddenly occur. The best way to insure against that is to introduce proper business continuity, not pseudo-science risk models or the endless paper trails of corporate governance.

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IT SECURITY

A human fix The financial services sector often places much emphasis on the technology side of the business, but ultimately, all technology is only ever as good as the people behind it. BM speaks exclusively with David Lacey about the importance of managing the human element in information security.

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n David Lacey’s latest book, Managing the Human Factor in Information Security, he investigates the growth in social networking and the vital need for all enterprises to ensure that computer users adhere to corporate policies.

“Technology security is a big issue,” he explains, “and certainly we don’t place enough emphasis on it. In fact, over time, the balance between whether you need more emphasis on technology, people, or processes does tend to shift a lot.”

As Lacey details, there have been times in the past where the financial services sector has needed a ‘technology fix’, but at the moment he believes that the real problem lies on the people side. “You can’t get a perfect solution with people,” he notes, “you need technology as well. People make mistakes – they’re only human. And there will always be incidents arising from that.”

People can be easily fooled, for example, and Lacey stresses that there needs to be a lot of emphasis on people simply because they are behind everything: “People design systems: they supervise them and they operate them. They also attack the systems, and it’s actually people who then identify the risks, spot the incidents and then turn them around.”

Another important factor for Lacey is the issue of major incidences that can also be an opportunity for organisations. “There is a lot of publicity that comes with a major crisis,” he explains. “There is a lot of opportunity to transform the organisation – and it is possible that you can come out on top.”

In fact, according to research by Oxford Analytics, shareholder values for companies that manage a crisis well can actually go up quite significantly, by as much as 10 or 20 percent. It can also go down by 10 or 20 percent if the incident is managed badly.

“The key thing with people is that we’ve been going about the whole process the wrong way. We haven’t learned from areas like safety, for example, where there is a distinct no-blame culture. You do a root cause analysis of every major incident to find out all the different things that contributed to that, and

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MANAGING RISK you fix them. The safety field also realises that behind every major incident, there are, on average, 29 minor incidents, 300 near misses and thousands of bad practices.”

This is something that currently isn’t being done in the security field.

Here, professionals wait for a great big incident and then carry out a kneejerk reaction where a lot of money is spent to try and stabilise the crisis. “If you’re instilling the kind of blame-culture where everybody knows if they do something wrong, they’re going to be immediately disciplined and punished severely, then that’s the wrong kind of culture to promote. Behind every incident, there are many causes. It’s never just down to a single person and that

“Behind every major incident, there are, on average, 29 minor incidents, 300 near misses and thousands of bad practices”

David Lacey discusses the relationship between technology and the human risk element he starting point is to realise that the people who work in security and technology don’t have any training background on the essential sciences that are related to how we communicate in messages. I believe that communications need to be developed by communications professionals, not technology professionals, it’s much cheaper to hire a journalist than a security consultant. The question is, why are we using security managers and consultants to develop educational awareness material? What we need is a lot more emphasis on getting professionals in to support security people.

But it’s not just the psychology of communications that we need to understand, it’s also taking on better practices that prove to have longevity, like those within the safety field. And we, as security professionals, could learn so much. There’s almost a whole culture of reeducation that’s required in the area.

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becomes a big distraction in tackling the root causes of such crises.”

Lacey identifies that incidents are often the fault of varying layers of responsibility, and he stresses that organisations need to understand that people are going to make mistakes. He even notes that it is often the best staff who will make these mistakes because they are working harder, for longer hours and are under more pressure – particularly during this recessionary climate where layoffs and cutbacks result in harder work schedules for those left behind.

“If staff are working too hard,” Lacey explains, “they are more liable to make mistakes. If they’re not supervised properly then that’s another factor, and if they’re not trained properly or aware of the risks then that poses another problem too.” He also adds that badly designed systems, that are neither user friendly or ergonomic enough also play a role as a root cause of an incident happening.

termined, competitive, ruthless, aggressive and focused, and therefore it’s often the case that fraudsters do well within an organisation.

“Having said that, there are things you can do to bolster your defences,” Lacey continues, “and these include more rigorous background checking when recruiting people.” He also notices that organisations don’t do enough in terms of disciplining and encouraging people not to commit crimes, because everyone who commits a fraud tends to justify it to themselves. “Fraudsters have to rationalise why they did it, and they often believe that they did the right thing. Evidence shows that even serial murderers think they did the right thing for society. That’s how they live with their actions.”

Lacey believes that if organisations allow people to get away with the small things – like someone browsing inappropriate material and nobody Bolster your defence doing anything about it – it creates a climate that is encouraging people to take Insider threat is another major issue, and people processes are bethat one step further and commit a fraud. “People will only do something coming more and more important because of networking and its use in the wrong if they can justify it to themselves in some way and if they believe they’re workplace. “Networks connect people, and with the growth in social netgoing to get away with it. What we tend to find is, ‘acceptable use policies’ are working, you’ve now got a collective power of absolutely worthless within an organisation people to do things which they never could do and, oftentimes, people just don’t know before and therefore make mistakes on huge about them, they’re badly written or are inDavid Lacey is a leading authority on scales that they could never do before either. All comprehensible.” What’s more, they’re not Information Security management with of the centralisation of power and the powerful communicated properly through training, more than 25 years professional access an individual can have encourages insidnor are they enforced consistently. “So every experience, gained in senior leadership er threats and encourages external attempts to now and then, when somebody does enroles at Royal Dutch/Shell Group, Royal manipulate people inside. Because of this, there force one of these policies, it’s always a Mail Group and the British Foreign & are some really severe things going on. shock to the organisation, and it shouldn’t Commonwealth Office. Lacey is now a “The problem with insider threat is that it’s be that way; people should know what the freelance director, researcher, writer and very hard to actually differentiate a potential rules are, they should know exactly how far a consultant to organisations, venture crook from a high-flying, effective manager. They they can go, and they should know that they capitalists and technology companies. both show the same characteristics of being dewill be enforced consistently.”

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ASK THE EXPERT

Information lockdown Protecting your data from internal or external threats will dictate whether or not your business succeeds.

The utility of security tools MOHAMMAD MOBASSERI

evelopment in information communication technologies has brought about an accelerated information explosion and huge change in how information is being produced, processed, stored and communicated. Information is now being made available in digital format accessed via electronic networks such as the internet, and being stored or preserved in digital archives. In addition, digital information can be manipulated and disseminated very easily. Such forms of development have resulted in major concerns about the protection of digital information sources.

We will examine some key trends we are witnessing today and challenges organisations are facing to protect information from being stolen, disseminated inappropriately or misused. We will explore how technology can help secure information, and how industry has been benefiting from the security tools, standardised policies and practices.

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We will examine the utility of several cutting edge technology tools like Data Auditing & Protection (DAP), Data Leakage Prevention (DLP) and End Point security implementation and understand how they can help protect or prevent data theft. DLP is a cutting edge technology that monitors and prevents known content from leaving the edge of the enterprise via emails, web, or IM-type applications. Newer versions of DLP have also

“Digital information can be manipulated and disseminated very easily” started monitoring desktops and laptops to understand the type of data stored and track its movement to the edge. In contrast, DAP is a data centre technology that monitors how data stored in databases and fileservers is being accessed, to track and alert on data

breaches. Data auditing is helpful for monitoring and detecting when data breaches result in a loss or theft – mostly from critical databases that house customer or financial data. Data leak prevention monitors confidential data leaving enterprises, typically via email. For most enterprises, both technologies are needed, but it is worth examining the relative value of the technologies.

DAP can understand when a user accesses and retrieves sensitive content from the source such as a database. DLP can monitor when the content leaves the enterprise, for example when the user emails the content from his/her PC. In most of the recent data theft incidents, data theft did not happen via email leakage but by users who hacked into the database or had credentials to access the database. Such users could then carry out the data via disks, tapes, or PCs. DLP cannot solve this problem effectively since it may not have visibility into how data was accessed. DAP is intended to address this visibility hole. Additionally, financial or credit card compliance regulations require visibility and auditing at the stored data level – a capability provided naturally by data auditing.

Future trends Success in business will also be defined by the ability to protect business information despite volatile situations posed either by internal or external threats. Our consultancy teams often report that non-adherence to compliance standards is a niggling issue. In most instances, there is little we can do, as compliance standards are not yet mandatory in some organisations that we consult with.

We are making an effort to create awareness. I am sure that internationally accepted standards will soon be making their way into several work spaces across the Middle East region.

Mohammad Mobasseri is the Senior Manager at Comguard FZ-LLC. He has more than 15 years experience of hightechnology in IT Security for consumer and enterprise experience, holding key positions at several start-ups in the ME as Business Unit Director.

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INNOVATION

Cerf’s up In an exclusive interview, Vint Cerf, internet pioneer and current Vice President and Chief Internet Evangelist for Google, explains why infrastructure development is more important than ever in a tight economy.

hen Vint Cerf speaks about the web, people sit up and listen. Widely thought of as the founding father of the internet, Cerf, along with research partner Robert Kahn, designed the TCP/IP protocols that govern data transfer across the net along with its basic architecture.

In 2005, the pair received the highest civilian honour bestowed in the US, the Presidential Medal of Freedom – recognising the fact that their work on the software code put them “at the forefront of a digital revolution that has transformed global commerce, communication and entertainment”. For many, Cerf is as close as you can get to internet royalty.

However, it’s a title he’s reluctant to accept. “The internet has many fathers; there are lots of people who’ve contributed,” he says. “This is very much a collaborative effort, and over the history of the internet you’ll find that tens of thousands – maybe by this time, hundreds of thousands – of people have contributed over the years. This is one of those wonderful ideas where everyone has an opportunity to contribute – and they do! And that’s the real magic and power of the internet. It’s an open environment that everyone has an opportunity to share in and to contribute to, and that’s exactly what’s happening.”

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Indeed, the idea of openness and collaboration – and of sustaining the internet as an open network for consumer choice and innovation – is a subject close to Cerf’s heart. “Google believes in a very open internet environment,” he explains. “One where everyone has the opportunity to try out new products and services without discrimination. We also believe that you have a right to know exactly what you are getting. Suppliers of internet service need to be clear about expected performance and what you are paying them for.”

In Cerf’s view, the internet should be an egalitarian entity used by anyone and everyone, one where suppliers of the service are unable to discriminate against a user merely because of who or where that user is. “We are arguing that the internet should be nondiscriminatory in terms of its access, although we accept the argument that for larger capacity you may have to pay more,” he says. “What we are after is an open environment where both consumers and suppliers of applications are treated fairly.”

“The internet should be nondiscriminatory in terms of its access”

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Investment Naturally, in order to attain the open environment that Cerf is so keen to see happen, the infrastructure itself needs investment. But in a tight economy, are companies in the mood to invest in internet infrastructure? “We have a situation where the incentives for companies providing internet access are distorted by a natural desire to maximise

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their investment to the detriment of innovation,” concedes Cerf. “I think we need to provide adequate incentives for all parties, those providing underlying facilities and those providing value-added services, to have fair and nondiscriminatory access to the underlying bit-carrying capacity of the internet. Monopolising provision of service does not produce innovation; in fact, it sometimes inhibits it. People want to know why they should invent a new, less expensive solution when they are able to charge more money for their service by sticking with the old way of doing it.”

However, Cerf sees innovation as critical to long-term prospects, and as a result insists there must be some kind of incentive for investors to create the appropriate infrastructure. He believes that there will certainly be opportunities to find ways to invest in infrastructure, particularly in light of the current financial crisis. “Perhaps there are subsidies that could be provided? Maybe there are other tax benefits that could be provided? What we need to do is be creative about providing incentives for building infrastructure, and at the same time ensure that it is as openly accessible as possible to all parties who want to innovate on top of it,” he explains.

He likens the shared asset to a road system – everyone drives on it and the roads are used simultaneously by lots of different users – which is exactly how packet switching works. “Packet switching may be a way, like the road system, to allow people to share common infrastructure,” says Cerf. “From my point of view, in order to create broadband access there needs to be a financial or other business incentive, whether that’s R&D tax credits or credits related to revenue gained on new investment – if there are ways of providing incentives to business for creating openly sharable infrastructure, then that’s a hint of the direction in which one might go in this current climate where at least the present legislation is intending to provide a substantial amount of government support for investment in infrastructure of all kinds. Creating incentives for industry and the private sector to both build the underlying infrastructure and then participate in inventing new ways to use it is the direction that we want to be heading in,” says Cerf.

21st century infrastructure But away from the development of the internet infrastructure itself, Cerf sees great potential for expansion of internet services and applications. For example, during the Great Depression, President Roosevelt deliberately created a massive investment in physical facilities and infrastructure in the US, and Cerf believes that there is now a reasonable need and opportunity to do something similar in the current climate. However, he maintains that it is of vital importance to invent 21st century versions of those infrastructures. “I want to build the 2010 version of infrastructure,” he says. “So we need to ask ourselves technologically, what kinds of infrastructure could we build? What kind of infrastructure would create more opportunities for businesses to invent new products and services? In Roosevelt’s case he focused on this in the midst of horrible turmoil and joblessness; he saw an opportunity.

They say opportunity lies on the edge of chaos – maybe that’s going to be true today too.”

Ideas for the 2010 infrastructure include ensuring that every new mile of highway or bridge that is built has conduits built-in so that it

could carry fibre. This way the road wouldn’t have to be dug up later in order to pull fibre along that particular length of road. Other examples include the use of so-called Smart Grids. “For the first time in history, we may have the opportunity to not only adapt our supply of electrical power to demand, but have control over some of the energy-consuming devices in businesses and residences. We can communicate when to run the hot water heater or the air conditioning in order to moderate peakload demand, and if we manage the demand as well as the supply, then we may be able to avoid investing huge amounts of money in peak load capacity that we only use two or three percent of the time. Similarly, if we’re investing in new electrical grid distribution media, maybe that same framework will allow us to also invest in new high-bandwidth telecommunications facilities, fibre being an obvious example.”

It’s about exploring the possibilities, and at the end of the day Cerf sees huge potential in terms of the opportunities the internet opens up for the businesses of tomorrow. “I think what companies need to do is to examine the products and services that they offer and the means by which they make those things known to others and ask themselves how

THE FUTURE OF THE INTERNET?

Vint Cerf offers his thoughts: “Frequent speculation is that somehow as the internet gets larger and larger and more computers with more software and more memory flow into it that someday it will simply wake up and become self-aware. I am somewhat sceptical of this, although I will say that as we provide the internet with more and more information – and in particular the ability to experience the world the way we do through video cameras, microphones and sensors – the internet could potentially have a kind of sensory system like human beings do.

“The question is, ‘How does the internet experience that information?’ In a human being, the information is sensed through our neural system and then goes into a neural network in our heads.

The neural networks are extremely complex, and they are quite malleable. In fact, the imposition of sensory data into the brain physically affects the way in which the brain evolves. The internet could conceivably affect a similar kind of evolution, but it might require human beings to change the software because we don’t have self-programming systems at this stage of the game.

“I think, though – in my science-fiction speculative moments – that if the internet could interact with the environment in ways like human beings interact then we might someday actually find that the internet or its successor could become self-aware. For me that’s still science fiction. But you can certainly see on another axis here that – independent of self-awareness – the network and the sensory systems associated with it can handle much more information than any individual human being could handle and could process that information with all the huge computing power that’s available, and so that’s a different kind of intelligence than what you and I have.”

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the internet can enhance their ability to draw attention to their products and services – or even to deliver their products and services,” he says.

“Google is an example of this. Our business is the selling of advertising, but the advertising is incidental to the use that most people make of our products and services – they’re looking for information, and we try to help them find it. Take Google Maps or Google Earth, for example.

We didn’t get any direct revenue from the Google Earth or Google Maps system, although we have advertising related to it, and if people are there taking advantage of information that others have provided and also can see related information coming from our advertising, people click on the ads, and that generates revenue for us and sometimes also for the other people who provided the information.”

Business opportunities Almost invariably, improvements in technology lead to opportunities in the business world – whether by making it less expensive to provide a product or service, or by creating entirely new businesses or industries that nobody had ever thought of before. Cerf cites a couple of examples.

“Look at education. Here, the product is learning; but technology opens up new opportunities with regards to how you deliver it. For many years, the way you delivered it was by having a professor up on the podium and students sitting in chairs taking notes.

But we now recognise that not everyone can afford to go on a four-year course at a college and devote themselves exclusively to that.

Nonetheless, they still have to learn new skills and knowledge in order to maintain the edge that they need for the jobs they’re doing. So the university, which is providing education as a product, needs to package not only the four-year degree and the twoyear degree, but also the two-week special course or the part-time MBA program. In this instance, repackaging the product of education and delivering it through the network could be a very powerful revenue enhancer, to say nothing of growing a market that doesn’t exist compared to residential colleges.”

The second example is that of information sharing. “People increasingly rely on information in order to keep their lives organised, whether it’s calendars, keeping track of their stocks, or keeping track of medical records,” he explains. “Most people probably visit more than one doctor and have medical records scattered around on physical paper in different offices. This means when someone new asks you for your medical records, you don’t have an easy way of gathering the data. So if we had a common ability to record our personal medical records, we could supply that information more easily and accurately – making this information more easily discoverable and analysable is a powerful tool.”

Google has a number of applications that help people manage this information, such as Google Docs and Spreadsheets, and Cerf insists that it is the increased level of collaboration provided by advances such

as cloud computing that is making the difference. “Companies that are trying to help people analyse, evaluate and accumulate their information can take advantage of the internet – and in some cases, of what Google offers – to help people organise their information and evaluate and analyse it.”

The value of collaboration It is this quality that most inspires Cerf about working for Google – the company’s commitment to organising the world’s information and making it accessible and useful. “That’s an honest motivation,” he says. “It’s true. The company really believes that this is what it wants to do, and that’s what people who work for Google want to make happen.

I’m one of them, but just one of 20,000. It’s a wonderful feeling to have a company whose leadership believes that motto and wants to make it happen.”

He believes one of the keys to the organisation’s success is its ability to deal with scale – particularly given the rate at which information flows into the internet, the rate at which it changes and the rate at which Google has to keep track of that. The ability to manage all of that change and all of that increase quickly and responsively is really stunning,” he enthuses. “When you walk into one of the Google data centres, which most people are not gonna be allowed to do, it’s awe-inspiring. The physical scale of the facilities, and the number of machines that are made to work together – both the hardware and the software – is frankly mind-blowing.”

Cerf also cites the firm’s internal structure – the quality of people it hires and their ability to work together and share information – as important. “The willingness to share internal information with a fairly significant part of the entire company really helps improve its likelihood of success,” he says. “One thing I’ve learned about companies that are successful is that virtually every employee, whether they are cleaning the floors or the CEO and everything in between, has a pretty good idea of how the company makes money. And if people understand how the company works, then they can reasonably ask the question – and I hope they do – of whether what they are doing today is helping the company do what it’s trying to do.”

Ultimately, however, it is technology that really excites him. “For the first time in human history, computers are allowing us to magnify and leverage our brain power, whereas in all the previous history what we’ve done is magnify and leverage our muscle power,” concludes Cerf. “This is a big change in our human civilisation where we’ve mechanised something that never has been mechanised before.” And it is this – Google’s ability to leverage the power of the human brain to make it more capable than it ever has been in the past – that truly sets it apart.

“Creating incentives for industry and the private sector to both build the underlying infrastructure and then participate in inventing new ways to use it is the direction that we want to be heading in”

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PROJECT FOCUS

Crisis averted How to avoid the mistakes made by Google in disaster planning and business continuity

SKIP WILLIAMS

money and sustain it when there isn’t. Keep reading and we’ll examine how each of these questions are the foundation for your project and can lead you in the right direction.

Finding the right consultant

n May, Google suffered a service outage that led to worldwide internet slowdowns and left millions with limited or no access to critical business functions like email. The real story, though, is not the outage, but why a company controlling almost two-thirds of the world's internet search traffic didn’t have a better disaster plan in place, and how you can learn from its mistakes. We live in interesting times right now.

Everyone expects complete 100 percent ‘uptime’, but nobody has the budget to support those kinds of expectations. In business continuity and disaster recovery, there should be contingency plans put in place, but with today’s market it is tough to find the financing to have the redundant systems in place.

The job of a good business continuity and disaster recovery specialist is to build a plan (both recovery and project) that allows the company to maximise its effectiveness when there is

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It isn’t uncommon to be sceptical of a consultant, which is why we have seen their title change from ‘Consultant’ to ‘Managed Service’ over the years. Most people feel that a consultant is simply there to punch the clock and not exactly geared towards results, even though they are being paid a lot of money. How do you find a good one? Read on to learn more about what each project should entail to ensure a good result from your consultant.

Know your business As you work in, manage or own a successful business, you already know what solutions work best for you. Are you an ‘online’ office? Is your entire office paperless? Is your office full of paper and do you “need it” to operate? Or is the bulk of your workforce mobile? The answer to each of these questions requires very different strategies and very different solutions to ensure the best chance for recovery. Your disaster recovery or business continuity plan should reflect the manner in which your regular business operates.

Keep your options open All projects are impacted by advancements in technology and slowdowns in the economy; business continuity and disaster recovery are no different. Thus building a flexible recovery solution for your business is key. As with all contracts, avoiding being locked into one long-term contract with only one technology is essential. If you are looking for a solution that is going to grow (or shrink) with your business, make sure your contract allows for flexibility. Any good service provider (software or managed services) should be able to determine a solution that works for you. If you feel they are pushing service on you, consider changing to a vendor neutral provider.

To recap the above paragraphs, let’s outline the major points: • We need to do due diligence on our proposed consultants • Also, it is critical to have set deliverables for a set price • Find a solution that works for you. It can be very simple or very complex, but make sure it works for you • Whatever you choose to do is better than nothing, but it must work for you (and your company) As budgets are at the forefront of everyone’s mind right now, when researching a solution provider, make sure they can offer a solution that works for your budget. There are a lot of providers that will sell you on overkill, but there are also a lot of providers that will give you an excellent solution for less than you are expecting. Find a solution that works for you and make sure they have a good history, they offer a flexible solution and you like them because you might be working with them for a long time! n

Skip Williams is the CEO of KingsBridge Disaster Recovery.

KingsBridge’s sole focus is building disaster recovery and business continuity plans for your business with its Microsoft Office integrated Phoenix software or its managed services.

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BANKING

LESSONS IN BUSINESS Difficult times call for new approaches. For IT, that means getting out of the back office and talking business, says Gulf International Bank CIO Seb Kacary.

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n a recent survey conducted by the Economist Intelligence Unit, 59 percent of 360 Middle East executives surveyed said they had been prompted by the financial market turmoil to scrutinise their risk management practices in greater detail. This demonstrates the need for having the organisation as a whole understand the importance of risk within the banking arena. Certainly within Gulf International Bank (GIB), we’ve taken great steps to highlight and improve the risk appreciation across the board, so we can see the importance of getting more thorough processes in place and more targeted technology to support those processes.

To foster a culture of risk management, education is fundamental from the outset. We’ve been fortunate enough that because of the crisis, people understand the need to have the group in the corner covering risk management. But now they understand full well the importance of that group and how it can support both the trading function and the operational function of the bank.

A perfect fit The IT function of managing the business need for speed and the innate slowness of risk is done by getting the right technology in place, right now. It’s about understanding technology that’s fit for purpose. Too often, organisations, banks in particular, over-engineer solutions and over-engineer the process to support those solutions, and you need to have something far more slick and targeted to understand how the business performs and how it wants the information available to it.

Finding the technology that’s fit for that purpose is about getting the right people in place who understand the processes, how to measure the risk and understand the scope of our business and what we need to support that. It’s about getting the right people educated in order to get those tools in place. Too often, you have a salesman selling you a tool or a chief executive reading about a technology, which becomes implemented and

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then you find that it’s not fit for purpose. So you need to get the intelligence in the organisation, or draft it in, in order to properly set out what’s required and what you need to build.

From a technology point of view, one of the most important things that we need to do is have all the requirements thoroughly mapped out and approved, and then make sure we have a full support structure around that.

That is far more important than what may be the new technology to support the business. It’s fundamental to get the right technology in place and have that completely supported, without having pockets of technology that evolve from the business.

Communication Building effective communication channels is vitally important.

Without those, if you don’t communicate with the business and you don’t let them know what you’re doing, the natural assumption is that you’re not doing a great deal. What they typically see is that you’re not prioritising their

requirements as highly as they would like you to be, yet you’re spending an awful lot of money on upgrades and software patches, and unless you communicate the importance of those, they don’t adequately see why you’re doing that. Building effective communication channels is key.

IT also needs to adapt to the corporate culture in which they live. As a department, they are quite often working as an island to themselves and have a view that they should be able to operate in isolation. Business doesn’t understand what IT are doing, and think we should just be left to work the way we should be working. But we need to look at how business operates. Are they a centralised organisation? Is it process driven? Is the company seen as a measurement company? Do they measure much more beyond financial records? Are they risk tolerant? And so when you understand that corporate culture, IT and business tend to work far more effectively together.

It’s important, not only for IT but the entire banking sector, to look outside of itself. I try to encourage my whole team to look at best practice

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across the board. A good example of this is Reuters. Since I began and held a position there, they have evolved quite remarkably as a company – however they’ve sought to allow technical staff to progress within a technical sphere and have that promotional capability, without them having to move into a management role that potentially is not suited for them.

It’s important for all of IT to look at best practice outside of the IT arena.

Some of the areas I’ve looked to introduce within IT are having a proper service management governance structure to bring in an ITO framework within the bank, which has been very successful. So we’ve implemented the processes, and now it’s implementing the tools to support those, which we’re having the fun part of doing now.

We’ve introduced a newsletter within IT as a means of fostering communication within the IT community. It’s a way of IT having something that’s purely for us. We can poke fun at some of the banana skin moments we have within IT; we can applaud good work. But we can also foster that communication across the organisation.

Security

Reliable resources Streamlining functions and becoming resourceful is one way of cutting costs within the department. It’s a similar thing that you’ll see across a lot of organisations, that the strands we’re looking at are predominantly simplification of the environment. So a lot of organisations evolved organically and found themselves supporting multiple applications and multiple streams with similar core functions.

They turned to Reuters as having a common platform, and it’s a similar process I’ve looked to instil within GIB to drive an initiative that was already ongoing, and pushing back a very complex network of applications that were meshed together into something that’s far better suited to the organisation we are now, and far more directly supports what business functions we have. Also important is looking at technologies such as virtualisation both from a server point of view – storage and desktop – and having the flexibility that affords us as a bank.

Difficult times such as these can often lead to both customers and providers neglecting innovation. In order to reduce impact from the financial crisis, we’re deploying a tactic of moving away from some of the over-engineered solutions that we had and moving to end solutions that are inherently reliable and robust because you build in resilience as part of it, rather than buying very large units that are fully resilient.

It’s more the provision of the technology rather than the technology itself that will flourish in these times. This will happen more if less organisations invest heavily in the bespoke applications for their sites, and far more organisations that are our size will look to buy software as a service or an ASP model to support their business and then look at how technology can support the integration of those services.

“The role of today’s CIO is still in flux from technologist to strategist”

Fortunately, the issues we have faced in convincing management to follow us with our ideas have not necessarily been true for us in terms of security. There’s been enough press and media attention related around issues of our IT security function and the lapses in security, and the effects have been positive – it’s almost done the job for us to a certain extent. It’s certainly not easy to get the funding for these initiatives, but there’s enough profile within the business now, and I’d imagine it’s similar in other organisations, that as long as we can justify and show the benefits it’s bringing to security, then we often have the approval to proceed.

From a security point of view itself, we no longer have issues – they’ve pretty much recovered from the early initiation of software as a service, where that was an obvious flaw. That box has been ticked now. However, software as a service doesn’t provide what we’re looking for, in terms of customising the applications. You need to integrate the customisation of the application, and that’s where we would struggle and any provider would struggle to support us as a bank. You almost need a larger bank providing services to smaller banks like us, or us engineering our solution and being a profit centre rather than a cost centre, being a software as a service provider to other banks.

Strategist The role of today’s CIO is still in flux from technologist to strategist. I think something that’s helped is that lot of organisations promote, pure technologists. They no longer hit a glass ceiling at a senior developer stage, and they can progress within the organisation. That helped stop the Peter Principle proliferating through IT, where 10 years ago it was very common.

“The problem is that people only really hear of the IT projects that fail, first off. If you went to most organisations, the vast majority of IT projects succeed, and typically they are within budget and within the agreed time scales”

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I strongly feel that the path that CIOs are following more and more now, is one where they’re becoming much more strategists than they are pure technologists. Along that path they need to pick up far more business knowledge, business education and look to stretch themselves a bit more. They are no longer looking at technology with their head down and only concerning themselves with providing a good technology solution, but are looking more at how the business is supported by that technology. And that’s what I think is becoming far more important.

Whether technologists have that experience comes down to whether each company wants their CIOs to focus purely on technology, which isn’t a bad thing – in the right situation and with the right people, they’re serving their best skills.

FEELING THE PINCH However, what we need to do is to move the IT function to work better with the business. You IT and operations are often one of the only makes us more agile, but also can need to have more of a strategic overview, and I first areas that the organisation will look contain costs. think it does come down, to a certain extent, to at to cut costs. When you work in IT, you Historically, business and IT have education, having more business education always see yourself as being one of the elements of distrust. IT didn’t do amongst IT. areas that will be approached first when themselves any favours from Y2K and Something I’ve introduced within GIB is havthere is a financial downturn. Sometimes the fiasco that was, and a lot of ing business talk directly to IT, which has gone that helps lead to an element of distrust business representatives haven’t down very well. It’s about having the opportunibetween business and IT. That’s part of forgiven IT for that yet. What’s ty for IT to listen to the people that are conductmy role – to try to build those bridges important in building that trust and ing the business and are on the trade floor and eradicate the distrust that’s created building those bridges is really laying talking about future plans, talking about how by that. But from the heyday we had a out to business representatives exactly well the business is doing, talking about issues decade ago, IT has been trying to rein what services we are providing for that they have, both with technology and outside back the costs and the over-engineering them. A key part of that is to build of the technology remit. It helps IT appreciate far that has been put in place across a large SLAs into what you deliver to the more exactly what business is all about and think number of organisations. From a customer without being too regimented of new ways in which we could offer solutions or structural point of view, we’ve completed into how you dictate those. However, if offer products that we could market within the an exercise to help contain the costs you’re leaving yourself open to the organisation. from a resource point of view, and now service you provide, you’re really You can always work to improve the gap it’s really looking at further instilling a leaving yourself open to failure as far between IT and sales – it’s mainly down to comstrategy across our technology that not as business is concerned. munication across the teams. It has suffered and still does suffer from the fact that you typically don’t have a seat on the board, as this is typically allocated through a finance, marketing or sales function, not IT. However, My view of project work is that the time spent upfront is the most imthat view is changing more and more, and IT is getting more representation portant time in any project, and that helps the project be a success. Too at a senior level because fundamentally it’s core to a lot of what businessoften with project planning and initiation, people try to cut corners, and es do now. From a sales function, it’s important in that there are channels they try to rapidly produce a business case or forget about the business of sales, be it effective internet for example, that IT could use to help the case. So it’s getting back to the basics, back to what we need to implesales function deliver the message far more cleanly and efficiently. ment, and to know what you’re implementing or the success criterias of The problem is that people only really hear of the IT projects that fail, what you’re implementing, a robust project team and project governance first off. If you went to most organisations, the vast majority of IT projects must be in place. succeed, and typically they are within budget and within the agreed time Most importantly in any project is communication. If those channels scales. But you can’t get away from the fact that certain high-profile proaren’t built and you don’t have a proper communications plan, you’re ultijects do suffer and are widely reported. mately going to fail.

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INDUSTRY INSIGHT

BANKING, THE ETHICAL WAY Islamic banking has been widely established as an ethical alternative to the conventional banking system. Software firm ITS hopes to help drive its adoption worldwide.

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ith the Western banking model looking pretty rough after a year of collapses and crises, even Pope Benedict XVI recently urged financiers to look at the Islamic system, where bankers are automatically more risk averse because they share the risks with the customer. This shows that Islamic banking is now ready to be re-branded as ethical banking, a system that could find new customers in the Western world and elsewhere, as well as its traditional home in the Islamic world.

The new focus on Islamic banking in the West comes just as ITS prepares for a global roll-out of its latest suite of banking solutions, called Ethix.

Going global Today ITS supplies more than 85 banks in the Middle East. In the past couple of years it has grown into Africa, and into the Far East from Malaysia to the Philippines. Its core expertise is in Islamic banking, but it also supplies into the conventional banking industry.

ITS has a lot of the Tier One banks as customers; it supplies conventional banks in Africa, Nigeria and South Africa.

“Conventional Western banks are looking to open up Islamic ‘windows’, especially with the global banking crisis,” says Haitham Abdou, Group Director of Marketing at ITS. “Islamic banking saw a boom starting a couple of years ago and we feel it’s been growing at about 15 to 20 percent here and globally. We don’t see that

slowing down. We’ve seen some of the Tier One banks such as HSBC, Citibank and ABN Amro, all establishing Islamic windows in their operations.” The ITS development centre is in Cairo.

We have about 1400 software engineers there.

We’re the only CMM level five software organisation in this part of the world. What we’ve done is put several products together whether they’re ours or third-party, and re-packaged them as one solution, which we call Ethix Financial Solutions. The focus is on ethical banking, which is the new term, really that is starting to be used for Islamic banking. This way it can cross the borders of the Western community.

Unique Sharia compliance The nature of Islamic banking means that every bank interprets what rules there ought to be. The problem that causes is that it

Haitham Abdou is Group Director of Marketing at ITS. He has over 15 years of IT experience in the banking and finance industry and expertise in IT strategies for financial institutions based on the latest service orientated architectures. His areas of expertise include: bank automation projects; branch delivery; core replacements; Islamic financing; AML; electronic banking; payment systems.

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makes building a rigid IT platform to administer all the different versions very difficult.

However, ITS welcomes diversity: “We don’t believe there will ever be a standard, and I believe that if there was one it would defy the whole point of an Islamic bank. I don’t think you could come up with a standard, for example, of how Murabaha [a type of sale compliant with Sharia, involving a declaration of the seller’s fixed costs, to be added to the price] is defined,” says Abdou.

What ITS has done, is create an Islamic platform which represents the underlying principles of Sharia. This then allows the client bank to define its own products from the ground up, from an accounting point of view, a product point of view, a line of business point of view, how the particular bank’s Sharia board wants to see it done and define the workflow completely from scratch.

ITS is preparing to market the product globally, and has now had its name registered around the world as a trademark. “Even conventional banks need to be more ethical,” says Abdou. “There are many components that fall under the Ethix brand, such as Ethix – finance, Ethix – Branch, Ethix – invest, Ethix – Ledger: overall there might be 25 different products under that banner. The good thing is, you don’t have to purchase all of that, they’re all components in the suite.”

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EXECUTIVE INTERVIEW

Perfect portfolio management

Hazem Elmalla of Advent Software outlines why Middle East companies now need to deploy portfolio management software more than ever before.

In a previous issue of BM you said that financial houses in the Middle East rely too much on legacy systems, often based on Excel spreadsheets. Do you still feel this to be the case?

Hazem Elmalla. We still feel that there are many major financial houses that rely on legacy systems and Excel for bookkeeping of their investments and some basic financial reporting. These organisations need to start by analysing their internal operations and identifying the key risk that threatens their business due to lack of proper systems and enterprise strength infrastructure. These risks can vary from lost data, erroneous data entry and inaccurate reporting calculations to the damaging compliance and regulation violations. Then they will need to look at their internal workflow between departments and work on introducing the proper systems to help with increasing efficiency and scalability to their operations.

What key trends are you witnessing in the Gulf, and what are the common mistakes being made by investment management organisations?

HE. We noticed that there are more and more investment management firms who are looking to diversify their portfolios by introducing hedging strategies and unconventional investment vehicles such as Derivatives and Swaps, as they realise

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that relying only on the conventional Equity and Fixed Income investments can expose them to major market risks and limit their ability to protect their clients and investors from events such as the current market downturn. The need for electronic trading capabilities is increasing. Exchanges in all countries are looking into offering these capabilities, if they don’t already. Firms need to have a relevant front office system in place in order to take advantage of this opportunity. This allows them to reduce manual work and cut down on errors, i.e. reduce cost and operational risk.

How are your products and services benefiting your clients in the region? Do you have specific examples?

HE. Advent offers the most tightly integrated sin-

gle vendor solutions available. These have been developed and delivered by professional experts with a broad and deep market understanding of the business requirements in the region. A solution like Advent Portfolio Exchange has enabled many of our regional clients to leverage the integrated client relationship management component to provide highly personalised client service that has helped them distinguish themselves from competition and attract new business. Moxy, which is the industry-leading order management system and part of Advent’s offerings to the investment management community, has helped many of our clients achieve true straight-through processing by automating key functionalities like portfolio modelling, rebalancing and trade order management processes. Also Moxy has the ability to route orders electronically utilising the industry standard protocol FIX which reduces manual duplications and errors by minimising manual intervention in the trading process.

What’s your vision for the market in the near future and how will Advent Software play its part in the Middle East?

HE. We see a challenging period ahead for our clients as the uncertainty in the markets continues, and they are being extra cautious with their budgets and watching their costs very carefully. At the same time these companies understand the importance of enhancing their capabilities to manage their investment operation efficiently and provide superior services to their clients while acquiring new businesses. Advent, as a technology partner, will make sure that we help our clients and prospects manage through this cycle to achieve their goals of controlling costs and at the same time growing their business. Our vision is that we continually demonstrate our commitment to the region with an expansion of our team in the Dubai office, which is now almost five years old, and also the opening of an office in Riyadh later this year.

Hazem Elmalla joined Advent Software in 2000 as an Application Developer and Systems Integration Specialist.

He now works as a Senior Implementation and Business Consultant. He was involved in the implementation, support and solution delivery for some of the largest firms in the asset management industry, and graduated from City University of New York with a Bachelor’s degree in Computer Science.

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RISK MANAGEMENT

/REWARD Fixed Income Risk Management Services (FIRMS) is a unit within Standard & Poor’s focused on providing financial professionals with a wide range of analytic insight, data and risk management solutions. BM meets David Samuels, the global head of Risk Solutions at FIRMS and asks how the financial downturn has affected organisations’ risk management practices?

What impact is the ongoing market volatility having on the business of managing risk?

David Samuels. As you can imagine, the current state of the markets and their ongoing volatility is having quite a dramatic impact on our clients.

They recognise the need for greater transparency in their risk management processes, as well as the need for implementing overall risk management frameworks within their organisations.

We are seeing a widening interest on the part of senior executives for improved internal risk management capabilities. Clearly, these executives recognise that they need to have a greater understanding about the risks affecting their businesses. Not only are they placing increased emphasis on having the right systems for assessing risk, but also on the right processes and the right people to evaluate risk across their entire business.

Do you think that the failings and the failures related to the financial crisis will change, how we approach risk in the future?

DS. I believe that many organisations are already mobilising to implement what we refer to as best practice risk management. Such organisations recognise that they need to have the right systems, processes and people in place to analyse and manage a wide range of risk in a proactive fashion.

For Europe, some of the incentive for better risk management is associated with the demands of Basel II, but it’s not the only driver. Not all best practices can be derived from a regulatory framework; some are derived from just looking at what other institutions have done and profited from.

This is why we’re seeing a significant increase among financial institutions and investors starting to implement comprehensive workflow-based solutions such as our Credit Risk Evaluator product. Credit Risk Evaluator ensures a complete and accurate picture of an organisation’s risk profile across the organisation.

In the wake of the financial meltdown, many have suggested that it was impossible to see it coming. Do you believe this to be true, or were there signs of what was to come?

DS. Our feeling is that no one system or process can predict everything.

However, with the right risk management systems, organisations are in a far better position to identify, mitigate and manage risk. Proper risk management systems can help organisations not only quantify the risk, but turn risk into competitive and financial benefits. It comes back to our overall mission within the business and being focused on our clients. Not simply to understand what the risks are, but how to turn those risks into an advantage for the business. There is a fundamental shift going on in the industry right now.

Do you see any significant trends in risk over the coming year? How do you predict the financial industry will respond to ongoing difficulties?

DS. We see several significant trends that are driving our clients and indeed the direction of our business.

The first trend is actually a continuation of one I have already mentioned.

We believe that senior management will continue to expand its role in risk assessment and risk management and require their organisations to broaden, improve and integrate this capability across the entire organisation.

Another trend will be the increased focus on risk management as a step in business improvement, not just control. History suggests that you have to take risks in order to grow your market. From this we can deduce that organisations that have effective risk management programmes should be in the best position to turn controlled risk into competitive advantage. We are already seeing many organisations come to us for help in putting in place industry best practices to avoid any number of the pitfalls that others are running into. n

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ANALYSIS

As competition for business hots up in the GCC, family-run firms can no longer afford to take their futures for granted, according to a new study by Booz & Company. BM investigates.

A family affair

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amily-run businesses are still going strong in the GCC – dominating most market segments. But as international players encroach on domestic markets and economic conditions worsen, these companies must modernise if they are to survive long enough for the fourth generation to take over. This is the verdict of a new study by Booz & Company, which identifies the challenges facing the family-run firms in the GCC, including the “restless entrepreneur syndrome” and the need to develop longer-term business strategies. The first step for any family firms undergoing this process is to re-evaluate their existing business portfolio and to, if necessary, shed parts of the business that no longer fit into the company’s long-term strategy. “The same discipline is required for the evaluation of new investments and may call for individual family member investments to be separated from the family firm’s activities,” says Joe Saadi, Chairman of Booz & Company.

One of the most important steps these companies must take, he says, is to recruit outside management to oversee this process of change as well as “change agents” whose interests are closely aligned with those of the business.

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Managing change Some of the world’s most successful companies are family-run with governance structures under the control of the original founding family. So far this strategy has proven effective, allowing companies to survive economic downturn, war and family feuds. Indeed, an index compiled by Credit Suisse found that between January 2005 and January 2008 family firms outperformed non-family firms in shareholder creation by 15 percent. “Our analysis of more than 100 family businesses reveals the most critical factor to their success is the families’ coordinated and sustained long-term strategy for growing and controlling their businesses,” explains Ahmed Youssef, an analyst at Booz & Company. He goes on to say that the corporate governance strategies of family run firms usually involve the exercise of patience in investing capital, the retention of companies through bull and bear markets, a focus on core businesses, and an emphasis on long-term performance over quarterly gains.

However, Booz & Company’s study points out that this method of operating will not necessarily continue to sustain family-run firms in the long term or overcome some of the challenges they face. Among these are the firms’ attachments to the long term businesses that define the legacy of the family but that may not necessarily still be generating profit. In this situation, the study claims, many families will retain the business just for the sake of preserving tradition. They also risk losing objectivity and failing to distinguish between family and business issues, resulting in conflict and badly judged commercial decisions: “The line between family and business activities is often blurred, thus making it difficult to calculate the real profitability of the business and increasing the potential for areas of conflict among family members,” says Youssef.

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The restless entrepreneur Another problem is the “restless entrepreneur syndrome” that can afflict members of family-run firms – the main symptom of which is a constant focus on new business opportunities rather than the insitutionalisation of the businesses once they have been created or hired. A survey by Booz & Company of 25 family-owned firms found that 48 percent of respondents were involved in five or more sectors. Another 40 percent were involved in three or four sectors and 12 percent in two sectors or fewer. According to Booz & Company, the “restless entrepreneur syndrome” was particularly applicable to companies that operate in strong economic conditions with limited competition and abundant capital to spend on new ventures. Economic conditions in the region have destabilised however and family firms also face additional challenges from the democratisation of the Middle East business world, which has seen international players enter the market bringing increased competition. This means that the time has come for them to address the profitability of existing businesses, stop investing in new opportunities and take an overview of their existing operations and what their long-term strategy should be. Booz & Company has identified four steps family owned firms should take in this regard: Revaluate existing portfolio of businesses to create sharper focus: When capital costs increase and management time is stretched thin, family businesses must focus on the best use of both by divesting or lowering the priority of some traditional businesses.

Let go of emotional attachments to traditional businesses: Family businesses must have the discipline to focus on the most advantageous use of capital and target fewer businesses to drive superior performance. Between 2003 and 2007, family firms that focused on one coherent sector outperformed those that didn’t by 5.5 percent per year.

Apply rigorous discipline to evaluation of new investments: Family conglomerates must create clear guidelines for new investments, focusing on scalability and relative return on capital and management time. Other businesses important to the family can be financed by funds that are independent of the business.

Build management capabilities and relinquish control when necessary: An essential element for an “immortal” family business is a talented management team that is able to grow the business independently of the shareholding. Family businesses must delegate control to the management team when required, eliminate the glass ceiling and create the right incentive structures.

In terms of family issues – and preventing these from affecting business decisions – Booz & Company advises firms to ensure there is separation between family and business activities, by creating a “family office” to handle such issues. It also urges these companies to separate the philanthropic activities of individual members from the business itself and to create a separate financial arm to specifically support

Ahmed Youssef the family members’ own business ventures. One the biggest “family issues” facing these firms is the fact that many are going through a transition period of passing on the business to the third generation. This, warns Booz & Company, creates greater difficulty in maintaining control over the business as a company formerly controlled by siblings is now controlled by cousins, leading to weaker family ties and obligations. It also creates pressure to increase the size of the business to support more family members. According to Booz & Company’s research team, family firms need to grow by on average 18 percent each year, just to maintain the same level of wealth across generations. Creating a formal governance structure for the company will help to ensure effective delegation and separation of activities but will also prepare the firm for successful transistions. A change agent may also be appointed who can oversee this transition period.

This is a critical time for family firms, with studies showing that 80 percent on average fail to make it through the third generation.

Given the vital role that family firms play in the GCC economy, it is crucial that they survive this transition and the challenges that the economic situation throws at them. Family ties have enabled these firms to become highly successful businesses. But unless companies adapt to the changing conditions around them, these ties could ultimately strangle any potential they have left.

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PROJECT FOCUS

Right on schedule NetSimplicity’s Nate Pruitt explains how streamlining scheduling resulted in better communications for Staples Canada. s Canada’s largest supplier of office supplies and a subsidiary of the world’s largest offi ce products retailer with consumer and business clients in 19 countries throughout North America, Europe and Asia, Staples Canada, Inc. is committed to making sure that buying office products is easy for clients around the world.

So when the company needed a room and resource scheduling solution, it’s not surprising that its top priority was that it had to be easy to deploy, easy to use and effective – just like the products it sells to small businesses and Fortune 500 clients around the world.

A company with a unique understanding of business processes and business solutions, Staples Canada needed a scheduling solution that not only met stringent requirements of ease and sophistication, but also reduced the costs associated with booking and scheduling.

“We maintain approximately 40 conference rooms within our building,” says Leigh Pearson, Facilities Service Manager for Staples Canada, headquartered in Ontario. “We were looking for a centralised application that would streamline the process.”

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to view schedules and request bookings – something they couldn’t do in the past. And with Meeting Room Manager, Staples Canada can do just that.

“The software allows for easy and consistent bookings to facilitate communication among everyone at the office, whether members are travelling to and from the various stores, or at home in the main office in Ontario,” says Stella Grgar, Meeting Room Manager Administrator for Staples Canada.

Staff members simply forward their requests to Grgar, who can instantly confirm availability and secure the necessary resources. Meeting Room Manager automatically sends confirmation notices to requesters, letting them know that the details for their meeting are complete. The reservation is then visible to everyone who can view Meeting Room Manager.

Streamlined, controlled operations

As a company which serves business needs around the world, Staples Canada knew that Cost control for success streamlining its internal room and resource As Canada’s largest supplier of office supscheduling process was key to efficiency – and to plies and business equipment, maintaining lower containing costs.

Nate Pruitt is VP of operational costs has been key to the company’s Now bookings and scheduling are centrally Sales and Marketing for success. That dedication has resulted in more than controlled, yet company employees can request NetSimplicity, a division of 296 stores across Canada and jobs for more than reservations and instantly obtain status with comAsure Software. Pruitt was 13,500 employees. plete visibility in a transparent, open process that previously the Regional VP Simplified scheduling for 40-plus conference facilitates better communication. of Eloqua Corporation and rooms and resources within the company’s main Staples Canada has centralised, consistent is a former analyst at Giga location would help Staples Canada continue its scheduling practices throughout its offi ce; a Information Group. growth trajectory and focus on its future success. streamlined, easily accessible room scheduling The company wanted software that gave it process; and a much more efficient use of rooms simple, intuitive functionality; a friendly, flexible and resources. interface; easy deployment; universal access at all levels of the orAnd, because there’s no wasted time when it comes to bookganisation; complete tracking of expenses; and flexible reporting. It ing and scheduling, like double-booked rooms or waiting to confirm also had to be sophisticated and scalable to accommodate the growwhether a room or resource is available, the company can focus ing company’s changing needs. solely on retaining and solidifying its lead in the office and business products industry.

Scheduling made easy “Meeting Room Manager has helped us by eliminating double After researching several room and resource scheduling software bookings and making the scheduling process easier,” says Pearson. applications, Staples Canada chose Meeting Room Manager. The comMeeting Room Manager is the easiest-to-use, most customisable, pany wanted centralised booking, allowing each person the freedom room, resource and appointment scheduling software available.

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CORPORATE GOVERNANCE

Playing by the rules There has never been more demand for the work carried out by the Open Compliance and Ethics Group as pressure grows on companies to improve their corporate practices. BM asks OCEG President Carole Stern Switzer for her verdict on the adoption of governance, risk and compliance by companies worldwide.

Can you describe the work that the OCEG does?

Carole Stern Switzer. OCEG is a non-profit organisation and our mission is to assist companies to achieve principled performance through the application of improved approaches to governance, risk management, compliance, internal controls and the integration of these functions in the organisation. We define what is right for the organisation by identifying the mandated boundaries.

These include the boundaries that are set by law and regulation, and also the voluntary boundaries that are set by the board and senior management of the organisation, which reflect its values, its culture, its appetite for risk and its desire for risk resiliency. We then identify what the organisation needs to do to ensure that it stays within those dual sets of boundaries while still moving as rapidly as it can towards the achievement of its business goals.

How do the current issues affecting the global economy highlight the need for companies to adopt better governance, risk management and compliance practices?

CSS. I think what we can see in the financial crisis is a lack of balance and the desire for short-term returns and immediate financial gains versus a longer term strategic view that would balance the well being of the organisation. What happens in organisations that don’t both establish their appetite for risk and their approach to risk and drive the understanding of that throughout the organisation, is that individuals at every level make risky decisions every day. They define the organisation’s appetite for risk. In this financial crisis, senior management made overly risky decisions, but they did so because they were not taking a holistic integrated view of what was best by balancing the well being of the organisation and ultimately shareholder value against that desire for quick high returns. When you’re engaged in a process of governance, risk and compliance (GRC) that is driving principle performance, you’re never going to lose sight of that strategic view and you’re never going to lose sight of the need to balance and understand the risk appetite of the organisation.

How much of the crisis could have been prevented if these organisations had better safeguards in place?

CSS. Well that’s hard to measure, but I sincerely believe that we would not be in the global financial crisis situation we are in if these major organisations had engaged

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in proper identification and management of risk. I don’t think we would be anywhere near it. Does that also mean that we might not have seen the extraordinary financial gains over the prior several years? Maybe we wouldn’t have, but I think we would be better off.

Do you think that these situations are going to prompt more organisations to put better GRC in place?

CSS. I’ve seen a lot of evidence that organisations are recognising that they need to be much more risk aware, and risk resiliency is becoming a really

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key factor. Right now you might think that companies would be tightening the purse strings and not engaging in improvements to risk or compliance processes or technologies because they are cutting funding everywhere and to some degree that’s true. But I’m hearing that more and more companies are still planning on moving forward and in some cases more rapidly with improvements around risk management and around technologies that support more transparency of information throughout the organisation because they are less able to withstand a failure now.

How much of a part does technology play in how companies can improve their GRC processes?

CSS. I think technology plays a very large role today in the way that companies operate in a global and very complex structure, but you can’t just throw technology at the problem. You have to follow a process that takes you through having appropriate oversight, having that strategic analysis in place about what the organisation wants to achieve and how it’s going to achieve it and what boundaries it must adhere to and what boundaries it accepts for itself. You then have to determine the processes and

“I sincerely believe that we would not be in the global financial crisis situation we are in if these major organisations had engaged in proper identification and management of risk” policies and then you can determine what technologies you need.

We’ve recently released what we call our GRC IT blueprint, and that identifies 72 different types of technologies that support different aspects of GRC. There is no one magic bullet. There are some very good over-arching GRC management platforms that have come to market in the last several years, but they don’t do everything. Also you cannot succeed if you don’t have clarity and the ability to move consistent information across the organisation for different uses.

What are some of the biggest challenges that organisations currently face when it comes to putting risk management and compliance practices in place?

CSS. The biggest challenge is historic development. Virtually no one is going to scrap everything they have and start from scratch, so you’re beginning with the challenge of understanding how things have been done in what we call silos of operation as they have grown over time, and a lot of things have grown over time in ways that you would never put them together now.

Organisations that have merged or acquired other organisations often have contradictory policies or procedures, duplicative technologies, or information that can’t be easily reconciled, so that’s the biggest challenge I

think. Another big challenge is that people are comfortable with what they’re doing in their limited role. People like their silos. People like their spreadsheets. People like to hoard data because it gives them a certain amount of indispensability to the organisation, and overcoming that resistance to change is a very big challenge.

How easy is it to recruit skilled professionals who are able to implement governance, risk and compliance measures within organisations?

CSS. In my opinion a good executive, anyone with strong executive skills can head up a GRC improvement process. I don’t think that it has to be a lawyer, accountant or auditor.

The organisations that have the most success with this are those where there is good and consistent communication between the Chief Compliance Officer, Head of Internal Audit and Chief Technology Officer.

These people have to function together as a team in order for the process to work. What we do find is that while these people need to work closely together, they have very different vocabularies. They speak very different languages in their professional lives, and so what we want to do is get them more comfortable with the language of each other’s roles. I think it’s helpful to have people who are well skilled in understanding the basic models like OCEG’s GRC capability model and that’s why we are in the process of creating an online course of recorded lessons that we call GRC fundamentals.

What is the OCEG doing currently to encourage greater adoption of governance, risk and compliance strategies among companies?

CSS. Well clearly the first thing, which really drives our mission, is the GRC capability model, and the GRC IT blueprint that goes with that model. We are also in the process now of beta testing something we call the Burgundy Book, which is basically a set of procedures that can allow a company to evaluate itself and to see how well its programme of following the Red Book, the GRC capability model, is going.

In the next month or two we are going to be adding a community feature to the OCEG website so that members of the OCEG will be able to join communities together around specific interest areas and risk areas, do polls or surveys and share sample policies. We have right now more than 20,000 people who are members of OCEG and they are in more than 40 countries around the world, and so we’re beginning local chapters. We’re beginning translation of the Red Book into Spanish, Portuguese and Japanese, all of these efforts are undertaken by our members in a voluntary way and so these community groups will grow as the members drive them to grow. n

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EXECUTIVE INTERVIEW

The benefits of good governance Darren Burrows of Create-Comply outlines the benefits of governance, risk and compliance (GRC) technology.

How would you define GRC? Darren Burrows. GRC technology is an architectural framework that enables all control functions to define, maintain and monitor risks and policies effectively, across the entire organisation rather than in silos. This engages with the businesses’ operational units, and enables the boards of directors to see a consolidated view of risk and compliance across the organisation.

What does a comprehensive GRC framework look like?

DB. Our product offering is a pretty good benchmark. It includes: policy management, risk and control, incident and losses capture and analysis, audit and assessment management and comprehensive document management. We have industry-specific content, dashboard reporting, the ability to integrate with multiple business applications, and the system is also available as a hosted solution.

“Turnover of staff introduces a risk that key knowledge is lost to the organisation. There is a need to do more for less and to be more efficient in the use of resources” You are providing content, not just the technology?

DB. We offer content for SAS70, SOX, MiFID, anti-money laundering, health and safety regulation, data protection, IT security, and other client-specific requirements. This offers clients reduced implementation time-frames as they do not need to manually add all the policy content themselves.

What is the impact of globalisation on GRC? DB. Boards of directors need to manage complex regulations in multiple jurisdictions. GRC technology enables them to ensure that all the local regulations and policies are captured and managed whilst also ensuring that group best practice is adopted in each locality, with consistent processes and business controls being observed. The ability to see consistent and consolidated reporting across all entities is also key.

Would a GRC solution have prevented the impact for firms of the current financial crisis?

DB. Business controls in place across the organisation to manage credit risk would have allowed attention to be focused where most required and for Corrective Action Plans to be instigated and effected. It’s a difficult economy in which to try and sell a GRC Framework!

For many institutions the business case for GRC is clearer than ever. Companies are faced with a wave of regulatory

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initiatives. Their boards and regulators are demanding more detailed and more timely information. Turnover of staff introduces a risk that key knowledge is lost to the organisation. There is a need to do more for less and to be more efficient in the use of resources.

But do you agree that it is still a big commitment to invest in a GRC application?

DB. It is, and now is not the time for “risky” projects. However, our application is genuinely multi-modular, meaning that customers can select which modules they want and which to prioritise, ensuring meaningful results in weeks, rather than a project which takes 12 months to implement.

Can organisations ever expect to achieve a Return on Investment (ROI) on GRC software?

DB. One prospect has 500 different business checklists, which can all be automated within the Audit & Assessment module. They spend 28 man days per month generating M.I. for management, clients and regulators, all of which can be automated using the embedded Crystal Reporting and Dynamic Dashboards. Their SAS 70 review costs nearly US$0.5 million annually, a figure which could be dramatically reduced by capturing all Control Objectives, Controls and Control assessments in the Policy Management module. Unfortunately, the ROI will not always be so obvious.

Finally, the Dynamic Dashboards look great!

DB. Thanks. These are on every C-Level executive’s wish list! They are fully integrated with our GRC software but they can also integrate with all your business applications ensuring consistent, highly engaging and intuitive reporting. It is a great addition to our product. n

Before joining Create-Comply, Darren Burrows, Managing Director, held senior compliance and risk positions at leading financial institutions and provided extensive consultancy and implementation-support services on governance, risk and compliance issues to companies in the EMEA region; including in respect of SAS70, SOX, Occupational Health and Safety, Data Protection, Operational Risk and Market Risk.

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The luxury collection After conquering the Dubai property market Nakheel is taking on the world with its own portfolio of luxury hotels. BM meets Nakheel Hotels’ CEO Joe Sita.

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HOSPITALITY

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nly in Dubai could a company acquire a hotel property portfolio worth US$4 billion in the space of just four years. But with the weight of its parent company’s brand and budget behind it, failure wasn’t an option for Nakheel Hotels. Today, the company’s portfolio includes 25 hotels across 18 cities, including joint ventures with luxury hotel giant Kerzner International’s Palm Atlantis hotel in Dubai and the One&Only resort in Cape Town. Nakheel’s close business relationship with Kerzner provided it with the leg-up it needed on the global hospitality ladder – and access not only to expertise and investment but to a highly lucrative brand name. Describing the importance of the partnership, Nakheel Hotels’ CEO Joe Sita says: “Our strategy has always been to be partnered in the luxury segment with the best of the best in terms of brands. So we have always had a very good relationship with Kerzner.

We’re the largest single shareholder in Kerzner and one of the reasons that we are invested in them is because of the strength of both the One&Only brand and the Atlantis brand. We find that the value of the real estate we invest in is significantly enhanced if you have a very high quality luxury brand like One&Only.” The latter already has a well established and loyal following among luxury hotel clientele, he says: “It’s interesting that such a small portfolio of hotels can garner such interest and such a loyal following from its marketing. I put that down very simply to the quality of the hotels in terms of the experience that’s offered in terms of the physical product, because every one of the One&Only products is absolutely stunning.” He goes on to say, however, that he has no wish to establish Nakheel Hotels as a brand in itself – it is an investment, development and asset management company that operates behind the scenes and behind the face of the operators it chooses to associate itself with. “Nakheel hotels is really a hotel investment and development company. We’re not a brand per se. Nakheel is a very well known brand obviously but as Nakheel hotels we’re a fully integrated investment, development and asset management company. We’re not operators of hotels – we invest in hotel companies and real estate, then we appoint operators such as Kerzner to brand and run the hotels for us.”

in the next five years. “We see great growth potential for branded budget hotels in the Middle East hence we acquired the master franchise from Stelios [Haji-Ioannou – founder of the easyGroup]. The Middle East is well known for its luxury hotels but we do see a significant gap at the lower end of the market in the branded hotel segment. There is certainly many two and three-star unbranded hotels in the Middle East but there are very few in the budget sector and we see great opportunities for products in that market.”

In Asia Nakheel Hotels also sees strong potential for budget hotels and has a 40 percent stake in a fund set up by Tune Hotels, a subsidiary of AirAsia, which aims to develop between 20 and 30 hotels in the region in the next three to five years. “Tony Fernandes, the founder of AirAsia, came up with a concept for a branded budget hotel company which he formed and called Tune, and everywhere that AirAsia flies to he’s planning to put a Tune hotel,” explains Sita. “We think this concept is extremely valid and lucrative, hence the reason why we’ve invested in this fund.”

Challenges ahead Sita admits that the company has had to put the brakes on some of its plans for Tune Hotels because of the economic downturn: “We currently have two hotels under construction in Bali and a number of other sites that have been acquired in Malaysia. Our plans for that are still the same but with the current economic conditions we’ve slowed down a little bit on that plan.”

It’s not the first time Sita has expressed concern about the effect of economic conditions on Nakheel Hotels’ aggressive expansion plans.

“Nobody is immune to what’s going on in the world and we’re no different”

Freedom of choice This strategy means that from a business point of view Nakheel Hotels is free to pursue any avenues it views as profitable without compromising brand values. This flexibility means it focuses on five distinct lines of business: luxury hotels, private clubs, equity investments, QE2 Enterprises and branded budget hotels.

The latter is a sharp departure from Nakheel Hotels’ most high profile properties, such as The Atlantis or the One&Only. Sita, however, says the company sees strong potential in the branded budget hotels sector. It holds the master franchise for easyHotel in the Middle East, North Africa and the Levant and plans to open around 20 branded properties across the region

Speaking at the Arabian Hotel Investment Conference in May this year, he said the company would not be making new investments in 2009, adding: “This year is all about survival. We are not out in the market [for new investments]. We are preserving cash.”

A month on, he says he believes that given the strength of the brands Nakheel Hotels has associated itself with it is well placed to weather the storm. However, he says the company is currently being hyper vigilant over its spending and is in talks with lenders about restructuring the considerable debts on its properties: “Nobody is immune to what’s going on in the world and we’re no different. But by virtue of the quality of the assets that we’ve invested in I’d like to think that we are reasonably well placed. We’re having our issues like everybody else. We’re focussed on very active asset management of our portfolio and we’re working with our partners to mitigate the impact of cash flow in all of our investments.

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We’re constantly looking at our overheads at our hotels. We’re talking to our lenders to find out how we can restructure some of the debt that we have on our properties.”

He reiterates also that the focus for Nakheel in 2009 is not on making new investments but on nurturing existing ones. “We’re continuing to look at how we might take advantage of the environment in terms of new opportunities that may arise. But certainly that’s not the primary focus at the moment. It’s all about looking after the assets we have and making sure we can continue to trade them properly.”

Grand gestures It’s a new note of caution for the company whose reputation is built on spectacular and often record-breaking real estate feats. The opening of the Palm Atlantis fea-

Djibouti Palace Kempinski tured a mind-bogglingly lavish US$24 million launch party – the most expensive in history with more than 2000 guests that feasted on lobster and champagne and were entertained with a display of 10 million fireworks – reportedly 10 times the scale of the display at the Beijing Olympics opening ceremony. The resort itself features 1539 rooms and was completed at a cost of US$1 billion in November – which given current economic conditions – was very bad timing. Sita maintains however, that the world still has an appetite for luxury and maintains, that the hotel’s launch has been a success despite the shadow that the downturn has cast over it: “It has been extremely successful. We are very happy with the way that it’s been launched. We launched it officially in November and despite the global economic conditions the hotel has traded exceptionally well. We had a tremendous March and a very strong April. So we’ve very pleased with how the property is performing.”

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From top: Fountainebleau Miami One & Only, Cape Town Fountainbleau, Miami Beachfront.

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He is hoping similar success will be enjoyed by South Africa’s first One&Only resort, which it opened in April in a joint venture with Kerzner International and which features two artificial islands and restaurants operated by the celebrity chefs Gordon Ramsey and Nobu Matsuhisa. It’s one of several properties owned by Nakheel Hotels in Africa, including Djibouti’s first five star hotel, the Djibouti Palace Kempinski, which was launched in conjunction with US$1.3 billion of investment in the country by Nakheel Hotels’ parent company Dubai World, which has included the building of a new port, free zone and roads. Speaking about the importance of investing in Africa, at the time of the opening of Cape Town’s One&Only resort, Dubai World Chairman Sultan Ahmed Bin Sulayem, said: “We see a bright future for this dynamic continent and continue to invest in Africa for the long term. We are delighted to add the One&Only at Dubai World’s own Victoria & Alfred Waterfront to our Africa portfolio. Our strategy is to work with the best partners and invest in high-end assets in key destinations around the world, which deliver real, measurable results. The One&Only Cape Town is part of that highly successful business model.”

A confident outlook The fact that Nakheel Hotels is still continuing to launch luxury properties is testimony to the success of its business formula, which Sita says is based on never diverting from the path that the company has set

itself on – and continuing to leverage strong partnerships with more established names in the industry.

“We have a very specific strategy in terms of the segments that we operate, both the luxury and branded budget segment, and we stay focussed on those two segments. We actively look for high quality partners such as Kerzner, Starwood, Tune Hotels and easyHotel. We don’t get too distracted from that and therefore don’t dilute our efforts over the whole spectrum of hotel products and that allows us to be very focussed and very successful in what we do.”

For now the company’s strategy is to focus on the new openings that are in the pipeline, including the opening of several W hotel properties: “We have a few hotels that are still under development. We have two in Thailand, both W hotels. One is the W Retreat and Residences in Ko Samui. which opens towards the end of Q1 next year.

We also have a W hotel under construction in Bangkok which opens probably Q3 2011. Apart from that we also have a W hotel under redevelopment in Washington DC, which opens in July. That’s fast approaching completion.”

Nakheel’s brash confidence as a company shines through in Sita’s predictions of future growth despite the downturn. But with a portfolio of super brands behind it – the company stands a pretty good chance of continuing the firm’s success story. n

“We have a very specific strategy in terms of the segments that we operate, both the luxury and branded budget segment” Joe Sita

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EXECUTIVE INTERVIEW

Information overload With organisations often wasting considerable time and money through mismanagement of documents, Kofax’s Thomas Senger discusses how to best capture and manage your all-important information effectively.

Why are capture and transformation technologies so important for organisations and how can they boost productivity and competitiveness?

Thomas Senger. According to a study by PricewaterhouseCoopers, companies spend US$20 in labour to file a document, US$120 in labour to find a single misfiled document, and a staggering US$220 to reproduce a lost document. The same study records in detail, that 7.5 percent of all documents get lost, while three percent get misfiled and on average each document gets copied 19 times.

These activities and their associated costs increase the cost of sales and cut directly into company’s margins. Lowering these costs has become a priority for businesses, retargeting related cost savings to new revenue generating activities. Advanced capture technology can solve this problem by eliminating tardy manual processes. Digital information can be easily shared with all subsystems and constituents of the respective business process.

However, capture and transformation is not only a question of pure cost reduction – and it’s not ‘only’ applicable to digitise information residing in paper. Solutions like Kofax Intelligent Capture & Exchange enable organisations to capture, enhance, intelligently extract and categorise relevant information from documents – regardless of their format – and then integrate the won information into a multitude of business processes. Furthermore, they enable automated notifications to the senders of the documents or any other involved instance. Resulting competitive advantages are not only related to reduced costs, but also to the ability to share vital information and collaborate quickly with suppliers and customers. Combined with the ability to meet governmental requirements around data accuracy, security, and auditing, information capture and transformation be-

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‘Proper Preparation Prevents Poor Performance’.

I couldn’t agree more that the right preparation is key to a successful automation project.

I would strongly recommend an in depth business process analysis; ideally together with an experienced vendor like Kofax or one of our business partners. Our professional services team is able to engage with clients throughout an entire project, from discovery and design through customising, implementation and support.

Thomas Senger is SVP of Applications Software & Services EMEA for Kofax. In this role he has full P&L responsibility for the entire region and manages a team of 150 sales and service employees. Senger reports to Alan Kerr, EVP of Field Operations.

comes a must-have for all organisations dealing with large numbers of documents.

What are the common pitfalls that businesses encounter with their business process automation efforts and what should they do to overcome these obstacles?

TS. The most important thing about the successful implementation of a new solution is definitely the right preparation, which will result in tremendous dividends down the line.

Industry experts agree upon the rule of ‘Ps’:

What key trends will we see in the capture and transformation market in the next few years?

TS. One of the trends we clearly see is best described as ‘from back office to front office’. In the past, the promise of document image capture has been to simply introduce a scanner to a workflow, and to scan at the point of the largest volume of paper (back office). While demonstrating already a huge improvement, back office solutions don’t necessary deploy the full potential of modern capture and transformation technology. Modern, transactional capture systems, seamlessly connected to the business process they serve, are able to provide a much higher value.

Organisations are realising the benefits of capturing information at the earliest point (front office), while pushing for information being captured at multiple points.

In addition to centralised, high-volume operations, capture systems will be present throughout organisations including mobile devices which is another trend we observe. By integrating small workgroup scanners, multifunction peripherals (MFPs) as well as handheld devices, capture systems will turn into enterprise solutions. Kofax, the leading global provider of Intelligent Capture & Exchange solutions, is one of the trailblazers in the development of easy-to-install and easy-to-use distributed capture applications.

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CRM FOCUS

The future of CRM Santosh Kumar Sinha of Frost & Sullivan describes why there is growing demand for CRM applications.

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he phrase ‘the customer is king’ has never been more apt than in the current market scenario. Global slowdown has forced companies to revisit their strategy and devise ways to boost their relationships with their customers. Companies are focusing more on retaining existing customers and increasing their loyalty to fight the economic slowdown. Getting more out of existing customers by identifying their individualised needs has become even more important. Concentrating on key customers in order to enjoy their continued loyalty is the strategy of companies across the globe. All this has brought Customer Relationship Management (CRM) services to the limelight.

billion despite economic meltdown. SAP has maintained its leadership in CRM followed by Oracle. Both companies experienced higher growth in their on-demand software compared to that in their on-premise software.

Riding on the increasing demand for Software as a Service (SaaS)-based CRM software, Salesforce.com has strengthened its market position further. There has been a significant increase in the demand for and acceptability of open source CRM software as well. North America and Western Europe are the largest markets for CRM software. Regions like the Middle East, Africa, and Eastern Europe have also registered high growth in the CRM market. In the Asia Pacific region, both India and China are attracting more CRM vendors due to long term growth prospects in these countries.

Global market landscape The CRM market has witnessed healthy growth rates in the past couple of years and the trend is expected to continue. In 2008, the market registered a growth rate of 12 to 15 percent and reached a value of US$9.6

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Recent trends Higher bargaining power and the demand for personalised products by end customers, the advent of new technology like Web 2.0 and cloud

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Open source CRM Open source CRM software has gained strength in the last two to three years. Ownership of code and the liberty to tailor different aspects of the software apart from a significantly lower price level has attracted many small and medium business houses to adopt such solutions.

The number of open source CRM projects are on the rise with more than 350 projects being listed on SourceForge Inc.

Social CRM Earlier, CRM was more operational in nature. Customer insights were used to increase the employees’ effectiveness in managing the relationship with customers. Today, the customer is demanding more personalised products and an individualised relationship with the company they choose to do business with.

CRM products have undergone remarkable transformation to meet this rising demand. Social tools such as wikis, blogs and enterprise mash-ups have been incorporated into CRM solutions.

CRM on mobile

“Today, the customer is demanding more personalised products and an individualised relationship with the company they choose to do business with”

Quite a few vendors have tried to make CRM applications available on mobile. However, the complexity of providing such functionality on small screen thumb operated mobile devices and slow networks has hindered the success of such attempts. With new devices coming into the market and greater adaptation of 3G as standard for mobile devices, vendors are expected to achieve a higher success rate in their efforts. The focus on platform interoperability is also expected to increase the penetration of such applications in future.

Future outlook

The future holds the promise of a high demand for CRM solutions.

However, clients’ increased focus on ROI and investment requirements for such solutions is going to increase in the coming years. Customers are likely to demand more clarity on pricing and a stringent case for the return on their CRM software investment. Reduced funds are expected to increase On-demand CRM interest in on-demand or SaaS-based models. This is expected to prompt Under this model, companies generally purchase a license to use the more vendors to offer such services and experiment with unique pricing software and the service provider manages the logistics and models, such as connecting the aphosts the infrastructure at his premises. Companies can even plication’s cost with the customer’s Santosh Kumar Sinha is Industry choose to rent a solution and then decide whether to purchase profitability to gain market share.

Analyst for the Information & the solution at a later date. With the software running at a cenVendors who are able to deliver high Communication Technology tralised remote location, on-demand solutions provide lower value solutions at low cost using inPractice, South Asia and Middle software implementation and customisation costs as well as novative models are most likely to East at Frost & Sullivan. faster implementation. succeed in future. n computing, strong focus on the ROI of CRM software, and untapped demand for medium and small segment businesses have prompted CRM vendors to look for new technology and innovative business models.

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INDUSTRY INSIGHT

Making savings with ERP business software Roland Rott explains how 2nd-tier business software can cut companies’ investment by up to 75 percent, whilst streamlining business processes, increasing transparency and delivering high value.

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n a normal economic climate, when striving to optimise their business processes and boost value, companies might automatically be compelled to choose a 1st-tier provider as their business software solution. Top market brands such as SAP or Oracle are widely believed to be safe and trusted choices, although they come at a significant price, require a lengthy implementation period, and may not even be optimally suited for every business because of their complexity.

Today, in these challenging economic times, most companies are not in a position to simply accept paying the premium amount for any investment, which also applies to business software. As it has never been this important to have a strong software backbone to help streamline processes, increase transparency and gain control, companies are searching for cost-efficient alternatives to the pricey market giants. And there is an alternative – in the form of 2nd-tier ERP solutions.

They can save companies millions on investment, implementation time and long-term cost of ownership, while delivering as much or more value, benefits and satisfaction. No matter what type of business software set-up companies are currently using, 2nd-tier business software solutions like Exact Software are well worth considering.

Study According to a study carried out by the Panorama Consulting Group, companies can save up to 75 percent with 2nd-tier solutions within a much shorter implementation time.

They were also found to yield up to 10 percent more employee satisfaction. In around three to six months, a 2nd-tier provider can help a company gain control, optimise cash flow, increase transparency, boost revenues, identify underperforming areas and increase reaction time – providing valuable agility in these challenging times. Fully integrated and standardised, 2ndtier alternatives can either complement 1st-tier solutions already in use at headquarters or they can serve as comprehensive ERP systems, and

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efficient 2nd-tier provider whose solutions are specifically designed to suit the needs of SMBs or the SMB subsidiaries of larger companies.

Combining global presence with local support, Exact provides companies with one standard product globally and complete integration of all business areas in one solution.

“If a company is considering which type of ERP software to implement, 2nd-tier providers present a cost-efficient and often more attractive alternative to the top-tier brands”

Customers Roland Rott is the Managing Director for the EMEA region of Exact Software, a leading provider of business software solutions. Rott is responsible for key global clients and has played a leading role in the development of the company’s international strategy. Prior to joining Exact Software in 1998, he was a successful entrepreneur.

they are generally perceived as more userfriendly by employees and IT. If a company is considering which type of ERP software to implement, 2nd-tier providers present a cost-efficient and often more attractive alternative to the top-tier brands. Additionally, in cases when a leading brand has not optimally served its customer’s needs or running costs like maintenance are a material factor, it could still be more cost-effective to switch to a 2nd-tier ERP system in order to gain significant overall savings and benefits. Exact Software is a cost-

Founded 25 years ago, Exact currently operates a network of subsidiaries in more than 40 countries worldwide, providing support to customers, such as Siemens, Toyota and Lufthansa, in over 125 countries. Exact’s solutions can be implemented more quickly than 1st-tier competitors and better suit a company’s needs without weighing it down with unnecessary bulk.

Exact Synergy and Exact Globe – Exact’s fullsuite, front and back office business solutions – integrate all business areas to provide real-time enterprise resource planning, high information quality and streamlined processes for all of a company’s stakeholders, thereby increasing transparency. By reducing the number of different ERP solutions a business uses, Exact also lowers long-term cost of ownership, resulting in future economies of scale.

The decision to invest should never be taken lightly, but it is particularly critical today. Studying the available options and their real return on investment, companies may be surprised to find that 2nd-tier solutions are the better choice in almost every scenario. After all, why pay substantially more for less satisfaction?

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BEVERAGE INDUSTRY

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As the makers of the some of the GCC’s best-loved drinks, Aujan Industries is the Middle East’s answer to Coca-Cola. Diana Milne meets Executive Vice Chairman Dr Kamel Abdallah to find out the secret to building brand power.

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dvertising giant Saatchi & Saatchi coined the term ‘lovemarks’ to describe brands that are so loved by consumers that they transcend the products themselves and are known not for what they are but for the values they represent. Among those listed in the advertising giant’s top 200 are Coca Cola, Guinness, iPod, IKEA and Cadbury. One that it forgot to put on the list is Vimto – a drink so popular in the Middle East that it even features in the reconstruction of a typical Arab home at the Dubai museum. “It’s got to the point where people completely associate Vimto with Ramadan and it has become ingrained in the local culture. People even tell jokes about it” says Dr Kamel Abdallah, Executive Vice Chairman of Aujan Industries, the company behind the brand in the Middle East since 1928. Vimto is not the only ‘lovemark’ in Aujan’s brand portfolio. It is also behind the hugely popular non-alcoholic beer Barbican and the juice drink Rani, that is distributed to 56 countries worldwide. The strength of these brands has seen the company achieve phenomenal success, chalking up profits of US$500 million in just four years, one year ahead of target.

Today Aujan is the largest privately-owned, independent soft drink and confectionary manufacturer in the Middle East, with 2200 employees. Like most of the Middle East’s most successful companies, Aujan is family run, having been set up as Abdulla Aujan & Brothers in 1905. However, unlike many of those companies, it is keen to ensure that it is run like any other private venture, with those who carry out the running of the firm chosen because of their credentials and not their family ties, and an emphasis on good corporate governance.

Dr Abdallah says: “The success of the company is all down to good execution, leadership and

strategy. We have been blessed with a board and a Chairman that have the vision to separate the ownership of the company from its management. This means that the management can concentrate on the execution of the Chairman’s vision. We are run like any other private company with good corporate governance and clear objectives it wants to achieve.”

Breaking the mould This modern approach has seen the company set new standards in the region regarding the branding and marketing of its products, breaking the mould in terms of creativity and the use of new media. Barbican, which is aimed squarely at the male Arab youth market, has been the subject of several award-winning advertising campaigns, including the Supe-up Up Your Ride campaign which invited customers to send in a video of their car with the chance to win a free makeover of the vehicle. There were 1800 entrants and 86,000 people viewed the Barbican micro-site for the campaign.

Describing this success, Dr Abdallah, says: “We wanted to build a campaign where we didn’t talk down to the customer as much as the customers talked to each other. The uploads to the websites were unbelievable. We were getting 10 films a day that people had made on their digital cameras. Consumers found it to be a way for them to communicate with each other and that played a big part in our success. The passion for Barbican among the youth generation is unbelievable.” This success is a double-edged sword however, as Dr Abdallah says the company now has to work harder than ever to retain its market share as competitors are now seeking to emulate the success of its marketing campaigns: “We very much dominate the segment that we’re targeting which is the young Arab consumer. But we now have to work extra hard to maintain our leadership position because everybody is trying to copy us. They are even trying to copy our marketing campaigns.” The economic

“We now have to work extra hard to maintain our leadership position because everybody is trying to copy us.

They are even trying to copy our marketing campaigns”

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AUJAN’S BRANDS Barbican: Launched to great acclaim in the 1980s, Barbican is aimed at the GCC’s growing youth market. A flavoured malt beverage, Barbican is aimed at the younger generation and keeps its leading market position by embracing regional changes in trends, imagery and consumption habits.Barbican is now available in a wide choice of flavours.

Rani: Originally launched in the region in 1982, Rani has been sold across the Middle East for over a quarter of a century. It was launched as a new concept in juices, with a recipe that combines smooth juice and real fruit pieces.

Rani has experienced tremendous growth across the Middle East and North Africa, and is now sold in over 56 countries worldwide.

Vimto: First introduced from the UK to the Middle East in 1928, Vimto is one of the most well-known brands in Aujan’s portfolio. It is particularly popular during Ramadan and has been consumed during over 80 Ramadan Iftar celebrations within the region,.

In addition to the original bottled cordial recipe, Vimto is now available as a carbonated, ready to drink can.

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downturn means that for now Aujan does not plan to copy its own success by launching new brands – choosing instead to focus on its three existing strongest products; Vimto, Barbican and Rani: “We’ll always have innovations but probably not any new brands this year,” says Dr Abdallah. “Brands have a life of their own and starting them is not easy. You need to make sure you will be able to support them afterwards in order to have the right product, capacity and thinking.”

Having hit its US$500 million target a year ahead of schedule, Aujan’s eye is now on regional expansion and it has now entered the Iraq and Iran markets. Dr Abdallah claims Aujan is currently the only international company to have build a factory in Iran – a reflection of the bureaucratic and logistical challenges involved in setting up a business there: “Iran required a higher tolerance for risk and a long-term vision. There is the risk of sanctions there at any time. The regulatory frameworks are very complicated. We also faced other challenges such as the intellectual property rights protection. There isn’t a good system there for protecting brands.

We had to work hard to protect our brand because we knew we were fighting copy cats.” The effort was well worth it: Iran is now Aujan’s biggest market in terms of dollar value after Saudi Arabia.

“We thought it was worth the challenge,” says Dr Abdallah. “Iran has a population of 70 million and a good per capita income.”

Daring to venture into the Iraq market, where competitors feared to tread, has also reaped rewards for Aujan. It is now the company’s third largest market and it is planning to invest heavily in marketing its products on Iraqi television channels. The challenges it faced in setting up there were primarily security related,

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as Dr Abdallah explains: “In Iraq security is paramount.

Getting a team on the ground is challenging, particularly because of border controls. Some borders would close, some would open. There were also issues with customers and wholesalers in terms of payment terms and getting money,” he goes on to say.

Thinking big

The Aujan Industries’ heritage

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bdulla Aujan & Brothers was set up in the GCC in

Aujan’s success in Iran and Iraq has spurred it on to 1905 as a family operation trading in tobacco, rice further expand outside its domestic market, the GCC, and and beverages. In 1928 the company obtained the to become ‘super-regional’. It now plans to target North exclusive rights to import and distribute Vimto in the Middle African markets, and further afield, South East Asian and East, following the drink’s success in the UK. Shortly Eastern European markets. In North Africa it already has afterwards it became Aujan Industries and enjoyed two market share in Egypt, Libya and Sudan – where Dr Abdaldecades of growth starting in the 1950s and by the 1970s lah says it benefits from pan-Arab television advertising had established itself across Saudi Arabia and other parts of and good word of mouth: “We advertise on a lot of Panthe GCC. Arab television programmes. In addition, there are many In the 1980s it launched its first home-grown brand, Sudanese, Egyptians and Libyans working in the GCC and Rani, and by 1999 sales of the drink had exceeded 10 million so they are familiar with our products.” Aujan now hopes cases. It also launched Barbican, a malt beverage, which it to target new North African markets including Morocco. In aimed at the Arab youth market.It continues to market Vimto Eastern Europe it sells products in Romania, Bulgaria and Albania where it dominates the fruit juice sector. It hopes and its two home-grown brands having established a strong to achieve similar success in Afghanistan where it has a R&D department. five-year expansion plan.

This confidence in the future of the company’s international sales is THE AUJAN INDUSTRIES DISTRIBUTION NETWORK impressive given the worsening global economic conditions. So far Aujan apRegional Office pears immune to the woes befalling Indirect Distribution many of its fellow GCC companies, Direct Distribution having announced a 26 percent rise in Regional Office 2008 third -quarter revenue and a 20 Manufacturing Facilities Head Office percent growth in sales. The company recently opened a new US$54 million factory in the Dubai Investment Park, which will boost its production capacity by 50 percent and announced plans to launch an US$40 million factory in Iran and to spend another US$50 million on expanding its main factory in Dammam, Saudi Arabia. That’s a lot of drinks. At present Aujan produces one billion cans or bottles of soft drinks a year. The figures, once the new factories on board, are pretty mind-boggling. Despite having hit its US$500million target a year early. However Aujan is not resting on its laurels. Dr Abdallah reveals it is already planning its strategy for the next phase of expansion and says we can only expect big things.

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MARKETING FOCUS

THE MARKETING GURU Marketing budgets may be shrinking but there’s no better time to get your company’s message across, according to Donovan Neale-May, Executive Director of the Chief Marketing Officer (CMO) Council. He tells BM the latest marketing tricks his members have up their sleeves.

What is the feeling among your members regarding the effects of the downturn on the marketing industry?

Donovan Neale-May. We’ve just completed our latest Marketing Outlook study and generally we’re not seeing direct predictions of imminent failure. In fact we’re seeing a fairly positive outlook. I think what you see and read in the newspapers is not necessarily reflected within marketing organisations themselves. However there is clearly a lot of tightening up of marketing budgets within companies and there are a huge number of marketing people that are on the street because of job cuts.

Within marketing organisations I think they are looking strongly at the types of skills and proficiencies they need to actually embrace new digital marketing programmes and strategies. They are paying a lot more attention to the customer and to understanding who they are doing business with, who their most profi table customers are and what the lifetime value is of those customers. More traditional PR functions have been impacted more than the folks working in areas like search engine marketing, demand generation, Donovan Neale-May lead acquisition and search advertising.

How many companies are cutting their marketing budgets?

DNM. Well actually we’ve seen around 30 percent of companies increasing their marketing spend. Also it’s less about cutting budgets than redirecting spend.

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It’s going to be more expensive and difficult to acquire new customers, so companies are focusing on the customers they have and what to do with those customers relative to getting increased value from them or using them as agents to help introduce other customers. This situation is forcing companies to do something which they’ve been very poor at which is to grab more customer data, get deep inside it and figure out ways to get more tightly connected with the customer.

The CMO Council has published a report claiming that marketing departments are not forming strong enough relationships with other parts of the business such as IT and finance. What could they learn from these departments?

DNM. The marketing departments today have got to want to live, breath and eat data. The trouble is that so much data is being generated today and it is not being effectively collected, mined or leveraged. There are so many different third party data sources that you can gather insights from, but companies don’t even necessarily use that data. With a lot of marketing folk their modus operandi is focused on spend, not around analytics or insight gathering. They need to be able to not just acquire a contact but track and monitor the return from that contact. Marketing departments need to look at

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ing analytics company. This features an intelligent agent, which you can programme to track certain topics that are being discussed in certain environments such as forums, bulletin boards, news groups and blogs. You can use it to track conversations around issues, So for instance, a company like Shell could track conversations about environmental concerns or lawsuits or things that their company might be embroiled in from a programme reputation point of view. The future is about getting much smarter and using the new interconnected world that we live in.

What are the benefits to marketing officers of using cyber-eavesdropping techniques?

DNM. This technology allows marketers to track every nuance of discussion, to track discussions about fashion, electronics and all sorts of consumer goods. This allows them to predict trends more effectively and manage their demand and supply chains more adeptly. They could also identify potential threats that could be incursions into their market space. This technique should, if it is embraced properly and systemised, put companies at a significant competitive advantage.

This sort of technology will transform the way people acquire customers, keep customers and more importantly, operate their marketing programmes globally on a much more efficient level.

hiring people from different backgrounds such as people with PHDs that can run algorithms.

How are marketing companies taking advantage of social networking technology?

DNM. It depends on the product they are marketing. If you are in a consumer business there are obviously some very creative ways to get your brand, your experience or your product talked about using social networks. On a consumer level there are opportunities to virally communicate and to introduce conversations into communities that centre around new offerings, new innovations and new experiences.

At the same time you can build a collectivised customer community, particularly on the b2b side. It’s about creating a shared interest group around themes, issues, needs and requirements, not necessarily about your product. You’re creating an affinity network of decision makers who have an interest and want to interact peer-to-peer.

Trusted business networks are very powerful. They are the way people, in many cases, influence and shape huge amounts of spend.

What do you think are the next big marketing trends? Can you predict any groundbreaking new marketing methods that may be used in the future?

DNM. Well I think the future is all about automating on a massive scale and about interacting more with the marketplace and being far more agile and adaptive and responsive to shifts and trends. One of the trends will be cyber-eavesdropping – listening in to the conversations people are having on the web. For instance we’ve built a whole global community of mobile computer users and we use a system called Track the Yak which has been developed by an Indian market-

How will mobile technology change marketing techniques?

DNM. The future is very mobile. The new markets around the world are being driven entirely by mobile communications and cellular technology. Places like Africa, Latin America and Eastern Europe don’t have structured markets, they have informal markets and the future for marketers there is to look at new channels for interaction.

The mobile device is going to be the primary way to interact with the market and deliver content and create relationships. When you look at text messaging applications it’s not just about games and content, it’s about delivering messages. So for instance a message could be sent out to farmers saying the climate is great and now is the time to spray their crops, or to senior citizens telling them when to re-order their medication.

Donovan Neale-May is Executive Director and founder of the CMO Council – a global network of 3500 senior marketing and branding executives. He is president of GlobalFluency Inc. The company specialises in intelligent market engagement and has 70 offices in 40 countries employing 450 employees.

Previously he held senior marketing positions in marketing, promotions and public relations agencies in Silicon Valley, New York, London and Los Angeles. For five years he ran Ogilvy & Mather’s west coast PR operations and managed communications during the formative years of Dell Computer in the mid 1980s.

During his 30-year career Neale-May has consulted with over 300 leading multi-national companies, including Del Monte, Samsonite, Colgate, Lever, Polaroid and Kraft General Foods.

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EXECUTIVE INTERVIEW

Managing customer relationships for business success Rajesh Hari Parsad discusses how the latest CRM technology is benefiting businesses today.

How can effective CRM initiatives allow organisations to boost productivity, better serve customers and lower response times to customer enquiries?

Rajesh Hari Parsad. By ensuring that the CRM initiative is driven by business issues and not technological ones. CRM is a business problem first, a technological one second. It is critical to understand how and where customers interact with their company and how CRM technology can provide assistance in automating and expediting those interactions to the benefit of both the customer and business.

Once the business issues are resolved, selecting and implementing a CRM solution that fits the processes and procedures that support your CRM initiative is critical. In short, the technology should support the processes, not visa versa. By doing so, businesses are leveraging a CRM solution to meet

“Choosing a CRM platform that supports both your tactical and strategic requirements is essential to ensure its longevity” their customers’ needs across channels and outlets that are unique to that business and/ or industry, and in a fashion that customers expect and are more satisfied with.

What would you say are the common mistakes that people make with their CRM strategies?

RHP. In addition to the mistakes mentioned above, end-user adoption is one of the most common reasons for CRM failure. Adopting solutions with intuitive, simple-to-use user interface, in addition to training, is critical for

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success. Failure to achieve executive buy-in is another common mistake companies make. Having C-level support for a CRM initiative provides leadership and motivation, provides support at the management level, helps to solidify and achieve goals, and drives high end-user buy-in.

We are currently witnessing a significant global economic downturn. How can CRM help to attract and retain customers, as well as gain a competitive advantage in these tough times?

RHP. During economic downturns CRM initiatives need prioritisation. Deferring these projects can lead to reduced customer satisfaction or acquisitions. Reducing customer churn is critical, since most research points to the fact that customer acquisition costs significantly more than retention.

CRM can be leveraged to track and maintain current relationships, identify crosssell and up-sell opportunities, and identify disgruntled customers for further service. In addition, analytics and reporting can give managers insight into different customer segments during a recession that can lead to increased sales and marketing opportunities.

Choosing a CRM platform that supports both your tactical and strategic requirements is essential to ensure its longevity. Web 2.0’s collaborative and viral nature should be exploited to extend the lifespan and effectiveness of your campaigns, especially when marketing budgets are dwindling.

Could you explain about a recent CRM solution that you implemented for a client that you are particularly proud of?

RHP. Neotel is a converged telecommunications provider offering wireless and wire-line services across South Africa. SugarCRM

Rajesh Hari Parsad is founder and CEO at TAUSPACE, a SugarCRM channel partner, and has over 10 years of experience with enterprise integration and operational and business support systems in telecommunications carriers. He has previously fulfilled roles as chief architect and CTO within telecommunications related companies in Africa.

Enterprise is used across the consumer and SME verticals within the organisation for sales force automation, customer support and order entry. Tied into a middleware and workflow engine, the solution provides a comprehensive mechanism to automate key areas of order entry, management and fulfillment, which are often complex and disparate in most telecommunications companies.

A unique trait of this solution is one that many telecommunications companies strive for. There is a single, profile driven business interface: SugarCRM. This simplifies internal training and the rollout into new sales channels. Every customer interaction is always captured and tracked in one place, which is unusual in a telecommunications company, where unstructured customer information is spread across many applications. Another feature enables business users to quickly build reports using a graphical interface to measure KPIs or gather statistics.

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It’s 46 years since Italian tractor maker Ferruccio Lamborghini hatched his harebrained scheme to build a luxury supercar. But with the wheels falling off the car industry amid the deepening recession, can this luxury brand navigate the tricky conditions ahead? Julian Rogers investigates and hears from Director of Brand and Design Manfred Fitzgerald.

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quick trawl through Lamborghini’s flashy looking website brings you to a grainy black and white clip of the late Ferruccio Lamborghini in a suit and dark sunglasses being interviewed whilst steering a tractor. A lit cigarette sits between his index and middle finger. The journalist perched on the front of the moving machine flicks a microphone back and forth between himself and Lamborghini’s chin. “What type of man are you?” the young hack asks inquisitively. “A normal chap who likes creating things,” Lamborghini responds nonchalantly. “A good worker in the morning, and a man who likes enjoying himself in the afternoon.” The interviewer suggests his subject is “very wise” in choosing to adopt this outlook. Lamborghini then offers a snapshot into his uncomplicated working philosophy: “I’m not interested in ending up like my colleagues, with heart problems.” A sagacious grin creeps across the tractor-maker’s face.

The company’s serendipitous foray into luxury sports car production came after Lamborghini complained to his friend Enzo Ferrari about the gearbox on his recently purchased Ferrari. The Ferrari founder’s dismissive response was to tell him to stick to making tractors because the problem was down to the driver, not the car. Cue a defiant Lamborghini, vowing to build a sports car to rival a thoroughbred motoring icon like Ferrari, contrary to the vehement advice of those closest to him who said he would squander his wealth. He was accused of being pazzo, or crazy, but Lamborghini would not be deterred in his Herculean quest, and in 1963, aged 47, he created the eponymous ‘Automobili Ferruccio Lamborghini’.

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in-house designers and engineers. Lamborghini has always had a cult following among petrol heads. Ferrari is a bit, dare I say it, ubiquitous.

Lamborghini, on the other hand, is a more elusive breed that manages to conjure up an intoxicating mix of elegance with muscle. I have crazy visions of the designers using laboratory test tubes to mix the chromosomes of a testosterone-pumped heavyweight boxer with a svelte and graceful matador. Exotic names (albeit slightly unpronounceable) for the models, like Murciélago, all add to the alluring nature of the Lamborghini brand. Perhaps as a clue to the brute force contained within, a snarling bull features in the badge stamped on the bonnet. Ferruccio Lamborghini’s zodiac sign was Taurus, in case you were wondering.

It’s at the Sant’Agata Bolognese factory showroom that I find Manfred Fitzgerald, Director of Brand and Design. All around us sit the fruits of his labour in shiny yellows, oranges and blues. Fitzgerald first arrived at Lamborghini in 1999 as the Marketing Manager and recalls how the business had lost its sense of direction. “Back then you didn’t have a clear idea of what Lamborghini stood for,” he explains.

“If you went to a dealership you would find that everyone interpreted the brand in a different way, so I went out to create a corporate identity and corporate design.” A focused vision is vital, he says. “It is so important for a luxury brand like ours to have a clear idea and vision of where you want the brand to go. You have to be very consistent in your approach.” Getting customers to believe in the brand is what it is all about in the world of high-end motoring. When you slap down a deposit you are buying into a select club, not just blowing your hardearned cash on a lightning-quick car that costs about the same to run as a small African country.

Heritage

Market forces

The Lamborghini factory resides in Sant’Agata Bolognese, about 25 kilometres from Bologna. It is here that some of the words’ quickest, most expensive and most desirable supercars are handcrafted by the

Like much of the car market where one carmaker seems to be owned by another, Lamborghini is a division of Volkswagen’s Audi brand. Despite this, Fitzgerald is keen to stress that Lamborghini is a stand alone and autonomous company. “The whole of the R&D, as well as the design, is done here in-house. If we want to, we can tap

THE NUMBERS THAT COUNT

The iconic Countach was created in 1974 and production ran for 15 years

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With a top speed of 340 km/h, the Murciélago LP640 is the fastest street-legal model

Lamborghini went bankrupt in 1978 and was sold to Chrysler

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into their research development facilities because it would be stupid if we didn’t do that. But my team live at Lamborghini because we are integrated into the company.”

When the bean counters at Volkswagen took charge they introduced economies of scale. Profi ts soared and the factory was operating at full capacity. However, in 2008 the car industry was hit head-on by the credit crunch and subsequent meltdown. Global car sales have fallen through the fl oor and factories have shed significant staff numbers. Lamborghini, though, bucked the trend in 2008 with a pre-tax profi t of US$83 million – a 27.4 percent increase.

But it wasn’t all smooth running; sales were fl at and much of the announced profi t came from cost-cutting measures. Unit sales rose by just one percent to 2430, which was short of the fi ve percent target. On top of this, the company’s largest dealer in the world – Lamborghini Orange County in the US – closed last year amid an accounting discrepancy whilst a third of the Sant’Agata Bolognese workforce was sent home during temporary shutdowns recently.

CEO Stephan Winkelmann says he expects sales to decline and no growth in 2009 and 2010 but there are no plans to lay off staff permanently.

Fitzgerald echoes his boss’ pragmatic approach to dealing with the economic climate. “We have a clear strategy for the future and if we stick to that we will weather the storm out there,” he reveals. “It’s about not being tempted to do something erratic – there are some quick wins but that is not us.

Wealth is still out there and luckily people have enough money to buy our products.”

Much of the wealth Fitzgerald identifies is being unearthed in the emerging countries and their inhabitants’ newfound fortunes.

Russia’s nouveau riche and well-heeled oligarchs think nothing of splashing out a few million roubles on a supercar. Likewise, the ultrarich Arabs see a car like Lamborghini as a badge of wealth and status.

“We still have quite a lot of white spots on the world map so we still see potential to bring our products to the market without diluting our brand image and exclusivity” he says.

Lamborghini is hard at work penetrating the Chinese market – the most populous nation with a burgeoning, cash-rich elite. “A couple of years ago, the Chinese did not know what Lamborghini was,” says Fitzgerald. ‘Is it a coffee brand or perhaps something to wear? Is it a car manufacturer?’ No, it’s a super sports car manufacturer and luxury brand. We have to be something that the Chinese would like to possess.” The tiger economies are far from impervious to the global economic crisis but Fitzgerald still sees China as an uncut gem. “China is still predicting growth this year of eight percent or more, which would be a dream in Europe. Luckily, we still find markets out there that have enough money at their disposal.” It’s also especially important that the Lamborghini brand and message translates across different countries and continents, says Fitzgerald. “We don’t have products for a particular market – we have a global product that has to work everywhere. We have to understand the market and penetrate our brand values, and we have to be understood as a luxury brand.”

One of Lamborghini’s unique selling points is its option for customers to personalise their new car in order to stand out from the crowd (as if pulling up at the traffic lights in a US$300,000 supercar isn’t conspicuous enough already). The options are bewildering, right down to the colour of the brake callipers.

Fitzgerald says this customisation and whole customer experience is vital. He wants to the company to have a greater focus on the customer, although this would never extend to would-be owners influencing the design of the cars. And with Fitzgerald and his team already producing stunning looking cars coveted by the motoring press they probably don’t need any input from an over-zealous enthusiast.

US$83 million Lamborghini’s 2008 pre-tax profit

US$1.3 million is how much the Lamborghini Reventón model cost the lucky few that got their hands on one

The first ever Lamborghini car was the 350GTV from

1963

Founder Ferruccio Lamborghini died in 1993 at the age of 76

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“Our obligation is to surprise people with the designs and let them see how we realise the dreams they haven’t dreamt so far,” he remarks whilst trying not to sound too much like a quote lifted from a glossy Lamborghini brochure. Fitzgerald explains how his team are able to design a car in 3D from the first sketch onwards, which speeds up the whole production process. For instance, the Murciélago Revingtón was designed in just four months. The team work hand-in-hand with R&D, too. “We don’t work in sequences where one person gets something and it then gets handed back for their approval. No, it’s an integrated process.”

So where does he look for inspiration when designing a new supercar befitting the Lamborghini range? “Everywhere.” He expands: “We are so fortunate living in a country like Italy where you can get so many inspirations. As a global company, we have our ears and eyes open everywhere. We are heavily influenced by other industries – just looking at the automotive industry won’t get you anywhere.

Our lives are moving and changing very fast; the way we commute and the way we communicate is changing so this inspires us for future products.”

Image is everything

“I discard around 95 percent of what lands on my desk in terms of product placement for big Hollywood films because they are just not a brand ‘fit’”

Like many of the luxury sports car producers, Lamborghini has done more than churn out cars – its merchandise is also a lucrative revenue stream. Indeed, you can find the Lamborghini name associated with everything from playing cards to coffee mugs. Fitzgerald suggests diversification is a necessity for a luxury supercar manufacturer. “A luxury brand is allowed to play in other fields. Obviously this [car making] is our core business, but the merchandising has taken enormous steps in the last couple of years. As long as you stay authentic and credible in what you are doing, any path out there is allowed.”

Ferrari is thought to rake in around US$150 million a year through ‘brand extension’ and Fitzgerald says they are ahead of his company.

“They [Ferrari] are in a different position to us,” he notes. “We are in

what you could call the ‘brand building’ phase and any step we take out there has to be considered more than once. I discard around 95 percent of what lands on my desk in terms of product placement for big Hollywood films because they are just not a brand ‘fit’.”

On the subject of movie placement, Lamborghini was featured in the 2008 blockbuster movie The Dark Knight where Bruce Wayne (Batman) is seen putting an equally masculine Murciélago through its paces in the streets of Gotham City. A car’s appearance in a high-profile film can outstrip any advertising campaign and show the product off to a global audience. Fitzgerald says Lamborghini went through the script and felt that the film would suit their brand. It was a similar decision with Mission Impossible 3 when the producers pitched the idea of a Lamborghini Gallardo making an on-screen appearance. So how does Fitzgerald select that five percent of offers that land a Lamborghini on the silver screen? One major factor is who will drive the car. “I do not like to see our products being driven by villains because that would not be the appropriate move for us. Mission Impossible 3 was a luxury setting but it’s important that our products are perceived in a normal context. I’m trying to take us out of being a ‘niche of a niche’.” Lamborghini’s presence in the US box office has led to “huge steps” being made in the US market – the firm’s largest.

Manfred Fitzgerald

With the interview wrapping up, Fitzgerald offers an insight into what it takes to be head of brand and design: “You have to be consistent in your approach and also a bit stubborn, but don’t get irritated by what the people left and right of you are thinking. If you have a clear vision of what you want to achieve, you have to go for it.” It seems that having this maverick-like design attitude is translated in Lamborghini’s corporate vision, too. “We like to be in the driver’s seat, rather than the passenger seat,” he beams. Fitzgerald heads back the drawing board, so to speak. Outside the factory a white Gallardo (a colour that appears to be de rigueur at the moment) is fired up. A beastly cacophony emanates from the four chrome exhaust pipes protruding from the car’s rear. Seeing these cars in the flesh (or should that be carbon fibre?) it is difficult to imagine that the name Lamborghini was ever associated with a piece of farm machinery, but we have to thank Enzo Ferrari and the disputed dodgy gearbox for that. Oh, and a laidback Italian’s headstrong attitude and dogged determination. Bravo Ferruccio.

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ENERGY

United we

stand Khalid Al-Falih, Saudi Aramco’s new President and CEO, gives an exclusive insight into the future of energy and his company’s relationship with the US.

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oday the financial and economic crises are on all our minds, and rightly so. The impact of the global downturn, the restorative effects of various economic stimulus packages, and the timing, strength and breadth of the eventual recovery are all issues of the highest order. But to my mind, one of the most significant and enduring lessons from this painful downturn is the reminder that ours is one, highly integrated and mutually dependent world. What impacts one country, business or industrial sector ultimately touches us all, and whether we realise it or not, we’re all navigating the same rough seas in the same boat. Global interconnections are abundantly clear to those of us in the petroleum industry, and we understand that in an interconnected, interdependent global petroleum market, the strategies and actions of even a single major supplier or consumer have implications for us all. That is why the decisions about energy that we make as companies, institutions and nations have ramifications which know no borders, which touch the lives of everyone on the planet, and which will be felt for many, many years to come. Today, much of the talk in the petroleum industry is about faltering demand and markedly lower prices for crude oil and refined products. There is plenty of oil in the market, and in some cases it appears to be storage capacity that is in short supply rather than the petroleum that goes into those tanks. That’s quite a different picture

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than the one we saw just a year ago, when the perception of supply shortages and the fear of interruptions opened the door for speculation which played a significant role in driving oil prices to record highs.

But these snapshot indicators of a crude oil market awash in barrels are just that: a snapshot taken at a particular point in the cycle, rather than the shape of things to come. In the future, as before, I believe that crude oil markets will be impacted by significant trends on both sides of the supply-demand ledger. Furthermore, given the need for wise and timely investments in all segments of the petroleum industry, I believe we must collectively adopt a more pragmatic approach to energy and oil, particularly when it comes to long-term prospects for global energy security and environmental stewardship.

Rising demands Although global petroleum consumption has exhibited considerable volatility in the short term, it is rising worldwide oil demand that is the surest feature in the future energy landscape. The combination of a growing global population and greater prosperity and affluence in developing economies point the way toward a relentless increase in petroleum demand over the next several decades. And given that six out of every seven units of energy the world will consume over the next two decades will come from fossil fuel sources, it is clear that the world will be looking to producers like Saudi Aramco for significantly more petroleum than is the case today. Some may argue that rising demand for oil in the developing world is a matter for those economies to worry about, but given that petroleum is a fungible commodity which is traded in highly integrated global markets, demand growth in China, India and other countries has a direct impact on consumers in industrialised nations as well, including the United States. We are all in the same boat, and when it comes to petroleum, we are all subject to the same rising and falling tides. To meet this increased future demand, the petroleum industry must be ready – and given the long lead times associated with petroleum sector projects, that means investing now in various segments of the value chain. It is true that the industry has just come off a high in the investment cycle, and that for the next several years supply is set to outpace demand. But the economic cost to the world will be considerable if the industry is not well-prepared for future growth in consumption: we all know that potential supply-demand imbalances have the potential to trigger another cycle of steep price rises and debilitating market volatility. That, in turn, would spell trouble for the green shoots of a nascent economic recovery. At the moment, though, the low price, low demand environment discourages substantive investment in petroleum development and infrastructure projects – a situation which is compounded by high development costs and tight credit markets. Furthermore, the talk in some quarters about moving away from oil and toward energy self-sufficiency and unproven alternatives which still face significant technical, economic and environmental hurdles, are creating greater uncertainty about the future prospects for fossil fuels in general and petroleum in particular.

Capital dislikes uncertainty, and indecision related to energy policies may serve to exacerbate the trend of underinvestment – which is particularly dire in an extractive industry like petroleum. The underinvestment risk is especially worrying because large, timely oil investments are necessary to meet not just one but three requirements. First, as you produce resources, you have to continue to invest simply to maintain current capacity, or in

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other words, you have to keep running just to stand still. Second, you need to build new capacity as well as infrastructure to meet future growth. And third, we also need to maintain a cushion of spare production capacity, the very existence of which plays a vital role in tempering market volatility.

Shaping the energy future Given these dynamics, I believe we should commit ourselves to a more pragmatic approach to shaping our energy future, especially considering the central role that energy plays in our economies, our societies, and indeed our daily lives. In my view, the optimal strategy is to support continued enhancements in proven technologies and fossil fuels – most important of which is oil – while concurrently supporting the development of a number of alternatives to a reasonable level of maturity, as opposed to favouring one option to the exclusion of others. Then, let us expose the most promising alternative sources to the rigors of market competition and consumer preferences, and compete on a level playing field with other sources.

Thus we will increase the variety of options available for the long term without premature commitments, and maximise the range of viable approaches to realising greater global energy security. But continuing to utilise conventional energy sources doesn’t mean we must continue to operate as

“Although global petroleum consumption has exhibited considerable volatility in the short term, it is rising worldwide oil demand that is the surest feature in the future energy landscape” we have, particularly when it comes to the environmental impacts that are associated with the production and consumption of fossil fuels. While working to meet growing energy demand, we must address global and local environmental concerns, particularly carbon emissions. Ideally this would be accomplished through R&D and technological solutions such as a combination of enhanced conservation measures and more fuel-efficient end-use technologies, cleaner burning petroleum products, the development of carbon capture and sequestration technologies applied to both stationary and mobile emission sources, and the use of alternative energy sources in ways which complement coal, oil and gas. Of course, such utilisation of alternatives should be based not on optimistic assessments of their future potential, but on realistic expectations consistent with actual progress made in resolving the various issues restricting their greater use.

In terms of carbon management, much will depend on the policy environment surrounding these issues. I believe that policymakers and regulators must acknowledge the complexity of implementing alternative mechanisms, as well as the ultimate costs for consumers and the far-ranging impacts on our global, regional and national economies. A high degree of uncertainty and inconsistency surrounding carbon management legislation and policies is in the interest of neither producers nor consumers, nor are risky policy initiatives and overly hasty legislation. As in so many matters, a pragmatic and holistic approach that stabilises the energy market and achieves the sought-after reductions is likely to be the best path

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Khalid Al-Falih to achieve not just one-off, short-term gains, but meaningful, long-term, and sustainable benefits.

The Aramco story It is within this broader industry context and with our sights firmly fixed on the future that we at Saudi Aramco are striving to enhance energy security in an environmentally sensible manner, and partnering with other companies and institutions which share these strategic objectives. That’s why I would like to outline some of the many steps we are taking to bring about a brighter energy future – one in which we are able to grow our economies and enrich our societies while simultaneously protecting our natural ecosystems. First and foremost, we are continuing to invest all along the petroleum value chain, on a scale never before seen in the history of our industry. In the area of exploration for crude oil and natural gas, for example, we are continuing our efforts to locate additional resources across Saudi Arabia, including new frontier areas both on land and offshore, despite the large resource base we already possess. We believe there is tremendous potential to locate substantial new hydrocarbon resources in various regions of the Kingdom, and are bullish on these prospects.

In terms of production, Saudi Aramco is on the verge of attaining its goal of a 12 million-barrel-per-day crude oil production capacity, once we complete our Khurais oil field programme. This project is the largest single crude oil increment ever commissioned, and will be capable of producing as much oil

as the entire State of Texas. But Khurais is only one aspect of our overall crude oil development programme, and Saudi Aramco alone will ultimately account for more than half of the grassroots crude oil production capacity brought on-stream worldwide this decade. We will also be expanding our natural gas production capability, which is important given the role that gas plays in the Saudi economy, supplying utilities and a wide range of industries, fueling greater economic development and diversification, and encouraging the development of valueadded enterprises based on gas and its associated feedstocks.

And while we’ve been known since the 1940s primarily as a leader in the upstream segment of the business, we are also a major player when it comes to refining. Today, we are constructing additional refining capacity both in the Kingdom and abroad, including in the United States through our Motiva joint venture with Royal Dutch Shell. Once the current expansion of our Port Arthur, Texas refinery is complete, it will be the single largest refinery in the country. In fact, Saudi Aramco will be behind one out of every three barrels of firm commitments to new refinery capacity to be built worldwide over the coming five years. Even further downstream, we are moving forward with integrated refining and petrochemical ventures in collaboration with some of the world’s leading chemical companies, including Dow Chemical, our partner in the landmark Ras Tanura Integrated Project. These new facilities not only add value to the Kingdom’s hydrocarbon production by converting refined product streams into both base and specialty petrochemicals, but also form the hubs of new industrial clusters which will house conversion industries and manufacturing companies in purpose-built business parks.

The bigger picture Major investments such as these, including the maintenance of significant spare production capacity to respond to unforeseen circumstances elsewhere in the global petroleum industry, allow us to play our part in meeting the world’s demand for energy responsibly and reliably. But some people question the wisdom of pressing ahead with these mammoth projects even in a challenging business environment and at a time when oil consumption has fallen for the first time in 25 years. Certainly we have been negatively impacted by the crisis along with the rest of the petroleum industry. But we continue to invest across the cycle, in good times and bad, because we are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions. Given the combination of geology, geography, history, and economics, Saudi Arabia and Saudi Aramco have been fated to play a dominant role on the world’s energy stage. This is a duty that we have embraced just as generations of Aramcons before us did, and it is a responsibility we take very, very seriously indeed. So we build with confidence today, knowing that tomorrow we will be able to meet our commitments to all of our various stakeholders.

Ground breaking innovations Our world-scale infrastructure development projects and programmes are coupled with investments in advanced technology and applied research.

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Saudi Aramco is particularly active in the area of cutting-edge upstream technologies relevant to our operations, including the first development of gigacell reservoir simulators which allow us to optimise our production strategies to ensure outstanding reservoir sustainability over several decades using a range of scenarios; we are also developing extreme reservoir contact well technologies that enable us to produce our hydrocarbon resources more effectively and more efficiently. We are also continuing to push forward and further develop our Intelligent Field – or I-Field – vision, which serves to enhance the efficiency of our production operations, lower production costs, and help further improve the recovery of precious in-place resources. And this is not just talk, or something that might happen in the future; in fact, all of our new field developments are I-Fields, and we are retrofitting our older fields to become I-Fields as well. Within our EXPEC Advanced Research Center focusing on upstream technologies, we are also developing futuristic technologies like “res-bots”: tiny, intelligent nano robots which will be injected directly into the reservoir to provide a hitherto undreamed of direct sensing of the subsurface, and a much greater understanding of the reservoir properties and varying conditions over time. Innovation is also helping us meet global energy needs with less impact on the environment, and programmes designed to lighten the environmental footprint of hydrocarbon production and consumption are central to the mission of our Research & Development Center that focuses its efforts on downstream technologies and surface facilities. Our commitment to environmental stewardship is nothing new—the company’s first environmental policy statement was published more than 35 years ago – but today, advanced technology and innovation are enabling us to do much more with much less impact.

At the moment, we are focusing our research on significant key initiatives with widespread applications affording Saudi Aramco a future global leadership position in select areas, including carbon capture and storage techniques, the pre-refining desulfurisation of whole crude oils, new refining technologies, novel fuel formulations to power next-generation engine technologies, and production of hydrogen out of liquid fuels in a cost-effective manner. All of this will help to reduce the environmental ramifications of petroleum consumption while prudently and creatively building on acquired human knowledge, existing infrastructure and expanding intellectual capital. Energy and the environment are closely bound together, and at Saudi Aramco we’re applying cutting-edge R&D and advanced technology to both sides of this vital equation.

cloud the demand picture and thus could possibly put into question our investment decisions.

Saudi Aramco has contributed significantly to the past, present and future energy security of the US. We have contributed through our sustained investments in world-scale upstream projects, and our maintenance of at least 1.5 to two million barrels of expensive spare production capacity – which has been brought onstream many times to make up shortfalls in global supplies, including in the wake of Hurricanes Katrina and Rita which shut in US Gulf of Mexico production. We have contributed through significant and ongoing investments in US domestic refining capacity, and in the construction of one of the world’s largest and most modern fleet of double-hulled supertankers, devoted primarily to bringing our crude oil to these shores, with the explicit aim of providing America and Americans with the petroleum energy they need to maintain their prosperity.

Second, I think it would be very, very risky to bet the farm on one or two unproven alternative sources of energy, because the stakes for this economy and this society are extremely high, given the central role of energy in every aspect of modern life and contemporary economies. The risks would be compounded if tried and tested energy sources and technologies were de-emphasised and big bets placed on unproven and upcoming technologies. A more rational approach would make the fossil fuels the base on which the energy future is built, of course complemented by alternatives whose contributions would gradually and steadily grow, as their technical limitations are resolved.

Third, we need to work together more closely and collaboratively on the development of sensible environmental measures which protect and preserve natural ecosystems while supporting the conditions necessary for economic growth and development. Enhancing the environmental performance of fossil fuels, including oil, through R&D and the development of groundbreaking technologies, is perhaps the single most important step we can take in this regard, given the overwhelming proportion that will continue to be met by conventional fuel sources. Clearly, such enhancements are in everyone’s interest, whichever side of the producer-consumer line we find ourselves, because a cleaner environment and more effective and efficient energy use benefits everyone.

My fourth, final and perhaps most important point is that Saudi Aramco firmly believes that the United States will adopt a pragmatic, realistic and balanced approach to energy issues, and eventually arrive at a basket of solutions that serve to simultaneously enhance energy security, economic competitiveness, and environmental protection. Winston Churchill once said, “The United States invariably does the right thing, after having exhausted every other alternative.” Certainly in this case the complexity of the issues in play, the number of stakeholders involved, and the sometimes rough-and-tumble nature of the processes involved may make for a difficult route, but I believe it is one which will ultimately lead to the right place. For some seven decades, Saudi Aramco has been among the foremost providers of energy to the world and to the United States, and we look forward to continuing to meet a substantial portion of this nation’s energy needs for another century – or more. n

12 million

Saudi Aramco’s target daily production in barrels

Conclusion I want to conclude with four brief points related directly to our interactions with the US market. First, ‘energy security’ is a two-way street involving not only security of supply for consumers, but also security of demand for producers. Given the billions of dollars and millions of manhours required to bring petroleum projects and crude oil developments onstream, unrealistic expectations and pronouncements could indeed undermine energy security, instead of enhancing it, simply because they

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EXECUTIVE INTERVIEW

The magic formula Dr Dirk Oevermann and Dr Russell C. Gomersall of IDS Scheer give their insight into how Business Process Management can help Middle East companies to beat the competition and improve their business performance.

How would you describe the current profile of Business Process Management in the Middle East?

How do companies currently relate to BPM and where do you think they need to focus to improve?

Dr Russell C. Gomersall. The BPM market in the Middle East is currently dominated by several Business Process Redesign (BPR) initiatives. In the current situation BPM and the element of BPR as the method of choice take the strategy to an operational level. The overall goal is predominantly not to optimise local processes but to derive from the organisation’s strategy, clear design guidelines which are the basis for setting up a holistic and integrated process framework in which all introduced changes and requirements concerning for example roles and responsibilities, KPI’s and IT requirements can be linked back to the overall strategic objectives.

Another field of BPM activities within the more industrial related markets is initiated by IT/ERP reimplementations. The reason for re-implementing is either driven by the necessity to consolidate the heterogeneous IT landscape existing due to the fast growth of companies and ever-growing IT requirements but also due to failed implementations.

In both cases companies in the Middle East realise that IT has to follow business and that processes are the key element in aligning Business and IT.

company in the international area that can offer consulting and software for all aspects of business process management from a single source.

Dr Dirk Oevermann is a member of the Executive Board with responsibility for the DACH and EMEA regions of IDS Scheer.

Why would companies need the solutions of IDS Scheer? What value do you add to them?

DO. IDS Scheer helps its customers to improve their business performance by increasing efficiency, reducing costs and enhancing flexibility through expert Business Process Management. Successful companies know that the required changes need to be monitored and implemented effectively to achieve the needed results. Business Process Management from IDS Scheer enables these companies to improve their overall business performance continuously. IDS Scheer supports companies to make strategic decisions, driving costeffectiveness, efficiency and business success.

Innovative companies know that business processes need continuous improvement. This also includes redesign on the basis of up to date information about the current process performance. The IDS Scheer offering is the ARIS Solution for Process Intelligence and Performance Management. It enables the measurement of key performance indicators (KPIs) in live business processes. It offers executives and managers a comprehensive, real-time view of their processes, so they can make objective decisions and identify and realise improvement potential.

Which solutions does IDS Scheer offer in order to improve companies’ business performance?

Dr Dirk Oevermann. IDS Scheer covers the whole What is IDS Scheer’s Middle East strategy and spectrum of BPM consulting. Major areas of focus why is this market unique? besides the established Enterprise Business RG. On the one hand the focus is on the industries Dr Russell Gomersall is responsible for the Process Management are Process Intelligence, of the region such as public sector, petrochemical MENA region at IDS Scheer Saudi Arabia LLC. Process-Driven SAP, Supply Chain Management, industry and the regional industrial groups as Business-driven Service-Oriented Architecture, and Governance, Risk and these are all IDS Scheer’s strategic fields. But several other factors make Compliance Management. With the integrated approach of ARIS Value the Middle East markets unique. The organisations and industries within Engineering (AVE), IDS Scheer consultants view their customers’ enterthe region have grown incredibly during recent years and they are still inprises holistically. AVE means building bridges between corporate stratevesting heavily. I would like to stress the point that these investments are gy, the processes derived from it, the IT solutions needed to support it and not just merely concerning the ‘hardware’ aspects of the business. From also the controlling of running processes. my perspective the region is unique concerning its determination to build With its ARIS Platform for Process Excellence, the company offers an insoft skills to ensure and sustain the investments in the long-term. I see our tegrated and complete tool portfolio for strategy, design, implementation and relationship with our customers as a partnership with the vital element of controlling of business processes. This means that IDS Scheer is the only knowledge transfer in any of our engagements. n

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HUMAN RESOURCES

Getting better

?

Kelli Kolsrud of the International Federation of Employee Benefit Plans sheds some light on the state of corporate wellnes

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he IFEBP recently completed a major survey into wellness programmes, focusing on the design of wellness programmes and what employers are offering, and if they offer them at all. We looked at what types of initiatives were out there, whether organisations were getting adequate participation rates, whether or not they’re offering incentives and if so, what kind of incentives? One of the first questions we asked was what is their motivation for offering wellness?

Of thse surveyed 46 percent said they want to control healthcare costs.

Another primary reason is they just want to help employees have better overall health. That’s not really startling, but it confirmed what we expected.

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Then we asked about a lot of different initiatives.

Screening and health risk assessments and appraisals are popular, near the top of the most commonly offered.

Weight loss and fitness are also popular, as well as some informational initiatives where companies arrange health fairs or give employees web links to useful resources.

Unfortunately a lot of the programmes they institute do not have high participation rates and that’s a problem for employers that leads them to offer incentives to try to increase those participation rates.

We asked about specific initiatives and whether employers include incentives or not and also whether they believe they derive certain benefits from wellness. That brings up an issue that’s a challenge with wellness. A lot of employers are not measuring the return on investment.

When we have an economic crisis like the current one, the main challenge for wellness programmes is that employ-

“Weight loss and fitness are popular, as well as some informational initiatives where companies arrange health fairs or give employees web links to useful resources”

Healthy figures Highlights of the IFEBP’s recent survey into corporate wellness programmes • Types of incentives 39%

Non-cash incentives/raffles/prizes Gift cards or gift certificates Cash rewards Insurance premium reductions Gym/fitness center discounts Contributions to health accounts Reimbursement of costs Waivers/reductions for deductibles Additional time off Other No Incentives offered

32% 22% 22% 21% 11% 10% 5% 4% 4% 20% 0

5

10

15

20

25

30

35

• Screening and treatment initiatives Flu shot program

82%

Health risk assessment/appraisal ers don’t have a good sense of how much they save money or add value. These programmes are then perhaps vulnerable to reductions, budget cuts and problems like that.

Understanding the true value of wellness programmes is going to be key to their ongoing success.

Academics have gone into companies and tried to do studies, but the trick with wellness is it’s a long-term investment. You don’t institute a programme and then six months later have a huge drop in healthcare costs. It takes years and it’s a difficult task to try to change behaviors and convince employees that it’s worth their

73% 69%

Health screening 60%

Smoking cessation program 34%

Stress management program Complementary/alternative medicine

23%

On-site massage therapy

21%

On-site healthcare clinics

12%

None of the above

3%

0

20

40

60

80

100

• Improved worker morale

• Increased productivity Kelli Kolsrud is Senior Information/Research Specialist for the International Foundation of Employee Benefit Plans. The IFEBP is a nonprofit organisation, dedicated to being a leading objective and independent global source of employee benefits, compensation and financial literacy education and information. The Foundation delivers education, information and research, and networking opportunities to benefits and compensation professionals.

40

Not at all 5% To a very great extent 2%

Not sure 61% To a very great extent 1% To a great extent 4%

To some extent 20%

To a little extent 10%

Not at all 3%

Not sure 41% To a little extent 12% To some extent 29%

To a great extent 11%

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while, both for themselves and for the organisation. All in all, it’s a pretty complicated challenge.

I think sometimes employers institute plans and they look upon them maybe as a perk. But for wellness programmes to succeed they have to be an integral part of the health plan and the company culture. You need to have support from upper management to realise the full potential. You need a commitment from the employer to budget for it, allow time for employees to participate and reward them if necessary. Sometimes getting them started in the programme isn’t so hard, getting them to continue is the real challenge. People don’t necessarily want employers dictating what they consider their personal lives and they are sometimes just used to eating less healthy foods or not making the time to exercise. We’re creatures of habit and a lot of people don’t feel they have the time to exert effort in that regard. Plus, some of those unhealthy foods taste really good.

But if employers see the value of wellness plans and can realise that value then they’ll want to continue to support and enhance these programmes.

I certainly think the interest and popularity is growing. We have seen that, but their success may be closely tied to whether wellness plans are able to show their value.

Wellness is not purely a financial issue. Another element of our survey addressed the impact it can have on other factors within a company.

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We asked the participants in the survey whether they thought some of the benefits derived included things like improved morale, worker health, increased productivity and reduced absenteeism. The areas where they saw the most benefit is in worker health and morale and not as much in controlling costs in general for healthcare or of high risk conditions. A lot of respondents to the survey just said they weren’t sure whether they derived benefits or not.

That’s telling in itself.

The concept of wellness isn’t something that should only be the concern of employers. News stories today are heavily populated with items about childhood obesity and lack of fitness in young people and children. Obviously, if you have that problem at a young age it’s only going to be worse as they age and enter the workforce. It’s a social issue across industrialised nations. I think even Japan is having problems. Fast food has taken over the world.

As for who is going to take the lead on this going forward, the jury is still out. It certainly seems like the new administration is interested in healthcare reform and many healthcare reform proposals include wellness initiatives, improving quality of healthcare and reducing costs. A public health message is certainly part of healthcare reform proposals that are being introduced, but it remains to be seen whether or not they will come to pass. We just heard in Obama’s budget that he has set aside a healthy chunk for healthcare reform, but of course it has to get through Congress. There are a lot of people who will be clamoring for that money as well. It’s not a done deal yet.

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EXECUTIVE INTERVIEW

place them in positions of strength to get going when the downturn ends. We now find that a few progressive Middle Eastern businesses are realising the advantage that interim managers provide in a recessionary environment and are opting for the same.

Could you give a recent example of a successful interim appointment in the GCC that Manager Forces handled?

NA. A Leading defence equipment and security systems company in the UAE recently engaged an interim COO through us to optimise the various operations processes in the organisation and bring about efficiencies in managing their entire value chain. The candidate we identified and brought in for them has wide experience across defence, aviation, security and construction industries and has proved himself successful far beyond the expectations of the management.

FILLING THE VOID Nadeem Ahmad of Manager Forces explains why appointing an interim manager can reap big benefits for Middle East companies.

If an organisation is looking to appoint a CEO, what are the benefits of choosing an interim CEO? Nadeem Ahmad. The CEO holds the most important position in an organisation. If a CEO is replaced due to unforeseen circumstances, the company is faced with one of two decisions. Either wait for a few months as they search for a permanent CEO or bring in an interim CEO within 10 days.

Having an experienced and top-level interim CEO managing the business immediately is a great benefit to the company as it brings in a sense of confidence to all stakeholders and ensures that the business maintains a steady course.

How is the interim management market being affected by the global recession and what’s the situation in the Middle East?

NA. Traditionally in markets hit by recession we find companies look to top-notch interim C-level professionals to turn around businesses and steer companies towards becoming lean and efficient organisations. In the Middle East, most company owners and members of the board are reluctant to admit that their companies are fac-

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ing serious problems. This denial mentality often impedes them from moving in the direction of bringing in top notch CEOs, CFOs and COOs to turn around and transform their business and

How has the interim management market evolved since you first set up in the region and how do you see it changing over the next few years?

NA. Interim management, being a new product in the Middle East, was often being confused with recruitment or executive search. Through strategic business development activities we have been able to educate the target audience on the nuances of interim management and the benefits that hiring an interim C-level professional brings to their company. We are certain that over the year to come interim management will be the route of choice for most Middle East corporations when they look at restructuring, new projects, gap management or business turn around.

Nadeem Ahmad is the CEO (Middle East) for Manager Forces.

He is a trained psychologist and has substantial experience in the study of human and organisational behaviour. With a strong interest in human resources and, in particular, recruitment, he possesses an indepth understanding of international talent acquisition.

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TRAINING & DEVELOPMENT

The art of e-learning Tim Buff of CM Group explains why learning online is the future when it comes to training executives.

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he current economic crisis has prompted much debate around how the HR function can contribute to the effectiveness of an organisation in a time of challenge and change. There is increased pressure to cut costs, increase value for money and enhance flexibility, whilst at the same time it’s vital to continue to drive for more effective and relevant staff development.

So how can businesses, with a recognised need for training staff, begin developing their own e-learning strategy?

Firstly, remember that an e-learning strategy is part of an overall staff development strategy; you need to ensure overall strategic aims are in place before you embark on using e-learning. These aims need to identify the audience; understand the skills that employees need to develop; the subject matters that are covered by the training requirements; who the subject matter experts are within the organisation; what the ‘quick win’ areas are; where (in geographical terms) the learners are based; which requirements can be effectively addressed through e-learning, and which will require a traditional classroom-based or mixed approach; and how ROI and cost benefits will be measured.

HR functions need to be flexible to changing business requirements and must support them proactively. Using modern e-learning as a key part of an overall training strategy is becoming much more important in increasing reach and reducing costs. So how do you develop e-learning strategy?

Decide on your curricula Which content will be delivered as elearning, and which will be issued as classroom-based training? If you need help, then

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talk to someone who has the relevant experience; e-learning providers can supply a full range of support services to help clients get the most from e-learning as part of an overall strategy.

Decide how to develop your e-learning content In the past the only real option in developing e-learning content has been to subcontract to specialist e-learning developers. However, with prices per hour of e-learning ranging from US$14,000 to US$35,000 or more, and long development cycles of typically three months or more, it’s easy to see why e-learning adoption has been patchy.

Now, with the latest enterprise rapid elearning development platforms, e-learning can be created and updated quickly, without having to outsource to external specialists. This is an approach that can deliver a very high ROI, with payback in just a few months. The key is to make sure you select a system that requires minimal author training that can be used to develop high quality and engaging e-learning, quickly and easily.

Decide how to deliver your e-learning content You can deliver e-learning content in a number of ways. Most e-learning development platforms can be delivered through CD-ROM or a website, but the advantages of a learning management system (LMS) should also be considered. Additionally, you might benefit from the ability of comprehensive platforms that are on offer, to deliver elearning through a Microsoft SharePoint site or even a mobile phone or PDA.

Monitor results and modify the strategy going forwards.

In tough economic times, it is important to ensure you get the best return on any investment. For e-learning, this means tracking learner progress and ensuring the effectiveness of the training. A key contributor to monitoring e-learning is a SCORM-compliant learning management system that can automatically track and report learner progress and individual results.

The real benefit of using the latest technologies within your e-learning strategy is not only the cost reduction that is offered, it is also the speed, relevance and effectiveness that the latest e-learning platforms can enable. Content development timescales are reduced from months to weeks, or even days, and consequently many more courses can be developed for a wider range of uses.

This enables a much better use of staff time, and most crucially, training can be better targeted for increased effectiveness.

Tim Buff is one of the founder members of IT Consultancy CM Group and a major shareholder in the company. He is a strategic thinker and an astute entrepreneur with solid managerial skills, wide experience and a strong business mind. Buff is a graduate of the University of West of England where he studied Accounting and Finance. On leaving university he joined international accounting firm PriceWaterhouse Coopers, where he qualified as a chartered accountant. He is currently responsible for the development of CM Group, its staff and its position in the market.

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LEADERSHIP Showing the way

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John Baldoni, author of the best selling management guide Lead By Example, tells BM why leading from the frontline is key to business success.

n my field of leadership development you become aware of certain skills and attributes that make leaders successful and keep them in control, and given the current climate there is an even greater amount of pressure being placed upon business leaders. Subsequently, what leaders need to do is assert themselves enough so that they become ‘true’ leaders.

But what does this mean? Well, it means that leaders need to maintain their vision, maintain their mission and strive for alignment, while at the same time pushing for innovation and risk.

The other part that goes in hand with this is the human element, where you have to work overtime to keep the team together. That really calls into the issues around whether leaders are being seen, being heard and being present in the workplace. Leadership is about letting people see you out there, meeting and mingling with your people and listening to what they are saying; yes, leaders need to stay on message for themselves, but they also need to ensure that they are listening to their people.

Leaders have to be prepared to be available to do whatever the organisation needs. So if you’re in a small enterprise or a small publishing firm for example, this might mean helping pack boxes to get the orders out. Leaders have to understand that they need to be there for the organisation and do whatever it asks of them.

In truth, every executive probably knows this already, but there is a another side to a recession that says that as things slow down this is the optimum time to develop your people. Leaders need to be thinking about things like coaching, mentoring, career

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development, job rotations and cross-functioning roles.

These things don’t have to cost money either, which is of course a huge concern given the current state of the economy.

Every manager should be doing these things anyway, but there are other career development opportunities out there that leaders need to explore. Some of these may involve going back to school, and that does provide a fi nancial consideration, but things like job rotations aren’t going to cost any money, cost-functional training isn’t going to cost money, and pairing people up in senior/junior-teams requires no extra funding.

Leadership is about having the assertiveness to make these things happen.

The real cost of leading Regardless of this though, sometimes the only way to save on dollars is to cut back on labour costs, and that’s a really terrible thing for a manager to have to face. No manager likes having to do that, and if you do you’re probably shouldn’t be working with people in the long-term, but sometimes you do have to make these tough decisions. For me, a definition of leadership is, knowing to do what is good for the organisation – even if what you really want to do is what’s good for the people. As a manager and a leader, the other thing that you have to do is focus on who is left behind after the layoffs. You need to really shore up the morale of the people who are left behind, because they’ll be struggling with the dual emotions of fearing that they’ll be next and the sense of

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guilt over why it wasn’t them getting laid off in the first place. All A shining light that is then mixed with the sense of relief they feel when they One person’s story that I really like is Anne Mulcahy at Xerox. She was someone from within Human Resources who is don’t also become victims of further layoffs and are still in a job. now running the company. When she was given the job, I reSome organisations are currently looking to get rid of non-value member all the financial people saying, “You’ve got to break up adding activities, such as preparing reports for senior management the company and bring about some drastic changes,” and there or an excessive numbers of meetings, so that job roles can ultimately was a remarkable amount of pressure. run more efficiently, but the push for leadership development is still Of course, the thing is, Mulcahy strong. In fact, it was recently reported in is a Xerox-lifer – she had grown up the Wall Street Journal that while many with the company, and she said, “I John Baldoni is a recognised thought leader training programmes are being cut to know the values of our organisation, in leadership and communications, as well save on costs, leadership development is I know what we are capable of doing,” as a motivational speaker, author, executive not, and this is because companies now and while there was a significant coach and communications consultant. realise how critical leadership developamount of downsizing that Xerox went Baldoni’s work is designed to help managers ment is to the future of the enterprise. through, Mulcahy really helped to create, plan, manage, recognise, motivate and Again, leadership development does not right the ship. lead more effectively. always mean spending money. There is She’s a wonderful communicaoften a misconception that leadership tor, she went out and listened and she development programmes have to be asked, “What can we do here? What formalised for them to matter, and I don’t can’t we do?” and she focused on core competencies. It’s a wonthink that is necessarily true. For example, you can coalesce a team, derful story of someone who worked – and I’m a great admirer of give them special projects which relate to furthering the enterprise her leadership ability. and then you come back and work on that. How are we doing?

Leadership development isn’t always easy. Sometimes What have we learned? Those aren’t cost intensive, but they still people need to have the door opened for them, or they need add value and give people greater levels of responsibility, which in permission to do those kinds of leadership things, especially turn prepares your people for greater roles of leadership as they within a large corporate infrastructure. “Oh, you mean I can do progress in the company. that?” That’s leadership. And we have to go and do it, we have The other thing that organisations need to understand is that to make it happen. you can actually teach leadership. It is true that you can’t just make someone a leader – it has to be earned, but you can teach it. In other words, while you can teach someone the principles of it, actually becoming a leader has to be a personal decision. That said, most leaders in our world never went to any sort of a leadership development institution and never will, nor should they need to. I like to define personal leadership as the sense of autonomy, initiative and responsibility, that sense of willingness to step forward and make positive things happen – and that has to come from within us.

What’s more, with the economy we’re experiencing right now, we could be seeing the emergence of new leaders because people often to have to step up and really show their worth during difficult times. In fact, in many ways, crisis is the crucible of leadership. It generates something in people. If we look back at history – George Washington, Abraham Lincoln, Winston Churchill – these are all people who step forward in moments of crisis and society has always benefited from that. I expect we’ll see that same mentality happening within our corporate environment as we continue through this recession.

Communicating leadership Leadership involves both communications and learning. We look at John Baldoni’s Leadership Communication Model – a key tool in his teachings.

Leadership process

Communication action

VISION

Visualising and verbalising the message

PLAN

Describing the steps the organisation needs to take to fulfill the vision

DELEGATE

Defining individual roles and team reponsibilities

COACH

Advising, counselling and listening

MOTIVATE

Recognise the contributions of others

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IN REVIEW On the shelf

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As climate change and sustainability become increasingly important, Business Management reviews the best of this quarter’s green book releases.

Green Recovery

Get Lean, Get Smart and Emerge from the Downturn on Top,

by Andrew Winston When the economy turns rough, many companies sideline their green business initiatives. That’s a big mistake. In Green Recovery, Andrew Winston shows that no company can afford to wait for the downturn to ease before going green. Green initiatives ratchet up your company’s resource efficiency, creativity and employee motivation. They save energy, waste and money, preserving precious capital – and give precise focus to your innovation efforts and strategic priorities. Part manifesto and part how-to guide, this concise and engaging book provides a road map for using green initiatives to deliver short-term gains and position your company for long-term strategic growth.

BM says: Green Recovery is a great guide to establishing green positioning in a downturn and explains how to emerge stronger when the economy is back on the up.

Fixing Climate

The Story of Climate Science – And How to Stop Global Warming, by Robert Kunzig and Wallace Broecker With Broecker as his guide, award-winning science writer Robert Kunzig looks back at Earth’s volatile climate history and sheds light on the challenges ahead. Ice ages, planetary orbits, a giant ‘conveyor belt’ in the ocean – it’s a riveting story full of maverick thinkers, extraordinary discoveries and an urgent blueprint for action. Fixing Climate explains why we need not just to reduce emissions, but to start removing our carbon waste from the atmosphere. And in a thrilling last section of the book, we learn how this could become a reality, using ‘artificial trees’ and underground storage.

BM says: A fascinating account of how we have arrived at a point where climate change is no longer preventable. A compelling read for anyone wishing to understand the unique challenge of climate change.

The Off-Grid Energy Handbook

by Alan and Gill Bridgewater As awareness of our own carbon footprint continues to grow, we continue to seek ways to be as eco-friendly as possible. In this guide, off-grid energy itself is explained in detail, and then seven different chapters take on the various different options available (solar, wind, wood, bio, water, geothermal and gaseous). This invaluable book is a must for anyone who wishes to control their consumption of fossil fuels and learn about the different possible sources of energy that could be adopted in ether the home or the workplace.

BM says: Generally concise and well-written information for the energy-conscious consumer.

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CITY GUIDE Moscow

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From the capital of the old communist days to the nerve centre of New Russia. BM puts this ever-changing city to the test – be it for a weekend getaway or an important business trip.

Time: +3hrs GMT • Currency: Rouble • Average annual temp: 5.4°C • Population: 10 million

Red Square

About

Getting around

From the airport

Moscow is a city soaked in history and intrigue, like much of Russia and the old Soviet Union itself. Indeed, Winston Churchill famously described Russia as a “riddle wrapped in a mystery of an enigma”.

Since the fall of communism, Moscow has transformed itself into a modern city although traces of the old soviet era are clear to see. Moscow is one of the world’s most expensive cities – perhaps even the most expensive. All foreigners entering Russia require visas.

The Moscow Metro is an excellent way of navigating the city and mixing with the locals.

Indeed, around seven million Moscovites travel by the metro on any given weekday. A first glance at a map of city’s extensive underground rail network (which stretches just under 300km in total) can appear daunting. However, try to make an effort to learn the Russian Cyrillic alphabet to better negotiate the cross-crossing lines and 170 stations. Travel on the underground is cheap and efficient – as well as ostentatious in parts; some stations have intricate chandeliers and beautiful murals. Above ve ground, taxis are abundant; just stand on the street and stick your arm out. Official taxis have a chequer-board logo and/or a small green light in the windscreen.

Drivers never use meters and often claim that they don’t have change. Alternatively, buses and trams go almost everywhere the metro doesn’t.

Moscow boasts five airports but you will more than likely arrive at Sheremetevo-2 International Airport, 30km north west of the city. Some airlines use Domodedovo airport – located 40km south of the city and connected to the centre by a road and rail link. If arriving at the former, once you collect your luggage the ‘taxi mafia’ swing into action.

Drivers will often quote absurdly inflated prices to go to the centre so haggle hard.

The journey should cost around $US45 but many foreigners unwittingly wind up paying at le least double. There a few car rental stands but to get the best deals it’s sta probably best to book in advance. pr If you are on a budget, buses to the centre operate from 5.40am until midnight. Be warned that passport control at both airports can be time-consuming so factor this into your journey.

Not your usual station

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TOURIST TIPS

Bolshoi Theatre

• When venturing out at night Moscovites like to dress glamorously, especially when going for dinner, so make sure you pack smart evening wear.

• Learn to say ‘neyt’ to your host.

Russians love their vodka and your glass will keep being refilled if you drink it dry.

• Temperatures in winter can plummet to a teeth-chattering -10°C. Conversely, summer can get very hot.

Relax

bouut • Keep your wits about

A visit to the world-famous Bolshoi Theatre is a must. The six-tier auditorium provides an eass, you in touristy areas, unforgettable experience, be it ballet or opera, although tickets for popular performances nd where thieves tend can be hard to come by. For a more vibrant evening out, Moscow is packed with bars and to operate. nightclubs, offering you a chance to sample Russia’s national drink – vodka. However, don’t be surprised to see strippers, both male and female, plying their trade in bars. The city also uld has an abundance of casinos and card rooms for you to gamble away your wads of roubles. Adventurous visitors should ome e sample a traditional bathhouse (banya) where you can enjoy being steamed, washed and pummeled. Russia has become a). an emerging force in world football and Moscow is the home of fi ve teams in the country’s premier league (Viysshaya Liga).

Tickets for matches can be easily purchased, although the league shuts down for an extended break during Russia’s harsh winters.

Eat See No visit to Moscow would be complete without a trip to the historical Red Square, which lies outside the Kremlin’s north eastern wall. It was here that communist rulers paraded their military hardware, especially so during the Cold War era. To the southern end of Red Square sits the kaleidoscope of colour and epitomy of Russia that is St Basil’s Cathedral, created between 1555 and 1561 to celebrate Ivan the Terrible’s capture of the Tatar stronghold Kazan.

Nearby, Lenin’s tomb proves a popular tourist attraction. He died of a massive stroke in 1924, aged 53, and has been preserved in a granite tomb ever since.

St Basil’s Cathedral

1, Red Square For authentic Russian fare head to this conveniently-located restaurant in the same building as the history museum.

Reservations are needed, even in the daytime. Meals from US$50 Pushkin Café Considered by many as the best eatery in Russia with its early 20th century atmosphere. The food is exquisite. The first floor is open 24 hours a day.

Dinner costs around US$50

Sleep Hotel Metropole Moscow Location is everything in Moscow and the Metropole doesn’t disappoint, with its perfect spot near to Red Square. A traditional Russian-feeling hotel.

Rates: From US$400 a night.

Ritz Carlton Hotel This eagerly-awaited hotel opened in 2007 with the stated aim to raise the standard for luxury hotels in Moscow. Sumptuous surroundings and décor make this possibly the finest in the city.

Rates: From US$300 a night.

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THE KNOWLEDGE

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The wow factor Looking to broker a big deal over dinner? BM guides you through a handful of restaurants guaranteed to impress your clients.

El Bulli, Girona, Spain El Bulli has been voted the best restaurant in the world by virtually every culinary magazine and association. This restaurant reinvents dinner as an art form, with its picturesque setting in Girona on Spain’s Costa Brava. Owner Ferran Adriá spends months in his kitchen, or “laboratory” as he refers to it, perfecting new techniques and tastes. The flavours and textures are the result of incredible amounts of work, and an unrivalled understanding of the gastronomic make-up of each fresh ingredient. A highlight is the 27-course food festival that will awaken taste buds you never knew you had. One downside for food lovers is that El Bulli is only open from April through to September.

Raffles Grill, Raffles Hotel Singapore Raffles is a colonial-style hotel that dates back to 1887 and is named after Singapore’s founder Sir Stamford Raffles. Today, it is managed by Raffles International and the Raffles Grill is where Singapore’s elite flock for that special dining experience. The hotel’s opulent surroundings and that traditional Raffles aura blended with a touch of French decadence provide the perfect backdrop.

The quiet ambience and formal attire does give you a feeling that you are attending an official dignitary dinner. The lobster bisque comes highly recommended, while the Raffles Grill boasts an impressive and extensive wine list.

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Al Mahara, Burj Al-Arab hotel, Dubai This underwater themed fish restaurant sits at the bottom of Dubai’s iconic Burj Al-Arab hotel. Al Mahara, which translates as ‘oyster’, begins with a simulated submarine ride from the reception to the dining area. Once inside, you will find the tables are placed around an enormous glass aquarium packed with fish of all sizes and varieties. It certainly is a jaw-dropping view as you tuck into your meal. Being situated in the world’s only 7-star hotel, it’s no surprise to learn that the service is exceptional. A special mention has to go to the whole bass for two people, while the sushi foie gras is an unexpected and tasty combination. Al Mahara is open from 12.30pm-3pm and 7pm to midnight daily. A formal dress code is observed.

Masa, New York, US Situated in New York’s Time Warner Centre, Masa is a sushi restaurant considered to be one of the best, albeit the priciest, in the world. Just don’t go leaving your wallet at home – dinner will set you back around US$400 per person, not including drinks, tax or tips. With just 26 seats, this dimly lit and intimate restaurant serves unique cuisine prepared by chef Masa Takayama. Takayama opened his eponymous restaurant, as well as Bar Sushi next door in 2004, and it quickly gained a reputation in New York for its exotic ingredients. The owner flies fresh fish in from his homeland of Japan and serves up Kobe beef. He can often be seen serving the food himself and working behind the bar. Masa’s exclusivity means that reservations need to be made several weeks in advance.

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HOT WHEELS

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Speed demon Lotus has a sound heritage for producing fast two-seater sports cars.

For this issue’s star car, we put the Evora model under the microscope.

ith a top speed of 160mph, the mid-engine, six-speed Evora is the latest lightning quick sports car from British manufacturer Lotus. Despite its unique design, the Evora does retain the company’s tradition of beginning all model names with the letter ‘E’. First impressions are that the car is larger than previous pocket rocket models like the Exige and the Elise. It exudes curvy lines that give off an aesthetically pleasing and stylish appearance. Inside, the designers have blended leather with metal to conjure up a minimalist and modern interior. You also have a choice of a twoseater version or the more family-friendly 2+2 (back seats) configuration, while the boot is even large enough to accommodate two sets of golf clubs. Lotus plan to make 2000 Evoras, with an automatic version scheduled for 2011. Expect to shell out around US$85,000 to get your hands on one.

W

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CATALOGUE PAGE BMME6:june09 18/06/2009 08:41 Page 143

Your World. Covered

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OBJECTS OF DESIRE Technology for the mobile executive

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A glance at some of the gadgets designed to make your life easier.

<<< Sony Reader Digital Book If you are fed up with lugging dog-eared paperbacks around with you on holiday Sony could have the answer. The Reader Digital Book holds about 160 eBooks or hundreds more with optional removable memory cards. Its portable size makes it the perfect travel companion, allowing you to read a variety of books whenever and wherever you want. With thousands of eBook titles available at the eBook Store from Sony, you can choose to download new releases, classics and popular titles. It’s available in silver, dark blue and red. Despite its advantages, some critics argue that it takes the romance out of physically reading a good book.

Desirability rating >>> Nokia E75 The latest handset to roll off the Nokia production line is the stylish E75. First impressions are that this is a solidly-built phone with a fairly slim design (14.4mm thick), which is all the more impressive when you discover the slide-out, full QWERTY keyboard concealed underneath. The 139-gram E75 offers the usual features like internet access and email on the move, a 3.1MP camera, MP3 player, video calling, VoIP capabilities and Wi-Fi, whilst the GPS receiver is a handy addition. The vibrant 2.4-inch screen displays 320x240 pixels.

Desirability rating <<< Archos 5 60GB Relatively unknown manufacturer Archos had a long history of producing media players – long before the now ubiquitous iPod was just a twinkle in Steve Jobs’ eye. Its latest model is the Archos 5 Media tablet with a great 4.8-inch touch-screen display that fills the back of the unit. The basic model comes with a somewhat stingy 60GB, although there is a more expensive 250GB version. The built-in Wi-Fi and software means you can stream content from your home computer. Splash out on the additional DVP station accessory and you will be able to record your favourite programmes straight to the hard drive; perfect for catching up with re-runs of Dallas while on the road.

Desirability rating: >>> Lumix DMC-FX48K Panasonic has been churning out some great digital cameras of late, and its latest Lumix model – the DMC-FX48K – doesn’t disappoint. The 12.1-megapixel camera features a 25mm ultra-wide-angle Leica DC lens and a powerful 5x optical zoom, yet its slim profile makes it convenient to slip into a pocket. A welcome added bonus is the ability to record High Definition (1280 x 720p) motion images at 30 fps. And, using the DMW-HDC2 component cable (optional accessory), the video can output directly to a television for easy playback.

Desirability rating

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