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FIRST-CLASS DELIVERY The secret behind Aramex’s meteoric rise across the Gulf and beyond

ARAB POWER The most influential and successful Arabs under the spotlight

Taking flight

How Middle East airlines are fighting back from the downturn

QATAR HERO Dohaland CEO Issa Al Mohannadi on transforming the heart of the capital

VISITORS WELCOME Abu Dhabi Tourism Authority’s Mubarak Hamad Al Muhairi trumpets the city’s ambitious tourism projects

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ED NOTE_june10 18/06/2010 15:49 Page 7

FROM THE EDITOR

Up, up and away Why the Middle Eastern airlines and the burgeoning aviation sector in the region are leading the way in these times of economic doubt.

T

ony Wheeler, the intrepid globetrotting founder of the Lonely Planet travel guides, recently wrote that in order for a country to have its own identity on the world stage it needs two things: its own brand of beer and a national air carrier. The latter of Wheeler’s requirements is something that the GCC states have, on the whole, delivered with aplomb. In the space of a few years the so-called ‘big three’ of Emirates Airline, Etithad Airways and Qatar Airways have burst on to the aviation scene and shaken up the market, muscling in on the legacy carriers’ lucrative routes into Europe and Asia.

The Middle East’s favourable geographic position is being leveraged to their advantage as these carriers strive to be the first choice for travellers. Emirates Airline, the Arab world’s largest airline, seems to be cornering the market on Airbus 380 ‘super-jumbos’ with its latest US$11.5 billion order for 32 of the 800-seat aircraft. The Chairman and CEO, HH Sheikh Ahmed bin Saeed Al Maktoum, already has another 58 being manufactured with the Emirates livery at Airbus headquarters. It’s a far cry from when the airline took to the skies with just two aircraft 20 years ago.

But the leading triumvirate haven’t got it all their own way. The low-cost airline sector, although representing just five percent of the aviation industry in the region, is capturing new business as travellers tighten their purse strings in these times of economic uncertainty. It’s a market ripe for expansion, hence the emergence of Air Arabia, Jazeera Airways and flydubai in the last few years. Then there is Oman Air, the Sultanate’s flag carrier, which is snapping up new aircraft and opening up new routes. In our exclu-

“Tradition is always the focus and a priority when we consider anything in the development” Al Mohannadi, CEO Dohaland page 51 “You have to be on your toes at any given time because that’s how you work in the service industry. We survive to serve our customers and attend to their needs so you can’t switch off” Hussain Hachem, CEO Aramex (MEA) Page 42

sive interview with the airline’s CEO, Peter Hill, (page 56) he discusses where his expanding company is heading.

“We don’t have huge ambitions to be the biggest, but we do have an ambition to be become recognised as a worldclass business and economy class airline,” Hill states.

Like Oman Air’s Gulf rivals, the GCC governments are using their flag carriers as a marketing tool to entice both tourists and business visitors. Dubai has been charging ahead with attracting foreigners (holidaymakers and expats) for the past 15 years or so. Its lack of the black stuff compared to its oil-rich neighbour Abu Dhabi meant it had to look for alternative sources of income.

As Hill explains, Oman too is looking to diversify its economy away from oil and gas and promote the Sultanate as an upmarket tourist destination. Its stunning coastline, desert and mountains are an unspoilt beauty that is already proving a magnate for foreigners looking for an alternative destination. Like Emirates, Oman Air will be crucial in putting its country on the tourist and business map in a part of the world with states jostling for foreign attention. For these rapidly expanding airlines, things are really taking off. n

Julian Rogers, Editor

7

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CONTENTS 9138

36

Power play Business Management takes a look at 10 of the most powerful and influential Arabs in the world

Good things come in small packages

Qatar Hero After Qatar discovered oil and gas back in the 1930s, its capital, Doha, morphed from a small fishing village into a sprawling city.

Dohaland CEO Issa Al Mohannadi believes, however, that now is the time for the city to go back to its architectural roots

42

Global logistics services and transportation company Aramex started life in 1982 as a small, regional player but soon became the Middle East’s biggest courier firm. Hussein Hachem, CEO of Aramex Middle East and Africa (MEA), explains why this “dynamic” and “creative” business is really going places

48 52

Flying high The world’s major economies may be struggling through severely turbulent times but the Middle East’s aviation industry is one sector that appears to be soaring. However, is this growth sustainable or are the airlines heading for a bumpy landing?

Business Management investigates

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CONTENTS

56 Rising star Oman Air has its sights firmly set on new routes and fleet expansion but the top priority right now, stresses CEO Peter Hill, is to clear the airline’s debts and turn a profit

127

Ousama Kabbani

60 Cheap thrills The rise and rise of lowcost flying

66 Predicting the future of enterprise IT

Ask The Expert 76 Abdulaziz Al-Salloum, Duroob Technology 83 Costin Raiu, Kapersky Lab 84 Salah Abu Shaar, STME 106 Khaled EL-Faramawy, AL-Nokhba for Business Transformation (NBT)

Joe Baguley forecasts some key considerations that will need to be addressed if cloud computing is to deliver on the hype

68 CEO perspectives The results of the Annual Global CEO Survey 2010 shows that business leaders in the Middle East are emerging from the economic crisis with optimism

74 Zero tolerance and passive network infrastructures

144

Draka’s Peter Ludin explains why failure is not an option for upcoming generations of high-speed broadband networks

78 Beyond keeping the lights on To discover why technology is the “main fabric” of Abu Dhabi Commercial Bank and the key role of innovation, we speak to Head of IT Operations, Steve Dulvin

86 The changing face of project finance Although times are undoubtedly leaner than at any point in the last three years, those involved in project finance in the Middle East are still bullish about the health of the sector

94 A princely position Reigning supreme in the world of construction Wal King, CEO of Leighton Holdings, reveals why evolving with the times has proved a key strategy to getting – and staying – at the top

100 The challenging road ahead We hear from Saudi Aromco’s Khalid Falih

Jay Bauer

Executive Interview 104 Gaby Matar, Maximo 114 Ibrahim Al Daour, Technostream 127 Ousama Kabbani, Abdulla Fouad Holding Co.

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CONTENTS

108 Birdies, bogies and bytes The European Golf Tour would be firmly plugged in the proverbial bunker if it wasn’t for the mountain of technology behind the scenes, says CIO Mark Lichtenhein

Regulars

138

112 The long arm of the law Major General Khamis Mattar Al Mazinah, Deputy General Commander of Dubai Police, reveals how the force is working to improve safety and security in the emirate

116 Gateway to the Gulf Bahrain’s well-diversified economy and attractive geographic location enhance its appeal as an attractive trade hub in the Gulf region, putting it in a strong position to prosper.

124 Redefining refining As oil refineries encounter one of the toughest periods in their history, Bapco’s deputy CEO, Dr Eion Turnbull, reveals what the company is doing to stay one step ahead of the competition

128 Training up Nigel Banister explains how an MBA could help executives get that all important edge in an increasingly competitive recruitment market

16 18 23 138

The brief International news In my view City guide

140 141 142 144

Gadgets Books Lazy days Final word

79

130 Visitors welcome Mubarak Hamad Al Muhairi, Director General of the Abu Dhabi Tourism Authority (ADTA), on how his emirate plans to become a global tourism hub

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134 Magnificent metropolis Robert Kunkler, Regional Vice-President of Operations tells us what makes the Madinat Jumeirah stand out

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Business Management GDS International, 4th floor, 3 Callaghan Square, Cardiff CF10 5BT, UK Tel: +44 (0) 2920 729 300 E-mail: cardiff@gdsinternational.com Legal Information The advertising and articles appearing within this publication reflect the opinions and attitudes of their respective authors and not necessarily those of the publisher or editors. We are not to be held accountable for unsolicited manuscripts, transparencies or photographs. All material within this magazine is ©2010 GDS.

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The African dream comes alive. Could it be Qatar in 12 years?

A

fter months of anticipation, the FIFA 2010 World Cup Finals have finally kicked off in South Africa – the first time football’s greatest prize has been staged on African soil. For four weeks the eyes of the world will be on Africa’s richest nation as the feast of football dominates TV coverage, the media and conversations over the office water cooler. To award South Africa a sporting event of this magnitude was somewhat of a gamble but football’s

“South Africans have proved to be colourful, hospitable and noisy hosts”

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UPFRONT 17

governing body, FIFA, felt this continent’s time had come. South Africa narrowly missed out to Germany to stage the 2006 tournament.

The build-up to the World Cup was dogged by fears that the stadia wouldn’t be completed on time but the organisers proved the doubters wrong by building and upgrading the grounds with months to spare. Getting the 10 stadia in nine cities completed cost the country US$2.2 billion. But even this is dwarfed by the US$52 billion total infrastructure investment programme initiated by the government to upgrade roads, rail and airports. From a financial viewpoint, South Africa’s economy is forecast to grow by 2.3 percent this year with an estimated 350,000 fans from 32 nations flooding the country and adding some US$2.7 billion to the economy. The tournament has also created 129,000 jobs.

South Africans have proved to be colourful, hospitable and noisy hosts thanks to the cacophonous din from the army of fans passionately blasting their vuvuzela horns before, during and after the matches.

Some matches have been played in stadia with large empty patches of seats in the stands, which has been attributed to the extortionately high price of air fares, the cost of travelling between games in a country with a creaking infrastructure and the lingering security problems. On top of this, FIFA has been accused of pricing the tickets too high for the locals.

However, FIFA’s decision to award the tournament to this continent will give Qatar extra impetus.

The Gulf state is hoping the World Cup can be held in the Emirate after launching an ambitious bid to host the tournament in 2022. This would be the first time it has been played in the Arab world. Although just an 11,000 square-kilometre peninsula sticking into the Persian Gulf and housing a population of just 1.3 million, the bid committee, who are in South Africa for the finals, are confident the Emirate has the credentials to land the coveted prize. Qatar certainly has the funds to construct state-of-the-art stadia, transport links and hotels for the players, FIFA officials and travelling fans. One of the biggest stumbling blocks to Qatar being selected is the heat. The World Cup is played in the summer, a time of the year when temperatures in Qatar regularly top 40°C. This stifling heat could reduce play on the pitch to a sweaty crawl, but the bid committee has plans for air-conditioned indoor stadia as well as outdoor grounds with innovative cooling systems. Qatar failed in its bid to host the 2016 Olympic Games so will be looking to learn from where it went wrong. A decision on the 2022 World Cup’s host country will be announced in December so watch this space.

News in Pictures Sultan Bin Nasser al-Suwaidi, the governor of the United Arab Emirates Central Bank, speaks at the First Annual World Islamic Banking Conference, in Singapore in June

Smoke billows from the scene of one of five explosions that rocked the Iraqi capital Baghdad killing at least two people, according to an interior ministry official

Kuwaiti MPs Ahmad al-Sadoun (R), Msallam alBarrak (C) and Khaled al-Tahous leave a session of Kuwait’s parliament after four members of Kuwaiti opposition group the Popular Action Bloc walked out of the parliamentary session when MPs voted to grill the prime minister over alleged inaction on pollution behind closed doors

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UPFRONT

International news USA

Europe

UK

The massive oil spill leaking from a well in the Gulf of Mexico is having a damaging effect on oil giant BP’s share price, which has fallen to its lowest level in 14 years.

Recent weeks have seen BP’s failed attempts to contain the leak in an operation know as “top kill” which aimed to plug the leaking well. Figures for the clean-up have now been put at a staggering US$990 million, according to BP. As a result of what President Obama has called “the worst oil spillage in US history” and an “environmental 9/11” the shares sell-off was BP’s biggest one-day shares fall for 18 years, and wiped UK£12 billion off its stock market value.

Europe’s luxury goods retailers are experiencing a wave of rising profits on the back of the economic crisis in the region. The reason for this unexpected success has been put down to the fall in value of the single currency, which has lost a fifth of its value against the dollar since last November. This fall has boosted profits for those companies that export their goods to the US and East Asia.

Likewise, luxury goods companies that source their products from the eurozone countries have seen their costs fall sharply and their revenues rise.

The BBC recently found that almost UK£30 million has been left unused on 16.5 million smart travel cards during the year from April 2009 to April 2010. The Oyster pay-as-you-go cards, which are used for travel on London’s trains, buses and tubes have no expiry date and each of the unused cards is thought to contain credit totaling an average of UK£1.80.

In 2009, 31,000 Oyster cards were issued and topped up but never used, even though they held UK£246,000 worth of travel on them, according to information obtained in a Freedom of Information (FOI) request.

In 2009, 31,000 Oyster cards were issued and topped up but never used, even though they held

UK£246,000

“Following the death of a 19-year-old employee who fell to his death at the factory and eight other suicides at the site this year, Foxconn has reportedly asked employees to sign letters promising not to kill themselves”

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China Two-way capital flows between the China and the Middle East are likely to increase rapidly in the coming years as investment catches up with recent fast growth in trade, according to the Chief Executive of Invest AD, the Abu Dhabi-based financial services firm.

In the last five years, two-way trade between China and the Middle East had tripled to reach US$107 billion in 2009. Chinese companies are among the most active in the infrastructure sector of the Middle East, winning US$2.1 billion worth of construction deals in the UAE alone, in 2008.

Taiwan Taiwanese manufacturer Foxconn, the world’s largest maker of computer components, has witnessed an unfortunate number of suicides at its Shenzhen factory in China, which has raised questions about the working conditions for millions of factory workers.

Following the death of a 19-year-old employee who fell to his death at the factory and eight other suicides at the site this year, Foxconn has reportedly asked employees to sign letters promising not to kill themselves and agreeing to be sent to psychiatric institutions if they appear to be in an abnormal mental or physical state.

Nigeria Troubled Nigerian airlines are to receive a US$3.3 billion bail-out from Nigeria’s Central Bank. Many of the airlines, which have been hit by higher fuel prices, are now heavily indebted.

The bank’s spokesman, Mohammed Abdullahi, said that airlines can now access this fund and those that are already indebted to banks can refinance their loans and amortise them over a period of 10 to 15 years.

It is hoped that this funding will help to avert a financial crisis in the aviation industry.

In the last five years, two-way trade between China and the Middle East had tripled to reach

US$107 billion

“The massive oil spill leaking from a well in the Gulf of Mexico is having a damaging effect on oil giant BP’s share price, which has fallen to its lowest level in 14 years”

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UPFRONT

Landmark sale amous London department store Harrods has changed hands in a deal reportedly worth UK£1.5 billion. The store was sold by Egyptian tycoon Mohamed Al Fayed who bought a 30 percent stake in House of Fraser (which included Harrods) from the Fraser brothers in 1984 and then in 1985 he and his brothers paid UK£615 million for the remaining 70 percent.

Fayed’s acquisition of Harrods did however lead to one of the most bitter feuds in British business history as business magnate Roland ‘Tiny’ Rowland, from whom Fayed bought his original 30 percent stake at a price of UK£2.50 per share, accused him of using a power of attorney that he held for the Sultan of Brunei, the world’s richest man at the time, to fund the purchase. Rowland took the matter to the Department of Trade and Industry, where an inquiry ensued.

The DTI report was delivered in July 1988 but was not published. However, it was reported in UK newspaper The Observer that the findings confirmed Rowland’s suspicions.

“We are satisfied that the image they [the Fayeds] created between November 1984 and March 1985 of their wealthy Egyptian ancestors was completely bogus,” the report allegedly stated.

However, Fayed retained ownership of the store and since 1985 he has invested almost UK£400 million on refurbishing the retail wonderland, including a UK£30 million computerised distribution centre to speed up shipments and the UK£20 million Egyptian Escalator, which was designed alongside experts from the British Museum for authenticity.

The sale of Harrods was announced on May 8, 2010 when it emerged that Qatar Holding, the Qatari royal family’s investment company, became the fifth owner of the store since its creation in 1840 for a reported UK£1.5 billion.

F

Harrods timeline...

1834 Charles Henry Harrod founds a wholesale grocery in Stepney, East London

Fayed’s sale of Harrods followed months of speculation due to rumours of investors from the Middle East making unsolicited approaches. It was reported in the UK newspaper The Times that Fayed had commented in April: “People approach us from Kuwait, Saudi Arabia, Qatar. Fair enough, but I put two fingers up to them all. It is not for sale. This is not Marks & Spencer or Sainsbury’s. It is a special place that gives people pleasure. There is only one Mecca.”

However, according to a statement from Fayed following the sale, the decision was prompted by the desire to retire and spend more time with his family. The store’s new owner, Qatar Holding, is estimated to control about €57 billion in assets and has interests in many leading companies in Europe and Unites States.

Qatar is the largest shareholder in Songbird Estates Plc, which controls more than half the buildings in the

“People approach us from Kuwait, Saudi Arabia, Qatar. Fair enough, but I put two fingers up to them all. It is not for sale. This is not Marks & Spencer or Sainsbury’s. It is a special place that gives people pleasure”

Mohamed Al Fayed on the sale of Harrods “After 25 years as Chairman of Harrods, I have decided to retire and to spend more time with my children and grand-children.

“I have made Harrods into a unique luxury brand that it recognised all over the world, and in reaching my decision to retire, I wanted to be sure that the legacy and traditions I built up in Harrods would be continued.

“The team I have built will be encouraged by new owners to develop the foundations I have laid and support the long-term successful growth of Harrods.”

1849 Harrods moves to

The British department store holding company, House of Fraser, buys Harrods

1959

the Knightsbridge area of London, near Hyde Park

On 6 Decem-

1883 ber, fire guts

the shop buildings, giving the family the opportunity to rebuild on a grander scale

Harrods shares are floated on the London Stock Exchange under the name Harrod’s Stores Limited

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“It is a privilege for us to acquire Harrods, a unique company that combines an iconic luxury brand and one of the most prestigious retail properties in the world with best-inclass financial metrics”

The Fayed brothers buy the remaining 70 percent of the store for UK£615 million

1985

Canary Wharf estate in London and J Sainsbury Plc, the UK’s third-biggest supermarket owner. It’s also the second-largest shareholder in London Stock Exchange Group Plc and has a stake in Volkswagen AG, the German automaker. It had previously invested in Barclays Plc, the UK’s third-largest bank by assets, but recently sold its shares.

Speaking to Sky News about the acquisition, Ken Costa, the Chairman of Lazard International, the investment bank advising the deal, said: “After 25 years as chairman of Harrods, Mohamed Al Fayed has decided to retire and to spend more time with his children and grandchildren. He has built Harrods into a unique luxury brand with worldwide recognition.

“In reaching the decision to retire, he wished to ensure that the legacy and traditions that he has built up in Harrods would be continued, and that the team that he has built up would be encouraged to develop the foundations that he has laid.

“Qatar Holding will become only the fifth owner of Harrods since its creation in 1840. Qatar Holding was specifically chosen by the Trust as they had both the vision and financial capacity to support the long-term successful growth of Harrods. Of paramount importance to Mohamed Al Fayed was to ensure that the Harrods staff would find in QH an owner who would be supportive of their efforts to maintain the traditions of Harrods.”

Ahmad Mohammed Al Sayed, CEO and MD of Qatar Holdings said: “It is a privilege for us to acquire Harrods, a unique company that combines an iconic luxury brand and one of the most prestigious retail properties in the world with best-in-class financial metrics. This acquisition further expands our global portfolio of world-leading companies.”

Al Fayed will remain as honorary Chairman of Harrods.

Harrods was established in 1849 The Harrods motto is Omnia Omnibus Ubique - All Things for All People, Everywhere The store has over 90,000 square metres of selling space and 330 departments The store currently employs 4000 staff 15 million people shop there each year Up to 30,000 customers pass through the store per day 100 tonnes of chocolate is sold by the Harrod’s confectionary department every year The store is open 363 days a year

2006

Holding become the 2010 Qatar new owners of Harrods,

The Harrods ‘102’ store opens opposite the main store on Brompton Road

after Al Fayed announces he has sold the store. It was reported that they paid UK£1.5 billion for the Knightsbridge store, in a deal signed in the early hours of 8 May, 2010

The relationship between House of Fraser and Harrods is severed. Harrods remains under the ownership of the Fayed family, and House of Fraser is floated on the stock exchange

1994

The Facts...

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Facts & Figures It took 22 million man-hours of work to build the Burj Khalifa Source: arabianbusiness.com

Lebanese growth

T

he Lebanese economy is expected to grow by seven to eight percent in 2010, according to Riad Salameh, the Central Bank governor. He made the announcement at the 18th Arab Economic Forum, which was attended by 25 countries.

Lebanon’s 60 banks have assets worth three times the GDP and this, together with their conservative policies, has allowed them to largely avoid the global economic crisis. The banks’ resilience has helped to boost confidence and has therefore had a positive effect on growth.

However, Lebanon’s national debt tops US$50 billion (some 153 percent of GDP), accumulated since the end of the 1975-1990 civil war. The International Monetary Fund has urged Lebanon to take steps to reduce its debt-to-GDP ratio, raise revenues by reviewing current electricity tariffs, and redirect expenditures.

Fixing the finances Shortcomings in the UAE’s financial system will be addressed through a series of new measures to tackle regulatory and legal deficiencies that were exposed during the financial crisis.

Dubai International Financial Centre Governor Ahmed Humaid Al Tayer announced the measures at the recent Middle East, North Africa and South Asia forum. He stressed that although robust economic fundaments have enabled countries in the MENA region to be resilient to the impact of the crisis, the risks and challenges uncovered by the economic downturn need to be addressed.

The matter is increasingly important given the regions increased role in the global economy as global economic power shifts towards the east.

Market opportunities A study released by US-based fund manager Invesco has shown that Middle East investors are looking to invest more in emerging markets than in North America, Europe or Japan, lured by the higher returns that these regions can offer. Approximately 82 percent of the 200 participants surveyed for the report showed a preference for exposure to emerging markets in the next three to five years, compared with 30 percent for North America and 14 percent for Europe.

The study also showed Gulf investors have a short-term investment horizon with about 38 percent of retail respondents having a time horizon of less than a year, while only 12 percent of institutional investors have an investment horizon beyond five years.

Global asset managers frequently look to the Gulf region as an important source of financing from the region’s sovereign wealth funds. Invesco Middle East head Nick Tolchard estimates the region’s asset management industry to be US$2 trillion. The Invesco study included a variety of Gulf investors, ranging from sovereign wealth funds to retail bank advisers and pension funds. One of the main observations in the report is that most Gulf investors have become more risk averse in the last six months to a year, with sovereign wealth funds in the region looking more at alternative investment strategies than in the past.

Kuwait budget surplus

K

uwait has posted a fiscal surplus of US$28.3 billion after oil revenue more than doubled the budget forecast, according to the Finance Ministry. In the financial year to March, state income was 122 percent above its budget at US$61.8 billion, whilst spending came in under budget at US$33.6 billion, compared to the annual forecast US$41.7 billion.

The annual revenue from oil was predicted to be US$23.8 billion, but the actual figure came in at US$58 billion, according to data from the Ministry. The prediction was based on an oil price of US$35 per barrel, but oil is currently trading at US$70 per barrel. The forecast budget deficit US$16.7 billion therefore did not materialise and instead 10 percent of the revenue earned will now be put into a reserve fund for future generations.

For the current fiscal year, Kuwait, the fifth-biggest oil producer in OPEC, is planning to increase its spending by 34 percent and is projecting a budget deficit of US$22.2 billion, based on an oil price of US$43 a barrel.

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In my view DR RUMAIH M. AL-RUMAIH, Deputy CEO of the Saudi Arabian Railway Company (SAR), explains why rail is so important for the Kingdom of Saudi Arabia.

O

nce the Saudi Railway Company (SAR) North-South Railway (NSR) project is completed and in operation, the map of the entire region will be significantly smaller, with the rail network opening up remote areas and eventually extending across borders. This will inevitably mean an increasingly viable transport option in the entire Middle East, with rail linking the Kingdom together with its neighbours, and linking the region to major rail networks beyond.

The advantage of rail is that it is safe, secure and affordable alternative to both air and road travel, and will connect the mining centres in the north to the processing and export ports in the South.

Despite already boasting an existing rail network, the development of an expanded rail transport system in the Kingdom is crucial to improving the nation’s economic viability, whilst positively impacting its neighbours in the region.

The first priority for SAR is the design and construction of the Mineral Line of The North-South Railway (NSR). This connects the phosphate and bauxite-rich mining-cities of Al Jalalmid and Az Zabiiah in the North; with the agricultural district of Al Basayta at the Al Zabirah Junction in the East. These will then be linked to the processing and export facilities of Ras Az Zawr, currently under construction inside the Arabian Gulf port and industrial city of Al Jubail, in the South. Another important function of the

railway is its linking of a number of cities, neighbouring areas and villages, which will lead to their development socially, economically, industrially, agriculturally and commercially. In the future this will help also to establish advanced industries in the north of the Kingdom of Saudi Arabia.

Improving remote areas currently distant from more market-driven cities in the Kingdom, such as Riyadh, will be another advantage of the project. In turn, this will create opportunities for the Kingdom’s youth with the country’s economy as it develops.

From a regional perspective, SAR aims to eventually provide a safe transport alternative for expatriates and tourists between the Kingdom and other Gulf Cooperation Council nations, and beyond to countries such as to Jordan, Syria, Lebanon, and Turkey.

The challenges are many, but our resolve and determination is greater. The NSR is part of the largest railway project under construction in the world today.

The total length of the railway is an estimated 2400 kilometres, and includes sidings, yards, maintenance shops, stations and administrative facilities.

SAR has commissioned the best consultants worldwide to ensure that our decisions are based on the best and most reliable engineering and technical solutions. In addition to this, SAR ensures that young Saudi engineers are recruited and actively engaged with the consultants on the ground, training abroad, at the various project sites, or in our head office, all year round.

“The challenges are many, but our resolve and determination is greater. The NSR is part of the largest railway project under construction in the world today.

The total length of the railway is an estimated 2400 kilometres, and includes sidings, yards, maintenance shops, stations and administrative facilities”

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Saudi Arabia’s US$209m power shortage

T

he Kingdom of Saudi Arabia’s power need has been highlighted by the company’s electric company, Saudi Electricity Co, seeing a loss of US$209 million in its first quarter due to it having to purchase power from external providers to effectively meet the kingdom’s energy demands. In a statement, the company said its loss was “due to the increase in purchased energy from independent producers in order to meet increased energy demands, as well as the increased costs resulting from new projects”.

It is no surprise that the company wants to make some sort of expansion, but such a project is expected to cost upwards of US$1.87 billion and the company is trying desperately to make sure it can meet Suadi Arabia’s power demand, which is growing at a rate of eight percent per year. It was recently estimated that if Saudi Arabia is to meet its rising domestic demand, then it needs to raise investments in its power and water supplies industries by a third to at least US$266.7 billion through to 2025.

However, while the Kingdom has plans to spend more than US$400 billion over five years to upgrade infrastructure such as airports, roads and power plants, its energy plans aren’t as highly financed with only US$186.6 billion earmarked for such projects – US$79.9 billion on power generation, US$53.3 billion on water desalination and US$53.3 billion on sewerage.

According to a recent report from Banque Saud Fransi, this amount is “a step in the right direction – but at least a third more in funding would be required to bolster capacity in a way that comfortably cushions demand”.

Additional energy plans In order to meet the Kingdom’s future energy demands, Saudi Arabia has said it has set up a scientific centre for civilian nuclear and renewable energy. Despite the country being the world’s second highest producer of oil,

The potential of solar energy resources is excellent in all MENA countries, with an annual global solar radiation between 4-8kWh/m

domestic power demand has forced Saudi Arabia to look at other sources of energy to support the economy as well as the rest of the world’s.

The country’s investment in power generation is expected to see capacity increase from 46,000MW now to 67,000MW by 2020. Currently, the UAE is the first Gulf Arab country to take the nuclear route, in a bid to meet rising electricity demand for a fast-growing population.

Despite saying they intend to increase the use of crude oil for power generation to 2.5 million barrels of oil equivalent on a daily average by 2020 from 1.5 million BOE in 2009, Saudi Arabia’s plans to invest in alternative, sustainable, reliable sources to produce electricity and desalinate water is a clear intent to reduce their reliance of their oil reserves.

Saudi Arabia has invested US$12.5 billion in the sustainability-oriented King Abdullah University of Science and Technology in Thuwal, which opened in September, in a bid to become the world’s largest exporter of clean energy and the most important centre for solar energy research within 30-50 years. Despite cynical suggestions that it is yet another way for Arab oil producers to expand their grip on global energy

Countries such as Oman, Egypt and Morocco have good wind energy resources, with a wind velocity range between 8 11m/sec

“Saudi Arabia’s plans to invest in alternative, sustainable, reliable sources to produce electricity and desalinate water is a clear intent to reduce their reliance of their oil reserves”

supplies, others believe the case for renewable energy in the MENA region comes down to pure economics. Why burn finite hydrocarbon resources for yourself if you can save them and sell them?

Egypt, Lebanon, Iraq, Syria, Tunisia, Morocco and Algeria have good hydro resources, although potential far outstrips current output

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Al Jazeera gets social

Facts & Figures Qatar's economy is projected to grow 16 percent in 2010, with the state expecting a budget surplus of US$2.7 billion Source: arabianbusiness.com

Qatar’s Al Jazeera Network will be making its content available free of charge on social networking sites such as Facebook and Twitter. The move, which is reportedly part of a campaign for internet freedom, was announced by Wadah Khanfar, Director General of the network, at a conference in Doha. Khanfar says that by making their content available free of charge across a range of digital platforms, more people will be able to access it, which creates an environment where people are better informed and can make better decisions.

Content will be available on Facebook, YouTube and Twitter, and Al Jazeera is set to launch an application on the iPad and is expanding its presence in mobile communications on the iPhone, Blackberry, Android and Symbian platforms.

Facts & Figures 50% of the MENA region’s users prefer to use Facebook in English Eygpt

Digital media explosion

Morocco Tunisia Algeria

T

Libya Palestine Jordan Lebanon Iraq Yemen Saudi Arabia UAE Kuwait Qatar Bahrain Oman 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Arabic

English

French

he Middle East is currently undergoing a new media explosion, according to a panel of local and international digital media experts who met at the Shelter in Dubai to discuss the future of the region’s media landscape and the fate of traditional media. The debate, led by American author, online publisher and journalist Mark Briggs, explored the need for journalists to keep up with the times in order to remain relevant.

The discussions concluded that journalists need to embrace new technology if they are to excel in the digital age. Briggs commented that the rise of new media does not signal the death of journalism and that there will still be a place for print newspapers, which will continue alongside a thriving online element.

Technology is, according to Briggs, making journalism more collaborative, more immediate and more interactive, which, he says, is better serving readers. He added that online media allows journalists to reach far more people than they could have ever hoped to reach through print.

The debate coincided with the launch of the SAE Institute’s Diploma in Digital Journalism – the first course of its kind in the region. “Digital journalism is the way of the future,” says Pia Heikkila, co-creator of the new diploma. “The media revolution shows no signs of slowing down, so journalists must evolve, embracing new forums and ways of working to reach their audiences.”

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Facebook’s startling stats

The Facts...

• There are now 15 million Facebook users in the Middle East & North Africa (this figure excludes Iran, Israel, Pakistan and Turkey) • 50% of MENA Facebook users have selected their primary language for using Facebook as English, with 25% preferring French and just 23% Arabic

F

acebook has become a force to be reckoned with in the Middle East and North Africa and the platform can now claim 15 million users as of May 2010, according to a new report by Spot On Public Relations. Facebook experienced a strong period of growth in 2008/2009 from English and French speaking users across the MENA region, but the decision to add an Arabic interface in March 2009 opened up access to a whole new demographic of internet users and as a result Facebook gained a further 3.5 million Arabic users over the past year.

The Facebook communities in Egypt and Saudi Arabia have seen the strongest growth in Arabic users during that period with each adding 1.1 million users.

Susbscriptions to Facebook in the MENA region now outweigh the total regional Arabic, English and French newspaper circulation, which is just under 14 million.

Facts & Figures

Omen

4%

7%

Bahrain

Qatar

• MENA’s top five Facebook country markets, Egypt, Morocco, Tunisia, Saudi Arabia and the United Arab Emirates, account for 70% of all users in the region • The GCC has five million Facebook users, with Saudi Arabia and the UAE representing 45% and 31% of that total respectively • North Africa has 7.7 million Facebook users, with Egypt accounting for 3.4 million users (or 44% of all North Africa users).

Egypt has the largest Facebook community in MENA

Five million Facebook users in GCC

3%

• Only 37% of Facebook users in MENA are female (compared with 56% in the USA and 52% in the UK). Only Bahrain and Lebanon Facebook communities approach gender equality with female users accounting for about 44% of total users

10% Kuwait

• Francophone countries Algeria, Morocco and Tunisia together account for 3.7 million French speaking Facebook users, equivalent to nearly 25% of all MENA users • Algeria, Egypt, Jordan, Lebanon, Morocco, Palestine, Tunisia and Yemen all have Facebook communities with more than 50% of users below the age of 25

45%

31%

Saudi Arabia

UAE

Source: Spot On Public Relations

• The UAE has the oldest Facebook community in the MENA region with 41% of users being over 30 years old, 28% being 25-29 years old and 31% being under 25 years old

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Stronger job creation New labour laws

W

hile most companies around the world have been suffering in the past 18 months during the financial recession, several top Arab companies have seen strong growth, which is expected to equate to job creation over the next few months.

According to a report by AllWorld Network, a Boston-based global economic development firm, despite the global recession “most of the companies grew in 2009, and 95 percent of the companies expect significant growth in the next six months, with several predicting sales growth of 25-50 percent”.

As such the firm has released ‘Arabia 50|500 Leading Indicators’ data on the performance of major companies in the Middle East and North Africa. All these firms have seen employment double since 2006 and are all expected to hire large numbers of new staff over the next six months.

The Middle East has one of the youngest populations in the world, with 60 percent of the population under 30 years of age. While countries like the UK are deeming their 20-25 population as ‘The lost generation’ due to the lack of jobs, the new openings in the Middle Eastern market have the potential to absorb this young labour force.

Quoting the AllWorld report, “it is estimated that the Middle East will need to generate 100 million new jobs by 2020 just to maintain current living standards. While private sector employment growth has been sluggish in most Middle Eastern and North African countries, AllWorld's research shows that there is a new entrepreneurial dynamism taking hold in these countries.

“We have bench-marked the sophistication, intensity and mindset of the Arabia 500 entrepreneurs, and unsurprisingly, we found the same entrepreneurial DNA in them as we have found in our work with their US and European counterparts,” said Anne Habiby, co-founder of AllWorld Network Habiby. “What they lack, and what the regions of the Middle East, Africa, Asia and Latin America lack, is visibility to sustain rapid growth.”

On top of that, nearly 75 percent of the region's entrepreneurs are expected to launch another company, while more than half of them will bring in outside investors. A third want to acquire a company in their industry. “The largest constraint to their further growth is finding qualified managers and employees.

Tied for second place is shortage/cost of long-term finance and government regulation and red tape,” said AllWorld’s research.

New Labour Ministry rules in Kuwait will allow females in certain sectors, like banking, hospitality, medicine, law and journalism to work nightshifts until midnight, according to the Kuwait Times. The new rules, which also cover an outside work ban for both men and women between 12 noon and 4pm from June 1 until the end of August because of the extreme summer heat, were announced by Labour Minister Dr. Mohammad Al-Afasi, However, women will be banned from working in physically demanding roles, including handling petrochemicals and in manufacturing roles where chemicals are used, the report said.

Employing the elderly

T

he World Health Organization is predicting a workplace revolution as more employees choose to postpone their retirement in the coming years. John Beard, Director the WHO’s ageing and life course believes workplaces should prepare for a rapid ageing population boom that could see tech-savvy 100-year-olds as part of the workforce.

Beard believes that employees be should be allowed to continue working past the traditional retirement age if they are willing and fit. He says that whilst ageing is often portrayed as a burden on society, we vastly underestimate the skills and experiences that older people can bring to the workplace.

Envisioning an older generation that is plugged into the latest technology and choosing to stay at work, Beard cites surveys from the US in which only 20 percent of retired workers say they were happy to give up their jobs. The majority wanted to stay employed in some capacity although through more flexible working hours.

According to Beard, some American companies are now offering employees the option of working 1000 hours in a year over retirement, which could put an end to past divisions within someone’s life from strict periods of education, employment and then retirement.

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Tourism takes off

T

he tourism industry in Saudi Arabia is expected to make a revenue of SR66 billion this year, 4.76 percent up on the revenue earned in 2009, according to Salal AlBakhit, Deputy Chairman of Saudi Commission for Tourism and Antiquities (SCTA). In a statement carried by the Saudi Press Agency, Al-Bakhit said he was optimistic about the future of the country’s tourism industry. “By the year 2015 its revenue would reach SR118 billion and by 2020 it would jump further to SR232 billion,” he said.

Making a presentation on ‘Creating a tourism investment climate in the Kingdom,’ AlBakhit said the revenue of transport sector would increase by eight percent in 2010 to reach SR30 billion and that restaurants and coffee shops are expected to earn a revenue of SR36 billion in 2010, a rise of nine percent compared to last year. The number of jobs in the tourism sector also rose, registering an annual growth rate of 7.4 percent.

Al-Bakhit also revealed SCTA’s plan to establish a company for tourism development in various parts of the country in association with private and public sectors. Al-Bakhit said he is hopeful that tourism will strengthen the Kingdom’s economy, diversify its revenue, create more jobs for its citizens and provide investment opportunities for small and medium enterprises.

Relocation, relocation According to a recent report entitled Global Professionals On The Move, working in the Gulf is becoming an increasingly attractive option for a growing number of professionals. The report, which was produced by ESPC Europe Business School in conjunction with specialist recruitment group Hydrogen, surveyed 3155 mid to senior-level professionals from over 70 countries. The findings of the survey revealed a readiness by the majority of respondents to work abroad. Among the most popular locations for relocation were the US, the UK and Australia, but the United Arab Emirates consistently ranked in the top 10 as a destination of choice for those who work in law, engineering, human resources, finance and technology related jobs.

The Middle East, with over 56 percent of the world’s oil reserves, is a particular hot bed of demand for engineers as the Arab nations are set to spend over US$120 billion on new power projects before 2012. “With this mass demand for energy and infrastructure and the opportunities it creates, it is no surprise the region is such an attractive location for engineers,” says Andy Clapham, a manager at Darwin Park, which is part of Hydrogen Group.

Top 10 World’s top 10 airlines Source: www.worldairlineawards.com

1

2 3 4 5

6

7 8 9 10

Asiana Airlines Singapore Airlines Qatar Airways Cathay Pacific Air New Zealand Etihad Airways Qantas Airways Emirates Thai Airways Malaysia Airlines

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Social media in business

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ith more people utilising social media technology such as Twitter and Facebook, companies are coming to realise it is another resource to reach their clients. As such, many firms can now be found on a variety of social media networks. Here we take a look at the Fortune Global 100 Companies.

3 companies Latin America

20 companies Asia Pacific

29 companies United States

FORTUNE GLOBAL 100 COMPANIES How are the top 100 companies in the world embracing and utilising social media?

48 companies Europe

65% have a Twitter account

33% have a corporate blog

54% have a Facebook fan page

50% have a YouTube channel

40% in Asia Pacific 67% in Latin America 71% in Europe 72% in the United States

TWITTER ACCOUNTS Percentage of companies with Twitter accounts by region

33% in Latin America 40% in Asia Pacific 52% in Europe 69% in the United States

FACEBOOK FAN PAGES Percentage of companies with Facebook fan pages by region

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33% in Latin America 35% in Asia Pacific 52% in Europe

25% in Europe 33% in Latin America 34% in the United States

59% in the United States

50% in Asia Pacific

YOUTUBE ACCOUNTS

CORPORATE BLOGS

Percentage of companies with YouTube accounts by region

Percentage of companies with corporate blogs by region

79%

of companies globally use at least one of the four platforms

20%

of companies globally use all four platforms

FREQUENCY OF ACTIVITY

82%

68%

Percentage of Fortune 100 companies using their Twitter account per week

Percentage of Fortune 100 companies using their YouTube account per month

27 tweets

10 videos

3.6 posts

7 posts

on average per month

on average per week

on average per month

on average per week

59%

36%

Percentage of Fortune 100 companies Percentage of Fortune 100 companies using their Facebook page per week using their corporate blog per month

[ Source: The Global Social Media Check-up - Insights from the Burson-Marsteller Evidence-Based Communications Group ] [ Graphic by T Farrant | Twitter @fallenblossom ]

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Arabic addresses allowed

I

Top 10 The 10 largest Sovereign Wealth Funds worldwide Source: IRRC Institute SWF Report October 2009

1

2 3 4 5

6

7 8 9 10

Abu Dhabi Investment Authority Australian Government Future Fund

n the biggest evolution of the internet since its inception 40 years ago, net regulator Icann has switched on a system that allows full web addresses that contain no Latin characters. The move, which has prompted more than 20 countries to request approval from Icaan for international domains, is the first step to allow web addresses in many scripts including Chinese, Thai and Tamil.

The first three countries to have so-called “country codes” written in Arabic scripts are Egypt, Saudi Arabia and the United Arab Emirates. “All three are Arabic script domains, and will enable domain names written fully right-to-left,” said Kim Davies of Icann in a blog post. Previously, websites could use some non-Latin letters, but the country codes such as .eg for Egypt had to be written in Latin script. The UAE government announced last year its plan to launch .emarat – the Arabic equivalent of the .ae domain name for the country and now the UAE’s Presidential Affairs Ministry has launched the world’s first Arabic address website: Khalifa.emarat.

The Egyptian Ministry of Communications also now has a website with a full Arabic. Egypt’s Communication and Information Technology Minister Tarek Kamal told the Associated Press that three Egyptian companies were the first to receive registrar licences for the ‘.masr’ domain, written in Arabic. Masr means Egypt in Arabic.

Facts & Figures Youth vs. overall unemployment rates (latest available) Country

Youth (15-24) unemployment

Overall unemployment

China Investment Corporation Government of Singapore Investment Corporation Kuwait Investment Authority

Libyan Investment Authority Government Pension Fund Global Qatar Investment Authority Russian Reserve Fund and National Wealth Fund Temasek Holdings

Algeria

45.6%

10%

Bahrain

20.7%

5%

Djibouti

37.8%

41%

Egypt

25.8%

8%

Iraq

45.3%

30%

Jordan

38.9%

11%

Kuwait

23.3%

3%

Lebanon

21.3%

12%

Libya

27.3%

7%

Mauritania

44.3%

16%

Morocco

15.7%

10%

Oman

19.6%

7%

Qatar

17%

1%

Saudi Arabia

25.%

5%

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Improving insurance

Facts & Figures

The insurance industry in the MENA region has made significant progress in the last three years, according to a new study by Booz and Company. Policy makers and regulatory authorities have succeeded in promoting growth, competitiveness and development of the industry, which looks set to build on this success.

The regions insurance market saw 26 percent compounded annual growth between 2005 and 2008, which was bettered only by 27 percent growth in Central and Eastern Europe. The UAE market, in 2008, was the largest in terms of Gross Premium Income and was worth over US$5 billion, followed by Saudi Arabia with US$3.1 billion and Morocco with US$2.5 billion. Bahrain, Algeria, and the UAE showed the strongest GPI growth rates between 2007 and 2008, at 46 percent, 45 percent and 41 percent, respectively.

However, the report by Booz and Company also states that there is room for improvement. “The MENA region’s share of the world market accounted for just 0.42% last year. Furthermore, insurance penetration – GPI as a percentage of gross domestic product – remains low in the MENA region,” said Peter Vayanos, a partner at Booz & Company. This ratio grew to 1.08 percent in 2008 from 1.05 percent in 2005, but paled in comparison to every other major region of the world.

Company Index Q3 2010

In the Middle East, there are an estimated 57,425,046 internet users, and between 2000 and 2009 the region witnessed an impressive internet usage growth rate of 1648.2% Source: www.internetworldstats.com

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

Abdulla Fouad Holding Co. 47, 103, 127 Abu Dhabi Commercial Bank 78 Abu Dhabi Tourism Authority 130 Adfec 36 AGR Petroleum 72 Air Arabia 36, 42, 52 AL-Nokhba for Business Transformation (NBT) 106, 107 Alshaya Group 36 Anantara 130 APC 13 Aramex 42 Atkins 116 Bahrain Chamber of Commerce and Industry 116 Bahrain Economic Development Board 116 Bahrain Mumtalakat Holding Group 116 Bapco 124 Boeing 56, 60

Central Bank of Bahrain 116 Cisco 34 Deloitte 116 DHL 42 Dohaland 48 Draka Telecom Solutions 65, 74, 75 Dubai Customs 42 Dubai World 36 Duroob Technology 8, 76 Durrat Khaleej Al Bahrain Company 116 easyJet 60 Emaar Properties 36 Emirates Airline 42, 52 Emirates Group 60 Euromonitor 52 Facebook 42 Fairmont 130 Fedex 42 Ferrari 130 flydubai 52, 60 Gavrosche 6 General Federation of Workers

Trade Union 116 GolfWeb 108 Good 4 Goodrich Corporation 60 Gulf Air 56 Gulf Finance House 36 HP 108 IATA 52 International Monetary Fund 116 Iraqi Airways 52 iStrategy 77 Jazeera Airways 52 JetBlue 60 Kangaroo TV 108 Kanoo Group 36 Kaspersky Lab 11, 83, OBC Kingdom Holding 36 Land Rover IFC Leighton Holdings 98 Manchester Business School 128, 129 Masdar 124 Mashreq Bank 36

Maximo 81, 104, 105 McLaren Automotive 116 Meet the boss 93 Mubadala 120 NBT 106, 107 NVS 63 Oman Air 56 PGA European Tour 108 PricewaterhouseCoopers 68 Qatar Airways 36, 52 Quest Software 15, 66, 67 Research in Motion 2 Ryanair 60 Saudi Aramco 100 Sri Lankan Airlines 56 STI Systems 97, 144, IBC STME 41, 84, 85 Tamkeen 116 Tatweer 120 Technostream 114, 115 Twitter 42 Volvo 130

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SPECIAL INSIGHT

POWER pl1a0y ziz Alsaud Prince Alwaleed Bin Talal Bin Abdula di Arabia Chairman, Kingdom Holding, Sau al holding

successful internation As the man behind one of the world’s most Abdulaziz Alsaud has been named companies, Prince Alwaleed Bin Talal Bin test and most creative investors in twice by Forbes magazine as one of the smar honours and accolades from many the world. He has also received numerous of state, including 14 honorary organisations, societies, monarchs and heads in, Korea, Egypt, Malaysia, Ghana, doctorates from universities in the US, Brita da, to name but a few.

Palestine, the Philippines, Tunisia and Ugan 1980 and his first contract was a Prince Alwaleed formed his company in club at a Riyadh military academy US$8 million project to build a bachelor’s ess grew rapidly, and before long representing a Korean contractor. The busin able joint ventures. Investments in the Prince was involved in a variety of profit him catapulted onto the internathe banking sector in particular have seen idual shareholder in Citigroup and tional financial stage. He is the largest indiv biggest portion of his wealth, which is his 3.5 percent stake now constitutes the Prince at number 19 on Forbes’ list estimated at US$19.4 billion and ranks the of the world’s billionaires.

1

Abdul Aziz Al Ghurair CEO, Mashreq Bank, UAE

As CEO of the publicly traded Mashreq Bank, Abdul Aziz Al Ghurair has an estimated worth of over US$8 billion and his influence on the banking world is substantial. Mashreq is the largest private bank in the UAE with a growing retail presence in Egypt, Qatar, Kuwait and Bahrain. It was the first bank to introduce ATM machines and credit cards to the UAE and was also the first bank in the region to introduce customer loans and digital pointof-sale readers.

In 2009 Al Ghurair was honoured by The Banker Middle East with the ‘Lifetime Achievement Award’ in recognition of his significant contribution towards the development and progress of the banking industry in the Middle East. Aside from his responsibilities at Mashreq, Al Ghurair is also Vice President of the Dubai International Financial Centre and also sits on the board of the Emirates Foundation and the Dubai Economic Council.

2

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The Middle East is brimming with top talent and the influence of Arabs s. In on the global business scene in increasing with every year that passe this issue of Business Management we take a look at some of the most have powerful, influential and successful Arabs. All of those named here to demonstrated particular business prowess, which has enabled them ess propel their particular business ventures onto the international busin stage. Some of those featured have been so successful that they now feature in Forbes’ world billionaires list.

www.busmanagementme.com 37

TOP10 POWER ARABS_june10 18/06/2010 15:30 Page 38

Akbar Al Baker CEO, Qatar Airways, Qatar

of Qatar Airways Akbar Al Baker has played an instrumental role in shaping the development Before Al world. the in airlines acclaimed highly most and into one of the fastest growing capacity, regional a in aircraft four operated only Airways Qatar Baker became CEO in 1997, netroute nal internatio an across ns destinatio 89 to aircraft 83 but the company now flies orAirways Qatar 2007, During 2013. by aircraft 110 of fleet a work. The airline will operate of five ordered has It 777s.

Boeing 32 and 787s Boeing 60 with dered 80 Airbus 350s, together 2012. from delivery for jumbos’ ‘super the twin-deck Airbus 380 also CEO of Al Baker has been a successful businessman in Doha for over 25 years and is Qatar Holidays, Airways Qatar being these – airline national several divisions of Qatar’s on Distributi Qatar Airport, nal Internatio Doha , Company Free Duty Aviation Services, Qatar the of ent developm the leading also is He .

Company Catering Company and Qatar Aircraft New Doha International Airport, which opens in phases from 2011.

3

Sultan Ahmed Al Jaber CEO, Adfec, UAE

4

Sultan Ahmed Bin Sulayem Chairman, Dubai World, UAE

Sultan Ahmed Bin Sulayem is the Chairman of Dubai World and its subsidiary companies and has been a driving force behind the Group’s rapid expansion to become the fourth largest marine terminal operator in the world. The Jebel Ali Free Zone (Jafza) is now an unrivalled business park with global operations.

Bin Sulayem was also behind the establishment of Nakheel, one of the biggest master developers in the world and the creators of icons such as The Palm and The World. In addition he founded the investment house Istithmar, the Dubai Multi Commodities Centre (DMCC), and the international real estate developer Limitless.

Bin Sulayem has won several regional and international awards and honours. In October 2008, the UK-based Middlesex University conferred on him an honorary doctorate for his dedication to excellence and commitment to the economic development of the UAE and the Arab World. He was also chosen as ‘Global Leader for tomorrow’ by the World Economic Forum.

Dr Sultan Ahmed Al Jaber is the Chief Executive Officer of the Abu Dhabi Future Energy Company (ADFEC), which is mandated by the government to undertake and drive the Masdar Initiative. Masdar is Abu Dhabi’s vision for the world’s first carfree, carbon neutral, sustainable, zerowaste city, which is due for completion in 2014. The multi-billion dollar project explores the future of energy and environmental sustainability in response to the need for a global focus on the development of advanced energies and sustainability-related technologies.

Al Jaber also holds the position of Senior Projects Manager at Mubadala Development Company, where he has held broad responsibilities that have included direct project origination and execution in the energy and utilities sectors, as well as relationship management with key multinational companies and government institutions.

5

Al Jaber is also a board member of the Abu Dhabi Shipbuilding Company and a member of the Advisory Board of the College of Business and Economy at the UAE University. He also serves on the board of the American University of Dubai (AUD) and was recently appointed as a Board Member of the Young Arab Leaders organisation.

TOP10 POWER ARABS_june10 18/06/2010 15:30 Page 39

Mohammed Alabbar Chairman, Emaar Properties, UAE Mohammed Alabbar is undoubtedly one of the region’s most well-known business personalities. He has played an integral part in the development of Dubai’s real estate sector in his role as Chairman of the Middle East and Africa’s real estate powerhouse and the Arab world's largest developer.

Emaar has had a tough time recently due to the severe drop in Dubai property prices, but 2010 has seen Emaar deliver two of the biggest projects on the global stage. January marked the opening of its long-awaited flagship building, the Burj Khalifa, which at 828 metres high, is the world’s tallest man-made structure ever built. And four months later came the first ever Armani Hotel, built within the tower. It didn't take long before Emaar reported its full year profits had increased 98 percent yearon-year while revenue increased 94 percent.

With six business segments and more than 60 active companies, Emaar has a collective presence in several markets spanning the Middle East, North Africa, Pan-Asia, Europe and North America.

The company has established operations in the United Arab Emirates, Saudi Arabia, Syria, Jordan, Lebanon, Egypt, Morocco, India, Pakistan, Turkey, China, USA, Canada and the UK.

6

Adel Ali CEO, Air Arabia, UAE

Air Arabia CEO Adel Ali is credited for setting up the Middle East and North Africa’s first low-cost carrier (LCC) and as such was awarded world’s Low Cost Airline ‘CEO of the year’ in 2008. Since the company commenced operations in October 2003, Ali has brought a wealth of strategic aviation, tourism and marketing expe-

7

rience to the company, which was voted the world’s best low cost carrier in 2009.

Ali drove Air Arabia’s growth to become the largest low-cost carrier in the Middle East as well as the first publicly owned airline in the Arab World within just five years.

Previously, he served as Vice President (Commercial and Customer Service) for Gulf Air and spent over 20 years with British Airways. He has been recognised within the industry as a Middle East airline expert and has received awards for his contribution to air transport and tourism in the Middle East and Africa.

POWER play www.busmanagementme.com 39

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Mohammed Alshaya Chairman, Alshaya Group, Kuwait

Alshaya has become a byword for trading and commerce in the Arabian Gulf and Mohammed Alshaya is the undisputed king of Gulf retail. A major player across a variety of sectors – real estate, construction, hotels, retail, information technology and advertising – Alshaya initially operated in Kuwait and the Kingdom of Saudi Arabia and more recently throughout the Middle East, Turkey, Cyprus, Russia, Poland, Egypt, Czech Republic and Slovakia.

Mohammed Alshaya was appointed CEO of the Retail Division in 1990, and Executive Chairman in 2007 and has driven the rapid and continuing expansion of the company.

The retail arm of Alshaya currently owns and operates over 1800 stores across 15 countries, representing over 40 international brands, such as MAC, H&M and Mothercare, among others.

Mishal Kanoo Deputy Chairman, Kanoo Group, Bahrain Mishal Kanoo is Duputy Chairman of the Kanoo Group, one of the largest independent, family-owned, group of companies in the Gulf region. With diversified interests in shipping, travel, machinery, logistics, oil and gas, power, chemicals, joint ventures, retail and commercial activities, the Group has really forged a name for itself.

Kanoo is a frequent speaker at conferences in the Gulf and his wide-ranging knowledge of regional business affairs and global capital markets give him a unique and often controversial insight into business life in the Gulf region.

He made his writing debut as a columnist in Money Works magazine and continues to voice his views by writing to local and regional newspapers and magazines.

8

9

Mohammed Alshaya is also a member of the Supreme Council of Planning and Development of the State of Kuwait, a member of The Board of Trustees of the Arab Thought Foundation and a board member of Mentor Arabia and Mentor International.

Esam Janahi Chairman, Gulf Finance House, Bahrain

Janahi One of the main founding members of Gulf Finance House (GFH), Esam elected was he when successfully led the organisation as CEO until 2007, Chairman. With 21 years of financial experience, Janahi sets the long-term medistrategic direction and advises on operational matters for the short and um term.

Consequently, GFH is one of the most successful Islamic investment banks in the Middle East and saw a 61 percent increase in profits to US$340 million

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during 2007.

Since 1999, Janahi has led flagship initiatives including the launch of Energy Cities in Qatar, Libya and Kazakhstan, a series of Financial Harbours in Bahrain and Tunisia, and the largest GFH concept to date, the US$10 billion Mumbai Bank, Economic Development Zone. Elsewhere, GFH has announced First Energy finance. ased energy-b the world’s first Islamic investment bank offering tailored

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THE BIG INTERVIEW

Good things come in small packages Global logistics services and transportation company Aramex started life in 1982 as a small regional player but rose up to become the Middle East’s biggest courier firm.

Hussein Hachem, CEO of Aramex Middle East and Africa (MEA), tells Julian Rogers why this “dynamic” and “creative” business is really going places.

I

Hussein Hachem

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nstantly recognisable with its scarlet red livery embossed with bold white lettering, Dubai-listed Aramex is going from strength to strength. Its trucks, vans, motorcycles and boats can be found day and night ferrying goods, packages and documents all over the Middle East and beyond. Headquartered in Amaan, Jordan, Amarex is a top-five player in the world behind in the likes of international household names Fedex and DHL. However, the company’s earnings are soaring – no mean feat amid a global economic downturn and the cut-and-thrust market Amarex competes in. Net profits for 2009 hit US$50 million, which was a 25 percent up over 2008. The trend continued this year with a 10 percent jump in firstquarter profit to US$12.93 million compared to the same period in 2009.

“You have to be on your toes at any given time because that’s how you work in the service industry,” remarks Hussein Hachem, CEO of the MEA region. “We survive to serve our customers and attend to their needs so you can’t switch off.”

Hachem says the company’s low asset model that it adopts keeps heavy costs off the books and allows for price and cost flexibility. For instance, unlike rival logistics firms, Aramex doesn’t have the expense of aircraft on its balance sheet, choosing instead to use the services of local airlines. “Our light asset model and the range of services we offer are quite unique. It’s a flat management here with no bureaucracy whatsoever, which makes for a corporate culture that allows people to think

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creatively, have the space to challenge themselves, challenge the market and challenge the customer – it’s a very dynamic environment. And our customers are happy to see a young dynamic company that keeps coming up with new ideas.”

Aramex, which has low debt levels and market capitalisation of more than US$650 million, registered on the NASDAQ in 1997, the first company in the Middle East to take such a step. It returned to private ownership in 2002. Today, the business’ reach stretches to more than 35 markets globally while the number of employees has doubled to more than 8000 in the past five years. The company has a network of 310 offices in 200 major cities although a hunger exists for

US$32.6 million Cost of Aramex’s new state-of-the-art warehousing facility in Dubai

further expansion with a push into Africa, Southeast Asia, the CIS region and China on the cards. Indeed, China is a market boasting enormous potential for Aramex; the firm already operates in the world’s most populous country through its Shanghai office but is looking to expand in to the capital, Beijing, and Shenjing through a joint venture, CEO Fadi Ghandour told reporters earlier this year. He also said that these lean times were ripe for expansion because Aramex can capitalise on the fact that its rivals are taking an opposite viewpoint.

“Our core markets continue to show a high level of growth,” says Hachem. “However, we see a lot of opportunities in Africa and a lot of opportunities in the CIS countries.”

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His company could have a foothold in 10 new markets in Africa and CIS within two years, analysts predict. “Central Asia is another key area for us because there are lots of oil and gas in landlocked countries,” Hachem reveals. “They have a couple of gateways and ports and we believe that if we go there with the right tools we can reshape the logistics industry in Central Asia.” Aramax already has a presence in North Africa but is looking to operate out of Nairobi, Kenya, before establishing a base in South Africa and using this as a springboard to tap into the West Africa market. This is a company that isn’t afraid to take awkward territories, be it operating in Lebanon in the 1980s and 90s with its crippled road network due to the civil war, or being the first company in its field to enter Iraq after the US-led invasion in 2003. Aramax doesn’t shirk challenges, Hachem states.

Human capital Cost cutting contributed to last year’s record profits but Aramex chiefs are proud of the fact that not a single member of the workforce has been laid off during the economic slow-

CEO Fadi Ghandour established the business 28 years ago

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“Our employees are our human capital and our main asset so we saw no need to lay any off” Hussein Hachem

down. Ghandour “guaranteed” every person’s job, apart from those who didn’t perform. “A measure we took in 2009 was quite simple: we did not hire, we did not increase our salaries and we didn’t lay off any of our employees,” Hachem explains. “Our employees are our human capital and our main asset so we saw no need to lay any off.”

This reluctance to slash the headcount is a philosophy that has served Aramex well down the years. “In the 28 years we have been operating, we never reduced our manpower due to any recession or due to any glitch in the economy. The success of Aramex has always been as a result of combined efforts of our employees across the globe – these people have made Aramex what it is now.” With a strong work ethic and a sense of working towards a collective goal, the business has gone from strength to strength.

“Our unique and flexible business model has helped us to weather the storm, big time,” states Hachem. “We are not bound by certain elements like our competitors but we have adopted a couple of measures across the organisation to help us manage and control our costs.” Any downturn throws up opportunities for companies to negotiate better deals with their suppliers. For Aramex, it was with its air freight contracts. “Airlines had the capacity issue during the recession and free space was available so we were able to receive better rates from airlines and thus improve our gross profit margin across the organisation.”

And in this period of belt-tightening, with customers looking to snip excess expenditure, Aramex has taken the decision to launch a new ‘Value Express’ service for express shipments in the MENA and South Asia region, allowing customers the option to transport less urgent parcels at economical rates. The service is aimed primarily at SMEs. In the GCC alone, SMEs represent over 75 percent of the aggregate number of operating companies, Hachem states. “We are able to give our customers a quality product where we can move shipments from point A to point B in three working days at a very economical rate,” he reveals. Value Express takes advantage of a soaring low-cost air travel sector across the Gulf.

“We’re probably one of the few people that really looked at budget airlines, although their main line of business is passengers because they don’t offer freight services,” says Hachem.

“Air Arabia and a couple of other airlines have hit the market and this opened a window of opportunity for us to capitalise on their belly space. And it’s a win-win situation for all parties: the airline is happy they’re getting extra business and the customer is happy because he or she is getting a good deal.”

Keeping the customer happy and satisfied with the Aramex service is a cornerstone of the business model. Last year, the company launched social networking pages on websites Facebook and Twitter in an effort to further strengthen and cement the brand in their customers’ psyche.

Charismatic boss Ghandour has 2282 followers on his personal Twitter page alone. “We use the internet and social

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Heads up: Aramex’s 28th annual leaders conference in Dubai in May net orders, gifts, magazine subscriptions, bank statements at Shop&Ship fulfilment centres in the UK and US – Aramex then forwards the goods to the customer at favourable rates, alerting them by phone or SMS that the delivery has arrived, which is usually four to six days after dispatch.

Green is clean

media sites like Facebook and Twitter because they allow us to communicate with our people and customers at any given time, 24/7,” Hachem explains. “It’s a seamless relationship that will allow customers to become more integrated with us.”

In broad terms, the internet has been a game-changer for couriers, particularly with the boon in online shopping. “The internet is a major facilitator of trade,” says Hachem when discussing the profound effect e-commerce has had on this business. “We are very much involved in e-commerce because the internet has obviously been a blessing, which is where we come in as a logistics and transportation solution provider.” And with customers keeping a tight reign on their spending, the online world can offer significant savings over bricks-and-mortar shopping – again a boon for Aramex. A popular online service is Aramex’s Shop&Ship, whereby customers can enjoy the benefits of shopping online at US and UK websites as if they actually live there.

They receive correspondence and packages such as inter-

Geographical revenue breakdown in 2009

Middle East 72.9% Europe 17.4% Asia and Indian Subcontinent 6.4% North America 3.3%

Shipping parcels all over the world comes at a cost, especially if you are at the mercy of volatile oil prices; great when the price of crude sunk to US$35 a barrel in 2009, not so great when oil hit a record high of US$147 in the summer of 2008. On top of the fuel costs associated with doing business in this industry comes the pressure to reduce your carbon footprint – something that Aramex has been championing for some time now. With this industry traditionally reliant upon oil to power its vehicles, Aramex has been introducing hybrid vehicles and electric-powered motorcycles to its fleet. Hybrid bikes have been rolled out for its couriers in Lebanon. In some countries petrol has been switched to liquid gas, which is a cleaner fuel. The mountain of packaging the company uses is all biodegradable, recycled water is used where possible and solar panels are installed outside buildings to harness the sun’s omnipresent rays in the Gulf. The company produced a programme to reduce energy consumption in offices and warehouses and expanded paper and cardboard recycling activities to new countries. In Aqaba, Jordan, 10,000 new trees were planted to offset the

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Following the sustainability trend, Aramex is in the process of delivering an environmentally friendly warehousing and distribution facility at Dubai Logistics City, which is slated for completion in the first quarter of 2011. The US$32.6 million facility, conveniently located adjacent to Jebel Ali Port and Free Zone, will be fitted with energy conservation systems, including an energy-saving water cooling system, the channelling of waste water for irrigation purposes and the installation of sophisticated lighting sensors. The development will boast a footprint of 43,000 square metres with a capacity of more than 40,000 pallet positions.

Other plans on the company’s itinerary include the opening of a new logistics centre in Cairo, Egypt, as well as joining Dubai Customs and Emirates Airline in implementing the e-freight system, making Dubai the first city in the Middle East to adopt paperless cargo operations. The new efreight system provides paper-free operations to enhance trade movement by allowing airlines, freight forwarders and customs administrations to exchange electronic information and e-documents. In 2009, Dubai Customs cleared over 2.5 million declarations transported by air.

One vision

business’ carbon footprint. Each tree is expected to compensate 0.8 tonnes of CO2 or 1500 km of executive travel in its 40-year lifetime. “All these initiatives are designed to

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reduce our emissions to the environment,” says Hachem says proudly.

Sustainability is a top priority for this company, which is a

Number of markets Aramex operates in

trailblazer in terms of being the first company in the Arab world to release its own Sustainability Report, in which it has set an ambitious goal of becoming the first carbon neutral company in its field. Amarex also contributes more than one percent of its profits to sustainability programmes around the world. “From day one, Aramex has been at the forefront of supporting community efforts,” says Hachem. “We always make sure the whole Aramex community is geared and working towards enhancing the community we operate in.”

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In May, Aramex held its 28th annual leaders conference in Dubai – a three-day event that brought together 280 members of the worldwide management team. Many of the global managers are Jordanians who started their careers at the firm’s headquarters in Amaan. The purpose of the meeting was to discuss growth strategies for 2010 and lessons learned from the economic slump. Other topics included further expansion opportunities and enhancing customer service through technology. Hachen, who was in attendance, says these gatherings are about formulating new ideas to keep the business ahead of the competition in the region. “You have to be innovative and creative to be in this business. What kept us competitive over the years is our creative approach because we are always looking at our supply chain and how we give innovative solutions to our customers.”

Hachem himself has worked in a variety of roles and different countries during his 20-year journey to his current position at Aramex. “The fact that you rotate around different countries economies means you learn a lot,” he explains. With this industry being very much a 24/7 operation, Hachem freely admits that his BlackBerry is never more than an arm’s length away. However, when asked to describe his management style he coyly skirts around the question. “My management style is similar to the other management styles here because it’s one culture that governs us all,” he says diplomatically. “It’s a culture of creativity, innovation, transparency, playing fair, giving opportunities and trial and error. It’s a beautiful environment that I’m lucky to be working in and I’m sure my colleagues across Aramex enjoy this atmosphere as well.” n

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CONSTRUCTION

Qatar

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After Qatar discovered oil and gas back in the 1930s, its capital, Doha, morphed from a small fishing village into a sprawling city.

Dohaland CEO Issa Al Mohannadi believes, however, that now is the time for the city to go back to its architectural roots.

A

subsidiary of Qatar Foundation for Education, Science and Community Development, Dohaland was established in 2007, aligned with the Qatar National Vision 2030, to create urban living concepts that build on traditional Arabian architecture and design. Earlier this year, the foundation stone for Dohaland’s first development, the Musheireb project, was laid at a ceremony attended by HH the Emir Sheikh Hamad bin Khalifa Al-Thani. Musheireb, which in Arabic means a place where one can draw water from, is a 35-hectare site that will transform the architectural centre of the Qatari capital and set new standards for inner city development in the Gulf.

Dohaland CEO Issa Al Mohannadi, who was named Property Development CEO of the Year by the Middle East Excellence Awards Institute, says Doha’s glass-encased buildings don’t always fit with the capital’s rich history. He wants to see Musheireb take the city back to its architectural roots and create thriving communities.

How does Musheireb reflect the aspirations of the Qatar Foundation and of the Qatar National Vision 2030?

Issa Al Mohannadi. Real estate projects in general can easily align with the 2030 Vision if they are well planned and the strategy is developed well. The 2030 Vision has been built in four pillars: social sustainability, economic sustainability, human resource development sustainability and environmental sustainability. If you take any real estate project you still can achieve these four pillars if the project is well defined or designed well.

The Musheireb project is a mixed-use development and one of very few developments in the region that focus on this style. This mixed-use concept – whether you have residential, commercial buildings, retail, hotels, schools or medical facilities – is all developed in the same area. This reduces the amount that people need to travel to a school or medical facility or maybe even go to work because all of these aspects have already been designed and catered for. So if you live in Musheireb, and you happen to have your business headquarters there, you have all the amenities you need to live in a community. That by itself contributes to the concept of social sustainability. We want to bring life back to the heart of the city, which we believe we can achieve through the master plan.

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How will the development transform Qatar’s capital city?

AM. If you look at the location of the project itself, this Musheireb area is one of the oldest parts of the city.

Unfortunately, during the last 10 to 15 years, this part has suffered from different social issues. The buildings themselves have lost their quality and have not been maintained very well, so the whole area has come close to becoming a rundown area. But this does not reflect the

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13,700 Number of underground car park spaces beneath the entire Musheireb project

strength of the country and the position and image of Qatar. The regeneration of this city started with us evaluating how we can improve the whole area, because some of the buildings are in really bad condition, not even suitable for people to live in. We will regenerate this part of the city and bring it to life and if this trend continues then the whole downtown could be redeveloped, which would contribute to transforming Doha into a modern capital that also embraces traditional architecture.

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The first phase of the project is due for completion in 2012, while the entire development is slated for completion in 2016. Are you confident that you will meet these targets?

AM. It’s so far so good; Phase I for 2012 is still on target and the whole completion of 2016 is still so far on target. Bear in mind that this regeneration project has a different nature to any green project. What I mean by a green project is that when you build a project outside a city in a remote area you can go there, start planning and start the construction.

Musheireb is a place with people already living there, so we have to go through the government process of land acquisition and giving people the right notice period until they find another place to relocate to. All of this, of course, takes time.

However, so far we are confident that this target is achievable.

“We don’t build the building for the sake of just building a building. We just want to make sure that this building is built right, built for a purpose and reflects a good identity”

How will Musheireb help to expand the Qatari economy and build on the successes of its oil, hospitality and knowledge-based industries?

AM. We had lost our identity when it comes to our architectural language and we became lazy as a society. From the 1960s onwards, there were hardly any developments for this architectural language. So the Musheireb project came with a number of missions, one of which is to bridge this gap and develop a new architectural language rooted in the past and embrace the traditions in our architectural language. We encouraged the architects and everybody involved in the project to think outside the box and start to apply knowledge in how we can come up with this architectural language. We spent more than two years on research and innovation.

We also have the knowledge enrichment centre (KEC) located in the most dense area of Doha where we exchange ideas and thoughts with the public on concepts to do with Musheireb or any other project Dohaland is doing. By exchanging this knowledge and these ideas we teach others how to do things differently. We encourage people to look at development of real estate not in the traditional way of how they look at it right now.

We want people to realise that whatever is going to be built is going to communicate a certain language to the public and is going to have a reflected identity on the country itself.

We want to stop importing ready-made architectural solutions and we want to stop constructing ‘glassy’ buildings that do not fit in this kind of environment. In Qatar we may have modern structures with good-looking facades but many of them are not designed for our environment and do not belong to our history or our architectural language. We want to stop people from being lazy and importing whatever is available for the design of a building. We want them to think again and find a new theme for their development or a new architectural language and work with us in thinking along these lines. I’m not aware that or there are many real estate developers that think this way. So we feel Dohaland is being unique in how we approach the development of real estate. We don’t build the building for the sake of just building a building. We want to

make sure that this building is built right, built for a purpose and reflects a good identity.

How does the design of the project incorporate traditional Arabian heritage and how important was this consideration when designing the project from the start?

AM. This was the key element. The reason why Dohaland waited for two years to launch the company itself was because we were searching, researching, learning and developing this architectural language that’s rooted in the tradition and the country. We learned more about how our ancestors used to build their buildings and how they used to make a master plan for a city without any software or architects. For example, an old part of Doha built 30 years ago is very close to being a green building because it is made of natural and local material that is reusable. Every single stone used at that time was reused. We have to look at the concept of making sure the buildings are not facing the sun and are opened up for the wind direction and that we are creating courtyard spaces with the homes themselves. These are all things that our ancestors applied too. So tradition is always the focus and a priority when we consider anything in the development.

What efforts are being made to ensure this project is environmentally sustainable?

AM. We are designing the buildings to reflect or to enrich the environmental sustainability for the country. Phase I of the project has been developed to make sure we are following the guidelines and requirements of LEED (Leadership in Energy and Environmental Design) certification. All the buildings we are designing are going to be green buildings for the Musheireb project. The master plan itself has been designed to cater for the environmental aspects related to this part of the world. So this by itself could contribute easily to the environmental sustainability.

What achievements have particularly made you proud during your tenure as Dohaland CEO? AM. I’m lucky and honoured to lead such a team and such a company. We have come a long way from when the concept of the project was just an idea on paper. We recently awarded the Phase I construction contract, so this makes me proud because it wouldn’t have happened without a great team here enabling an idea to move from the mind to reality. The greatest achievement will be when Musheireb is delivered to the people because we are building history that will be part of the whole nation’s history. Every Dohaland employee will be proud to have contributed to that. I believe this project will contribute to the whole world on how real estate developers need to think and how people can learn from projects. I am pleased that the employees of Dohaland are working as one team to achieve this objective. n

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Flying high

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The world’s major economies may be being buffeted in these turbulent times but the Middle East’s aviation industry is one sector that appears to be soaring, along with its profits. However, is this growth sustainable or are the airlines veering towards a bumpy landing? Business Management investigates.

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ast year was one of the most difficult 12 months for the global airline industry with airlines collectively racking up losses in excess of US$11 billion. Passenger travel contracted by 3.5 percent while cargo movement fell sharply by 10.1 percent. But after the doom and gloom of 2009, the outlook is looking brighter in the aviation industry, especially in the Middle East where many of the carriers have been reporting doubledigit growth. The Gulf’s favourable geographic position, combined with the strong regional economies and consumer purchasing power are key ingredients in the aviation sector’s positive forecasts for 2010 and beyond. “Despite a slump in sales across Europe and North America, the Middle East aviation sector seemed to perform better than other sectors worldwide,” says Nadejda Popova, a travel and tourism analyst at Euromonitor International. “The industry [in the Middle East] was faced with slowing growth rather than a widespread contraction. Competition between commercial carriers remained upbeat in the region mainly due to a strong overcapacity in the market.”

According to the International Air Transport Association (IATA), airlines in the region are predicted to post a profit of US$100 million in 2010 – their fi rst since 2005.

Th is positive forecast is a dramatic U-turn from the IATA’s earlier projected US$400 million loss for the year following the US$600 million losses in 2009. The association puts the reversal in fortunes down to GDP growth of 4.3 percent in the Gulf outstripping global averages as well as the airlines grabbing market share through their hubs for Europe to Asia-Pacific.

Regional powerhouses The rapid ascent of government-backed heavyweights like Etihad Airways, Emirates Airline and Qatar Airways has shaken up the global aviation scene in recent years. All three fly to more than 240 destinations and have around 600 aircraft on order. New routes are being added to their expanding networks with all three launching new fl ights to regions with strong growth potential such Asia and South America. “They are all entering new markets like China and we have seen Qatar Airways going into South America so they are taking advantage of their geography in order to do this,” explains John Strickland, Director of aviation consultancy JLC Consulting. “So provided they have the schedule, the price and the service quality, they can tap into these traffic flows.”

The strong cash reserves of the major players in the Gulf have helped them to ride out the storm of the past two years – rocketing fuel prices closely followed by the credit crunch and subsequent nosedive in passenger numbers. “The recession has also caused a seismic shift in the airline industry with a loss of demand and revenues previously unimaginable,” says Popova when assessing the effects globally. “Airlines have been forced to rethink policy and airline alliances have become increasingly important as a means of maintaining existing customers,” says Popova.

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Emirates Airline is the Arab world’s largest airline and part of The Emirates Group, which includes air travel services supplier Dnata. The group recently posted a record annual profit of US$1.1 billion – an increase of a staggering 248 percent. “Th is is a stunning rise,” remarks Strickland. “Th is massive increase in profits reflects their growth strategy.” Emirates Airlines, which has an order book worth over US$48 billion, saw revenue rise by 17 percent in 2009 and maintained its share of premium traffic – a stark contrast to the fact that 30 carriers across the world that went to the wall. Capitalising on its success, the Dubai-based carrier is also boosting its fleet of Airbus 380 ‘super-jumbos’ by 32 (worth US$11.5 billion).

Another 58 A380s are already on order. And a recruitment drive will see 700 pilots hired to cover the new routes, the company announced.

Emirates Airline’s bulging order book

90 A380s

70 A350s

18 Boeing 777-300s

Six of the biggest airport projects in the GCC.

7 1

New Doha International Airport Estimated value: US$11 billion Schedule: Due for completion in 2015

2

Al Maktoum International Airport Estimated value: US$8 billion Schedule: Phase one opens in June 2010

3

Abu Dhabi International Airport Estimated value: US$6.8 billion Schedule: Opening of the centrepiece Midfield Terminal is expected in 2015

4

King Abdulaziz International Airport – Phase 1 Estimated value: US$1.5 billion Schedule: Completion is expected in 2012

5

Expansion of Muscat International Airport Estimated value: US$1.2 billion Schedule: Completion expected in 2012

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Concourse 3 at Dubai International Airport Estimated value: US$1.17 billion Schedule: Completion expected in 2012

air freighters on order

To cater for the enormous influx of tourists and business travellers to the region, multi-billion dollar airports are being built and existing ones upgraded. The UAE alone, which recorded 46 million passengers passing thought its six airports last year (a four percent rise), is set for further air travel expansion The impressive Al Makhtoum International Airport in Jebel Ali, Dubai, is due for completion in 2017.

These airports are forecast to handle 240 million passengers a year. Likewise, Kuwait, Saudi Arabia, Oman, Qatar and Bahrain are expanding and renovating airport facilities that will result in increasing arrivals by at least 300 percent.

The new Doha International Airport is set to open in 2012 and will have the capacity to accommodate 25 million passengers and there are also plans to build a metro system for Doha. “The MENA region has invested heavily, spending more than US$50 billion on infrastructure and US$178 billion on aircraft developments,” says Popova. The development of Abu Dhabi, Dubai and Doaha airports as major hubs for customers passing through on their way from Europe to Asia Pacific and vice versa is why the big three have so many planes on order. Their global reach brings travellers directly to the Middle East, which can benefit local carriers’ business.

Popova, says regional travel has played its part in the boom in business. “In an effort to encourage growth of international tourist arrivals, many commercial airlines increased their efforts to attract more regional travellers from countries such as Saudi Arabia and Kuwait, in addition to lobbying with hotels and other travel accommodation outlets to keep prices down and introduce attractive price offers and discounts to dispel negative perceptions about the region’s elevated costs and prices.”

On a budget While the big three – Emirates, Etihad and Qatar Airways – have ruled the skies in recent years, the emergence of budget carriers has shaken up the market. The likes of Air Arabia, Jazeera Airways and flydubai have been the rising stars as cost-conscious travellers look for no-thrills means of getting around the MENA region, particularly in these times of economic uncertainty. “Travellers are feeling the pinch and trading down so that’s why we have seen big traffic developments in this area and profitability from companies like Air Arabia and early growth from players like flydubai,” Strickland explains.

“The big pool of ethnic workers from countries like India, Pakistan and the Philippines want to go home as often as they can and they can’t afford more than a low fare.”

On top of this, carriers like government-owned flydubai are entering riskier territories in the hopes these markets are air travel’s sleeping giants, says Strickland. “flydubai that is taking opportunities that maybe others wouldn’t necessarily see, such as getting into Iraq or Afghanistan – countries that, hopefully, are going to see good stability for the future. By getting in at the bottom rung straightaway, they are taking advantage.”

Air Arabia too has recently announced fl ights to Iraq’s city of Najaf, 100 miles south of the capital, Baghdad. But despite budget airlines flourishing in the Middle East, they still represent just five percent of air traffic, compared with 35 percent in Europe. It’s

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a segment of the market ripe for expansion. There is an appetite for growth and demand there but the low-cost airlines need to ensure high standards of efficiency. “flydubai is only a year old but it is growing – we’re not talking about it being profitable yet but it’s still following a key expansion plan,” suggests Strickland.

While the future for legacy and low-cost carriers across the Gulf is looking good for 2010 and beyond, there are challenges that need addressing. The major hubs like Dubai, Abu Dhabi and Doha may be creating 21st century transportation between cities and the airports but the infrastructure everywhere needs improvement.

“Dubai’s had its problem with gridlocked roads. It’s now got the Metro system but we probably need to see more developments of that kind,” says Strickland. For the airlines themselves, trade sources highlight a shortage of commercial pilots in the region, which threatens any further expansion plans, Popova reveals.

“The number of pilots required in the UAE and other Middle East countries is expected to increase by 75 percent by 2020, which needs to be addressed by the local industry and governments.” She adds: “Also, quality and - Nadejda Popova efficiency levels must be improved in order for the region to compete on an international level. Deregulation policies must be implemented, which can further boost route frequency and widening of destination offerings.” Then there are the environmental issues and carbon offsetting that needs to be addressed by the industry in the region, according to Popova.

The threat of rising fuel prices will have a profound effect on any airline’s bottom line. Then, of course, comes the expected crises like the swine flu (H1N1) outbreak restricting travel or the volcanic ash cloud paralysing air space and grounding passengers for days, as over 100,000 fl ights were cancelled. Indeed, the ash cloud is one of the main reasons for the IATA forecasting the European airlines to lose US$2.8 billion this year. For the Middle East’s burgeoning aviation sector, though, things are really taking off.

“Despite a slump in sales across Europe and North America, the Middle East aviation sector seemed to perform better than other sectors worldwide”

And the not so good: stateowned Iraqi Airways dissolved amid row with Kuwait.

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ike a phoenix rising from the ashes, Iraq’s national carrier, Iraqi Airways, was back in the skies over the Middle East and beyond after being grounded following crippling sanctions and the US-led invasion of the Arab state. Flights between Baghdad and London had even been resumed after 20 years. However, the government has taken the unusual decision to declare the company bankrupt over war reparations with Kuwait stretching back to Saddam Hussein’s reign. Kuwait Airways claims Iraq’s national carrier owes about US$1.2 billion for 10 planes and millions of spare parts taken during Iraq’s invasion into its oil rich neighbour in 1990. Ali al-Mosawi, an Iraqi government spokesman, told The Times: “The decision was made by the council of ministers to dissolve Iraqi Airways because of debts the company cannot pay. They don’t have the money.” A Kuwaiti official was quoted as saying his nation’s flag carrier won’t give up in its pursuit for compensation. Lawyers claim that the Iraqi government is now liable for the debts. When Iraqi Airways’ CEO Kafah Hussan arrived in London recently he had his passport seized and the plane he arrived on was impounded.

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COVER STORY

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Oman Air, the Sultanate’s flagship national carrier, has its sights firmly set on new routes and fleet expansion as it aims to muscle in on rival Gulf airlines’ share of the skies. But the top priority right now, stresses CEO Peter Hill, is to clear the airline’s debts and turn a profit.

man Air, which is 99 percent governmentowned, is looking to reposition itself from a regional carrier to a truly international airline and established brand on the aviation scene. There was a 28 percent increase in capacity in 2009 with the addition of 10 aircraft, including six 737s, while more planes are on order, including six Boeing 787 Dreamliners. And in 2009, passenger numbers hit 2.4 million – a 19 percent jump over the previous year.

As well as this, eight new destinations are earmarked for 2010, including Kuala Lumpur, Kathmandu, Lahore and Milan. The soft ly spoken and affable Englishman Peter Hill has been at the controls of Oman Air since the summer of 2008, after being the head of Sri Lankan Airlines. “We don’t have huge ambitions to be the biggest, but we do have an ambition to become recognised as a world-class business and economy class airline.”

But despite this seemingly rosy outlook, the company posted a 2008 loss of US$109 million and this year is also expected to see significant losses for the airline.

Hill doesn’t forecast the business being in the black until 2014. “I’ve said that 2014 is the turnaround for Oman Air, with the next three to four years being decreasing losses rather than profits,” he concedes. “I would be the fi rst to jump up with glee if we could bring that profitability forward, but it’s a tough old world out there as we try to cut costs, make sure the product is up there with the best and get closer to profit.” The target now is turning a profit and repaying government its funding. “It’s going to take us some time to recoup the amount of money we’ve put into the business so far, and this is certainly a year where we expect to make a considerable loss in our business. So whilst the government is keen on investing and developing the airline, it wants to see that investment paid back and that’s our strategy.”

He acknowledges that 2010 and 2011 are going to be tough years for Oman Air, which fi rst took to the skies in 1993, as adverse economic conditions continue to linger.

“In the next couple of years it’s going to be very difficult for us to make money because last winter we started five new long haul destinations. We’re bringing two or three more on during the course of this year and they’ll take a little while to mature.” The business won’t be overstretching itself, either. “Yes, in the last 12 months we’ve taken on a lot of aircraft – we took on 10 last year but this year it’s only two, next year it’ll be a couple more, so we’re not expanding beyond our capabilities. So you won’t see huge numbers of aircraft joining the fleet and we hope this will mean a gradual and profitable expansion of the network.” To fuel this controlled growth, the carrier has also raised its capital by 67 percent to from US$779.2 million to US$1.3 billion.

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“It’s going to take us some time to recoup the amount of money we’ve put into the business so far.”

Peter Hill

Bumpy ride With the global economy in a tailspin, the competition among the airlines is fiercer than ever. Up until the end of 2008, Oman Air, which took over the coveted national carrier status from Gulf Air, grew by 30 percent year on year. And although Oman itself has been fairly insulated from the fi nancial maelstrom, this airline has been quick to adopt flexible pricing and creative promotions in order to fi ll seats, because once the cabin doors close the empty seats have cost you money, Hill explains.

The fl ipside to the downturn is that Oman Air is able to negotiate favourable contracts with suppliers, caterers and baggage handlers. “We’ve been able to leverage a lot of benefits from this current situation,” says Hill. “Once the economic recovery materialises – and I am one of those people who believes it will – we are set pretty fair with deals we have locked in for the next three to five years with suppliers.” Despite the turbulent period, Oman Air is predicting a 30 percent rise in passenger numbers this year over 2009. “It’s ambitious for us but I believe we’ll do it.” Its cargo side of the business is another growth area. Today it represents four percent of the airline’s earnings but Hill forecasts it rising to 10 to 12 percent in the next five years, especially with the wide-body fleet coming into service. “Until we started taking delivery of the A330s we were predominantly a narrow-bodied operator with 737s; great workhorses but when you fi ll them up with 150 passengers they don’t carry too much cargo. So with the expansion of our wide-body fleet, we were able to start really carrying cargo.”

As well as offering passengers video on demand and six channels of live television, Oman Air recently became the fi rst airline in the world to offer the ability to make mobile

phone calls mid-fl ight, as well as Wi-Fi connectivity and broadband internet. Th is has been a staggered roll, out but by August the whole A330 fleet will be kitted out with this connectivity. These services are only functional above 10,000 feet, due to the fact that electronic devices need to be switched off during takeoff and landing. Th is groundbreaking move will be music to the ears of those needing to fi re off an email or make an important call, but the salient issue of fellow passengers being disturbed by loud phone calls will concern some customers. “When you’re travelling on an overnight fl ight you don’t want to be bothered by somebody having a rather robust conversation at three in the morning,” Hill explains. “We’ll speak to people who are making a nuisance and, if necessary, even cut it out, because we can do that.” He says it comes down to education. “We believe that we can educate our customers progressively to use the mobile phone in a responsible way. We’re going to encourage people to use the silent or the vibrating mode rather than the bells and whistles when a call or message comes in.”

Despite these concerns, the initial feedback from customers has been more than positive. “Time will tell, but so far the reaction has been amazing. Everybody wanted to know how we could do it but it’s all about investment and timing.” He adds: “It’s now very difficult to resist the urge to use your mobile phone up there. It’s the novelty factor initially, but it will also be pretty affordable when you’re sending messages and things like that to stay in touch.” Oman Air’s chiefs see these developments as a competitive advantage in the battle for business. “My board and the management team believe that the more things you can make available that you would normally expect in everyday life up in the air, the

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more competitive your product is going to be. I’ve spent quite a number of years in this area, and we’ve gone from nothing to fantastic in-fl ight entertainment. More and more connectivity is the way to go.” The airline says it wants to be at the forefront of technology and comfort but without forgetting the traditional values. Th is is echoed

by Hill: “We are investing in the product in a big way because we want to make sure that our customers not only have probably one of the most comfortable rides in the sky, but are also very well entertained.”

Desert delights Oman as a nation is weening itself off its dependency on oil revenues and turning its attention to the burgeoning tourism sector, marketing the Sultanate as an upmarket travel hotspot. Entitled the Economic Vision 2030, the country has a roadmap to diversify the economy over the next 20 years. As part of this investment and tourism drive, Oman Air will be instrumental in attracting increasing numbers of tourists and corporate visitors on direct fl ights in and out of Muscat. Oman is a

country that boasts a stunning coastline, desert landscapes and the highest mountain range in the Arabian peninsula. “For seven or eight months of the year, the temperature is perfect, with clear blue skies and tremendous scenery,” says Hill. “Increasingly, more and more people are going away to get away from city life and when you come to Oman you can experience all of that, as well as top rate hotels being developed. They won’t be inexpensive but you’re going to pay for the uniqueness of Oman.”

Oman isn’t looking to flood the country with tourists though, warns Hill. “The country doesn’t want to attract millions and millions of visitors every year because that would spoil the ecology and the ecosystem in the country. So the government is clever in that they’re developing areas that are designed to bring all the infrastructure together – the roads, the power, the water – and blend that into regions of the country that will not spoil the natural habitats. We’re creating new tourist sites that are going to be developed into resorts, golf courses and marinas all over the country. And this is not for the next couple of years – this is for five, 20, 30 years down the line.” Muscat International Airport is also undergoing a US$1.2 billion expansion plan that will eventually boost the airport’s capacity from four million to 12 million passengers a year. “For Oman Air, a steady expansion of the network and a consistent improvement of the product will get us up in the minds of people who will see Oman as an exciting but very interesting and rather exclusive destination. I would like to see Oman Air as the airline that brings them into and out of the country, and their fi rst experience of Oman should be on Oman Air as the brand ambassador of the country. Oman Air’s goal is to act as a catalyst for development in Oman,” Hill reveals.

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FLY DUBAI_june10 18/06/2010 15:44 Page 60

COVER STORY

Cheap

Thrills

The rise and rise of low-cost flying, according to flydubai CEO Ghaith Al Ghaith.

A

ny frequent traveller knows that all too well, you don’t get anywhere near what you pay for with air travel. The popularity of low-cost carriers like easyJet and Ryanair in Europe and JetBlue in the United States is therefore easy to understand – many consumers will happily trade already-decreasing amenities and services for lower ticket prices on short, simple flights.

So it was to great fanfare that flydubai – a low-cost airline designed to cater to a region brimming with expats – was founded in March 2008. Begun at a cost of Dh250 million, it is completely owned by the government of Dubai and operates out of Dubai International Airport between various cities in the Middle East and Africa. Though not part of the Emirates Group, flydubai was founded by Emirates Chairman Ahmed bin Saeed Al Maktoum, and is led by Ghaith Al Ghaith, a former Emirates executive.

According to him, it had long been the vision of Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, to have a low-cost carrier headquartered in Dubai. He recog-

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nised the need for Dubai to have its own low-cost airline to serve the largely expat population in the region and to ensure more people would be able to travel to more destinations more often. The capacity constraints at Dubai International Airport made the establishment of another airline in Dubai impossible before now. However, with the recent opening of Terminal 3 and the expansion of Terminal 2, these constraints were no longer a barrier to Dubai having its own low-cost airline and flydubai took flight in spring 2008.

Two years into the running of the fledgling company, and Al Ghaith is pleased with the success of the airline thus far. “We only started commercial operations with flights to Beirut on June 1 last year,” he explains. “Since then we have begun flights to a further 20 locations, bringing our total now to 16 operational destinations. We recently announced Colombo in Sri Lanka and Lucknow in India as our next routes with flights starting in June.”

To help meet rising demand for services, the airline recently took delivery of seven 737-800NG aircraft on schedule from Boeing, including the first Boeing Next-Generation 737 aircraft equipped with Goodrich

Dh250 million Cost to get the flydubai business airborne

FLY DUBAI_june10 18/06/2010 15:45 Page 61

Corporation Duracarb carbon brakes. In July and November last year, it signed aircraft financing, maintenance and logistics deals worth around US$520 million.

And it also moved into a new headquarters building on the North side of Dubai International Airport, near to Terminal 2.

“We are more than pleased with the success of flydubai to date,” says Al Ghaith. “Flydubai brings a fresh approach to travel and has its own unique business model. It was not modelled on any other airline, although we have tried to take the best of other airlines from around the world and adapt them to the market in this region. The flydubai model aims to make travel a little less complex, a little less stressful and a little less expensive for travellers. We’ve kept these basic principles in mind when conceptualising our business model. And, going by the enormous number of passengers that continue to travel with flydubai, I think we’ve successfully achieved what we set out to do.”

The original order for 50 Boeing 737s at the Farnborough airshow was valued at approximately US$4 billion and marks the biggest single order by a Gulf-based low-cost carrier for the aircraft. The reason for making such a large order at once was twofold: “First, to assure the best price possible for the fleet and second, because only once

THE DESTINATIONS OF FLYDUBAI

Aleppo

Alexandria Amman Assiut

Baku

Bahrain

Damascus

Beirut Kabul

Kathmandu

Khartoum

Doha

Djibouti

Kuwait

Lucknow Luxor

Muscat

Flights planned: Colombo, Karachi, Latakia, Istanbul

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FLY DUBAI_june10 18/06/2010 15:45 Page 62

Other low-cost airlines we have our fleet in place can we move forward and make decisions on the route network, staff appointments, and so on.” says Al Ghaith.

He explains that the Boeing 737-800 Next Generation aircraft was chosen above any other model because they are acknowledged as being the safest, most reliable and most fuel-efficient aircraft flying today. “The aircraft has the equivalent of more than 30,000 years in the air and has carried 12 billion passengers across 75 billion miles. Those are fantastic credentials by any standards. Its reliability, safety and fuel efficiency make the aircraft ideal for flydubai, which can pass on the savings to its customers,” says Al Ghaith remarking that the five safest aircraft models currently under production – with more than 10 million flights a year – are all Boeing, with the 737 having one of the best records and the most flights.

“One of the most striking features of our aircraft is the winglets, in which we invested US$50 million,” continues Al Ghaith. “These winglets add an extra 1.4 metres to the wingspan, and are aerodynamically designed to save up to four percent of the total fuel burn. A winglet-equipped aircraft can typically use three percent less climb thrust on take off, and cruising fuel flow is six percent less. This will save flydubai between 75,000 and 125,000 gallons per aircraft per year, which not only saves on energy expense and extends engine life, but also ensures lower fuel consumption,” he says.

“This reduction in fuel has a positive impact on the environment as it ensures nitrogen oxide emissions are reduced by as much as five percent and carbon dioxide emissions by around four percent. Another great benefit of the winglets is the reduction in noise from the aircraft.

Because les thrust is needed on take off, there is an average 6.5 percent drop in decibels, making it a much more flight path-friendly option for local residents.”

These considerations are of course gaining in importance, not only as environmental concerns work their way up the international agenda, but also as flydubai expands its route network. The low-cost carrier currently serves and will continue to launch a mix of destinations that are commercially popular as well as those that are currently underserved by direct flights from Dubai. “Our aim is to expand the region’s low-cost air travel sector by making travel more affordable and accessible for everyone,” explains Al Ghaith.

“I think all the destinations we currently fly to and will fly to in the future have great potential, especially since Dubai is a country dominated by a strong expatriate population.

With flydubai, travellers now have the option to travel more often – be it for business, leisure or to visit friends and family back home.”

In terms of geographical reach, flydubai will serve those countries that are within a five-hour flight radius of Dubai. This takes in a population of 2.5 billion people and

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easyJet, UK

Air Asia, Malaysia

Air Arabia, UAE

Ryanair, Ireland

Jazeera Airways, Kuwait

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gives flydubai access to one third of the world’s population.

“It is important to us to expand our network quickly to give our passengers the widest possible range of destinations to fly to. But some of our routes are proving to be so popular that we need to add extra capacity to existing routes to keep up with the demand.”

And even though it has only been 12 months since the airline started commercial operations, it is expanding rapidly. “We are proud of our achievements and have been on track with our plans; to be honest, I am overwhelmed by the great response we have received,” says Al Ghaith. “Like any business, our rapid expansion has meant we’ve had a very steep learning curve. However, we’ve met these challenges well and are in a strong position this year. Also, as flydubai continues to expand, another one of our challenges will be to continue to attract and recruit the right number and calibre of staff to ensure we can continue to offer our customers the excellent levels of service that we have started with.”

“We’re constantly looking at ways to make things easier and to save costs” Providing a good customer experience is one of the main priorities for flydubai and it’s what sets it apart from its competitors. “At flydubai, we like to keep things simple to keep costs low and that’s how we keep fares low,” says Al Ghaith.

“We’re constantly looking at ways to make things easier and to save costs. We want to be clear about the way we operate so there is never any doubt about the cost of a fare. Our fares are fair, as they include all taxes and charges and a generous hand baggage allowance of 10kgs. On flydubai you only pay for the services you want and we believe you should only pay for the baggage you have. If you require checked-in luggage, you can have it, but you pay for it separately.”

Al Ghaith is also quick to stress that low-cost does not equate to low quality. “We are also committed to ensuring a good on-time performance and a high quality on-board service. flydubai may be low cost but that doesn’t mean we will cut corners in terms of our on board experience. Our cabin crew is trained to provide the best customer service possible and they are of a variety of nationalities to ensure a wide range of spoken languages and cultural diversity,” he explains.

There is plenty to look forward to in the future, too. “We have only just completed a year of operations and have already achieved more than we set out to do. I am excited about everything we do. I’m looking forward to flydubai evolving as a company and helping to expand the region’s low-cost travel sector even further.” n

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flydubai in numbers flydubai was established by the government of Dubai in

March 2008

It was Dubai’s 1st low-cost airline The first commercial flight took place on

June 01, 2009 to Beirut

flydubai has a network of 21 destinations, 17 of which are currently operational

The company operates

8 Boeing 737-800 Next Generation aircrafts In the first 12 months of operations, the airline notched up

1 million

passenger bookings and 750,000 passengers

flydubai employs more than

500 staff

from almost 70 countries, including more than 100 pilots and more than 200 cabin crew

In the coming months the company expects to receive a further 5 aircraft and will fly to over

25 destinations by the end of the year

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QUEST_june10 18/06/2010 15:39 Page 66

INDUSTRY INSIGHT

Predicting the future of enterprise IT Joe Baguley forecasts some key considerations that will need to be addressed if cloud computing is to deliver on the hype.

C

loud computing is the hottest buzzword in IT right now. But is this the fabled magic bullet that promises to solve CIO headaches once and for all, or merely the latest in a long line of overhyped, marketing-driven technologies? As we know, cloud computing essentially describes an approach whereby IT resources are provided as a service via the internet. Instead of purchasing physical servers, databases, middleware and applications separately, as was traditionally the case, organisations will simply be able to order these services over the internet in ‘virtual’ form, as demand requires. In theory, cloud computing will deliver all the technical benefits but none of the financial costs and technical headaches associated with wholly-owned IT assets. Consumption of computing power will be billed using a simple ‘utility’ model – a per-unit approach similar to that used by power companies.

Whatever the wider economic environment, the recent stampede toward cloud computing has been startling. As big players like Google, Microsoft and Sun jostle to position themselves as Cloud Service Providers (CSPs), so relative arrivistes like Amazon.com are also being increasingly seen as technology providers rather than mere retailers. In this brave new world, the rationale goes, why shouldn’t buying computing power online be as straightforward as purchasing books or DVDs with a click of one’s mouse?

Marc Benioff of Salesforce.com, an early pioneer of the Software as a Service (SaaS) mentality, would certainly agree.

Speaking at his company’s London ‘Cloudforce’ conference in April 2009 – even the show’s name reflects this new mantra – Benioff argued that: “The old model of enterprise software is not working; paying 22.5 percent for maintenance every year does not work. Enterprise software can run in the cloud, which makes it much lower cost for everyone.” With such noise around this technology right now, it would appear that the future for cloud computing is assured. Indeed, IDC predicts that the market for cloud computing will reach US$42 billion by 2012. Before we all get carried away with such astronomic forecasts, however, it’s worth considering some potential pitfalls.

Foremost amongst these is the question of cost – or, to put it more accurately, value. Cloud computing certainly promises the potential for some significant efficiencies, but, when many organisations don’t even have an accurate pic-

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Joe Baguley is the European Chief Technology Officer for Quest Software. With more than 16 years of experience in IT, Baguley has extensive field experience deploying and managing large-scale infrastructures. He regularly writes and presents on the key challenges facing companies globally in an increasingly complex and integrated world.

ture of their IT costs today, how will companies know whether the cloud can save them money? IT companies need to invest far more effort in helping customers understand their existing technology spend before they even start thinking about moving them into the cloud. Indeed, in the current economic climate, companies should be subjecting their IT budgets to more forensic examination, whether they are considering a cloud strategy or not. With so much media hype around cloud computing, there is a danger that CIOs will be under pressure to reshape their IT strategy around a technology that may not be the most cost-effective option for their particular organisation.

Allied to these cost concerns are ongoing questions about technical robustness. Microsoft attracted criticism recently for an outage of its fledgling Azure cloud platform. As I blogged at the time, though, I think that much of this flak was unwarranted. Azure is only at the ‘pre-beta’ stage and this sector of the market is equally new. Indeed, I would argue that these kinds of glitches are positively healthy, as they highlight the need for greater industry collaboration and more cohesive standards within the cloud environment. It is difficult to envision cloud computing losing its current momentum, but then again it wouldn’t be the first time that the technology industry’s next great white hope turned out to be only so much marketing rhetoric. To avoid a repeat scenario, the IT industry must work together to address nascent issues like cost and security, ensuring that this cloud at least has a silver lining. n

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PwC_CEO Survey Ed_june10 18/06/2010 15:36 Page 68

CEO SURVEY

perspectives The results of the Annual Global CEO Survey 2010 shows that business leaders in the Middle East are emerging from the economic crisis with optimism.

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ublished annually, PricewaterhouseCoopers’ Global CEO survey is an extensive report that provides an important benchmark on the economic climate, both globally and regionally. This year’s survey – PricewaterhouseCoopers, 13th – interrogated 1198 global CEOs from 52 countries on their views of the factors that are impacting business in the post-recession environment. Issues explored include: how business leaders have responded to the challenges brought about by the recession, the concerns they are facing today and, reflecting on often difficult lessons learned, their strategies for positioning their companies for the long term.

This year, for the first time, PwCs survey included 68 business leaders from the Middle East and Africa. The Middle East Summary highlights the views of CEOs based in the region and compares them to those of their counterparts in other parts of the world.

Here, Business Management provides a brief overview of the survey results.

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Cautious optimism CEOs across the globe are still addressing cost-cutting while they prepare for the recovery and many had to make deeper cuts than they had expected with 88 percent admitting that they had initiated cost reductions. CEOs in the Middle East, however, appear to be emerging from the crisis with optimism and are more likely to state that they will increase headcount by five to eight percent in the next 12 months.

Middle East-based CEOs are also less anxious about threats to business growth prospects such as over-regulation, low-cost competition, currency volatility and energy costs. What does concern them, however, are business threats such as inflation, lack of available key skills in their market and terrorism.

Human capital challenge

CEOs in the Middle East are more likely to say that their governments have been effective in helping create a skilled

FIGURE 1 Middle East CEOs were the least critical of government ability to provide skilled workforces North America 10% Western Europe 21% Asia Pacific 29% Latin America 8% CEE 11% Middle East 39%

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workforce. However, the discrepancy between supply and demand – in terms of quality and quantity of labour available – is amongst the most pressing challenges to Arab business.

Of those surveyed, 71 percent of Middle East CEOs intend to increase their focus and investment on how they manage people through change. They are also more likely to say that they will change their strategies for managing talent in the wake of the economic crisis.

Whilst the timing of the recovery will vary by geography and industry, it is encouraging to see that CEOs in the Middle East have been quick to adapt to many of the challenges they have faced and are now in a strong position to take advantage of a global upturn Fouad Alaeddin, PricewaterhouseCoopers Middle East Managing Partner, Markets

EASE OF PAYING TAXES

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Maldives Qatar Hong Kong UAE Singapore Ireland Saudi Arabia Oman New Zealand Kiribati Kuwait Mauritius Bahrain Denmark Luxembourg

PwC_CEO Survey Ed_june10 18/06/2010 15:36 Page 70

Regulation

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ver-regulation tends to be less of a concern for Middle East CEOs who see government intervention in a more positive light than their counterparts elsewhere. They are also more likely to agree that their governments are taking adequate steps to improve their country’s infrastructure and to increase access to lower-cost healthcare. Confidence in their government’s ability to secure access to natural resources such as raw materials, water and energy is also higher amongst Middle East-based CEOs. They are also more likely to favour regulation for stability in the financial sector and for social sustainability and believe that enhanced enforcement would be more beneficial than systemic change. However, if there is a chance that regulation could harm job creation, business leaders in the Middle East are less likely to be in favour of it. They are also clearly opposed to new regulations in innovation, foreign investment and access to capital.

More regulation is sought by 39 percent of Middle East CEOs in order to protect the interests of consumers and the public. Many believe that consumers are becoming more sophisticated when it comes to brand awareness, product origin and environmental and corporate responsibility footprints and that more consumers want to play an active role in product and service development.

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Figure 2 Middle East CEOs are more likely to view government intervention as positive The government is taking adequate steps to improve the country’s infrastructure North America 33% Western Europe 38% Asia Pacific 50% Latin America 33% CEE 25% Middle East 82% Africa 43%

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The effects of the downturn were far-reaching. Many business leaders contend they should have anticipated the impact and prepared sooner – allowing them more time to consider various strategic options. As we see in the survey, CEOs continue to work to strengthen their organisations while seeking opportunities emerging from structural shifts in their industries, economies and regulatory environments. They recognise that the decisions they make today, dealing with issues like cash management and cost pressures, will have a lasting impact on their companies’ competitive position. The ability to understand and respond to the structural shifts underway, and to improve risk management capabilities, will be fundamental considerations as CEOs plan their course for growth

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Dennis M. Nally, Chairman PricewaterhouseCoopers International Limited

PwC_CEO Survey Ed_june10 21/06/2010 09:08 Page 71

“

It s clear that the fears of a global economic meltdown have started to recede and CEOs in the Middle East are more upbeat about the future.

The region’s economies are recovering at a faster pace than in other parts of the world and companies with the best prospects are those who managed through the recession while keeping an eye on the recovery ahead

”

Warwick Hunt, PricewaterhouseCoopers Middle East Managing Partner

Confidence in recovery The survey revealed that for the most part, Middle East CEOs are relatively optimistic regarding the future. However, the negative impact of the economic downturn has forced businesses across the region to refocus their strategy and place a greater emphasis on regulatory issues, understanding market risks and implementing long-term investment strategies.

In general, most believe that the region is well positioned to emerge with a stronger, more transparent, better-regulated and more sustainable business environment.

Organic growth Most CEOs surveyed, including those from the Middle East, see the biggest opportunity for growth over the next 12 months in existing markets.

Unsurprisingly, markets in the Middle East are growing more quickly and many were able to avoid the full impact of the economic downturn.

In comparison with the global average (15 percent), Middle East-based CEOs are more likely to fund this growth through private equity or venture capital (29 percent). Likewise, whilst 83 percent of CEOs globally plan to fund growth through internally generated cash flow, only 64 percent of Middle East CEOs plan to do the same.

Tax

The Middle East benefits from competitive taxation systems that promote investment, business activity and economic growth. The GCC countries are doing particularly well and in a recent PwC report entitled Paying Taxes 2010, which measures the comparative ease of paying taxes in 183 countries, the GCC ranked particularly highly.

Climate change Of all those surveyed, Middle East CEOs were least likely to have a climate change strategy in place a year ago, although this is no surprise given the fact that the region boasts 60 percent of the world’s oil reserves and Qatar alone has over 14 percent of the world’s gas supplies. The survey also revealed that Middle East CEOs are least likely to be working on a climate change strategy in the coming 12 months.

Despite this, they recognise the advantage that climate change initiatives can offer – in particular for their reputation – and consequently they are the largest group (75 percent) of CEOs surveyed to agree or strongly agree that regulatory cooperation will help successfully mitigate systemic risks such as climate change and they are looking to the government to take the lead.

Figure 3 Middle East CEOs view regulatory cooperation as positive

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INDUSTRY INSIGHT

Zero tolerance and passive network infrastructures Draka’s Peter Ludin explains why failure is not an option for upcoming generations of high-speed broadband networks.

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ext generation internet is now intertwined with our quality of life. Economic stability, critical business information, super definition HD and 3D multimedia and an ingrained social media culture are all part of our advanced societies. As the pressure on telecoms infrastructure increases, a quest for perfection is counterbalanced with a growing emphasis on reducing costs. Are the two compatible? Experience shows that innovative infrastructure solutions combined with turnkey approaches that reduce total cost of ownership doesn’t mean compromise for passive network structures.

Pyramid effect Draka builds passive networks using advanced fibre optics.

The business is illustrated as a pyramid-type layer model, one that applies to any telecom service. The passive network is the base of the pyramid, a critical part of the FTTH ecosystem. This ‘three-layer model’ separates fibre cables from the services that will pass through them. At the peak, the upper service layer includes services offered by content and market providers – radio, television, internet, mobile and fixed telephone. The middle ‘active layer’ has active equipment with small latency (time delay) and large bandwidth capability. It includes high-tech equipment placed in the district exchange, sophisticated decoding boxes with the end user, as well as active management electronics.

The foundation of this pyramid, the bottom, passive layer, is our business. With over 20 years’ expertise in cable and network building projects, we have a proven methodology comprising fiber optic cables with network project design, planning, implementation and maintenance. This strategy aligns with the

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current concerns of network operators. The successful running of a market-driven telecom network with a positive business case relies on the intelligent deployment and operation of a network. That’s why a systematic attitude to TCO is a requisite at the passive network layer level. As passive layer infrastructure expands to meet super broadband expansion, success means a constant focus on cost reduction and performance improvement. By managing Capex and Opex, we reduce the total cost of operations through the passive value chain.

Green field Energy City Qatar The same engineering principles apply to a small 6000 network in the suburb of Rotterdam in the Netherlands as for a large-scale green field project such as the Energy City Qatar (ECQ) in the Middle East. A US$2.6 billion project, Draka is designing, engineering and implementing this advanced fibre optic network. ECQ is being built from the ground up, with fully integrated communications. Three separate networks support the energy hub in Qatar; IT and datacoms, a security CCTV network for external and internal building protection and an additional CCTV network for security and street surveillance.

Here, a TCO approach runs throughout, down to the basic rudiments of running fibre cables through ducts. Draka’s JetNetXS blows cables through micro-ducts with jets of air from a central point up to a kilometre away. It means 90 percent fewer manholes as well as fewer ducts. A team of three people can deploy cables up to eight kilometres a day, compared with traditional cable laying techniques that take twice the manpower for a quarter of the distance. At another level of value chain detail in Qatar, Draka’s in-house manufactured bend-insensitive fibre, BendBrightXS, contributes to optical network rollout, reducing energy consumption, material use and civil works.

At the end of the 1960s, the planners of the internet had the vision of designing a communications network that would never fail, even in the event of a major catastrophe. Fast forward some 40 years to our three-layer pyramid and we see that next generation networks are interdependent throughout each of the layers, but depend upon a long-term reliance over the lifecycle of the passive network. Our approach is proving that by concentrating on innovative techniques that reduce TCO, a zero tolerance engineering attitude to passive network quality becomes a part of a construction culture. In Draka we call this ‘Value Innovation’. n

“Innovative infrastructure solutions combined with turnkey approaches for reducing total cost of ownership are going hand in hand to exceed expectations for passive network structures”

Peter Ludin, Vice President Sales EMEA for Draka Telecom Solutions, is an experienced executive in the European IT and telecoms industry. A Swiss National, he has a successful track record working with senior management in the telecommunications industry across Europe and the Middle East in a career which has spanned over 25 years.

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DUROOB ATE_june10 18/06/2010 15:32 Page 76

ASK THE EXPERT

Securing live business information Like other businesses in the world today, Middle East companies need to manage exploding information growth while keeping costs down and meeting stringent service levels, says Abdulaziz Al-Salloum.

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n the past, a business continuity infrastructure has been looked at as an insurance policy that should be there in case of a disaster. Nowadays, more and more companies are trying to make business continuity infrastructure dynamic – using it everyday of the week to move information technology systems anytime, anywhere and for whatever purpose.

Organisations in Middle East find data volumes continuing to grow, service level and compliance requirements increasing and costs rising. Awareness is rising as Disaster Recovery and Business Continuity solutions can dramatically improve operations, making data easier to share and manage with less disruption.

Over the last several years, organisations have learned that this comprehensive solution not only simplifies complex environments, but also improves utilisation and boosts productivity – all resulting in lower total cost of ownership.

Companies in the Middle East are now mature enough to understand that users require solutions that are easy to use and feature advanced capabilities that enable them to remain competitive in the marketplace while meeting IT infrastructure demands, reliability and performance.

As always, system reliability is critical for any organisation and the importance of continuous information access has never been greater. IT architectures that fail to deliver high availability will impede business operations.

Disaster recovery and business continuity solution capabilities make it easier to meet required service levels while improving efficiency and it provides the ability to place information in storage tiers that can significantly reduce costs.

Easy-to-use tools that work across the information infrastructure help to utilise best practices for backup and recovery management and operations. Also another key in meeting service levels is intelligence in the environment, including the ability to prioritise workloads at different times during the day to meet application requirements.

In a long-term vision, organisations should have the ability to move data among various drive types and RAID levels, streamlining their environment whilst improve effi-

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ciency and flexibility. Disasters can be costly in terms of downtime and manpower, so if a company has business continuity solutions that can alleviate the unexpected costs then the investment would pay for itself.

There has never been a good time to put off implementing a business continuity or disaster recovery plan. However, in these difficult times it could be even more important to implement a solution and ensure that your business can continue in the face of a disaster. Dynamic infrastructure ties in all of the benefits of business continuity, without restoration times, without downtime and companies should protect themselves in the event of the following: • Exponential data growth, compliance requirements and service level agreements • System or power outages, natural disaster, internal sabotage, government conflict or cyber attack The following aspects should be addressed before the evaluation of disaster recovery or business continuity solutions: • Business agility, superior application uptime, simplicity of management, and breakthrough value for your enterprise • Achieving performance objectives for all application tiers at the lowest TCO • Providing the highest levels of system availability and data protection • Enhancing backup and recovery processes while reducing associated costs • Proactive service and support to quickly resolve potential issues, minimise both planned and unplanned outages • Avoid penalties due to loss of information • Advanced business continuity via array-based replication technologies to protect and move critical information The overall goal should be to minimise business disruptions and maintain a high level of confidence in the ability of your company to resume working in a timely manner. n

Abdulaziz Al-Salloum owns and oversees Duroob Technology's business units and has 20 years of experience facilitating international business and developing strategies to promote new technology and solutions in Middle East markets. Prior to establishing Duroob Technology, he was the Managing Director of, and led the entire operations of, CA Middle East, headquartered in Saudi Arabia and with offices throughout the Gulf region.

iStrategy USA Chicago, Il

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• The top 10 most important factors in your social media strategy • How to measure your social capital and monetize your efforts • Hot buttons to bring people to your web store front • How to find your best fit in integrating email and social media • How to deliver a response-driven, relevant message The simple truth is that there is no magic one-sizefits-all marketing mix. iStrategy will arm you with the deep understanding of aligning social media and digital strategy according to your organization’s processes and operations to achieve the objectives you’re after. Join us to network, share ideas, and most importantly find out how to build your marketing strategy to its fullest potential.

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STEVE DULVIN 3_june10 18/06/2010 15:40 Page 78

FINANCIAL IT

Beyond keeping the lights on Without back-office and customer-facing technologies the banking sector would grind to a sudden halt. To discover why technology is the “main fabric” of Abu Dhabi Commercial Bank (ADCB) and the key role of innovation, we speak to Head of IT Operations, Steve Dulvin.

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eadquartered in Abu Dhabi, ADCB is a diversified bank with 45 branches in the UAE supported by 172 ATMs. This diversified institution is active in banking services spanning corporate, retail and commercial banking as well as in the areas of treasury derivatives, infrastructure finance, private banking and wealth management. The vast IT side of the business falls under the remit of Steve Dulvin who has occupied the top IT job at ADCB since April, 2009 after a three-year stint as Head of IT Security and Quality Control at the bank. He describes ADCB as one of the most aggressive banks in the Middle East, which means a race for the IT department to support the business in its goal of gaining a competitive advantage.

After having been Head of IT Security you were then promoted to Head of IT Operations. What were your priorities and challenges when you first took on the role?

Steve Dulvin. Data centre modernisation with cost reduction was my first priority; this involved customising data centre strategies according to business plans, regulatory requirements and rapidly changing technologies in line with business objectives. These projects had to enable ADCB to contain costs while maintaining a competitive edge. Key projects that enabled business growth were projects like consolidation, outsourcing and virtualisation by efficient and optimal utilisation of existing infrastructure and human resources. ADCB is known for being customer centric so this added more challenges for us, and the transformation had to be done with no disruption to customer service and we had to meet a 99.9 percent availability of service.

IT Heads talk about the 80:20 rule – 80 percent of the job being about ‘keeping the lights on’ and 20 percent about innovation. How is your job divided and can you tell us about how innovation comes into your role and what you are currently working on?

SD. This is one of the best eras for IT heads and managers because it’s about making sure we keep the lights on by maintaining our service levels but also looking at reducing operational costs and I do not believe you can achieve that by reducing your focus on innovation. So to answer your question, in-

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novation and keeping the lights on go hand in hand. Although our main focus would be on running the bank, innovation still plays a very important role in our day-to-day operations. The only difference is that today it’s not about it being nice to have but about improving our services with self-funded IT projects. Believe me, the opportunities are plenty but a few years ago IT professionals did not have to think from that perspective, which means today it has opened our minds to a new dimension. Innovation is not just something that should be seen from a senior management perspective – it’s a mindset that we need to spread across the organisation. Everybody in an

“Innovation is not just something that should be seen from a senior management perspective – it’s a mindset that we need to spread across the organisation” organisation can contribute to innovation. It means the IT department needs to think bigger and better than they think they can, it’s about breaking barriers to our vision and it’s about doing things we thought were never possible. A recent study from Gartner shows that IT time allocation can be divided with 62 percent on running the business or ‘keeping the lights on’, 21 percent for growing the business and 17 percent on transformational initiatives (see graphic).

Many CIOs have been forced to do more with less because of the global economic downturn. Being 64.8 percent owned by the Abu Dhabi government, are you insulated from the economic woes? Are IT budgets unaffected?

SD. ‘More with less’ has been my favourite quote. I do not believe a day passes by where I have not mentioned doing more with less. For sure, the economic crisis has affected almost every organisation in the world, but is it really economic crisis or is it something that we should have done a long

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“The IT department needs to think bigger and better than they think they can, it’s about breaking barriers to our vision and it’s about doing things we thought were never possible”

time ago? Coming back to your question, yes we are partly owned by the government of Abu Dhabi and ADCB is one of the few organisations that has never stopped and we continue to give the best to our customers with product offerings and benefits. There are always two ways of reacting to this: one is to stand still, during which customers will feel the pinch but for us it’s about continuing and maintaining our services to customers and making it a pleasure to bank with ADCB. However, it also does not mean we have an open budget, because all our projects today, including infrastructure enhancements, go through the management executive committee in which our CEO is present. I do not believe there is anything we do with no clear ROI which could be financially driven or to improve customer service.

When the business invests in IT it is not looking for the features and functions of a product . What it expects is business outcomes that can be translated into more efficiency, lower costs and revenue growth.

How does technology come into the bank’s retail operations? For instance, do you offer mobile banking? If not, are you considering rolling this out?

SD. IT is the main fabric to the business. We consider ourselves a value centre to the business, although a few years ago the concept of having separate strategies for the business and IT existed. Today, we are very much

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one and the IT strategy can only be part of the business strategy – they can never be separate. Technology plays a big role in ADCB’s retail operations for both Islamic Banking and conventional banking. We are one of the most aggressive banks in the UAE and for us in Information Technology it’s a race to support the business and continue to deliver new product lines and additional benefits to customers. Yes, we currently do offer SMSbased mobile banking to customers and we are assessing the situation to expand the mobile banking experience for customers, and are looking for solutions that will integrate internet banking into mobile banking with minimum changes to the software, thus providing consistent and seamless user experience.

Security still comes under your remit, and last year you implemented Guardium’s real-time database security and monitoring solution.

What were the reasons for rolling this out and how has it made a difference to security?

SD. Almost every study shows that the biggest risk to any organisation is internal. In fact, as we speak we are in the process of implementing bank-wide single sign-on (SSO) with biometric devices to reduce the risk of identity theft. Guardium is only one of those initiatives we took to ensure our customer data is secure and is accessed by authorised personnel, only when re-

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quired. It also adds value to our change management process during which all activities of administrators are monitored by an independent team to ensure what is said has been done. Apart from Guardium, we also use recording tools for GUI (Graphical User Interface) based changes and provisioning tools to automate changes to our critical systems which is reviewed by the quality control department and tested on the UAT (User Acceptance Testing) environment before they are deployed.

We also have a partnership with Cyveillance who monitor ADCB card numbers online and for phishing sites to minimise risks to our customers by taking down fraudulent sites. The partnership has helped us become one of the first banks in the Middle East to take a more proactive approach to leverage its online presence in social media networking sites such as Twitter, Facebook and MySpace. This service will provide us with valuable brand intelligence, including raw customer feedback, increased security and visibility; it will help us utilise this intelligence in future marketing campaigns and new product development to better serve our customers. We also have a partnership with Symantec who monitor our internal and external network 24/7, which include, ensuring our servers are compliant to ISO standards.

dedicated environments for disaster recovery for our critical applications.

While I am on this subject, we are currently in the process of moving our data centre to a Tier 4 site managed by Injazat partnered with EDS, which also is one of the first facilities to acquire a Tier 4 certification in the region. The move started in November last year and is scheduled to finish in August. The reason we are taking almost nine months for the move is to avoid disruption to customer service and avoidable expenditure on new hardware. As of now, we have already completed 70 percent of the move with little or no interruption to our customers.

What is driving the need for adequate disaster recovery plans in the Middle East and are there any unique differences between the region and, say, Europe in how you manage this aspect of business?

SD. A disaster recovery plan is very much related to probability and the frequency of any disaster. Keeping that in mind, yes, there will be a big difference between the Middle East and Europe, which also does not mean we should stay blind to any unforeseen possibilities so we must take precautionary measures because there are predictable and unpredictable disasters that we should be ready for. I would also say the global crisis is a form of financial disaster – a disHow a typical CIO’s role is divided between ‘keeping the lights on’, expanding aster that was definitely a surprise to many or the business and rolling out new technologies. something that was considered a high risk but with least probability.

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In fact, we were one of the first in the world to work with Symantec on outsourcing our internal managed end point service, which helps us give an independent view on our external and internal infrastructure. Security and compliance is key to ADCB, which I am sure you would understand seeing as we are a bank.

What strategies do you have in place to deal with disaster recovery and continuity planning?

SD. Disaster recovery and continuity is a continuous process. It’s about keeping planning current and ensuring rehearsals are done, not just from an IT perspective but also with the business users. It’s also an investment you make for something you may possibly use or never use, which is expensive for both hardware and software licenses, which again needs to be measured against the probability and frequency based on the kind of disaster. At ADCB we decided to use the disaster recovery environment as much as we can for user acceptance testing and pre-production tests before any new enhancements are made. By doing this, it comes back to doing more with less by not having two separate environments for UAT and disaster recovery. We also have a few

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Will the next area of focus for you be a new core banking solution?

SD. Yes, the main focus for the next 12 months will be looking at a new core banking solution that will fit into our environment, considering it’s been more than five years since we implemented FLEXCUBE. In the last few years we have acquired best of breed applications for each business area to suit 100 % their needs, such as treasury, trade finance and CRM. We will be looking for a system that could retrofit into our environment with interfaces to multiple applications but that does not necessarily have to be a traditional core banking system with the ability to serve multiple business areas.

Another thing we will be working on is to build a service-oriented architecture (SOA) where business areas can have flexibility to choose from services with a lower total cost of ownership and will give us the option of re-using existing assets and services with a much lower cost and a faster turnaround time. Some of the technology benefits of having an SOA architecture are faster application development, improved system interoperability, scalability, enhanced information quality and a capability of sharing, which turns into business benefits that can provide better responsiveness to customers, adherence to market and regulatory requirements and improved operational effectiveness, and cost avoidance/reduction.

SOA has been there for years and is not a new technology. It’s about decoupling business process from technology to enable organisations to change spontaneously in the most cost effective manner and today this would definitely be an added value to the organisation. We have several other initiatives that we are looking at but the two mentioned above would definitely be on top of the list. n

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ASK THE EXPERT

Mitigating the risks With security threats coming from all directions nowadays, Costin Raiu offers his advice on how organisations can protect themselves.

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he beginning of the year was marked by a number of notable incidents. First of all, the targeted attack against Google and 30 other large US companies marked what I believe will be a notable trend – cybercriminals focusing on high precision targeted attacks, with great potential for financial gain.

Secondly, we see P2P applications spiking as a source of malware and infections for users, so I believe that will continue throughout the year. Finally, this year will be marked by serious efforts from companies such as Adobe trying to close the huge gaps in their products, such as Adobe Reader.

A good security strategy and implementation policy is a key survival factor in today’s cyberworld. The emphasis is on ‘good’ here because there can be different levels when implementing a security strategy, balancing usability with strength of protection. A few key points include correct access permission in the local network (make sure that rights to change files are granted on a per-need basis) and that there are logs for Internet access. A good solution has been found to be the proxying of all outgoing connections, through a proxy with authentication. This seems to take care of many Trojan-Spy that are designed to steal passwords and other confidential data.

There are certain important steps that can limit the amount of attacks and threats coming from using social networking sites. In general, people should not post private details such as home addresses or other information that can be used in password recovery forms. Also, we should avoid publishing too much private information and make sure that we limit the amount of people that can see it. A good practice is ‘friends of friends’, a better one is ‘only friends’. Make sure that the information seen by random users is very limited, for instance, just name and city. Lastly, be careful who you befriend on social networks. A good practice is to only accept friend requests from people you’ve met in person. A better one is to only accept friend requests from people you’ve met in person at least twice.

Cloud computing can really make a difference when it comes to stopping new attacks, so it is important that security suites do take advantage of this technology. However, they are not the final solution to all problems. It is important for managers to understand that cloud computing and inthe-cloud security are just parts of the security chain and

must be complemented by the measures detailed in the previous point. In general, we see attacks against all kinds of enterprises – big, medium and small. As long as they have important information that can be turned into money, they are targets.

In the case of a successful attack, losses can include damaged image, loss of intellectual property, data loss and direct financial loss.The attack process itself can then include blackmailing or other threats. Facebook and Twitter are actively used by cybercriminals as infection vectors. Kido, one of the most widespread malwares of all times, did not take advantage of Facebook or Twitter to spread. Yet, there are cases of malware that are using social engineering in the process, which are very serious and hard to remove.

Promising technologies have appeared over the years which could turn the tides in this never-ending battle between security companies and cybercriminals. In-thecloud security is here and it is an important development in the battle, as it greatly enhances reaction speed – delivering faster protection while obtaining true feedback on the effects of new detection algorithms. Furthermore, virtualisation and sandboxing are shaping the industry, allowing for better isolation of malicious software – limiting damage. Whitelisting is another, as it makes sure that only programmes from known sources have access to the system. I think the changes in the threat landscape will closely mimic these developments, while at the same time, taking advantage of the weakest link in the security chain: the human mind. n

“Cloud computing can really make a difference when it comes to stopping new attacks, so it is important that security suites do take advantage of this technology”

Costin Raiu has over nine years’ experience in antivirus research and technology development. He is a member of the Virus Bulletin Technical Advisory Board and CARO. Raiu also provides his services as an incident reporter to The Wildlist Organization International and has published extensively on data security and computer viruses.

He joined Kaspersky Lab in 2000.

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ASK THE EXPERT

Wise investments Salah Abu Shaar says the right IT investments are key to sustained success of Middle Eastern enterprises.

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any companies throughout the world have been forced to drive down their IT budgets as part of their cost-cutting measures which were required following the financial constraints brought upon by the global economic downturn. But while the rationale of controlling costs to keep the company afloat is very understandable, are lower operational expenses worth exposing critical corporate IT functions to risks such as security leaks, lesser data protections and reduced availability? Sectors such as education and government continue to adopt advanced IT solutions to maximise their productivity, so why should enterprises do the reverse and hesitate on important technology investments?

Over the past decades, IT has become embedded within corporate operations and businesses, and IT business alliance governs most of the technology investments. IT investments have become essential to gaining a competitive business edge through optimised efficiencies and increased focus on core activities. This is why all IT-enabled enterprises are in agreement that budget cuts should not be dealt to the extent that an organisation would be deprived of essential IT functions such as availability, data protection and security.

Experts and market research predict a 30 to 60 percent annual growth for the enterprise data segment in the coming years, echoing general expectations that the downturn will not slow down corporate demand for IT solutions. IT has become the lifeblood across all Middle East industries, from financial services and oil and gas to telecommunications and logistics. The slew of latest innovations in information management and virtualisation promises to elevate the role of IT in organisational efficiency even higher, which is why system integrators such as STME are constantly assessing new technologies and how they can be deployed to provide valueadded services to enterprises.

STME brings to the Middle East markets modern and new technologies that can serve the Middle East enterprises to meet the needs to enhance their IT systems availability and provide more protections to their data storage and archiving; adopting the right technology and solutions with the right investments will greatly improve the IT infrastructure without the need for too high and costly investments. It is mostly a

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matter of determining the right mix of solutions and partnering with a reliable provider. Moreover, the chosen tools should be able to deliver in terms of minimising expenses, increasing operational efficiency and manpower productivity, proactively identifying problems and providing solutions, enhancing management, facilitating high-level data security and protection and supporting easy access and seamless integration, among others.

Founded in 1982, STME has been at the forefront of matching IT frameworks with the Middle Eastern brand of business. As an established regional data storage and IT solutions and services provider, the company has formed part-

“IT investments have become essential to gaining a competitive business edge through optimised efficiencies and increased focus on core activities” nerships with global technology providers such as Symantec, Hitachi Data Systems and NetApp, Cisco and others to deliver solutions geared to meet specific client needs. Through its strong presence throughout the Gulf region, Egypt, Levant and Pakistan, the company has been designing and integrating innovative solutions to its portfolio of over 400 enterprise customers. IT support providers such as STME will continue to emphasise the value of technology investments that complement rather than compromise the viability of Middle Eastern businesses. A fundamental rule in technology is that whatever can be done, will be done; organisations simply cannot afford to pass up the numerous benefits of IT platforms and functionalities in favour of squeezing out more from corporate finances. n Salah Abu Shaar is the CEO of STME. Shaar joined STME recently as part of the late acquisition process. He has 33 years of experience in directing and managing IT and technology divisions within well repudiated financial and telecom firms. He also has very good experience in developing, managing and leading restructuring and change initiatives and projects.

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SPECIAL FEATURE

The

changing face of project

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Although times are undoubtedly leaner than at any point in the last three years, those involved in project finance in the Middle East are still bullish about the health of the sector.

By Ben Thompson

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he image was blunt, offensive even: His Highness Sheikh Mohammed bin Rashid al-Maktoum depicted sinking in a sea of debt. As a piece of journalism, the illustration in the November 29 edition of the UK’s Sunday Times newspaper was crass and right on the edge of acceptability (over it, as far as the Dubai authorities were concerned: they reacted by removing the paper from shelves). But as an indicator of the strength of feeling regarding Dubai World’s call for a temporary moratorium on its debt obligations, it was right on the money: as far as the international finance community was concerned, the emirate’s credibility as an investment destination was dead in the water.

I was in Dubai last year when news of the looming debt problems first surfaced; the reaction was mixed. “It might slow the pace of recovery for a while but I don’t think it’s going to be one of these cataclysmic moments that suddenly means equities fall off a cliff,” said Stephen Pope, Chief Global Equity Strategist at Cantor Fitzgerald. His attitude mirrored that of many of the bankers, analysts and construction industry experts I spoke to at November’s Big 5 event, with the majority keen to play down the potential impact on global and regional markets. Others, however, were less sanguine. “The panic button’s been hit again,” suggested Francis Lun, General Manager of Fulbright Securities, while Faisal Ghori at consulting firm ME Ventures warned that there would be “repercussions throughout the GCC”.

The real impact has been somewhere in between. While fears of another global economic meltdown – the dreaded double dip recession – largely failed to materialise, the debt crisis did have implications for the infrastructure community, not least in terms of the availability of financing for projects both large and small. Back in November, anyone proclaiming the wisdom of using massive debt to finance large infrastructure projects would have been politely shown the door and intercepted by the men in white coats on the way out. The strong growth in the availability of credit for project financing since 2002 came to a screeching halt in the second half of 2008, and since then international banks have shown little willingness to take on project-related loan exposure outside their home markets. For many, the crisis in Dubai marked the end of an era.

A new phase “International banks do the bulk of the project finance in this region,” explains Eckart Woertz, Executive Director of the Dubai-based Gulf Research Council. “In Saudi Arabia it’s maybe 50 percent, but in the smaller Gulf countries, probably 70-80 percent of the project finance comes from international banking. Of course, their liquidity position is now strained and with the Dubai crisis they have been even more reluctant to lend money.” Shankar Krishnamoorthy, Chief Executive of GdF Suez Energy’s Middle East and North African operation, agrees, suggesting that the world of project finance has changed significantly in comparison to three years ago. “The certainty of transactions has vanished,” he says. “Liquidity is not what it used to be, and the pricing has gone through the roof.”

But despite the problems experienced in Dubai and increasing public unease regarding the dangers of large-scale borrowing, using debt to fund large capital expenditure projects still has a bright future in the region – and it could be argued that it is now needed more than ever before. The Middle East project finance market is also in much better shape than recent headlines would have us believe. Indeed, the bullish view is that any well-structured project can find fi-

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nancing; banks are conserving capital and rebalancing their books, but it is a myth that they have stepped out of project finance altogether. In fact, the rollercoaster Middle East project finance market could be about to enter a new phase of growth.

Since 1995, project finance deals around the world have been completed to the tune of more than US$1.5 trillion, but global activity dropped by 40 percent over the last 18 months as the funding costs of banks increased, making long-term finance scarce and expensive. Even so, the Middle East still represents a big market for project finance deals. “In 2009, regional project finance activity was probably 50 percent of what it was in 2008 – but you have to bear in mind that it was coming down from an incredible peak,” explains Jonathan Robinson, Head of Middle East Project Finance at HSBC. “Globally the project finance market had a quarter of a trillion dollars of project finance activity in 2008. So even with the drop-off in activity you’re still talking about a very big business, and the Middle East still occupies a very important role in the global project finance market. It’s just changed. It’s changed because the economics have changed. It’s changed because the number of international banks who are still in this business has decreased, and those who are left are lending less money than they used to or are being more selective. And it’s changed because the regional banks are to all intents now primarily focused on local currency funding, their US dollar capacity is very limited, and the secondary market has all but dried up.”

After closing GCC deals worth no more than US$20 billion in 2009, project financiers are predicting the value of completed transactions in the region could rise by up to 50 percent this year and to $40 billion in 2011. While this would still be less than in 2007 – when the Middle East was the world’s biggest project finance market – the oil price rebound over the last 12 months has restored confidence among project sponsors and delivered fresh urgency to the GCC infrastructure programme.

“All of the Gulf countries have been in privileged positions over the last 18 months in that they have basically been able to keep on spending during the recession,” says Woertz.

“They had savings that they could mobilise for counter-cycli-

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cal fiscal stimulus, so with the exception of Dubai, everybody has been able to keep projects going.”

Such government intervention has proved reassuring, and led to a number of high-profile deals. Last June, Bahrain’s US$2.1 billion Addur power and water project closed its financing, while July saw one of the year’s largest deals – the US$4.1 billion Dolphin Energy financing. The equity markets are improving, too. Earlier this year, the Carlyle Group – the US buy-out behemoth that launched a US$500m regional fund in 2007 – acquired a 30 percent stake in General Lighting Company in Saudi Arabia, its first stake in a Gulf company after two investments in Turkey. And local houses also plan to start investing again, with Saudi Arabia’s Amwal AlKhaleej closing in on four potential investments in Egypt and Saudi Arabia.

Big projects, bigger challenges Driving this growing appetite for project finance is the power and water sector, with a number of big deals currently in the pipeline. Despite tightening credit conditions, five groups have bid for Saudi Electricity Company’s 2000MW PP11 independent power project, even though the tenors of the supporting finance were 20-22 years long. To help make the deal more attractive, SEC offered to take a 50 percent equity stake in the project, its second IPP; the first, for a power station in Rabigh, was closed last July with SEC taking a 20 percent stake. Indeed, the GCC project pipeline suggests there will be at least two big independent power and water projects (IWPPs) every year for the indefinite future; next up are four more power IPPs – required to help meet SEC’s power capacity needs to 2019 – at a rate of one every 18 months to 2016.

But while this presents a huge opportunity for suppliers of equipment and services, it’s going to present a considerable challenge to the Gulf project finance industry because of the fact that so many other major schemes will be seeking long-term finance deals over the next decade. It raises a key point regarding the project finance market: that it has become, even more so than it was in the past, a matter of survival of the fittest in which only the most attractive projects – those with the best risk-versus-returns ratios – will be able to attract funding.

“We’ve been following the market closely, and the international banks are being very choosey,” says Abraham

“All of the Gulf countries have been in privileged positions over the last 18 months in that they have basically been able to keep on spending” Eckart Woertz

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Akkawi, Head of Ernst & Young’s Infrastructure and PPP Advisory Practice in the Middle East. “They want good projects and risks that are well-balanced, with little demand risk, and where the off-take risk is borne by the public sector in some capacity or another.” In fact, he sees this as the biggest hurdle in terms of tempting the private sector back into the infrastructure market. “There’s hardly any appetite by the private sector to get involved in financing for infrastructure – whether it’s equity or debt – where the private sector bears the brunt of the demand risk,” he explains. “In other words, unless the government is putting mechanisms in place to guarantee a certain level of payments, investors are not really interested.”

Another issue is the lack of standardisation in dealing with the international community. “Every country has different ways of dealing with risk. And that’s making some financial institutions very selective in terms of who they deal with and where they invest,” says Akkawi. Indeed, location is important, as the strength of the market varies from country to country.

“Places like Saudi Arabia and Abu Dhabi are quite strong at the moment,” he adds, “but Dubai is a different story. Until they sort out the restructuring that’s going on, it’s unlikely there’s going to be a flood of project finance money available very soon – although having said that, the government has just embarked on several opportunities for the private sector to participate in, such as IWPP and others that are ongoing. Even so, I would say that the opportunities for project finance are far more promising in oil-based economies than in service economies at this stage.”

The third challenge he sees is around enhancing the role of local institutions. “Local banks are funding,” says Akkawi.

“It’s just that they’re still not very aggressive in taking on longterm structured financing deals. We’re seeing some baby steps, but it’s still the international banks that are coming in and taking the longer view.” He believes that the governments of the GCC have to work harder on assisting the locally based banks in order to help them get into long-term financing.

“We have seen this be successful in other jurisdictions such as Egypt, where the government has been pushing local banks to get into 10,12, 13-year financing deals. It’s about stimulating local economies and institutions.”

Bankers clearly have a role to play in this, but the starting-point is in GCC government infrastructure plans – and in this regard, more regional co-ordination is required to reg-

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ulate project borrowing. For instance, the appetite among international banks for GCC project debt has been hit by a number of fluctuations in government policy, not least the decision to cancel the Saudi Landbridge private finance plan and suspend the Saudi National Water Company’s privatisation programme. Other discouraging factors include an uncertain regulatory environment in some sectors and perennial concerns about loan security, particularly when it comes to projects sponsored by government-related entities. Such anxieties must be addressed; after all, if Gulf governments themselves appear to lack the necessary commitment to make such schemes work, what incentive is there for global banks to try to win project finance mandates?

Diversifying the mix But building up the financial strength of local institutions is only one solution to the region’s funding challenges. And while project financing is slowly recovering from the fallaway seen in early 2009, developers will increasingly need to look at a mix of funding options for their schemes. The recent difficulties in securing favourable project finance loan terms have prompted many developers to look at capital market so-

lutions – either to complement loan funding or refinance expensive loans with more attractive bonds – as having funding alternatives means developers will be under less pressure to put in their own money as equity in projects.

Islamic financing is also proving attractive as developers look to diversify their funding mix. According to a recent report published by the Dubai International Finance Centre, infrastructure projects are ideal for Islamic financing, in part because of Islamic finance’s preference for equity-based and asset-backed projects. Furthermore, many infrastructure schemes benefit the wider community, which fits well with the moral underpinnings of Islamic finance. An example of this is the US$100 million International Finance Corporation Hilal Sukuk listed on NASDAQ Dubai and the Bahrain Stock Exchange, the proceeds of which are funding infrastructure and health projects in Yemen and Egypt.

“The sources of funds available for infrastructure financing can be increased with the expansion of the Islamic financial industry into other non-bank entities (such as investment banks and Takaful companies) and funds (such as mutual, hedge and pensions),” argues Habib Ahmed, Professor and Sharjah Chair in Islamic Law & Finance with the Institute of

“Unless the government is putting mechanisms in place to guarantee a certain level of payments, investors are not really interested” Abraham Akkawi

A lost decade for project finance?

According to World Bank and PPIAF figures, the years following the Asian financial crisis represented a lost opportunity for the project finance community, as investment commitments to infrastructure projects with private participation in developing countries fell dramatically and took 10 years to once again hit precrisis levels. However, the decade also witnessed unprecedented development in the MENA region, and saw the construction of some of the world’s most iconic projects.

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Middle Eastern & Islamic Studies at Durham University, and author of the DIFC report. “Investment in Islamic instruments that fund infrastructure projects can be facilitated if a variety of securities with different risk/return/maturity profiles exist.”

It certainly represents a huge untapped market: according to an analysis by Ernst & Young, to date only 22 percent of the US$40 billion in Shari’ah-compatible financing within the GCC has gone into infrastructure projects. By their nature, such projects tend to involve large investments, and as most Islamic financial institutions have a relatively small capital base they will only be able to finance components of a project rather than the whole deal. Shari’ah-compliant financing is likely to constitute only a part (or tranche) of the total funding, with the majority of the financing being supplied by conventional financial institutions.

As such, Robinson believes its potential as an alternative to traditional methods of project financing will be limited. “At the end of the day, whether it’s Islamic or conventional, you have to understand how to do project financing well,” he asserts. “You have to understand the industry. You have to understand the risks. Conventional banks have been doing this

for a lot longer than the Islamic banks, and as a result the Islamic banks don’t have that body of expertise built up to understand the risks. And if you don’t understand the risks, you’re not going to be successful. So I don’t see them becoming a dominant factor, although I think it’s realistic to say they’ll be an increasing element.”

Akkawi agrees that Islamic financing’s share of the market is increasing, but echoes Robinson’s scepticism regarding its widespread adoption. “I think Islamic finance as an instrument will play a role in partially financing some of the infrastructure, but it’s unlikely to overtake traditional financing because of some of the challenges and limitations associated with Islamic finance, not least around ownership,” he says. “Many infrastructure projects don’t lend themselves easily to an arrangement whereby ownership rests with the provider of the financing, as mandated in Islamic finance. There is certainly a desire by the Islamic finance market to get into the infrastructure sector, but I don’t see them becoming a prominent player. I see them continuing as a bit player, and growing, but they will not dominate the infrastructure play.”

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Stability returns to Cityscape A sense of stability is returning to the regional real estate investment market thanks to government-led infrastructure programmes – but it will take time to become fully established, according to senior executives speaking at Abu Dhabi’s Cityscape exhibition in April. Gurjit Singh, Chief Operating Officer of Sorouh Real Estate, said government investment in infrastructure – including rail and transport links, logistics, oil and gas and energy projects – will have a beneficial effect on the property market in Abu Dhabi.

“These investments are going to bring more employment creation which will bring more demand for real estate both for residential and commercial projects,” he said.

John Bullough, CEO of Aldar Properties, agreed, adding that while the last few years have been challenging it was now time for the sector to focus on potential growth opportunities. “We have all felt the pain,” he said. “The last 18 months have been cathartic for the market. We now need to give investors solid future prospects and that is a long-term play. This isn't a quick win. Property is a long-term investment.”

Building the future There is no doubt that the Gulf is now a lenders’ market, and it is the borrowers that have to do the bulk of the spadework in terms of attracting the requisite funding. Certainly, banks could do more to build project expertise in the region and develop secondary infrastructure debt markets. But getting the right returns is now finance’s top priority. Investing in infrastructure debt is a low-return activity and completing deals is hard work, takes time and delivers less than trading in short-term financial instruments. Around 80-90 percent of loans that banks provide are short-term (between one and three years) leaving project finance – which traditionally relies on loans with maturities longer than 10 years – to suffer from the liquidity crunch.

Nevertheless, analysts maintain that the situation is steadily improving, thanks largely to the rise in alternative sources of finance. “During the crisis governments had to step in and provide either some higher-level of guarantee or liquidity or additional funding to get projects going,” says Akkawi. “Now, from the projects we’re involved in, we’re seeing significant appetite by the private sector to get involved and help provide finance. We’re not yet back to where we were three years ago, when a good project with good off-take was being financed at around 125 basis points above LIBOR, but the pressure is easing.

We’re certainly not at the 300 basis points above that we saw during the crisis – we’re probably in the middle at this stage. Around 200 basis points above is typically the type of margin that banks are currently looking for.”

How quickly the market can rebound, however, is more difficult to gauge. “It’s going to depend on the next two or

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US$40bn Predicted value of GCC completed transactions by 2011

“I could easily see the Middle East once again becoming the largest project finance market in the world in the next few years” Jonathan Robinson

three big projects coming to market and how the market reacts to them,” continues Akkawi. “There are several projects in Abu Dhabi and Saudi that are coming to market in the next 18 months, and they’re going to probably shape the future – at least in the mid-term – for such financing. So I’m bullish and cautious at the same time.”

Woertz, too, is reluctant to call how the market will pan out over the next few months, given its dependence on international banks. “Depending on what your opinion is of the world economy, you are either optimistic or pessimistic,” he offers.

“Should we face a double dip recession there would be renewed problems; but should there be an ongoing recovery, that would be very helpful for the project finance market.”

To survive, sponsors need to go to the right what liquidity pools: tap the Islamic finance market, look at local currency financing, and look at the export credit agencies – quasi-government entities that help domestic companies win deals through loans and guarantees – that now account for almost half of all project finance raised in the Middle East. Such agencies have stepped up their activity in the region and ameliorated the downturn in bank lending.

Indeed, Robinson believes there is still massive scope for a buoyant market. “I do not see a return to 2007/2008 levels of activity in the foreseeable future, certainly not in the forthcoming five years,” he says. “But I think if we get back to a level of activity that is 60-70 percent of that, then it will have been a tremendous achievement. I could easily see the Middle East once again becoming the largest project finance market in the world in the next few years. Even if it’s not at the level of 2007/2008, it’s still a significant market.” n

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H

aving spent 23 years at the helm of one of the world’s major project development and contracting organisations, Wal King, Chief Executive of Leighton Holdings, has seen a fair amount of ups and downs – not least the global recession that hit last year. At the time, King admitted that “a few of our tail feathers were singed”, but the company seems to have made a fast and full recovery after recently announcing an 82 percent rise in profits from AUS$220 million in 2009 to AUS$400 million – and the company continues to go from strength to strength by winning contracts and acquiring new work, including AUS$1.8 billion since March 2010 alone.

Looking at Leighton’s operations, what would you say are the biggest infrastructure challenges in the market at large?

Wal King. Big infrastructure projects are getting larger but they are also becoming more complicated in terms of design, the risk profi le and community engagement, whereas 20 years ago, infrastructure projects were nowhere near as complicated. In terms of environmental approvals, community approvals, sustainability, the complexity of the projects is increasing, and it becomes an almost square off function.

And what would you say are the challenges in the Middle East, specifically?

WK. We work in 20 countries around the world and each of those countries has their own particular challenges in terms of culture and work practices, they all have their own unique cultural differences and issues. In the Middle East specifically the cultural differences are somewhat more amplified by the fact that most of the workers are actually imported workers; and then of course you’ve got the religious aspects, which are much more magnified in the Middle East than other parts of the world.

So how do you ensure that the Middle East’s cultural heritage is maintained, despite the advent of new developments?

WK. Well, we deliberately have a partnership with some very senior and trustworthy Arab gentlemen and we look to build our organisation around the culture. At the end of the day, it’s based on mutual respect and the ability to work in that environment.

Urban planning is an increasingly important subject in infrastructure development. Do you have to work closely with urban planning departments to get the appropriate planning permissions and so on?

WK. Absolutely, and you know the planning processes are becoming much more complicated in terms of new

Reigning supreme in the world of construction, Wal King, CEO of Leighton Holdings, reveals why evolving with the times has proved a key strategy to getting – and staying – at the top.

direction with the communities, sustainability, pollution – it’s a much more complicated process down the line than it was.

In the Middle East we do have a partnership where we own 45 percent of the company Al Habtoor Leighton, and the process that we go through requires engagement at all levels with the local authorities and with the Arab community, our partners. Our strategy is very much one of consultation and working together with the people.

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An increasing number of companies around the world are championing the importance of sustainability, so how is Leighton building a greener focus into its design and development processes?

WK. I would always broaden the concept of sustainability. It doesn’t only mean focusing on green issues; in its broadest context, it means being able to have a business that goes forward and embraces all of the issues of sustainability and includes and

embraces profitability – if there is no profitability, there is no sustainability.

We need to embrace the environment and recognise the needs of the community wherever we work – if we work in Indonesia or Mongolia, we need to have this cooperative arrangement recognising the needs of those communities

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and that includes energy conservation, recycling, energy efficiency, etc, the list is very long.

But a lot of people talk about sustainability as issues that relate only to the environment and the minimisation of power usage for example, but it’s a much broader subject than that. Sustainability, broadly speaking, is the concept that you have a license to operate that will only continue to be good if you satisfy the environmental issues, community issues, mutual respect issues and include the needs of the client as well as profitability.

And what are your views on using sustainable materials and resources?

WK. Wherever possible we use sustainable materials and resources but in some cases, of course, it’s dictated by our client. If it’s our own development then we develop to the highest standards in Australia. We were the first to build the highest rated building, the Green Square South Tower, which was a five-star Green Star rating for office design from the Green Building Council of Australia. However, quite often these things are dictated not by us but by our clients. If we’re in a location in, let’s say Central Indonesia, sometimes these materials are not available. So in Sydney and Melbourne and Brisbane, of course, yes we do use the most effective, sustainable and renewable materials and we recycle. We’re a big recycler and in our earth-moving business we strive to have more energy efficient uses of our equipment and the like. It’s a complete all-embracing ecologic strategy, but the strategy has to be pretty much in tune with the local situation.

To what extent are building and environmental standards important in your opinion?

WK. Well, they’re continuing to evolve in terms of energy usage, material usage and it’s a matter of keeping in contact with the demands of the community on the one hand, but also in terms of our license to operate, keeping in contact with in our own ethical standards, which are that we do the best possible job in the environment within which we work. Our core values very much dictate that we do the right thing.

Looking at the global economic crisis last year, what impact did that have on you in terms of your projects? Did you have to make any cutbacks, for example?

WK. The biggest area that was affected was our property business where work came pretty much to a standstill. However, if you went back to the start of the global financial crisis, there were dire consequences predicted that the world was coming to an end; of course, that hasn’t happened and the recovery, particularly in Australia, has been much quicker and more powerful than people predicted.

Yes, we had to adjust our business strategies, but we’re always adjusting our business strategies. In our particular case, we’re on a continuing journey and that requires us to be in tune with the environment. When you encounter a rough period like the global financial crisis, you adjust your business strategy so that the things that you’re doing are compatible with the economic circumstances that you encounter and again we’re adjusting now. We have a continually evolving strategy and that work is never done and never will be done.

It’s a matter of continuing to navigate your way through the ever-changing environment and it’s only in the context of looking backwards that you can see the rapid changes that are happening in the community and the world at large.

You say that you’re constantly evolving. Is that something that’s quite hard to do as such a large organisation? How do you manage that?

WK. We’re a very decentralised organisation and our business planning process is what I call “all about the rules of racing”. The rules of racing set out the financial parameters and so on and so forth. And then we delegate to our respective managers, so they have the rules of how they operate and then they have the freedom to operate within that. So it’s the financial and planning discipline but with freedom to operate. In simple terms, its like playing a game of football: everyone knows the rules but once you’re on the field, you have to use your

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own initiatives and accountability. So we delegate a lot of accountability and responsibility to our senior people but it’s all done within a disciplined framework.

And did you feel any impact on operations in the Middle East after or during the financial crisis – there was of course a great deal made of Dubai being bailed out by Abu Dhabi – did any of this have an impact on your operations in the region at all?

WK. The Middle East was more magnified in terms of the effect of the fi nancial downturn and a lot’s written about the Middle East, but Dubai is just part of the Middle East and is not representative of the region as a whole. Obviously there’s been difficulty in the region, and continuing difficulties in Dubai, but overall the region is very sound.

I’m a great believer that we’re in a long-term growth cycle that will go on for another 20 years. It’s like the stock market; when you look backwards in the stock market, like the crash of ‘87, these are mere blips on the horizon when taken over the fullness of time. But we are in a long-term growth cycle and in the next 20 years, there’ll be another billion and a half people that will enter the middle class and that middle class will drive greater growth in the world.

When the global financial crisis occurred, a huge economic earthquake happened, much like a real earthquake, and the economic plates of the world shifted and they’re not going back to where they were. So if the last century was the century for America, this century is going to be the century for Asia. Not that America will be smaller or poorer, it will just be less important in the world scale as is the case with Europe.

You’re obviously very optimistic about the coming decade. Where will you predominantly be focusing your work over this time?

WK. Well, we are focusing our work on Asia, the Middle East and India and all of those places where we think growth is important and will happen. Leighton has a magnificent footprint in the world and we have the resources, management and capability to continue to grow. When I joined Leighton in 1968 it was on AUS$17 million a year with about 200 people and now it’s a 40,000 people organisation on AUS$19 billion, and we have an aspiration that within five years, we will have a revenue of AUS$30 billion with AUS$50 billion worth of work in hand.

Finally, what do you believe to be the biggest challenges facing the industry as it goes forward?

WK. Well the biggest challenge is the continuing need for human capital and capable people and we at Leighton are continuing to recruit and train. At the end of the day, we only have two things in our business: we have capital and we have people, and assuming that you can get the capital either by equity or through borrowing, success comes down to people. So the greatest challenge for us is to be able to attract, retain and train our people to be effective in an organisation, be well rewarded and produce great results for the shareholders.

Where it all began Wal King: “I finished my first degree at the University of NSW in 1966, and I then worked with the Electricity Commission in New South Wales, which is a power generating authority where I did a Master’s degree. When I finished that master’s degree, I looked around to join an Australian company and eventually joined Leighton. Back in 1968 Leighton had an annual revenue in the dollars of that day of AUS$17 million a year and of course, this year it’s AUS$19 billion.

“When I was looking to join an Australian company, a lot of my friends went off to work for overseas companies but you know, I’m strongly patriotic and I looked for a small company to join that had a spirit of adventure, the ability to grow and in hindsight my choice was first class.”

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Saudi Aramco ED_june10 18/06/2010 15:37 Page 100

LEADERSHIP

The challenging road ahead Saudi Aramco may be the largest oil and gas company in the world but it faces a whole heap of obstacles in the coming years, explains President and CEO Khalid Al-Falih.

S

audi Aramco is the world’s largest producer and exporter of oil and is among the leading players in the global oil industry. For 20 years it has been ranked by Petroleum Intelligence Weekly as the number one oil company and is run as a modern international corporation, competing successfully with the best in the business; and it is this qualitative aspect of our standing in the global oil industry that is the focus of our efforts and the source of our pride.

Equally important to the company is our critical obligation to support the Kingdom and its people. We consider talent, technology and teaming to be the three most important success factors for Saudi Aramco and for any global energy enterprise, for that matter. Saudi Aramco comprises more than 57,000 men and women, 87 percent of whom are Saudi Arabs, with 13 percent expatriates employed in highly skilled professional disciplines; almost the entire management of the company consists of Saudis.

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Our businesses range from exploration and production of oil and gas, oil refining, chemicals and shipping to sales and marketing and support in industrial, personnel, medical, finance, law and planning disciplines. We maintain worldclass expertise in all these areas. We believe that talent will increasingly become a differentiating factor among more and less successful companies in the future. Consequently, recruiting, developing and retaining talent is one of our key corporate strategies. We regard learning as a lifelong process and operate programmes to enable this pursuit for our employees. We maintain one of the world’s largest corporate training programmes, having in-house training of operators, craftsmen and administrative staff. We currently sponsor more than 2000 students for undergraduate and graduate degrees and specialised programmes at more than 200 local and leading international universities.

Talent thrives only in an environment that rewards excellence, effort and achievement. Throughout its history,

“We believe that talent will increasingly become a differentiating factor among more and less successful companies in the future”

Saudi Aramco ED_june10 18/06/2010 15:37 Page 101

Saudi Aramco has maintained a corporate culture that encourages individuals and teams to excel; where advancement is based on merit, skill and work ethic; and where employees have the opportunity to go as far as their expertise and drive will take them. That kind of working environment continues to be vital for our business success.

We also believe that technology is a great enabler of more efficient, more reliable, safer, lower cost and more profitable operations. Therefore, we utilise the world’s best technologies in our operations. In fact, we are among the industry’s leaders in deploying new, cutting-edge technologies in our operations. To remain among the leaders in technology, we have two advanced research and development laboratories: one for sub-surface called the EXPEC ARC and the other for surface facilities, the R&D Center. Many of our technologies are also developed collaboratively in partnership with service companies, technology developers and academic institutions. This partnering model sets the stage for a brief discussion of our teaming strategy.

Teaming refers to our collaboration with partners, suppliers, customers, and other stakeholders. Whatever the extent of a company’s capabilities, no company can or should go it alone these days, simply because the business is just too complex and too multifaceted for any single organisation to excel at everything. We have pursued joint-venture partnerships with leading global petroleum companies and now with top-flight chemical enterprises. We also look at our dealings with suppliers, vendors, contractors and service providers as mutually beneficial partnerships. When it comes to teamwork, we look to partner with leading institutions which also take a strategic, long-term view of building capacity and capabilities, and whose strengths and expertise fit well with our own, thus creating synergies. Regardless of companies’ past record of achievements and possession of talent and resources, bad governance can ruin company reputations and indeed put them into peril, as the examples of Enron and many others tell us. Such risks can be avoided only by strictly adhering to good governance, and practice of the highest business ethics. We not only attach great importance to governance and business ethics ourselves but demand the same of our employees as well as our business partners.

Oil and the economy Despite a lot of discussion in the media about the rapidly rising role of energy alternatives, we believe that alternatives are starting from a very small base and realistically speaking, their contributions will grow only gradually due to technology, economics, infrastructure and consumer acceptance issues. Oil will continue to play a key role on the world’s energy scene for the foreseeable future. We subscribe to the consensus view that oil demand will rise from about 86

million barrels per day currently to between 105 and 110 million barrels per day by the year 2030. Even if the share of oil and fossil fuels falls in the energy mix over the coming years due to alternatives gradually gaining ground, the demand for oil and fossil fuels is expected to rise in absolute terms. To respond to the anticipated growth in oil demand, and taking a longterm view of the business, we have recently completed an upstream expansion programme that brought our oil production capacity to 12 million barrels per day, with a spare capacity of roughly four million barrels per day. This spare capacity alone equals the exports of two typical large producers of oil, and helps assure oil market stability during unforeseen circumstances.

Oil is a volatile business. You saw this vividly during the past two years as the oil prices shot toward US$150 per barrel; then fell below US$35 as the world economy was hit by the financial and economic crises; and has since then recovered to exceed US$80 per barrel. Oil exports remain the largest source of export revenue for the Kingdom.

Depending on oil prices and our export volumes, oil still accounts for 80 to 90 percent of total revenue. This major dependence on a single commodity, oil, is not desirable. This is why it is imperative on all of us to work hard on diversification and indeed transformation of our economy.

However, economies take time to transform. Oil will continue to play a major role in the Kingdom’s economy for the medium term, which I would consider to be the next several decades, while industrialisation steadily increases and economic diversification grows.

While energy is a key enabler of the Kingdom’s economic development and a major competitive advantage, we need to make sure that we use our precious oil and gas resources efficiently, wisely and minimising waste. The total domestic energy demand is expected to rise from about 3.4 million barrels per day of oil equivalent in 2009 to approximately 8.3 million barrels per day of oil equivalent in 2028, or a growth of almost 250 percent.

We estimate that through improved efficiency, while maintaining the same economic growth, the increase in energy demand can be cut in half. This is a highly desirable goal because increasing domestic consumption of oil reduces the export availability. If no efficiency improvements are achieved, and the business is as usual, the oil availability for exports is likely to decline to less than seven million barrels per day by 2028, a fall of three million barrels per day while the global demand for our oil will continue to rise.

Saudi Aramco and the Kingdom’s economy The challenge to accelerate creation of high quality jobs in the Kingdom is tremendous. Six of every 10 Saudi citizens are under 25 years old. To absorb the influx of young people entering the labour market, Saudi Arabia will need to create

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nearly four million jobs over the next 10 years. The Kingdom’s economy historically has grown between three and five percent, while to generate the number of well-paying jobs required for our youth, the economy needs to grow in excess of eight percent. This is a tall order. Saudi Arabia’s per capita GDP was US$20,300 in 2009, about half of the US per capita GDP of US$46,400. We’ll need to increase our per capita GDP to close the gap with developed nations, or at least make sure that the gap does not open up further. Saudi Aramco is well aware of this challenge, and is making a variety of efforts to contribute to the economy growing more strongly. The company’s activities have a major impact on the Kingdom’s economy, well beyond providing a large share of export revenues.

In our country, the transition to a knowledge-based economy cannot happen instantly; it will take time – certainly decades and perhaps generations – to take hold, all the more reason to start now. It will be an added challenge that other nations are ahead of us and moving faster towards the knowledge-economy, but with commitment and dedication we can overcome these hurdles. Clearly, high quality education is essential to lay the foundation for future growth in select knowledge-based areas that can be targeted for investment. With four out of every 10 Saudi citizens 14 years old or younger, improvements must begin in primary school

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where a large proportion of our population needs to receive a high quality basic education before it is too late. And the improvements must continue at every stage through higher education. A measure of the challenge before us is that Saudi Arabia has fewer than 500 engineers per 100,000 citizens.

Jordan and Kuwait have about twice as many engineers per capita; the United Kingdom has about 10 times as many per capita. A comparison of 8th-grade maths and science scores shows that Saudi Arabia lags badly behind the average of the top 20 countries in math and science rankings.

I am convinced that this is a moment the Kingdom can seize to leverage our current strength in petroleum to help our youth become world class participants in the global workforce, to diversify our economy, to improve energy efficiency and productivity, to accelerate and sustain economic growth, and to establish Saudi Arabia as the global leader in selected knowledge-based industries. These are not easy goals, but with hard work they can be attained. Just as today’s Saudi Arabia has achieved prosperity and cultural development few could have imagined two or three generations ago, so too can we prepare the way for an even brighter and more exciting future for our nation. n This article is based on speech given by Khalid Al-Falih at the MIT Club of Saudi Arabia Dinner.

Khalid Al-Falih speaks during his keynote address

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MAXIMO_june10 18/06/2010 16:08 Page 104

EXECUTIVE INTERVIEW

Managing your assets Gaby Matar lifts the lid on how his business is using experience gained in the Middle East energy industry as a springboard into the service sector.

Can you tell us about the recent IBM Tivoli Business Partner award won by eSolutions and its significance?

Gaby Matar. Out of hundreds of eligible partners, eSolutions has been honoured by IBM with the Smarter Planet Award in February 2010 at the Annual Pulse in Las Vegas. This award was given to eSolutions for its dedicated work with clients to manage instrumented, interconnected and intelligent infrastructures with better visibility control and automation across IT assets, people, information and processes. The IBM Tivoli Business Partner Awards recognises business partners that have demonstrated deep technology and industry expertise with IBM Tivoli software and are delivering exceptional industry solutions that solve critical business issues. eSolutions has represented IBM Maximo in the Middle East since 1996 and has trained over 22,000 Middle East Maximo users in the past 14 years. We are honoured to win this award and to be recognised for our commitment to provide solutions and services that enable businesses to gain a competitive edge, even during these challenging times.

How have you been affected by the global economic downturn?

GM. Despite the economic turmoil, eSolutions managed to maintain the same level of revenue in 2009, while projecting a growth of nine percent in 2010. This is mainly due to gaining a bigger market share and to offering our existing client base newly introduced functional add-ons of Maximo software for specific industry sectors such as oil and gas, utilities and transportation.

Where is IBM Maximo being used?

GM. Maximo started in the GCC as the big company tool and rapidly won the lion’s share of the oil and gas and utilities markets in the UAE, Kuwait, Oman and more. Now the focus is moving towards the service companies and we are seeing a big upsurge in facilities management and transportation

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inventory size costs. Large corporations may have hundred of millions dollars of investment locked away in the Inventory. A 20 percent saving on this realises tens of million dollars of free operating capital, which easily repays the investment.

“Savings can be achieved by implementing in time inventory replenishment” markets. In today’s marketplace there is a shift towards the service provider model. Companies now outsource the maintenance and operation of their strategic assets. For the service providers, the key to winning business is to be better and more efficient than their competitors. This leads to these companies selecting products like Maximo to give themselves a competitive advantage.

What sort of ROI can be expected?

GM. Our experience is that Maximo provides a rapid ROI, usually with 12 – 18 months of roll out. Some of these ROIs happen naturally, for example by inventory cost reductions and some take longer to achieve, such as improvement of workforce efficiency. Our experience is that usually the first major ROI is in the reduction of the

How do client achieve these savings?

GM. Savings can be achieved by implementing in time inventory replenishment (this is an automatic benefit of Maximo). Also by shortening the supply chain cycle – many of our major customers have been able to trim 20 weeks off their supply chain by simply implementing the automated workflow. This dramatically speeds up the replenishment cycle as approvals are automated and also because people know the clock is ticking and they are being measured. The result is 20 weeks less stock and a massive reduction in inventory. Another way is by improving the purchasing process, meaning that items on orders are better specified, history is available and the buyers can negotiate better pricing.

Are there functional add-ons?

GM. Maximo has always been a leading product in the EAM sector with its base functionality. IBM has now started to provide focused enhancements for specific industry sectors. These enhancements are based on the core product but add industry specific functionality. These include, six industry solutions for oil and gas, utilities, transportation, nuclear, government, pharmaceuticals and specific add-ons such as Linear Assets Management (for roads, rail, pipelines and oil wells). It also includes Calibration for regulated industries, service provider functionality, IT asset and service management, and Asset Configuration Manager for aircraft and technical systems. n Gaby Matar is the Group Managing Partner of eSolutions FZ LLC. With 23 years of experience, Matar drives worldwide partner relationships as well as establishing ties with key partners in the MENA region. He has been successful in working closely with many enterprise accounts especially in the energy, telcoms, government and banking sectors.

www.maximo.ae

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ASK THE EXPERT

Leading the ERP implementation journey For most organisations, especially joint stock companies, the question is not whether to use an ERP, but rather how to implement and maintain it, says Khaled El-Faramawy.

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he new era of internet, e-commerce, the high advancement of telecommunications, networking and globalisation forces business executives to be under continuous pressures to increase revenues, reduce operating costs, gather and analyse data more frequently, rapidly explore new market initiatives and increase the business opportunities thus resulting in more profits and market share.

To be able to operate within new global challenges, especially under major financial crises or global recessions, companies are in great need of a real time system that can streamline the transaction processing, provide operationslevel reporting and ensure the consistency and reliability of data across the enterprise, which simply implies that the organisations must implement an Enterprise Resource Planning system, which provides a robust foundation for the business by providing common data repository, and standardise the business processes across the different departments. Knowing that possessing a reliable system is becoming a business necessity which leads to the fact that implementing an ERP is a must to survive, and bearing in mind that the ERP implementation is not an easy task, the stakeholders are trapped and seek the answer to the key question: how to implement an ERP successfully? The key success factors are: Scope Definition: Organisations should precisely determine their requirements in details for the entire organisation, and then finalise the scope by having a helicopter view of the entire requirements from different departments and determine the flow of information between various business functions to identify the integration points.

Vendor Selection: According to the size of organisation, its vision and allocated budget, the suitable software vendors should be invited to demonstrate their capabilities for fulfilling the crystal clear requirements.

Implementation partner selection: The fact that the investment in an ERP system once started will never stop means that the organisation must seek a business partner rather than an implementation vendor. Organisations will require a long-term relationship partner who is capable of providing all services related to the ERP. Organisations will need a partner who is capable of identifying the pain areas and precise-

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ly suggesting, designing and implementing a value adding practical and best value for money solution satisfying the requirements. Further more, the partner should be capable of making the necessary integration efforts with existing applications and build industry specific features and functionality that are not accommodated within the ERP and streamline the processes towards a total business solution.

As the training is considered as one of the critical success factors, the partner must provide the required training to the different user within the organisation to ensure a smooth transition from the old legacy systems and the newly introduced ERP. Prior to going live, the partner must assess the site readiness and provide change management activities to ensure the implementation success and avoid any show-

“With top management commitment towards the successful implementation of the ERP, all the employees’ efforts will be focused to the company target”

stoppers. Obviously, the initial going live stage is extremely critical and accordingly the partner should provide the post implementation support and maintenance activities to quickly resolve any issues and ensure customer satisfaction.

Finally, the partner should ensure that the business users are fully utilising the implemented features and suggest future footprint to adding more value for business.

Top management guidance With top management commitment towards the successful implementation of the ERP, all the employees’ efforts will be focused to the company target. Lack of this major success factor will result in wasting time and a great deal of money. Strong project management functionality is necessary to ensure successful implementation of an ERP project.

At all times, project constraints, including scope, time, cost, quality and customer satisfaction should be taken care of and strong change control procedure should be in place to ensure the smooth implementation of the projects on time and on budget. n

Khaled EL-Faramawy is Business Solutions Sales Consulting Manager for ALNokhba for Business Transformation (NBT). He is a senior business professional with diversified credentials in business development, account management, solution development, sales, marketing, key alliance relationships, project management and customer satisfaction. He has more than 15 years’ experience working with various industries, challenging markets and different cultures.

Innovative Business Solutions…

Capable To Deliver…

A partner to trust SOTLIONSISOLUITIONSTIONSLOIOSNSOTLIONS NOKBHA FOR BUSINESS S O L U I T I O N S T I O NSSOLLOUI T O ISO NSSO T L IAL TO R ANN S S F O RSMO A TLI U O NI I N TIONSTIONSLOIOSISOTLIONSOSOLUITIONSIUT FINAL NBT AD.indd 1

15/6/10 14:45:01

EUROTOUR GOLF_june10 18/06/2010 15:34 Page 108

SPORTS TECHNOLOGY

The European Golf Tour, which stops off at Abu Dhabi, Dubai and Doha on its travels, would be firmly plugged in the proverbial bunker if it wasn’t for the mountain of technology behind the scenes. We tee off with Mark Lichtenhein, CIO and Director of Broadcasting and New Media, to hear more about the complexities of this globe trotting organisation.

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lthough golf is sometimes described by its detractors and those who have suffered the ignominy of a bogey-riddled round of 18 holes as the best way to spoil a good walk, it is now a multibillion-dollar industry. Its top stars travel the world, have money-spinning sponsorship deals and battle it out for purses worth millions of dollars. Even despite his recent annus horribilis and subsequent loss of lucrative sponsorship deals, Tiger Woods is still sport’s first billionaire. And although it’s always been portrayed as an elitist sport, increasing numbers are getting into the game, particularly in the developing world, as professional golf tours expand into new territories.

With golf garnering so much attention nowadays, you could argue that Mark Lichtenhein has landed one of the plum IT jobs in Europe. Last year, the tour stopped off at 36 countries and staged 100 tournaments as far afield as Dubai and Kazakhstan. The IT and broadcasting infrastructure that has to be set up at each tournament – often a greenfield site in the middle of nowhere – is mammoth, including over 80 kilometres of television cabling. When the golf finishes, it’s all taken down and the Tour jets off to the next location to begin the whole process over again. “You couldn’t do this job if you didn’t enjoy golf because it’s not a nine-to-five job and can be fairly all-consuming as I’m sure my wife will testify,” says Lichtenhein. He never leaves home without his clubs, though. “My handicap is nine, which just about puts me on the board of respectability in this organisation,” he reveals modestly. “I’m not a great golfer, but I enjoy it.”

Lichtenhein, a software engineer by education, joined the Tour in 1999 after having been a founding force behind Silicon Valley start-up GolfWeb in the mid-nineties, the first ever website dedicated to golf. In the past 10 years he has

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Birdies, bogies and Above: Paul Casey of England hits his second shot on the 13th hole during the second round of the Omega Dubai Desert Classic

been instrumental in the evolution of europeantour.com and rolling out new technologies for on-site IT infrastructure. As with most sports, the Tour’s information systems and technology have to be ready on time for the first player to tee off; delaying the start of a golf tournament because of IT snags is not an option. “The events don’t stop when the network goes down, so it’s not a question of when you’re ready but how ready are you when the event starts,” he explains.

Unlike the US PGA Tour that has to deal with one country, one language and one culture, the challenge of the European Tour can leave Lichtenhein feeling like he’s landed in the rough. “Last year, we were in 36 different countries which means it is very challenging dealing with 36 suppliers for telecoms, broadband or whatever we need on

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site. This is why we try to control our own destiny and bring as complete a solution to site as possible – we can’t rely on a local telco trying to work out why the DSL [digital subscriber line] doesn’t work or why they can’t give us symmetric connectivity.” The Tour is self-sufficient with its own VoIP (reducing the need for temporary lines, and Tour staff have the same number the world over), Wi-Fi and super-fast satellite broadband just in case there is a glitch with the local telco’s internet supply.

Most of the golf courses the Tour turns up at don’t have a permanent infrastructure but Lichtenhein seems to relish the challenge of unearthing solutions to ensure each tournament runs smoothly. The varying locations and cultures all add to a unique mix. “It means we have to have a lot of in-

€116,892,269 Total prize money on the European Tour in 2008

novation and different ways of thinking depending on where we are. It’s compounded by the fact that we’re not only in a different country, but we’re in a green field often in the middle of nowhere, which doesn’t even necessarily have good mobile signals or mobile access.” He continues: “Some courses, however, are well served, particularly those that have infrastructure like hotels on site, but we go to some fairly remote courses that are very beautiful but not necessarily known to the local telcos.”

Indeed, that’s the nature of where golf courses are situated, sometimes at a windswept outpost miles from any town.

The course itself can be spread over 30-square kilometres, which adds to the expense of installing temporary networks.

“The countries that we think might be more challenging tend

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to surprise us by being rather good,” Lichtenhein explains.

“We go to South Korea and it’s fantastic because they probably have the best broadband on the planet. We went to India and hats off to our Indian partners because we had great connectivity. However, it’s closer to home where we seem to have more difficulties: Scotland is not very densely populated and it has some remote courses so we’ve certainly struggled over the years out there but generally things are improving as broadband availability improves with every country upgrading its networks. Compared to 10 years ago, it’s night and day but the demands on the network are 20 times higher than they were.”

Data manager As in most sports, information is king for the spectators gathered at the course and television viewers watching at home. Wi-Fi networks now relay scores to the leader board and other data back to the IT hub, which is regurgitated to the public and media. The Tour was one of the first sports to pioneer the use of wireless technology for its scoring and today Wi-Fi is ingrained in everything that goes on behind the scenes. “Wireless technology in all its manifestations is really key for us,” says Lichtenhein, “especially because we are working over a wide area. We put down 80 kilometres of cable a week for television, so we don’t even have to compound that by putting out huge data networks as well by cable.” He adds: “We are so mobile and here today, gone tomorrow, that you don’t want to put in permanent infrastructure for one week of the year, even when you’re coming back to the same course another time. We look for technologies that help our efficiency and reduce the overhead of setting things up and the costs associated with it.”

Out on the course, an army of volunteers carry handheld devices to collect stats as the tournament unfolds, while GPS is used for calculating ball positioning, distance to the hole, ball speed and more. The scoring and stats are delivered to a worldwide audience, whether they’re embedded in television pictures, stand alone data on a website, syndicated to third parties or provided to the press. “Data is very much our product,” Lichtenhein states. Indeed, the thirst for information is hard to quench; golf followers want as many stats as Lichtenhein can provide. “There is an insatiable demand or appetite for information because our audience wants to know every last detail of everything that’s happening on the golf course. There’s an awful lot of data out there so it’s just a question of capturing it all.” This is where Lichtenhein thrives. “My role is very much to look after all those digital assets and to ensure that they’re produced in the most timely and cost efficient manner and distributed to all their respective destinations as quickly as possible because we’re living in a real-time world where the value of the data decreases dramatically with every second that passes afterwards.”

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200,000 golf fans will attend the 2010 Ryder Cup

“We’re living in a real time world where the value of the data decreases dramatically with every second that passes afterwards”

Miguel Angel Jimenez of Spain is presented with the winner’s cheque for the 2010 Omega Dubai Desert Classic

Following what’s happening on course can be a difficult proposition for spectators, whereas on television you have the commentary, close up action of all the shots and a plethora of stats and graphics. To redress the balance, the Tour is working closely with Canada-based Kangaroo TV to stream live footage of the action and data feeds to a handheld device that users carry with them around the course. The Tour predicts that in the near future this same footage will be available to spectators on their smartphones. “Unlike a stadium sport where you’ve got action replays and you know exactly what’s going on, it’s much more difficult on a golf course with 18 holes,” Lichtenhein acknowledges. “And on television you know instantly who is leading; as a spectator walking around the golf course you don’t. So this is the kind of thing we are working on to improve customer experience.”

But any technologies Lichtenhein rolls out usually come with a hefty price tag, especially given the open environment of tournaments and the globetrotting nature of the Tour. “It’s a huge cost because all of this is temporary infrastructure,” he explains. “It’s not like erecting a giant screen at Lord’s Cricket Ground and then leaving it there for the year – you’re picking it up and taking it somewhere else, so it’s got to be

durable, transportable and cost effective.”

As well as being CIO, Lichtenhein is charged with the broadcasting side of the operation, being Co-Managing Director of European Tour Productions – a joint venture with IMG Media – which produces almost all of the Tour’s telecasts on behalf of the broadcasters worldwide. A specialist live golf team has now produced more than 400 European Tour events while each week 20 hours programming is delivered to over 30 customers worldwide. Around 220 people are on site every week for the broadcasts.

“We produce all the pictures that you see on television stations around the world, be it Sky in the UK, Sky Deutschland or the Golf Channel in the US, so we bring a lot

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of infrastructure with us and are dependent upon technology. The Tour broadcasts the action in high definition to viewers at home and IPTV HD footage locally to hospitality and the clubhouse. The Tour uses the services of a company called Creative Technology to deliver the pictures to plasma screens around the course.

Eyes on the prize The ‘big one’ for Lichtenhein is the 2010 Ryder Cup at The Celtic Manor Resort in South Wales in October.

Europe’s top players versus the best the United States can muster in a match that takes place biennially. It’s one of sports most prestigious events and is expected to draw 200,000 golf fans and 1000 journalists to the nearby city of Newport and a global television audience of tens of millions.

Lichtenhein has been making preparations for the competition for the past four years. “It’s the biggest golf event on the planet – much bigger than any of the Majors.” Lichtenhein stresses that four years is a short time in terms of planning an event like the Ryder Cup but that technology can evolve dramatically in this time. Indeed, making tech decisions back in 2006 was a tricky proposition. “For instance, we are putting in 100MB symmetric connectivity but it’s situated in a valley.

There are a couple of PSTNs [Public Switched Telephone Networks] if we can find them so we are having to put in a lot of fibre from the local exchange. We are looking at some fairly sizable costs to run all this for a week but it’s an event that’s going to be under the world’s gaze.”

Preparations were ramped up in October of last year as the IT and broadcast teams nailed down what they needed.

By this April, a team was assigned to concentrate solely on the Ryder Cup and system testing began. The Tour will also be relying on outsourcing partners to make it all happen. HP, for example, will provide a unified wired and wireless network infrastructure to ensure fast, secure internet access to every corner of the complex, including the tented village, hospitality pavilions, business centre, media centre and the team rooms of both Europe and the United States.

Lichtenhein says any solutions he implements have to be tried and tested; the Ryder Cup is too important to be wrestling with unproven technology just before it starts. “We are very innovative but we would never use something that hadn’t been fully tested, particularly for the Ryder Cup. So if somebody came along and said they had this great solution for the Ryder Cup I would think that’s fine but let’s have it out on a European Tour event a year ahead so that we can see it in action, we can use it and by the time we get to the Ryder Cup we haven’t got any surprises.” This cautiousness is important but Lichtenhein is quick to reiterate that the Tour is innovative. “We are constantly innovating. One of the great assets we have is our high public profile which has meant we are fortunate enough to capture the imagination of a lot of technology companies who come to us with solutions that

Top: Alvaro Quiros of Spain plays his tee shot at the par 4, 9th hole during the final round of The Abu Dhabi Golf Championship Bottom: Paul Lawrie of Scotland on the 18th tee during the first round of The Commercialbank Qatar Masters

they think would work for golf. Some of them do and some of them don’t, so I think we’re well placed in terms of understanding what’s going on and events like the Ryder Cup only help to reinforce that.”

The overall goal for all this technology is to improve the user experience, he says. “We are always asking ourselves how we can improve things, deliver a better experience for our television viewers, website visitors and spectators but it has to be cost effective and build the business going forward.”

Looking into his crystal ball, Lichtenhein doesn’t foresee a ground-breaking technology development but rather ways of better using the technologies currently available. “I don’t think we’re going to have a paradigm change in the way that the internet changed things 10 or 15 years ago when it went mainstream. However, I do think we’re in much more of a consolidation phase about how best to use these technologies, and things like, VoIP are very important to us.” As he converses you notice that Lichtenhein seems to be always naturally smiling; he really does seem to relish this role.

Working in a sport that you love is a dream combination that most of us never get to experience. n

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SECURITY FOCUS

The long arm of the law in Dubai Major General Khamis Mattar Al Mazinah, Deputy General Commander of Dubai Police, reveals how the force is working to improve safety and security in the emirate.

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stablished in 1956 in Port Naif, the Dubai Police force has been serving the emirate for over half a century and in that time Dubai has changed immensely. “Dubai Police was founded as the first police system in Dubai because we needed a foundation of security,” explains Major General Khamis Mattar Al Mazinah, Deputy General Commander of Dubai Police. “The law maintained stability, safeguarded the rights, regulated transactions and spread security among the people of Dubai.”

In 1968, the late Sheikh Rashid bin Saeed Al Maktoum issued the decree under which His Highness Sheikh Mohamed bin Rashid Al Maktoum, Vice President, Prime Minster of the UAE and Ruler of Dubai, was appointed Chief of Police and General Security in Dubai. Since this time H.H. Sheikh Mohammed has set a mandate to concentrate on building and developing a modern and contemporary foundation in support of quality of life, economy, education, health, transport and sport.

“Over the past 53 years, tremendous achievements have been made by Dubai Police General Headquarters in its mission to maintain and support the security, stability and development of our homeland,” explains Al Mazinah.

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Challenges “The rapid development of science and technology in the world has a positive and negative impact on communities,” he continues. “Unfortunately, there are those who have endorsed the huge developments of science and knowledge to develop criminal methods. On the bright side, this helps us develop more sophisticated means of detection and prevent criminal activity. We not only stay up-to-date with these recent criminal techniques and methods, but we must also deal with them before they occur, eliminating criminal activity through proactive processes and pre-emptive strikes.”

Al Mazinah goes on to point out that security officers and policeman are responsible for maintaining the protection of society. “Dubai Police General Headquarters works hard and offers tremendous support, both financially and technically, to develop the capabilities and capacities of our criminal experts. We raise the performance level, professionally and technically, for those who work in all fields of criminal science, traffic and administration, providing them with the basic skills to cope with ongoing challenges, particularly the patterns and type of crimes that have become common in light of the rapid development of modern techniques.”

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Highlighting that security authorities around the world are dealing with the same challenges, Al Mazinah says that the Dubai Police work in accordance with the vision that security overcomes crime and they look to combat and reduce opportunities for criminals. As such, much time and effort has been given over to develop and upgrade the human resources team and provide them with the training to provide the best security and police practices internationally through an annual forum. Al Mazinah goes on to explain that Dubai Police have also established a department annexed to the General Administration of Criminal Investigation in Dubai

Safety for Dubai Metro There is no doubt that the Dubai Police will play an important part in the safety of the Dubai Metro. A new police unit has been established to provide security along the line and almost 200 officers will patrol the 74 kilometres of track and 47 stations. Al Mazinah explains how he foresees the role shaping up: “I can’t sing the praises enough of the signing of the memorandum between the Dubai Police and the Roads and Transport Authority for the security services of the Dubai Metro. In particular, the memorandum is in place to ensure the security of the metro stations under the responsibility of the Dubai Police.

We have appointed specialist staff to carry out and discharge all the tasks of the Dubai Metro safety and security by attending training and courses on secure facilities methods.”

and have sent a number of officers to attend educational and training programmes in research and investigation.

“We have managed to gain the confidence of all international security agencies who are keen to exchange experiences and information with Dubai Police,” says Al Mazinah.

“Some countries have even asked us to provide officers to share their expertise in the detection of the obscurities and mysteries surrounding the solving of global crimes, such as the robbery case in Wafi Shopping Centre, the murder of Lebanese singer Suzan Tamim and the murder of Sulim Yamadayev.”

He added that the Dubai Police General Headquarters will establish the Modern Laboratory for Criminal Evidence and Criminology at Dubai Police HQ, the first of its kind in the world. It is due to include the Administration of Physical Remains and Effects, Administration of Criminal and Social Evidence, Administration of Forensic Specialist, Administration of Forensic Technology and Administration of Forensic Engineering. “Many tests will be carried out in the new laboratory, including hair and fibre tests, analysis of fingerprint and images, chromosome tests and test for weapons of mass destruction, as well as DNA tests,” explains Al Mazinah.

“The police force is always looking to activate partnerships with different community organisations and various community members”

Improving the city The Dubai Police force have a lot on their plate: from strengthening security for construction projects to implementing new rules and regulations for safe living conditions for labourers and the huge traffic problems in the city.

“Dubai Police and other bodies and authorities such as Dubai Municipality, the Roads and Transport Authority, the Civil Defence Department and the Ministry of Labour all work together. We work in accordance with the vision and message of the United Arab Emirates Government,” explains Al Mazinah. “The police force is always looking to activate partnerships with different community organisations and various community members to provide a decent and dignified life for both UAE citizens and expatriate residents.” n

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EXECUTIVE INTERVIEW

Under lock and key Technostream’s Ibrahim Al Daour speaks to Business Management about security trends in the Middle East and how his company plays a critical role.

What is driving the need for top-notch security locking solutions today, and how does the situation differ in the Middle East? Are there unique challenges?

Ibrahim Al Daour. Security solutions are usually a combination of procedures, software and devices.

Without having a high security locking solution to physically block or control the access of personnel, the security chain will have a major weak link. In other words, procedures and software are the brain; locks are the muscles that act upon the brain’s set-up. When it comes to the Middle East, two major challenges occur: the environment, which is more humid, sandy, and warmer than where most of those advanced technologies originally come from, like Europe. The other main challenge is that the market has dramatically grown over the past few years in this region; people were very busy completing the job rather than executing the job to perfection, due to the huge number of jobs to be completed within a very short time frame. This has caused the competition to be, in most of the construction projects, rather price-driven and hence overlooking other important factors such as quality and durability.

Can you describe how best to integrate between mechanical and electrical security locks in the physical security systems field?

IAD. It is difficult to define a best way; however, all levels of access control have to be considered in this integration. From the main server in the security room to the cylinder, everything is to be traceable and, wherever applicable, electromechanically integrated. Locks can be over-ridden by keys in several cases, but if the cylinder used is electromechanical, even this overriding procedure is traced. The idea of using advanced electromechanical cylinders is to combine the complicated hard-to-break mechanical combinations of cylinders’ components and the uniqueness of electronic key codes provided by the built-in micro-electronics; ultimately, opti-

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“A key word in all security related solutions is ‘integration’” mising the strength of mechanics and the flexibility of electronics.

How do you see the area of physical security locking evolving – are there new developments on the horizon that you are excited about?

IAD. A key word in all security related solutions is ‘integration’. It is becoming more and more important to have security solutions communicating with each other using a common network platform. Physical security locks and locking solutions are no exception. To achieve such integration, we need to have traceable information that can be transferred over a common network.

This has been developed by few leading manufacturers in the world to the cylinder level and it has been successfully applied. The improvement now is to make those cylinders more wirelessly ‘networkable’ and traceable, and hence, make the deployment, integration with other systems, and maintenance much more convenient and powerful.

Do you have a recent example of how Technostream has improved an organisation’s physical security?

IAD. A solution was for a major petroleum company in the region. The problem in this field is that the plastic seal that is used for sealing the truck’s inlets and outlets was easily removed, part of the oil was stolen, and then a new seal was placed, leaving no evidence of abuse. This has cost lots of money by loosing oil and by getting into disputes with the oil dealers. To overcome the problem, we’ve locked all inlets and outlets by hardened steel padlocks using a mechanical key, which is inserted into a steel box that is installed on the dashboard. The mechanical key can’t be removed unless an authorised electromechanical key is inserted into the same box and rotated, when the mechanical key is removed to open the truck’s oil outlets. The other key is stuck in the same box until the mechanical key is returned again. All electromechanical key reports can be extracted from the cylinders at the company’s HQ, which can be audited and used as evidence incase any dispute occurs. Most importantly, oil is being transferred safely. n Technostream’s Director Ibrahim Al Daour graduated from the American University of Sharjah in 2004, holding a degree in Computer Engineering. In 2004, he became the acting Director of Technostream, providing engineering solutions and services in the fields of surveillance, security and access control, dental laboratories and industrial education equipment and training.

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COUNTRY FOCUS

GATEWAY TO THE GULF

With its well-diversified economy, Bahrain is in a strong position to prosper in the coming years.

Business Management looks at why the GCC’s smallest nation has managed to weather the global downturn and how it plans to develop.

Bahrain is an understated nation

by Gulf standards. The region’s smallest country, once a hub for pearl hunting and agriculture, lacks the fossil fuel wealth and headline grabbing mega-projects that have propelled its regional neighbours – the UAE and Saudi Arabia – into the world spotlight and often slips under the radar of the international media. Yet this tiny archipelago nation is home to a leading fi nancial services sector, a lucrative manufacturing industry and the most diversified economy in the Middle East. While the global recession crippled some of its more extravagant neighbours, Bahrain emerged relatively unscathed and looks set to assert itself as a major player on the world stage in the coming years.

Kamal Ahmed, COO of Bahrain’s Economic Development Board, is keen to explain why this is case. “In Bahrain,” he says, “we have taken prudent domestic measures to preserve and grow the prosperity that the Kingdom has been nurturing for many years.” Indeed, Bahrain has achieved a moderate level of growth in the last year. The country’s GDP grew by 2.9 percent in 2009, respectable given the fi nancial circumstances, and according to the IMF, Bahrain is expected to enjoy a further boost of 3.5 percent in 2010 and continued growth over the next five years. Th is ability to withstand such a difficult climate comes as a result of a measured approach to economic development, and with the recovery now under way, Bahrain looks to be in a comfortable position to enjoy long-term success across a number of sectors.

“Bahrain has always tended to its growth carefully,” Mr Ahmed says, “focusing on long-term, sustainable growth. We have also taken a cautious approach to public spending, focusing on the priorities. This approach has served Bahrain well; it has meant that the country has avoided excessive reliance on borrowing, on derivatives and on real estate.”

As a nation, Bahrain is well within its rights to feel somewhat smug about its conservative advances in economic growth. Like the fabled tortoise, Bahrain’s slow and steady approach is proving more successful than the impressive but unsustainable boom the UAE enjoyed during the last decade. As US$400 billion worth of construction projects have been shelved or cancelled in the UAE, an increasing number of landmark developments are now underway in Bahrain.

Currently taking up the most column space is the US$1 billion Durrat Al Bahrain island city project, located on Bahrain’s south coast. The 21 square kilometre development, projected to be something of an icon on the Bahrain landscape, will consist of 15 interconnected islands and provide a combination of residential accommodation, hotels and tourist attractions.

In addition to the luxury accommodation it will provide, the Durrat Al Bahrain project stands to provide a boost to Bahrain’s already comfortable tourism industry.

The sector currently represents 12 percent of the country’s income, and that figure is expected to rise to 25 percent over the next 10 years.

Bahrain is currently one of the most popular tourist destinations in the region, receiving around four million visitors a year, a significant proportion of whom are business travellers. Mr Ahmed explains that the country’s advanced infrastructure systems, competitive prices and, perhaps most significantly, the location, make Bahrain a popular choice for the Meetings, Incentives, Conferences and Exhibitions (MICE) sector.

The Bahrain Grand Prix, which debuted in 2004, was an early indicator that the country aims to develop its reputation as a leading tourist destination, appealing to tourists from across the world rather than just those from the Gulf region, who currently make up around 90 percent of Bahrain’s visitors. Improving on this already lucrative sector is important, Mr Ahmed explains, to the strategy for growth across all sectors. “As well as having an immediate economic impact, creating jobs and growing GDP, bringing people into the country will also provide benefits longer term in

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attracting business into Bahrain, both to service the growing tourism sector and in helping people to get to know the country and thus explore the opportunities to establish a base here.”

Prime spot Encouraging interest from foreign investors is a key factor for Bahrain’s economy. The country has long been seen as a popular base for multinational corporations looking to establish a regional headquarters. Bahrain is well placed as a gateway to the US$1 trillion Gulf market and is looking to capitalise on its proximity to other booming economies in the GCC, most notably Saudi Arabia and Qatar. The King Fahd Causeway has been providing a strong link across to Saudi Arabia since the 1980s, and on the other side of the country plans are well underway to build the causeway linking Bahrain with Qatar, set to be the longest of its kind in the world. Fresh developments such as the US$360 million Khalifa bin Salman Port, opened in April 2009, and the forthcoming Bahrain Logisitics Zone is setting Bahrain up as one of the most cost-effective transhipment hubs in the region.

Geography is by no means the only factor that makes an attractive base for foreign investment. Mr Ahmed links the country’s appeal as a trade base back to its sustainable and diversified economy. “Our plan has always been about building sustainable growth through a sound and flexible economic and fiscal policy, a highly skilled and educated local workforce, diversified economy and well-run, transparent regulation, which has been proven over time. In today’s world, recovering from recession, these same measures provide the optimum business environment for international companies.”

Indeed, Bahrain’s fi nancial services sector has successfully established the country as a prime business hub in the Gulf and will continue to make it a popular choice for the future. The fi nance industry accounts for around 26 percent of the country’s GDP, significantly more than the usual primary economic contributor in the region, oil and gas. The influence of this industry on the national economy makes Bahrain’s weathering against the recession all the more impressive.

Mr Ahmed puts it down to a belief in the importance of strong but transparent and rigorously regulated fi nancial system. “The Central Bank of Bahrain (CBB) is the only single regulator in the Middle East and is widely considered the most progressive in the region,” he explains. “The CBB consults with banking professionals in devising its regulations and applies them uniformly, with no exceptions.”

Another major influence in this sector is the Islamic fi nance industry, a niche market that Bahrain dominates thanks to a substantial quantity of specialist institutions.

The nature of Islamic fi nance allowed it to largely avoid any erosion from the recession; in fact, the sector has averaged a 15-20 percent annual growth for the last five years. These figures persuaded consulting giant Deloitte to choose Bahrain rather than Dubai, as the site for its Islamic Finance Knowledge centre. The announcement made earlier this year was yet more evidence that the country is now usurping the position of its neighbour as the fi rst choice for business in the region.

Deloitte are not the only global fi rm that have expanded into Bahrain since the recovery. Major British sports car manufacturer, McLaren Automotive, announced in April that the Bahrain International Circuit would be the site for its regional headquarters. While this news did not come as much of a surprise – Bahrain Mumtalakat Holding Group owns a 50 percent stake of the fi rm – the international prestige of McLaren has helped boost the nation’s profi le, sending businesses around the world a reminder that Bahrain is a prime destination for regional operations. “Our efforts to make our economy more business friendly,” explains Mr Ahmed, remaining modest, “by putting in the right legal and regulatory measures to make sure that there is an environment that’s conducive to doing business, has attracted growing interest from all over the world.”

Next generation It’s not all sunny, however. Bahrain has a longstanding problem with unemployment rates; the success

Durrat Al Bahrain Owned by the Durrat Khaleej Al Bahrain Company, the Durrat Al Bahrain is the biggest project of its kind in the country, and is intended to provide luxury accommodation, generate business opportunities and boost tourism. The mega-project, designed by global architecture firm Atkins, is slated for completion in 2015 and will consist of: 15 interconnected, artificial islands 2000 beachfront villas 3600 apartments and offices Luxury hotels Retail space 400 berth marina

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in attracting expatriate workers has had a detrimental effect on the country’s national workforce, with disproportionate numbers of Bahrainis out of work. Th is is one of the issues that Bahrain’s economic development plan, Vision 2030, plans to tackle; Mr Ahmed explains that the plans, which were published last year, aim to drive focus on the private sector and raise national living standards by creating greater opportunities for the country’s people.

The evidence can already be seen. A US$3.5 billion steel manufacturing complex is currently under development in the Salman Industrial City, which will generate around 1800 jobs and looks set to be one of Bahrain’s largest employers by 2013. “We are determined to invest in the future,” says Mr Ahmed. “A growing number of Bahrainis are entering the labour market and we are committed to attracting and training a workforce that will be able to fi ll the positions that we will create through a continued focus on diversifying our economy.”

As well as creating new jobs, there is an emphasis in the country on nurturing independent business. June saw the launch of a US$26.5 million support fund for small and medium-sized businesses that are at least 51 percent Bahraini owned. The initiative is a joint venture from Tamkeen (formerly the Labour Fund), Bahrain Chamber of Commerce and Industry and the General Federation of Workers Trade Union, and aims to support around 1000 SMEs. Nazar Sedeq Al Baharna, the Chairman of Tamkeen, told the Oxford Business Group in an exclusive interview: “Culturally, we need to change the way people look at SMEs because the majority only see the value in large corporations, but the reality is SMEs form 97-98 percent of total businesses in Bahrain”.

In fact, this recent project is just one of many initiatives Tamkeen has been involved in. To date, the organisation has invested some US$185 million into projects targeting more than 5700 SMEs and 19,000 Bahrainis to provide a boost for local businesses and ensure the national workforce are the fi rst choice for opportunities in the country. “Around 100,000 young people are forecast to join the national workforce over the next 10 years,” says Mr Ahmed, “which will provide a great opportunity for overseas businesses looking to tap into the talent and potential of our country.”

Certainly, Bahrain still has a way to go. The population is projected to double by 2030 thanks to a growth in the expatriate workforce, so the country must ensure it has the infrastructure capacity to sustain this boom. But all evidence suggests that Bahrain is doing everything to maximise its potential for significant economic development and establish itself as major global economy.

Kamal Ahmed, COO of Bahrain’s Economic Development Board

Constructing the future Looking to establish a strong living environment for its national workforce and to attract the greatest amount of interest from outside the country, Bahrain is planning to develop its national infrastructure, from transport systems to healthcare.

April 2010 saw the announcement of the King Abdullah bin Abdulaziz Medical City, a US$22.7 million healthcare centre in Bahrain that will be affiliated to the Arab Gulf University.

The end of 2011 is the planned start date for the US$7.9 billion public transport network that aims to be fully completed by 2030. The network will include a light rail link, a monorail system, trams and bus rapid transport systems and will cover a total of 184.2 kilometres.

The Bahrain Qatar Causeway is due to begin construction this year. The causeway is the longest of its kind in the world is set to cost around US$2.7billion.

In order to tackle a national housing shortage, 5000 homes are being built every year until the 45,000 families waiting for housing have a home. Using a new Chinese technique, the smart homes are built in two months rather than 18. The waiting period for houses is currently more than 17 years, but by the end of 2011 the list will hopefully have been cleared up to 2003.

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COUNTRY FOCUS

LAND OF As the most powerful figure in Bahrain’s oil and gas sector, the Minister for Oil and Gas Affairs he dr abdul-hussain ali mirza holds the key to one of the world’s most profitable refining industries.

In this exclusive interview, he tells Diana Milne about his hopes for the future.

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W

hen Dr Abdul-Hussain Ali Mirza started out as a freshfaced Bapco trainee after leaving school, he never dreamt of one day becoming the most powerful figure in the country’s oil and gas industry. Today he is charged with overseeing the whole of Bahrain’s energy remit, at a time when the country is undertaking a dramatic overhaul of its oil and gas industry. Formerly a relative backwater in the GCC oil and gas sector, Bahrain is currently experiencing a flurry of activity by major international oil companies (IOC) following the allocation of four offshore exploration and production blocks last year. Meanwhile, efforts are underway to tap into the country’s natural gas reserves and to develop technology that will breathe new life into the ageing Bahrain field.

Describing his spectacular climb to the top, the man in charge of these projects says: “I worked at Bapco for 40 years, starting off as a trainee before ending up as Chief Executive. During that period the company was kind enough to sponsor my higher education in London. Then I had to go through various positions, climbing up the ladder of the organisation. So I have been General Manager of Administration, General Manager of Services and of Finance and Legal Affairs, Deputy Chief Executive and Chief Executive.

I was appointed in 2002 by his Majesty the King as a Minister of State and in 2004 I was made Minister of Cabinet affairs.”

Leading change Ali Mirza became Minister of Oil and Gas Affairs in 2005. Then, following the issuing of political, social and economic reforms by the King of Bahrain, the National Oil and Gas Authority was formed, with Ali Mirza as Chairman. Since his appointment, he has been instrumental in encouraging investment by IOCs in Bahrain’s oil sector – an achievement he describes as his proudest to date: “The main thing I have brought about is a paradigm shift in the oil and gas sector. There are lots of activities going on now in the sector. We have offered all our offshore blocks for exploration to the international oil companies and they

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are working on it now. Cooperation with international oil and gas companies based in other countries is seen by the political leadership of Bahrain, and the National Oil and Gas Authority (NOGA), to be vital to the future of the industry in Bahrain. International oil companies are the enablers for us to develop our natural resources such that the citizens of Bahrain can collectively benefit in terms of standards of living, employment and wellbeing.”

In addition to the major upstream projects underway at Bahrain’s four offshore blocks by IOC’s, the country is also awaiting the completion of a major overhaul of the main pipeline, which transports crude oil from Saudi Arabia to Bahrain’s refi neries. Th is will enable Bahrain to achieve one of its key objectives – a plan to pour billions of dollars into the production of high quality gasoline and aviation fuels. “With respect to the new pipeline, the FEED study is ready to start while we await approvals for the onshore route of the pipeline. Th is project is part of our vision to create a refi nery that is a world leader and extremely competitive,” says Ali Mirza.

Maximising resources As well as creating new facilities, Bahrain is investing heavily in maximising its existing resources, in particular the Bahrain field – the oldest in the Arabian Gulf at 79 years. Oil was first discovered there in 1952, signalling Bahrain’s entry into the global oil and gas market. The NOGA has signed an agreement with two international oil companies, Occidental and Mubadala, which, together with the newly formed Bahraini oil company Tatweer, will aim to triple current production at the Bahrain field from 33,000 barrels per day to 1,200,000 in the next seven years. “They will be using the latest enhanced oil recovery technologies such as steam injections, water flooding and gas injections. Tatweer

will develop the onshore oil field with the latest technology such that the production of crude oil is doubled, from the current 30-35 thousand barrels per day within five years and then trebled two years after that.

In addition, Tatweer will implement a drilling programme to increase the non-associated gas production so that the planned increases in power and water requirement are met. Now one might ask how important this is to Bahrain, my answer is that the contribution to the national economy will be enormous,” says Ali Mirza.

Another activity upon which high hopes are being pinned in terms of its potential contribution to the Bahraini econ“Bahrain has always been omy is the exploration of Bahrain’s deep proactive in the use of new gas reserves. Currently the government is evaluating bids by IOCs to carry out the technology and we are currently using it both in work. To date drilling has reached 16,000 feet in Bahrain but the plan is to increase the exploration for crude this to 20,000 feet. Ali Mirza hopes that if oil and in the refining greater reserves are accessed in Bahrain it will, like neighbouring Qatar, be able to sector” tap into growing world demand for LNG: “Our consultants say we have a good quantity (of deep gas), this is their estimate. We don’t want to project any figures because the bidders have bid, and we want to look at their projections and their evaluations first. Gas is the most valuable commodity now everywhere. It’s required for generating energy for the industry, for generating power and electricity, for use as a fuel in the petrochemical industry, so it is a commodity in demand, and we in Bahrain have launched 12 initiatives to secure gas because we don’t have as much gas as Qatar has currently.”

The effective use of new technology, including enhanced oil recovery techniques, is vital to the success of Bahrain’s many projects, and Ali Mirza says the country prides itself on its investment in the latest techniques: “Of course Bahrain has always been proactive in the use of new technology and we are currently using it both in the exploration for crude oil and in the refining sector. So for example, we have spent more than US$1 billion over the last 10 years to modernise a refinery by using new technology. We have carried out major projects, for example, to produce unleaded gasoline and low sulphur diesel projects, and we are currently commissioning a new refinery gas exploration project. All these projects require new technology.”

Investing in the future As well as investing heavily in exploration technology, Bahrain has also paid millions of dollars into projects to increase the sustainability of its operations. Last year, the NOGA signed an agreement with Abu Dhabi - based Masdar to develop ways to cut carbon emissions in the oil and gas sector. Describing some of the environmental projects the government has been involved in to date, he says: “We are very proud of what has been achieved, and the support that we have received for environmental projects from the very top of the government. For example, over 10 years ago Bapco developed an environmental investment programme to improve the quality of petroleum products and reduce environmental emissions. Unfortunately these projects cannot be achieved overnight. In the early part of the decade Bapco eliminated the manufacture of leaded gasoline and the whole country

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went unleaded. More recently the refinery invested US$150 million to remove impurities from the Khuff gas and the project has reduced the SO2 emissions to a level below the standard for refineries in California. This is a clear example of how the refinery sets worldclass standards. We also invested US$700 million in the refinery to manufacture ultra low sulphur diesel, and the refinery now makes the cleanest diesel in the world. Further refinery projects have addressed solid waste from the refinery and improvement of the excess water.”

But these cutting-edge projects require major investment by the Bahraini government at a time when margins in the industry are tighter than ever. Ali Mirza admits the Bahraini oil and gas industry has been adversely affected by the economic downturn, but says, given the lengthy planning periods involved in constructing new refinery facilities, he is hopeful that long-term projects will not be affected: “The global recession has impacted the worldwide demand for petroleum product and the corollary of this is a reduction in refi nery margins. Hence, the recession has definitely reduced our earnings. On the other hand, investments in this industry take a long time to develop from the initial idea to a plant in operation. This can often take between five and seven years. Our strategic investment plans are designed to position us for the long term and so we have not reduced this investment.

Short-term investment has been modified but not to a great extent.”

As well as the financial capital needed to realise its ambitious plans, Bahrain requires skilled human capital, which, like in every other country’s oil industry, could be in short supply as the current generation of oil and gas workers approaches retirement age. Ali Mirza describes the steps being taken to combat the problem: “If I may take you back to the 1960s, Bahrain faced the problem of developing a skilled workforce in the oil and gas industry and a cadre of young men and women were identified for further education. That programme was coordinated by Bapco in conjunction with the American company Caltex and the result was that the major Bahraini companies are now predominately managed and operated by Bahrainis. It is not uncommon for our manufacturing companies to have a level of Bahrainisation of between 80 and 90 percent. The additional benefit was that many national leaders, myself included, originated from that programme.

“However, what are we doing for the future? Today is a different world and young people have different aspirations. However, we aim to recreate the successful develop-

ment programmes of the past to ensure that the necessary academic and vocational education and training is made available to every young person in Bahrain.”

He goes on to reveal that the government is in the process of discussing plans for an oil and gas institution in the country to educate trainees and that it is focussing on the continued training of those already employed within the industry: “We want to create an institute for education in the oil and gas industry, and we have been discussing an arrangement with a prestigious, globally recognised university that specialises in courses suited to the oil and gas industry. Furthermore, we ensure that the training and development budgets of companies within the NOGA portfolio are generously supported, such that employees of all ages are getting the necessary development as this is vital to the future. It is a great challenge for NOGA to demonstrate to the school leavers and the university graduates that a career in the oil industry will be rewarding fi nancially and in terms of job satisfaction.”

Ali Mirza’s own career success story should be motivation enough for aspiring young Bahraini oil workers to join the industry, despite the challenges it currently faces in today’s economic climate. He believes that Bahrain’s own part in the global oil story is only just beginning and that there is plenty of life left in the industry yet: “If anyone tells you that the oil industry is a dying industry, just take another look at the demand for hydrocarbons, the dependence of society today on the products from oil, and the reserves for the future. Oil will be a part of the energy solution for a very long time.”

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As oil refineries face one of the toughest periods in their history, Bapco’s deputy CEO Dr Eion Turnbull reveals what the company is doing to stay one step ahead of the competition.

A

lthough Bapco may appear often in the news headlines for its workers’ strike action, the company is keener than most to publicise its employee welfare schemes. Press releases are regularly issued describing the latest health and safety programmes or staff training days. And according to Deputy CEO Dr Eion Turnbull, it is the empowerment of its people that differentiates Bapco from the rest of the region’s National Oil Companies. “Fundamentally I believe these days, that if you look at different refineries, the technology and the hardware that sits behind them is broadly the same. In fact, the real difference between the pace setters and the laggers is the way people get engaged in the business and contribute to its success.

I firmly believe the difference between the best and the rest is the people. At the heart of the organisation are the people, their loyalty and the people thinking that the managers care about them in a holistic sense and make them feel special.” He goes on to say that this is very often not the case at GCC-based oil companies. “Some companies talk about issues like safety but you get a sense of them being driven by the wrong reasons. For example a manager might drive safety very hard because it’s going to affect his or her bonus, not because they really care about people or their well-being.”

People power Elaborating on how Bapco’s approach is different, Dr Turnbull says it provides support and training for employees’ career development, supports the families of injured workers and runs health and safety schemes such as a recent ergonomics awareness campaign.

Despite this focus on employee welfare however, Bapco workers frequently strike over pay and working conditions, with the most recent industrial action taken in February when hundreds of staff protested against the company’s refinery facilities, led by the Trade Union of Bapco Employees, which issued 52 different demands including automatic retirement for workers aged over 60. Similar strikes were held the previous February by around 700 workers demanding increased bonus payments. While these strikes indicate worker dissatisfaction, they are also perhaps indicative of the company’s willingness to provide workers with a voice by supporting the existence of a trade union. Indeed Dr Turnbull denies that Bapco’s record with regards to staff treatment is tainted and claims the only challenge it now faces in this regard is to ensure it keeps its standards up. “I think Bapco has an enviable history, in terms of safety, care and concern. The challenge for us now is how to maintain and sustain that because quite often when you are very good, there is a tendency to maybe take your foot off the accelerator and think you’ve done it.”

Safety first One of the ways in which Bapco aims to perpetuate its “enviable history” is through its strong focus on health and safety issues. Dr Turnbull points out: “If you have one big incident on the refinery, you can go from looking very good to looking very poor very quickly.” As well as operating ongoing health and safety training schemes for its staff and funding some through higher education programmes, Dr Turnbull says the company is looking at ways in which to use technology to increase the safety of its workers. One such initiative, he says, is the installation of remote sensing devices to detect the early signs of dangerous gas emissions. “There might be areas where there might, for example, be a release of volatile organics. The sensors can detect a combination of chronic and acute gases,” Dr Turnbull explains.

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ing needs really plays out on two sides. One side is how you restrict demand and how to be more energy efficient so you don’t consume energy in the production process itself. The other side is how you make more of the product itself.”

Competitive times

Technology is also being used to help the company reach its environmental targets, particularly reducing emissions of sulphur gases from its refineries. In order to achieve this, it is investing US$400 million in research and development to find a solution. Describing the project Dr Turnbull says: “Previously our gases were not treated as thoroughly as we’d like to so not all of them ended up in our fuel gas. There were three major pieces of work. The first major piece was to identify the different gas strains and to separate them, put them through different scrubbing units to extract the H2s and put them through sulphur recovery units. These are the modern recovery units where you actually have the three-stage conversion process with a unit at the end that really gets down to the very low levels of sulphur compounds released.”

Another environmental scheme the company is running is a new state-of-the-art wastewater treatment plant that uses membrane technology combined with biological technology to clean up the fuels before they become released in wastewater. “This takes away wastewater and treats it through chemical processes and then through biological processes. It was quite a challenging project because our wastewater streams have some characteristics that are unusual in terms of high temperatures and high levels of salinity. Also, some of our specifications on clean water were much tougher than in other parts of the world. So getting the combination of tough conditions and tough criteria was difficult. What we ended up with was a membrane-based biological system.” He goes on to say that environmental schemes of this sort are all the more important given the increased future global demand for energy: “Sudden demand for energy to meet ever increas-

But while Dr Turnbull is working to find ways of sustainably meeting world demand, he also says one of the biggest challenges the company faces in the shorter term is the growing competition from new refineries that are slated to open, particularly in emerging markets such as India – combined with the impact on short term demand from the economic downturn and growing eco-awareness.

“There are a lot of facilities coming online and some big ones like the refineries over in India. And because of awareness of the environment I think that in the western world we’re going to see demand either shrink or stay very flat as they make moves to contain their energy consumption. What we’re seeing around the world is that some refinery projects have stopped altogether and others have been slowed down. We’re seeing shutdowns and shut-ins of refineries on a scale that I don’t think we’ve seen in maybe 30 years. It’s having a profound impact on the industry at the moment.”

With this in mind, Dr Turnbull says he is working on ways to cut down on the company’s operational costs, “We are looking at how we can control our costs in a meaningful way during this period.”

The company is also forging ahead with plans to expand its refi nery capacity despite the gloomy economic prospects. Last year, it announced plans for a US$2 billion expansion of its Sidra refi nery, which would take capacity to between 350,000 and 400,000 bpd, from around 267,000 bpd. The success of the project depends on the building of a new pipeline from Saudi Arabia through which it will receive new crude oil supplies, which are expected to be pumped through from 2011. The company is also in partnership with the Finnish company, Neste Oil, to establish a base oil plant.

It will aim to take some of the lower grade oil streams from the hydrocracker and upgrade them to high quality base oils that can then be used for high performance engines. “It’s a major undertaking and that’s just the sheer logistics of getting all the equipment here on time and getting the right sequence of events around the construction and the commission of testing. You have got to be very careful with hydrocracker units.”

Like every oil company in the GCC, Bapco is working to achieve a delicate balance between planning ahead for increased global demand and adapting to current economic conditions, which have stifled it. Its ambitious expansion plans suggest, however, that its eye is set fi rmly on a brighter future.

About Bapco Bapco is wholly owned by the Government of Bahrain and is engaged in exploration and prospecting for oil, drilling, production, refining, distribution of petroleum products and natural gas, sales and exports of crude oil and refined products.

The company owns a 250,000 barrel-aday refinery, storage facilities for more than 14 million barrels, a marketing terminal, and a marine terminal for its petroleum products. Bapco’s prime customers for crude oil and refined products are based in the Middle East, India, the Far East, South East Asia and Africa, and 95 percent of its refined products are exported.

Eion Turnbull

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EXECUTIVE INTERVIEW

Keeping a watchful eye Ousama Kabbani explains how the security market has evolved in the Middle East region and how surveillance technology is improving.

OK: We have executed many security projects of high caliber in Saudi Arabia and in Bahrain but the most demanding one was the integrated security system of a modern university on the west coast, where intelligent long-range CCTV cameras were deployed to detect intruders and pinpoint their exact location along the 15 km perimeter using satellite geo-positioning techniques.

Can you give us a quick rundown on how the Middle East security market was in the past and where it has evolved to today?

Ousama Kabbani: I remember the first time I approached a client in Jeddah in the late 1960s, he bluntly asked me: “Why would I be needing a security system when Allah (swt) protect me from above?” He may have had a point then. Looking around me, I saw a Rajhi money exchange shop owner close down for prayer by simply covering his goods (cash in essence) with a blanket, then going off to the mosque. It is said that “need is the mother of invention”. Maybe you wouldn’t hear of a theft then, or at least a theft without severe punishment. But as crime rates rise steadily in theft and/or terrorism, so does the need for security counter measures.

When did industrial security start becoming paramount in this area?

OK: After 9/11 of course, though it had already been making remarkable strides in some countries such as Saudi Arabia, thanks to local legislation from the Ministry of Interior through their

“Analogue cameras are becoming something of the past. They are being rapidly replaced by IP digital types, allowing communication over LAN networks with unprecedented image clarity and features” High Commission of Industrial Security (HCIS) that sets standards and ensures that all executed security projects meet those standards.

When did this legislation come into force?

OK: Since the early 1990s, every industrial and/or critical site in Saudi Arabia must have an integrated security system in place. This is what makes Saudi Arabia a very attractive market for security companies. They are growing in number every day. But of course, advanced security solutions remain in the hands of only a few professional integrators with the necessary technical know-how and financial strength.

What was the most demanding project that AFHC (ISSD) has been involved in?

We see the market flooded with CCTV cameras of all sorts. How can you choose the right camera for your application?

OK: Most of the cameras you currently see on the market are of the analogue type. They are cheap.

However, with the giant leaps in today’s information technology, analogue cameras are becoming something of the past. They are being rapidly replaced by IP digital types, allowing communication over LAN networks with unprecedented image clarity and features. Cameras with high processing power now yield high definition images with video content analysis. This means that it is now possible to analyse the size, speed, direction, quantity and behaviour of the image and alert the operator only when the image behaviour meets certain criteria as set by the software.

What is your preferred security technology at the moment?

OK: There is a definite tendency for our designers to rely more and more on image behaviour analysis as a means of intrusion detection and site control. And since this technology is in a state of constant change, our strategy at Abdulla Fouad is to always provide our clients with the most up-todate technology without compromising their already existing systems. n

Ousama Kabbani is an experienced veteran of the security world, having been involved in the industry for 40 years. He is an electronic engineer and has for many years been working extensively throughout the Middle East. He currently holds the position of General Manager of the Industrial Security & Safety Division (ISSD) of Abdulla Fouad Holding Co. in Saudi Arabia.

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MANCHESTER SCHOOL_june10 18/06/2010 15:36 Page 128

INDUSTRY INSIGHT

Training up Nigel Banister explains how globalisation and the economic downturn have made the recruitment market more competitive than ever and how an MBA could help executives get that all important edge.

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ith the world economy in recession and job cuts in many sectors, some might think that doing an MBA might not be of much relevance in the immediate future. The MBA industry is no stranger to recession and turbulence. Previous economic downturns and difficult economic times have in fact traditionally heralded a surge in applications, as people identify a natural opportunity to take a career break or to improve their skills. The burst of the dotcom bubble, for instance, brought many executives to business school campuses.

It is unclear what the future holds, but one thing can be certain, there will always be a need in the economy for skilled and experienced managers able to work in an international environment.

Many graduating MBAs are now obWe live in a viously anxious about recruitment. global age and Nonetheless, companies are still hiring, deit is imperative spite the difficult conditions, and an MBA will always be of benefit, in particular for that executives those who have just enrolled or are considare able to ering entry into a business school this year operate in an with graduation in 2011 or 2012 when the international economic climate will be very different and context� recruitment will be active again.

The current crisis is not going to reverse the trend for globalisation. We live in a global age and it is imperative that executives are able to operate in an international context evolving in and leading multicultural teams, suppliers, contractors and clients. In a global economy, corporations have a seemingly insatiable need for good managers.

This is a trend that will only gather pace in the years to come.

So I expect that the MBA will retain its status as the 'hot ticket' in postgraduate management education and European business schools will prevail, as they are already catering to diverse cultures and have a more global outlook than US business schools. Indeed, our students are usually multilingual and are very often seeking to work in another region of the world. They are generally open to the idea of job flexibility, which is essential in today's volatile economic climate.

Given the economic turbulence, many will opt for a general MBA that provides the basic tools for students to enter a wide range of sectors. Some students may opt for specialised programmes, enabling them to refocus or redirect their careers towards a specific industry.

Employers are becoming increasingly discerning and looking more closely at the additional value MBA graduates can bring to a role. So it is vital that executives planning an MBA select a programme that takes them in the desired direction.

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Nigel Banister is Chief Global OfďŹ cer of Manchester Business School (MBS), the UK’s largest campus-based business and management school. It provides a comprehensive range of undergraduate and postgraduate programmes as well as customised executive programmes for organisations from both the private and public sectors. Manchester Business School Middle East Region International Executive Centre was established in Dubai in 2006 and currently supports more than 700 MBA students from across the region.

Some will decide on a one year/18 month full-time programme and others on a longer, part-time, blended learning MBA, which allows them to continue to work whilst studying.

Part-time/blended learning students tend to have a wider age range than participants in full-time programmes, and choose this option to overcome logistical challenges, avoid the need to take two years off work and benefit from applying their new knowledge immediately.

The integration of technology is helping to facilitate this option and much of the work is still done collaboratively by students via the web, with several face-to-face workshops every year. And the part-time programmes are generally about 50 percent cheaper than the full-time equivalent, whilst the MBA degree awarded is exactly the same as for the full-time programme.

A part-time MBA is not an easy option, as it demands the combining of work, study and often family commitments, but our experience shows that most students complete their studies successfully whilst often having been promoted at work or moved to a better job in another organisation.

The most effective MBA programmes have a diverse international mix and attract professionals with strong work experience, establishing an extensive global network of contacts that will be invaluable in future careers.

MBAs are not a career panacea but in the current competitive marketplace, an MBA from a well-respected business school sets an executive apart by giving him/her the business agility to succeed. n For more information visit: www.mbs.ac.uk/dubai

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TOURISM

Visitors w With an estimated 2.7 million hotel guests expected there by 2012 and work underway on some of the world’s most ambitious leisure and hospitality projects, Abu Dhabi is on course to become one of the world’s most exciting tourism destinations.

Business Management meets the Abu Dhabi Tourism Authority’s (ADTA) Director General, Mubarak Hamad Al Muhairi, to find out how it plans to realise these ambitions through its Destination 2013 strategy.

Can you sum up the main goals of the ADTA’s Destination 2013 strategy and the impact this will have on Abu Dhabi in the long term?

Mubarak Hamad Al Muhairi. Abu Dhabi Tourism Authority operates a five-year rolling strategy. Our current strategy, which extends until the end of 2012, had numerous objectives. It called for a substantial increase in the number of hotel rooms by the end of the period. We are currently on course to achieve that with some 17,500 rooms at present with 21,600 rooms anticipated by the end of this year; 22,600 rooms by the end of next year and 24,000 rooms by the end of 2012.

The strategy also called for a significant increase in visitor attractions to expand the destination’s leisure segment appeal.

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How far have you come in terms of achieving your goal of creating world-class leisure facilities in Abu Dhabi?

MHM. Since the strategy’s launch in April 2008, much has been achieved with the opening of the renovated Al Jahili Fort in Al Ain , the arrival of the Big Bus Company operating city tours in Abu Dhabi city, the launch of the Yellow Boats speedboat tours of our coastline, bicycle hire for visitors to our Corniche and the opening of the expansive Corniche Public Beach. There has also been the launch of SeaCruisers diving, fishing and coastal sightseeing trips as well as more recently, the introduction, by Falcon Aviation, of helicopter tours of Abu Dhabi city and its environs.

In addition, we have seen the opening of the

Saadiyat Beach Golf Club with a championship ready course designed by Gary Player. Nine holes of the Yas Links course on Yas Island have opened and the nine-hole, all grass course at the Palm Sports Resort in Al Ain has expanded to 18 holes. We have also, in the past year, seen the opening of the iconic Yas Hotel – the only one in the world straddling a Formula 1 race track; the beachfront Fairmont Bab Al Bahr and Traders Hotel and the Qasr Al Sarab Desert Resort by Anantara in the midst of the towering dunes of the stunning Liwa Desert.

Our leisure proposition will take another giant leap forward this October with the planned opening on October 28 of Ferrari World Abu Dhabi – the world’s largest indoor theme park

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elcome boasting the Formula Rossa, the world’s fastest rollercoaster.

What advances has the ADTA made in terms of creating a skilled workforce to service and develop the emirate’s leisure and tourism sector?

MHM. The authority has made major advancements in the field of professional development training with more than 1000 employees of the local tourism industry now having gone through workshops and seminars staged by ADTA. Our ongoing training programme, which extends to the entire industry, not only the ADTA workforce, has also seen us introduce the highly successful Youth Tourism Summer Camp, which gives young Emiratis hands-on experience in all aspects of the

industry. Indeed this has been so successful that it is being expanded this year.

We have also expanded our Ambassadors programme to other Government entities in response to demand. This programme trains customer-facing UAE nationals to be ambassadors of the destination. Other strategy high points have been the successful introduction of our groundbreaking classification scheme, which was pioneered in close collaboration with our hospitality industry and the launch of our ‘Partners in Progress’ stakeholder campaign, which has drawn us closer to the industry worldwide. In short, the impact of these initiatives has been a much improved offering in terms of facilities, accommodation and service levels as well as enhanced

destination credibility at both trade and consumer levels.

Has the achievement of these goals been affected at all by the economic downturn through impacts on investment in infrastructure projects?

MHM. Not currently. In Abu Dhabi we have been fortunate that work on all previously announced projects has continued and is continuing. There may have been some delays within the private sector on projects it planned to announce but it has been minimal.

From which parts of the world does ADTA aim to attract tourists and are there any national-

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MHM. In the case of the classification upgrade, we simply want to recognise certain properties where standards and facilities are well above the traditional five-star categorisation. This is one way of better positioning the properties to the trade and consumers. In the case of the Green Hotels programme – this is totally in line with our intention to build a world-class, sustainable tourism destination and with our core value of protecting our environment. It is also aligned to the Abu Dhabi Government’s 2030 plan, which has sustainability running through all streams of society.

Director General Mubarak Hamad Al Muhairi

ities it is working on that have not traditionally been frequent visitors to the region?

MHM. Our key source and emerging markets are the neighbouring GCC states, the UK, Germany, France, Italy, Australia and China – we operate offices in the last six. We are actively pursuing the opening of another office – possibly in Russia later this year – and are looking to expand our influence in China. We are also working closely with our key stakeholder Etihad Airways on activating the Japanese market after the launch of its recent flights from Nagoya and Tokyo to Abu Dhabi International. The Middle Eastern countries remain our mainstays but we are actively pursuing the high potential Asian markets.

Efforts are currently being made to train Abu Dhabi’s travel agents to ensure they are better prepared to meet the challenges of the emirate’s changing environment. Can you de-

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scribe what the aim is of this training and in what way travel agents need to improve their work?

MHM. As described above our professional industry development department is working on a number of initiatives to improve service across a variety of aspects – from better use of the internet for online selling, to having a deeper understanding of the Asian market and its specific needs. We offer stakeholders training sometimes at no cost, or at a nominal cost, because we believe that excellence of service will be a key destination differentiator.

ADTA has recently announced plans to expand its hotel classification system to include hotels above a five star classification and also to publish guidelines on building green hotels. Why has ADTA chosen to focus on these two areas in particular? Does it see these as particular areas of expansion?

What aspect of ADTA’s work are you most proud of as Director General and which aspect of the authority’s plans are you most looking forward to coming to fruition?

MHM. I am proud of the many international commendations now being received by our stakeholders and the destination as a whole – such as the recent recommendations by two of the world’s top travel guides Frommer’s and Lonely Planet of Abu Dhabi as a top 10 destination to visit this year. From the authority’s point of view I am proud of the achievements of the entire staff which last year helped ADTA be named as ‘The World’s Leading Tourism Body’ in the 2009 World Travel Awards – they have come a long way in just over five year’s of ADTA’s existence. I am looking forward to maintaining the momentum and reaching our target of 2.3 million hotel guests by the end of 2012 and to some of the new initiatives taken by our events team including the January 2012 hosting of the fourth leg of the Volvo Ocean Yacht Race when we hope to activate the entire community. Of course we all look forward immensely to the opening in 2013 of the Louvre Abu Dhabi and Guggenheim Abu Dhabi. These are certainly exciting times.

Which aspect of the ADTA’s targets do you think will prove the most challenging to achieve?

MHM. We love challenges at ADTA – they do not divert us. I think we have a challenge in achieving greater Emiratisation within the overall tourism segment and it is an issue we are devoting dedicated resources to. It is largely a matter of education and letting young Emiratis know the very diverse opportunities available to them in this exciting industry where they can greatly assist the future development of their homeland. n

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Intelligent living p136

City Guide p138

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Lazy Days p142

Downtime

Magnificent metropolis Robert Kunkler on running one of Dubai’s most iconic hotels.

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DOWNTIME. LUXURY TRAVEL

As the world of luxury hotels in Dubai continues to expand, some still stand out among the rest – and of those, the Madinat Jumeirah attracts a fair amount of attention as one of the largest properties in the region. Business Management spoke with Regional Vice-President of Operations in Dubai, Robert Kunkler, about his work at the property.

What is your role at the Madinat Jumeirah?

Robert Kunkler. Madinat Jumeirah includes three properties: the Mina A’ Salam, the Al Qasr and the Dar Al Masyaf, each with its own dedicated team and general managers.

I oversee the three properties, but our dedicated team of 3500 colleagues from 80 countries makes sure that every guest has an exhilarating and memorable experience.

Can you describe the resort and its offerings?

RK. Madinat Jumeirah translates into the ‘City of Jumeirah’, so named because of the variety of the resort, and is authentically Arabian-style featuring unique UAE architecture and design.

The destination encompasses three components; two grand boutique hotels (Mina A’Salam, Al Qasr); and clusters of 29 traditional Arabic summer houses (Dar Al Masyaf) nestling amongst the gardens and waterways, all built around the souk, the traditional centre of Arabic life at the heart of the resort.

The resort also provides the most comprehensive conference, incentives and banqueting facilities, a multitude of dining options, a collection of seven royal villas and a world-class spa.

The resort is practically a small city in terms of its size. What would you say are your biggest priorities as management?

RK. Maintaining our award-winning team of colleagues dedicated to personalised service. The priority is and always will be to look after our guests and exceed their expectations. Jumeirah’s promise to ‘Stay Different’ delivers imaginative and exhilarating experiences in a culturally connected environment offering a thoughtful and generous service.

Are most of your guests regional or international?

RK. Most of our guests come from Germany and the UK. Depending on the season, we welcome many visitors from the Middle East, Asia and Russia, while very important upcoming markets are the US, Brazil and China.

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What do you think Middle Eastern customers look for particularly in a hotel?

RK. I believe that all our customers, no matter where they come from, are looking for warm and generous service – true Arabian hospitality. Simple things such as remembering their preferences, attention to detail and luxury in everything the senses can take in.

What do you think sets your hotel apart from other luxury hotels in Dubai? What are some of the unique aspects of staying there?

RK. Jumeirah is committed to being the world’s most luxurious brand. Our core brand strategy is ‘Stay Different’ and we define luxury by providing thoughtful and generous service through exhilarating and imaginative experiences in a culturally connected environment.

At Jumeirah, we define luxury as emotional, memorable, and above all personal, and this is what we believe today’s sophisticated luxury traveller relates to and responds to. We want to be innovative, imaginative and leave our customers with a smile in their minds.

We are always looking at the trends within the hospitality industry as they are an important indicator as to what the guests need. Our guests are primary for us and to be able to exceed their expectations we need to listen to them and provide them with the best level of personalised service.

What is it about Dubai that makes it such a popular tourist destination?

RK. Dubai has become one of the most popular and sought-after tourism destinations in the world with its exceptional facilities, high levels of service and hospitality and a very exciting calendar of high profile sporting and entertainment events, such as the Dubai World Cup and Dubai Desert Classics. It has become a year-round destination that offers something for everyone. We’ve been a part of that with events like Art Dubai, and hosting the Dubai International Film Festival for the past four years.

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DOWNTIME. INTELLIGENT LIVING

The rise of the smart home Despite the downturn in Dubai, the UAE looks set to become a leader in smart home technology.

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icture the scene. You’re halfway to work and realise you’ve left the lights on/the door unlocked/the windows wide open/the air conditioning on fullblast. What are your options? In times past, you’d either have to perform a sharp U-turn in order to remedy the situation or continue with your journey and spend the rest of the day worrying about whether your home would still be there when you got back. But the advent of smart home technology could be about to provide a third, more intelligent option: mobile remote control.

Of course, smart home technology is nothing new. People now expect that if they are spending millions of dirhams for a place to live, it should come with the latest in gadgets and comforts, ranging from smart systems that allow owners to control the ambient conditions of their home from the touch of a keypad, to the best in home cinema and entertainment systems. But what is revolutionising the sector is the ability to perform such tasks remotely, via a mobile application or interface.

For example, leading multi-room entertainment and control provider Opus Technologies has just supplied the first resident on Nakheel’s Palm Island Jumeirah development, Andy Dukes, with a major upgrade to his multi-room entertainment system.

As well as incorporating new touchscreens, the latest Opus system benefits from armchair control using an iPhone or iPod touch.

“Andy was the first resident to move into Palm Jumeirah Island and opted to have a multi-room audio entertainment system installed throughout his home,” explains Steve Simpson, Opus’ Regional Manager for the GCC region. “It’s fantastic that he’s also become the first to upgrade his property with our state-of-the-art touchscreens in order to enable iPhone or iPod touch control for a wonderful user experience.”

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Smart appliances While most home automation technology is focused on lighting, security and entertainment, smart appliances may be on their way as well. Ideas include:

Trash cans that monitor what you throw away and generate online orders for replacements

Refrigerators that create dinner recipes based on the ingredients stored inside

Washers and dryers that send text message alerts when their cycle has ended

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The potential applications are significant. Opus cabling has been installed into the fabric of every one of Nakheel’s 1386 prestigious Signature Villas, Garden Villas and Canal Cove Townhouses on the Palm Island Jumeirah development, and similar solutions are becoming increasingly commonplace in new-build property developments across the Gulf. The cabling or pre-wire of such large-scale developments facilitates residents the option of having a multi-room control system installed at any time, without the disruption and costs normally associated with running cables and other infrastructure retrospectively.

Typically, the only visible evidence of this system are the flush-mounted in-ceiling speakers, the on-wall touchscreens and stylish remote control.

Opus iPhone/iPod touch control offers users full system control from the palm of their hand, in any Opus equipped room, and replicates the intuitive interface of the touchscreen. “I’m completely thrilled with my Opus system, but when I was informed about an upgrade package offering control by touchscreens and my iPod touch, I simply couldn’t resist,” explains Dukes. “The new touchscreens are so intuitive and an absolute pleasure to use – I particularly enjoy using my iPod touch to control the audio in my villa. The ability to select the room I’m in and then effortlessly control the system is a brilliant feature.”

Apart from the ease and time-saving benefits this gives the home owner, it also means they can be far more precise about how much lighting or air conditioning is used throughout the day, saving energy as well. Saleem Al Marzouqi, CEO of UT Technology, believes such interfaces will revolutionise the way people in the region think about energy efficiency.

“Smart homes are not only about providing technology, they also contribute to conserving the environment and reducing pollution,” he says. “Smart home applications rationalise 30 percent of energy consumption, providing around 50 percent of space needed for technology infrastructure and provides people with more control over their appliances. This helps in rationalising energy consumption by controlling usage of electricity, water and gas.”

Technology companies are betting that consumers and businesses are still willing to pay for smart home technology, even during a global recession. But while the global market for smart home technology is potentially huge, the real opportunities for smarthome technology in the Middle East comes not from the consumer market but from the business to business market. In the region, the biggest potential customers are hotels and utility companies.

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Setting up a smart home The idea of a smart home might make you think of George Jetson and his futuristic abode, or maybe Bill Gates, who spent more than US$100 million building his smart home. But while once a draw for the tech-savvy or the wealthy, smart homes and home automation are becoming more common. About US$14 billion was spent on home networking in 2005, and analysts predict that figure will climb to more than US$85 billion by 2011. Here are some examples of smart home products and their functions.

C CAMERAS will track your home’s exterior, even if it’s pitch-black outside p

AV VIDEO DOOR PHONE provid vides more than a doorbell – you get a picture of who’s at the door

MOTION SENSORS will send an alert when there’s motion around your house, and they can even tell the difference between petss and burglars

our-digit DOOR HANDLES can open with scanned fingerprints or a four-digit code, eliminating the need to fumble for house keys

AUDIO SYSTEMS distribute the music from your stereo to any room with connected speakers

CHANNEL MODULATORS take any video signal – from a security camera to your favourite television station – and make it viewable on every television in the house

REMOTE CONTROLS, keypads and tabletop controllers are the means of activating the smart home applications. Devices also come with built-in web servers that allow you to access information online – enabling smartphone control

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DOWNTIME. CITY GUIDE

Hong Kong Time: +8hrs GMT | Currency: Hong Kong Dollar | Population: seven million | Average Temp: 23°C °C

As one of Asia’s most breathtaking destinations, Hong Kong is a hotspot for both business and pleasure. We check out what is on off ffer er.

From the airport

Getting Around

About Hong Kong has a population of seven million people, but at only 1108 square kilometres, it is actually one of the most densely populated areas in the world.

Renowned for its expansive skyline and natural setting, Hong Kong is also one of the world’s leading financial capitals, and is a major business and cultural hub, having maintained a highly developed capitalist economy for decades.

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Over 90 percent of daily travels in Hong Kong are made on public transport, making it the highest used network in the world. A tramway system covers the northern parts of Hong Kong Island, while across the Victoria Harbour, the Star Ferry service provides panoramic views of Hong Kong for its 53,000 daily passengers. Elsewhere, the Peak Tram provides vertical rail transport between Central and Victoria Peak, and in the Central and Western districts there is an extensive system of escalators and moving pavements, providing access to Hong Kong’s steep and hilly terrains.

Hong Kong International Airport is the leading air passenger gateway and logistics hub in Asia, serving more than 47 million passengers each year. The airport is one of the most accessible in operation today, designed for maximum convenience.

Moving walkways and an automated people mover allow quick and easy movement throughout the building. The North Lantau Highway on Lantau Island connects the airport to inner Hong Kong; it can also be reached via the Airport Express, a dedicated rail link, and bus, taxi and ferry services.

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Eat Tien Yu For Hong Kong’s best dim sum meal with a view, head to this multi-level contemporary restaurant on the Peak.

Dim sum HK$43-54 (US$5-7) Yan Toh Heen One of Hong Kong’s top Cantonese eateries, this elegant restaurant offers a daily changing menu, listing two-dozen varieties of dim sum.

Dim sum HK$43-64 (US$5-8)

See The Man Mo Temple is one of the most important in Hong Kong. It was built in 1848 and is named after Man, the god of literature, and Mo, the god of martial arts. Elsewhere, Wong Tai Sin Temple is the most well known Taoist temple in the whole of Hong Kong, while a trip to Lantau Island brings visitors to the largest monastery. The 100-foot tall Buddha sits atop the 260step summit. Similar stunning views can be had by taking a trip in a cable-pulled train up Victoria Peak – named after British monarch Queen Victoria.

Hong Kong’s most famous hotel is The Peninsula so after all that traipsing around make sure you drop by for afternoon tea – sandwiches, scones and pastries – accompanied by a string quartet.

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Fast facts The saying ‘Only mad dogs and Englishmen go out in the midday sun’ originated in Hong Kong: Noel Coward wrote the words referring to the Noon Day Gun in Causeway Bay, which has been fired every day at midday since colonial times.

With over 8000, Hong Kong has the most skyscrapers in the world. Classified as buildings with more than 14 floors, that’s almost double that of New York.

Hong Kong’s official name is the tonguetwisting Hong Kong Special Administrative Region, or Hong Kong SAR.

Sleep Four Seasons Hotel Hong Kong Overlooking Victoria Harbour and the financial district, this elegant property redefines luxury and excellence with exceptional accommodation that is ideal for business travellers.

399 rooms available Deluxe harbour rooms from HK$7780 (US$1000) Kowloon Shangri-La Hotel This property is conveniently situated in the Tsim Sha Tsui shopping district with easy access to the Hong Kong skyline, financial district and busy Victoria Harbour areas.

Over 700 rooms available Double rooms from HK$3372 (US$433)

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Technology for today’s executive Apple iPad

Sony Ericsson Xperia X10

After months of waiting, Apple has finally unveiled its latest piece of shiny new tech outside of the US – the unimaginatively named iPad. Apple believes its new tablet-style device will occupy a gap in the market between an iPhone and a MacBook. For the critics (of which there are many), therein lies the problem; it’s too big to fit in your pocket and too impractical to replace a laptop. There’s no denying the iPad’s seductive curves and glorious 9.7-inch screen will have Apple fans’ palms perspiring, but its ability to garner mass-market appeal looks unlikely. For starters, it cannot run Flash and it won’t even allow you to multitask. It also has no USB port, no SD slot, no camera and no GPS. In essence its an iPhone on steroids.

The past year or so, Sony Ericsson has found itself losing ground to its rivals, particularly in the smartphone market. To redress the balance, the Japanese-Swedish manufacturer has released the all singing all dancing Xperia X10 running on Android. The unavoidable selling point is the massive VGA high-resolution screen – it dominates the front of the device. The generous fourinch screen size means the X10 is slightly on the porky side at 13mm thick and 135g in weight but this phone is packing a lot of kit, including an 8.1 MP camera, GPS, 348MB of RAM and 1GB onboard storage. It also has a 3.5mm headphone jack.

Can the X1 dislodge Apple’s crown? It’s unlikely but Sony-Ericsson have made a fine stab with this handset.

Flip Mino HD 8GB It’s amazing to think how much camcorders have shrunk in size from the days when you needed to put on a back brace before hauling a breeze block-like piece of kit up on your shoulder. The pocket size Flip Mino is about the same size as a chunky mobile phone and records in HD, capable of capturing 120 minutes on 8GB of built-in memory. A convenient USB arm flips out from the side of the unit for transferring video to a PC or Mac, doing away with the need to scrabble around for a USB cable. The easy-to-use FlipShare software allows you to edit, email or upload video to YouTube or MySpace. This is a point and shoot camcorder that even the biggest of technophobes would not have any trouble getting to grips with.

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Nokia Netbook 3G: With a new netbook seemingly rolling out onto our selves every month, you could be excused for not paying attention to Nokia’s latest addition. However, if you’re in the market for a new netbook then sit up and listen to this. Having taken the netbook concept one step further, Nokia has added memory card and SIM card slots, alongside a 10.1-inch glass-fronted screen – that is fully capable of leashing out HD films – and an in-built webcam and microphone. While you’re unlikely to be playing the latest PC games on its Windows 7 operating system, you can be assured that the US$750 you’ll spend will be worth every cent.

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DOWNTIME. BOOK REVIEWS 141

1

Get a Dog: Don’t Work Like One Jim Banting

2 The Game-Changer How Every Leader Can Drive Everyday Innovation, by A.G Lafley and Ram Charan

Co-author A.G Lafley is Chairman and CEO of Proctor & Gamble, a company that has tripled its profits in the past seven years. In this 336-page book he and Ram Charan guide you through how the likes of P&G, Nokia and Lego have become today’s game changers. This book claims to help you redefine your leadership style, whether you are running a company or in your first management job. The book is packed with thoughtful insight and advice on how and why certain strategies employed by multinationals have succeeded or failed.

BM says: The sections devoted to P&G’s organic revenue growth offer a fantastic insight into how the company has outstripped its rivals. The book also demonstrates how an innovation curve should be an achievable goal, not just wishful thinking.

How to Beat Bedlam in the Boardroom and Boredom in the Bedroom

By Jane Gunn

Gunn, described as a mediator, conflict 3 management consultant and speaker, promotes her inaugural book as a ‘life-changing guide to happiness at work and at home’. Packed full of interesting case studies, this book looks at how conflict in one area can have a profound effect on another. “Almost every instance of conflict at work is the catalyst for conflict at home,”

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This 230-page book offers a sense of perspective and practical guidance from the people who know best: senior executives and leaders. It’s about making people more successful and happy, by getting them to think differently. Packed with real-life experiences, case studies, anecdotes and stories, Banting provides 101 pieces of advice and tips to redesign your time in order to get a life. Themes such as money management, health and reorganising your everyday work activities are all discussed.

BM says: An abundance of practical suggestions are supplemented by an easy-to-read and witty writing style.

The Secrets of CEOs 150 Global Chief Executives Lift the Lid on Business, Life and Leadership, by Steve Tappin and Andrew Cave In this fascinating, authoritative book, 150 of the world’s top chief executives share their advice for getting to the top, and, once there, how to be successful leaders and still have a happy life. The book reveals frank discussions with some of the West’s most influential CEOs and incorporates radical and thought-provoking comments from the heads of companies in India, China and Russia and well as the US corporate giants.

4

BM says: The Secrets of CEOs contains a wealth of strategies that individuals and organisations alike can use to encourage a new standard of leadership. It could well be an essential guidebook for those wanting to know what its really like to be a CEO – and the health warning that should come with the job.

Why Women Don’t Ask The High Cost of Avoiding Negotiation – and Positive Strategies for Change, by Linda Babcock and Sara Laschever.

According to this new book, by neglecting to negotiate the starting salary of her first job, a woman may sacrifice over US$400,000 in earnings by the end of her career. From career promotions to help with child care, studies show that time and time again women don’t ask. Babcock and Laschever draw on research in psychology, sociology, economics and organisational behaviour to explore why women seldom ask for what they need, want and deserve at work and at home.

BM says: This book will strike a chord with modern women and will encourage them to pluck up the courage to ask for more.

writes Gunn. “Any time you’re under stress at home, it puts you under stress at work. And vice versa.”

BM says: This book has received rave reviews from both critics and leadership gurus. A must-read for those looking for a good work/life balance.

5

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DOWNTIME. LAZY DAYS

Audi lifts the roof with its latest version of the R8.

When the R8 hit the market it was received with adulation due to its stunning performance and gorgeous looks. This latest version features a retractable roof, which seems to enhance the German marque’s looks even further. This car caught the eye of Hollywood who featured it in the box office hit Iron Man 2. The 5.2 FSI quattro can propel the driver from 0-100km/h in just 4.2 seconds on its way to a maximum speed of 313km/h. This R8 features a fascinating package of technologies, including the Audi Space Frame (ASF) made of aluminum and carbon fibre composite, quattro permanent all-wheel drive, LED headlights and the innovative Bluetooth seatbelt microphone. Answering a phone call has never been so easy. The good news, depending how deep your pockets are, is that for a car this good it will only set you back around US$150,000.

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18/6/10 14:23:09

FINAL WORD STI_june10 18/06/2010 15:35 Page 144

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FINAL WORD

Sound advice STI Systems’ Jay Bauer on today’s vital business process lessons courtesy of the economic downturn.

A

deep economic downturn, like the one we are coming through now, is like a vicious storm threatening everything in its path. The natural responses to such an event are instinctive: first protect what is most precious, then rebuild as quickly as possible – but better and stronger than before. A crisis makes it crystal clear that customers are our most treasured business assets. Losing a customer will cost you not only the current business but also all the time and money you invested to get the customer, along with all the future revenue that this customer would have produced for your company. In a crisis you need to do everything you can with the systems available to protect your customers.

Then you need to take a hard look at your business processes to make sure they allowed you to do everything you possibly could have to avoid losing customers. Were they robust and flexible enough to detect and respond to customer needs quickly and comprehensively during the economic crisis? Or did you lose some customers because they felt your business was not in sync with them when they most needed a vendor who understood their needs?

“A crisis makes it crystal clear that customers are our most treasured business assets”

Revisiting deployment options Once these and other issues have been thoroughly considered you will be able to refine or totally re-engineer your processes to be more timely and effective, both in responding to customer emergencies but also moving forward to the new business opportunities. Before you implement your re-engineered business processes, however, you need to look at how you are deploying your systems and ensure you are making optimal use of the technologies currently available. Most CRM systems today

Rebuilding business processes We can take these valuable, albeit painfully acquired, answers as starting points for re-engineering our business processes to bolster customer retention while providing us with a more powerful engine for maintaining current customers and acquiring new business in the future. Here are some more questions indicating areas you may need to address: Do I have an adequate process for collecting information on business prospects? Do I have an ongoing plan for collecting and updating information concerning the needs and objectives of existing customers? Can my plans for updating this information be implemented from within my CRM system? Do all of the customer-facing individuals on service teams have access to the same information? Or are there islands of applications within our customer maintenance systems that isolate divisions, departments and individuals from one another, thus inhibiting timely and integrated responses to customer needs? Most importantly, do my business process systems present a holistic view of the customer to everyone working to serve his needs?

Jay Bauer has 25 years of experience in sales and marketing management with such companies as CSC, Boeing Computer Services and Motorola. Bauer has been the Senior Process Consultant on more than 300 projects. He has undergraduate degrees in engineering and liberal arts and a MFA and MBA from UCLA and NYU.

are based on a client/server methodology deployed behind a firewall. Web-based deployments retain the firewall but allow for greater data security. New cloud technologies (SaaS) are outside the firewall, allowing access from anywhere. They minimise hardware and software costs and shave months off the design and deployment schedule.

These advantages may be important if you need to get up and running with a reinvigorated system quickly.

So the downturn may have revealed some flaws in your business processes, particularly the ones that impact customer retention. You need to address those as fast as you can. Customer retention is essential. While proactively maintaining your existing customers you need to look at all the other things that can be done to improve your business processes. While you’re at it, revisit your deployment options. Some changes here could significantly reduce business process costs while making you more competitive for the upturn in the economy that is on the horizon. n

CAN YOU AFFORD TO

LOSE A CUSTOMER? You may only lose the customer once, but you pay for that loss over and over again. You lose the immediate revenue. You lose the opportunity for ongoing revenues. And you lose all the time and money it takes to acquire a new customer (if there is even one available).

This is why your CRM system must be designed and optimized to manage a customer retention process which will allow you to: • •

Capture information about current & emerging needs and the customer’s buying structure.

Create a yearly plan for servicing each customer based on the information collected.

Manage implementation of that plan including yearly, quarterly and monthly goals.

Enhance the customer service experience by always giving them more than they expect.

• •

That is how CRM done right helps prevent the loss of an incalculably valuable business asset, your customer.

If your CRM system isnʼt doing that for you– WE NEED TO TALK.

For More Information Contact: Jay Bauer, President/Senior Process Consultant, STI Systems.

Phone: +1 949 361 4070 Email: jay.bauer@salestechnics.com.

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