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THE COMEBACK KID In an exclusive interview, Michael Dell reveals a shift in strategy for the computer giant Page 56

www.busmanagement.com

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Q4 2009

ONE YEAR ON

Remembering the crisis, and how the business world is moving on

LOOKING AHEAD Operating in a post-crisis world Page 32

TALES OF THE CITY Retraining Wall Street Page 36

STRONGER, FITTER Adidas CEO Herbert Hainer Page 44

TOUGH TIMES, BIG IDEAS Is innovation the answer?

Page 108

CIO STORIES JOSEPH ENG JetBlue

• RAJESH RAWAL Burger King • SHARON STUFFLEBEME RadioShack

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FROM THE EDITOR 7

Bonfire of the vanities In the ashes of last year’s financial firestorm, is there evidence of a more chastened business community?

I

n an unassuming room at an understated press conference on a clear October morning, Olivier Blanchard, Chief Economist to the IMF, finally uttered the words both private and public sector leaders have been hoping to hear for the last 12 months. “The recovery has started,” he announced with the merest flicker of a smile. “Financial markets are healing.

And in most countries, growth will be positive for the rest of the year as well as 2010.”

The low-key statement, made at the IMF’s annual conference in Istanbul, was a far cry from the chest-thumping bullishness that has often characterized the boom of the past decade.

Triumphalism was the last thing on anyone’s mind given the financial write-downs and failures of the last year. But the humble nature of the announcement also hinted at another meaning: that the age of the ego could be over.

There’s certainly evidence of a more guarded approach in the testimonies of the executives we spoke to for this issue. All were keen to stress the

need for a return to the sound economic fundamentals of good governance, risk management, contingency planning and sustainability in their businesses, perhaps wary of the fact that unbridled growth is – more often than not – the precursor to an unbridled downturn.

“Because of the financial climate there’s a lot of focus on cost and cash flow, which is a natural reaction to a crisis,” says Michael Dell in our exclusive interview on page 56. “But over time we’ll move back to focus on productivity and growth, because you don’t get far moving a business forward without it.” Adidas CEO Herbert Hainer agrees – and actually believes the crisis has presented his firm with a real opportunity to become even better. “It has given us the chance to cut down on the excess fat that we gathered over the last eight years,” he explains. “When you are permanently running from one successful year to the next, you’re perhaps not as strict on cost control and process improvement. We took the opportunity to cut through, to change the way we do busi-

ness to a certain extent, to define new processes, to get faster, to get leaner and more efficient.”

Such steps are essential in this new era of frugality, and doing more with less is the mantra at all the firms we spoke to. Even so, those with one eye on the future are ensuring they’re well positioned for any upturn. As one CEO put it: “There’s only so much cost cutting and overhead reduction that a company can do; eventually you have to get back to asking questions about what you need to do to find new prospects and sell them stuff. That’s what business is about, after all.”

The age of the ego may well be over, but the business of doing business goes on.

“How you deal with the not-so-good times defines you as a company. You just have to deal with reality.

Hope is not a plan.”

“Credibility is extremely important. It allows for a lot more opportunities once you have a decent relationship in place.”

“It’s really been a balancing act between strategy and execution – which I guess is what the CIO role is all about.”

Joseph Eng, CIO, JetBlue (p76)

Raj Rawal, CIO, Burger King (p80)

Sharon Stufflebeme, CIO, RadioShack (p84)

Ben Thompson Senior Editor

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CONTENTS 9

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44 Faster, stronger, fitter Adidas Chairman and CEO Herbert Hainer talks candidly about trimming the fat, beating arch rival Nike into submission and why innovation is key to the sportswear giant’s future.

Reflections on the crisis One year on from the most dramatic few weeks on Wall Street since the Great Depression, what impact has the recession had on America’s businesses as they look to learn lessons from the financial crisis.

36

56 Fairytale of New York Michael Bloomberg is using his business acumen to help laid-off New Yorkers back to work through a $45 million stimulus package.

Is it working?

The comeback In an exclusive interview, Michael Dell reveals a shift in strategy for the computer giant.

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CONTENTS 10

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84

ASK THE EXPERT 88 Donato Buccella, Certeon 93 Roberto Moctezuma, HP 104 Ronald Partridge, Panduit 126 Marshka Kiera, BP Solar 130 Nuno da Silva, PE

52 Building a customer-centric culture Lynn Hunsaker offers her advice for developing and enhancing customer-centricty

93

Roberto Moctezuma

96

104

Ron Partridge

70 The silver bullet of asset management?

90 The promise of desktop virtualization

Kevin McGrew reveals how to conquer the greatest challenge of asset management

With IDC’s Michael Rose

54 Lost in the data blizzard?

Dmitry Faybysh gives his views on achieving essential operational efficiencies

Mark Fulgham

94 Datacenter transformation 72 Implementing ITIL the right way Dick Stark, RightStar President, explains the importance of an ITIL framework

64 Innovation in IT

Michelle Bailey explains what the datacenter of the future might look like

What Wells Fargo are focusing on

74 Taking center stage

96 UniďŹ ed computing in the datacenter

66 The value of automation

Why the CIO is essential for the muchanticipated upturn

Why Mark Fulgham is focusing on a systems approach to datacenter virtualization

Harnessing new modes of ITSM is driving innovation and business, says Stephen Morton

68 The importance of ITSM

By Charles Cyna, President and CEO of ThinkITSM

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CONTENTS 12 98 Following the green brick road

112 Keeping innovation alive

124 Heating up

Steve Herman gives the low down on datacenter dos and don’ts

Lorie Buckingham, CIO, Avaya, on inspiring a culture of innovation

100 The datacenter of the future

114 Buyer beware

With a long-term goal of having 100 percent of its power supplied by renewable energy, Walmart is transforming every aspect of its energy consumption

Jody Little and her thoughts on datacenter transformation utilizing cloud computing

By Joe Ruck, President and CEO of BoardVantage

128 Organizational boundaries

102 Green IT. Blah. Blah. Blah.

116 The device dilemma

Paul Hepperla where the carbon footprint starts, ends and the paradox in between

How will we ever attain green anything, asks Carla White?

The tug of war between employees’ mobile demands and IT’s security needs

106 A new era of IT

118 Mobilizing the workforce

Paul Miller reveals why HP is betting big on converged infrastructure

IDC’s Stephen Drake reveals the multiple business benefits of enterprise mobility

108 All out of ideas

121 The key to successful video conferencing

Four executives debate whether the US faces an innovation crisis and whether there is a serious threat to America’s innovation leadership

132 Energy sustainability in the desert Against the backdrop of the UAE’s extraordinary oil and gas reserves, Masdar looks set to transform the way developers look at sustainable development

Jeffrey Prestel explains the vital role of managed services in video conferencing

IN THE BACK

108

138 136 Executive education: Northeastern University 138 The knowledge: The high life 140 On the shelf: Book reviews 142 Away on business: 36 hours in Austin 144 Final word: Doug Mueller, BMC Software

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UPFRONT 16

June 2009: Hundreds of demonstrators from competing rallies gather outside the Board of Supervisors meeting at San Francisco City Hall to protest proposed budget cuts.

BUSTING THE BUDGET If you think the budget crisis looks bad now, wait until next year, warn the experts.

From coast to coast, state governments are in something of a fix. Budget deficits are on track to add up to at least a third of a trillion dollars. In half the states, education funding is being cut, meaning bigger classes, shabbier

facilities and fewer frills like music, art, languages and library books. Others are closing parks, draining rainy-day funds and shrinking services for children, the elderly and the disabled.

Almost all have cut services, forced workers to take unpaid days off, shut offices for several days a month and scrambled to find new sources of revenue.

“I think states are going to have to look at revenue and programs across the board, or they’re going to

have to raise revenue in an anemic sunshine and a boom that covered economic environment,” says everything from entertainment Chris Whatley, Deputy to defense spending to Executive Director of dotcom and highMore than the Council of State tech. It became Governments.

America’s fastest“Either way you growing state, and are projecting look at it, there’s the seventh-largest deficits for next going to be some economy in the year tough decisions in state world. Now it stands as capitals.” an object lesson for the whole Take California, for example. nation on how not to do it. The For decades, it was the state of Golden State ranks bottom of all dreams, the home of Hollywood, states as a place in which to do

30 states

UPFRONT BMUS17_oct09 29/10/2009 15:42 Page 17

UPFRONT 17 business. High-tech companies “I certainly don’t think this is are moving to more favorable desthe end of the problem,” explains tinations such as Texas and it is Liz McNichol, Senior Fellow at haemorrhaging jobs. Its public the Center for Budget & Policy schools, once the nation’s best, are Priorities. “The size of the shortnow among the worst and provide falls that states are facing are an extra impetus for people to probably going to be almost as big vote with their feet and head out. in the next budget year, and they’ll And no fewer than 80 percent of be harder to deal with because Californians think that the state is we’ve used up a lot of the oneon the wrong track. time solutions and trimmed serIn fairness to California, it is vices back to the bare minimum. not alone in its financial bind.

Stimulus money will be running Indiana, Arizona, Mississippi and out so, yeah, in one sense things Pennsylvania also went into the could be worse in the next budget final days of their fiscal years facyear than they are now.” ing the prospect of a shutdown of In fact, McNichol believes it public agencies or paying bills could take up to three years for through IOUs. state revenues to get The good news, if back up to pre-recesState deficits there is any, is that sion levels, and are projected to be much of the pain even then states this year has been face the prospect cushioned by bilof undoing many billion in 2011 lions of dollars of fedof the one-time eral stimulus money, measures put in place which has allowed states and to address current deficits. localities to avoid laying off teachJohn Grubb of the Bay Area ers, prison guards, police officers Council, a business advocacy and firefighters. But for the next group based in San Francisco, fiscal year, beginning in July, the agrees. “We didn’t get into this picture looks even bleaker: revproblem quickly and we’re not enue is expected to remain degonna get out of it quickly,” he pressed, even if the national says. “We’re looking at about a economy improves; there will be three-year timeline to try and get only half as much federal stimulus things back on track.” aid available; and many states And while solving the budget have already used up their emercrisis is not going to be easy given gency reserves. that state revenue recoveries genIn a dozen or more states, erally lag behind any pickup in the budgets have already gone into national economy, one potential the red less than one-third into route to salvation could lie in the fiscal year, while more than 30 President Obama’s plan to overstates are projecting deficits for haul the healthcare system. “One next year, according to of the spending pressures on Washington-based think tank the states is the growing cost of Center on Budget and Policy healthcare, both in the public and Priorities (CBPP). Cumulatively, private sectors,” says McNichol. it estimates there will be $166 bil“It’s not unique to the public seclion in state deficits in 2010 and tor, but if we can get a handle on $160-180 billion in deficits for the that then it would certainly help 50 states in 2011. the state budgets.” n

NEWS IN PICTURES

Student Michelle Thomas protests against state budget cuts, tuition fee increases and the University of California administration's handling of the California budget crisis.

$160-180

Overcrowding in California’s 33 prisons – now filled to nearly twice their designed capacity of 80,000 – has resulted in severe budgetary pressures. Studies suggest reducing the prison population by 57,000 could save some US$900-million a year.

President Obama’s $787 billion economic stimulus program is not just aimed at building essential infrastructure. Many states are only surviving because of much-needed federal funding that is helping plug budget shortfalls – much of which will soon run out.

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UPFRONT 18

TOP BANKING BRANDS VALUE

The Brand Finance review of the top 500 financial service brands in the world provides an insight into the top finance brands by sector. Whereas mature financial institutions in the west, such as the Bank of America, HSBC and BNP, have developed a strong value brand that can even withstand the effects of a global recession, the younger financial groups in the Middle East have not been able to develop the same level of brand strength. This means that the level of confidence shown in these banks is also low compared with others in the world that have lived through, and survived, more economic difficulties. Most notably, Chinese banks have emerged as major players on the world stage, with three now appearing in the top 25: ICBC, China Construction Bank and Bank of China.

PROFITS AT A PRICE Following a recent announcement from rival Google reporting a rise in profit during the recession, Yahoo has seen its third quarter profits more than treble. Of late Google have been boosted significantly by the internet ad market, yet Yahoo have had not fared so well, seeing their sales fall by 12 percent.

Instead Yahoo have resorted to making drastic cuts in order to improve its bottom line, including cutting more than 2000 jobs during the past year.

The company may have earned $186 million compared with $54 million in the same period last year, but revenue fell to $1.58 billion.

LARGEST US BANKRUPTCIES

Banking brand value of the top 10 brands by region North America $73,310m

Africa $8.588m

Europe $54.231m

PaciďŹ c $13.621

Asia $49.343m

Middle East $4,172m

South America $29.106m

Central America $2.909m

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EMBRACING MOBILITY

AROUND THE WORLD IN 80 DAYS

I know what you are thinking – not another blog about enterprise mobility. But the aim of Sybase’s new Speaking of Enterprise Mobility… blog expands well beyond the latest trends in the marketplace. The blog instead addresses the question of why enterprises should seek out and embrace mobility.

Author Willie Jow, a 15-year veteran of Sybase, leads product marketing and management efforts for Sybase’s mobility solutions and is no stranger to thinking strategically in this space. As many social media discussions currently focus on the how of enterprise mobility solutions, Jow muses on the returns and benefits enterprises can achieve with strategic mobile implementations. Why should mobility be leveraged across the entire enterprise versus limiting it to more traditional mobile task workers? Why should enterprises view mobile technology as a means to further their overarching corporate strategies, not just a way to accommodate the demands of iPhone users? What does the future of enterprise mobility look like and why should you get started today?

To stay abreast of the latest happenings from enterprise mobility leader Sybase, be sure to also check out the Enterprise Mobility Team Blog.

There you’ll find highlights on technology news, events and real world examples of how customers and partners are embracing mobility.

View both blogs at: http://www.sybase.com/mobilityblogs

OIL INDUSTRY STRUGGLES Surprise, surprise: firms are more likely to be popular if their products or services don’t involve exploiting the earth’s natural resources. In a recent Gallup poll, Americans say they have the highest regard for the computer industry, with restaurateurs and hard-working farmers not far behind. Oil and gas producers come off worst, with the troubled auto industry and the federal government only slightly more popular. Given the events of the past 12 months, banking has plummeted in the public’s estimation; only two years ago, it enjoyed an overall positive rating from 30 percent of people.

American public attitude to industries Overall opinion* % Negative

50 40 30

20

Positive

10 - 0 + 10 20 30 40 50 60

Computer Restuarant Agriculture Internet Retail Sports Film Education TV and radio Airline Advertising and PR Healthcare Legal Drug Banking Property Federal government Car Oil and gas Source: Gallup, August 2009. *% of respondents with positive opinion minus % of respondents with negative opinion

Our guide to the last quarter’s global events – and their impact on your business.

CLIMATE CHANGE UK Prime Minister Gordon Brown has told the Major Economies Forum to work together and compromise to help reach agreement at UN-led climate change negotiations in Copenhagen in December.

“Now is the time. For the planet there is no plan B,” says Brown.

December’s meeting will prove crucial for key climate issues.

BM impact rating: **** HEALTHCARE OVERHAUL In the US, Senate Democrats are meeting to write in the health bill they plan to bring that would cost $829 billion over 10 years. The bill would expand insurance coverage to 29 million Americans through tax credits and means the drug industry stand to gain by getting tens of millions of newly insured customers.

BM impact rating: **** CUTTING DEBT In Japan the government is looking to reduce the budget from 95.04 trillion yen to 92 trillion, announced Finance Minister Hirohisa Fujii. The government

now faces its biggest challenge as it attempts to control Japan’s debt, which stands at 200 percent, while increasing social spending and improving standard of living.

BM impact rating: ***** UNEMPLOYMENT UP The unemployment rate in South Africa hovered at 23.6 percent in this year’s second quarter, slightly up from the 23.1 percent reported in the same period in 2008. While the African continent was initially unscathed by financial turmoil, the collapse of Western consumer demand has had a huge impact on the economy.

BM impact rating: *** CONTINUED RECOVERY? Germany, Europe’s largest economy, is continuing to recover from its worst recession in more than six decades as exports picked up and investors regained confidence in the third quarter.

However, analysts believe that rising unemployment and the expiry of stimulus measures may hold back the upswing.

BM impact rating: ****

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UPFRONT 20

HOLDING OUT FOR A HERO Battered and bruised insurance giant AIG remains deeply wounded by the recession. Whether new boss Robert Benmosche, the company’s fifth leader since 2005, will bring it back from the brink or start dismantling it remains to be seen. Either way Benmosche will be firmly in the critical public eye.

Who is Robert Benmosche?

Benmosche, former CEO of MetLife, has much experience making deals and overseeing complex organizations, and he’ll need it as AIG hopes to regain its place in the insurance ranks after it’s government rescue last fall. While at MetLife, Benmosche oversaw the insurer’s change from mutual company to public corporation and he also orchestrated several major deals, which could prove useful in the coming months.

Challenges The 65-year-old will have a huge challenge on his hands in terms of the government rescue last year and how he decides to go about paying back the whopping $182 billion. He succeeds Edward Liddy, himself a scapegoat for critics, and will need to navigate AIG’s unusual corporate structure, as well as carefully manage the public perception of the company.

What they say Industry observers believe that Benmosche is well placed to be AIG’s

turnaround hero. Indeed, M. Evan Lindsay, Vice Chairman of Heidrick & Struggles has said: “There are very few financial services executives with insurance background that have his experience and track record.”

Lindsay goes on to explain that Benmosche did “an extremely good job at Metlife” and “changed it into a performance-based culture”.

Donald Marron, former CEO of PaineWebber while Benmosche worked there and current CEO of Lightyear Capital LLC, said: “Bob is an independent thinker and a very good operator. You have to create a profitable enterprise. The market will value a business on its earning power. It sounds like that’s exactly what he’s focused on.”

What he says In a statement issued by AIG Benmosche states: “With my AIG colleagues, we will focus on this mission: maximizing the value of the company’s assets and meeting all of our stakeholder obligations.” Just how he intends to maximize the value of assets remains to be seen, although it seems quite clear that Benmosche is determined to do a good job for the beleaguered insurance giant.

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OPENPRO ANNOUNCES VERSION 6.0 OpenPro, which has delivered quick-start business solutions to hundreds of businesses worldwide since 1998, has announced a new version of its enterprise resource planning (ERP) software. Version 6.0 has over 55 enhancements, with many benefits for small and medium to enterprise size businesses.

“This new release is perfect for celebrating OpenPro’s 10 years in business,” says President and CEO Jim Clark. The most impressive new feature is the connections system, which uses an XML SOAP interface to allow OpenPro to connect to almost any operating system in the world. Other new features include enhanced workflow management with detail tracking of approvals, and enhancements with financial reporting, including budget comparison. The Financial module now also integrates electronic translation of vendor invoices into payables transactions using OCR technology.

New features in OpenPro’s Manufacturing module include graphs showing status of jobs and processes, and more flexible scheduling. Job Costing now includes a detailed quoting process, from raw materials to finished goods, and scheduling of work orders. Additional new modules for Version 6.0 include Warranty Service Order Processing, Human Resources and Payroll for International Markets, Computerized Machine Maintenance, Warehouse Management with fully integrated bar coding, and more.

With version 6.0 OpenPro has updated the executive desktop with interactive flash graphics. OpenPro ERP has built-in communications integration for fax, email, electronic transfers, phone, and printing, as well as paperless workflow and document imaging. And because OpenPro ERP is built utilizing LAMP-based open source technology, small businesses can purchase OpenPro’s software at typically less than half the cost of traditional Windows-based ERP software. OpenPro also offers implementation options and can be used remotely as a webbased service or installed locally.

For further information, visit the website at www.openpro.com, email salesop@openpro.com, or call the company at 714-378-4600.

PFIZER TO PAY RECORD SETTLEMENT Pharmaceutical manufacturer Pfizer has agreed to pay $301 million to settle civil allegations related to illegally marketing a drug, Geddon, for uses other than those approved by the FDA. The settlement with the US Attorney’s Office was part of a larger $2.3 billion settlement, the largest healthcare fraud in the department’s history, between Pfizer and the US Department of Justice over civil allegations of off-label marketing of other drugs as well as kickbacks paid to doctors to prescribe them.

TOP 10: STATES FOR CLEANTECH

While every state in the US is involved in cleantech in some way, some states are doing a better job than others at bringing together all the parts of the economy with natural resources and manufacturing know-how. At the top of the list is California, with half of all cleantech-related venture capital going to the Golden State – a total of $6.5 billion from 2006 to 2008.

In spot number two, Texas boasts the world’s largest wind farm and generates more electricity from wind than any other state. Further down the list is Tennessee, which, thanks to the strong political foresight of Gov. Phil Bredesen, has landed two of the biggest cleantech deals of the last several years: Hemlock Seminconductor’s $1.2 billion polysilicon plant and German chemical firm Wacker Chemie’s $1 billion polysilicon factory.

Three additional states also deserve an honorable mention, despite not making the top 10:

1 2 3 4 5 6 7 8 9 10

California Texas Massachusetts Colorado New Jersey Tennessee Pennsylvania New York Ohio Oregon

Source: cleantech.com

Michigan, Washington and North Carolina. All three have made strong strides in the area of cleantech: Michigan specifically in next generation battery production, Washington in the area of hydroelectric power, and North Carolina with great innovations coming out of its Research Triangle.

$2.2 billion Cleantech deals secured in Tennesse thanks to Gov. Phil Bredesen

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MIAMI MAN NAMED WORLD’S FITTEST CEO

LEADERSHIP FOR TOUGH TIMES “Many companies have the wrong idea about what kind of CEO it’s going to take to lead them through today’s financial crisis,” says Stephen Miles, Managing Partner at global executive search firm Heidrick & Struggles and head of its leadership advisory practice. Here he provides five thoughts on recession leadership.

“There’s a widespread myth that you need a ‘turnaround leader,’ and this simply isn’t true. The best leaders in the world – the people running the fittest companies – are all leading their companies in the same way.

CEO Challenges is the world leader in sport competitions for CEOs, and once each year, hosts the CEO Challenge World Championship to find out who is the ‘best of the best’. This year the Championship was held in conjunction with the USA National Triathlon Championship in Tuscaloosa, Alabama, on August 22.

CEOs were required to pre-qualify for the event, either by posting triathlon times under 2:30, or winning a previous CEO Challenge event.

After a highly competitive race, it was Carlos Dolabella, partner and CFO of First Class Rent a Car in Miami, who bested the field to win in 2 hours 12 minutes for the Olympic distance course (1.5km swim, 40km bike, 10km run). As champion of this year’s event, Dolabella has earned the exclusive title of World’s Fittest CEO. Second place at the CEO Challenge World Championship went to Frank Karbe, CFO of Exelixis Inc. from San Francisco (2:14), and third place went to James Schnauer, President of Spice Design Inc. of Los Angeles (2:15).

“Carlos Dolabella is very deserving of the World’s Fittest CEO title,” stated Ted Kennedy, President of CEO Challenges. “Due to upriver flooding, the current in the Black Warrior River was very strong on race day, and Carlos used his superior swimming ability to distance himself from the other CEO Challenge competitors. Frank and James were chasing him down in the 10km run, but Carlos showed great perseverance to hold them off for the victory.”

CEOs who have a passion for sports love the opportunity to compete alongside people who share their challenge of finding time to train while juggling work demands, travel schedules and family commitments. Brent de Jong, founder of AEI and fifth place finisher at the CEO World Championship, summed up the experience by saying: “It was fantastic to spend the weekend with like-minded individuals. The appeal of the CEO Challenge program is a combination of the camaraderie with fellow CEOs who love triathlon, and the opportunity to compete against people who share my challenges.”

“These CEOs have an almost maniacal focus on operational excellence. They are not flying around at 50,000 feet, jetting to various speaking engagements. They are on-the-ground running ‘lean and mean’ organizations and don’t need a crisis to take them there.

“The best CEOs may change the levers they pull when going through different economic climates – such as a keener focus on cash management – but their leadership philosophy is the same, whether the economy is headed for a depression, in the middle of one, or coming out of one.

“The CEO that is required right now doesn’t need an entourage of 15 people to explain his or her business. This CEO knows the metrics and the business model of his or her company, and knows how they make money, how they compete, how they beat their competitors – and how they lose to competitors.

“Some people might think these are micromanagers, but I define them as ‘micro-leaders’. They’re not micromanaging and actually doing the work for their staff, but they do inspect what their people do; they ‘trust but verify’.”

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BIG POSTHUMOUS EARNINGS FOR THE JACKSON ESTATE Rarely has the phrase ‘gone, but not forgotten’ seemed more appropriate. King of pop Michael Jackson earned $100 million from a surge in music and merchandising sales in the 50 days following his death, according to sources close to the matter, whilst a wave of new contracts mean that at least the same amount again is expected by the end of the year.

Experts are predicting his posthumous earnings are certain to overtake those of Elvis Presley, whose legacy netted $55 million last year, and administrators of his estate said that interest in the Thriller singer has soared above all expectations – predicting future gains of between $50-100 million with each passing year.

“That is a new record for estates which is unlikely to be broken,” said the star’s lawyer John Branca, who was named co-executor of his estate in Jackson’s will with music executive and family friend John McClain. The pair have brokered a series of big money deals, including a $60 million agreement with Sony pictures to produce a film based on the final footage of Michael rehearsing for the O2 shows, due to hit cinemas in October. Other high-profile agreements include a merchandising deal worth $15 million and a $5 million deal with various companies to produce calendars, commemorative coins and a $150 coffee table book.

In 2004, Robert Sillerman, a New York music entrepreneur, purchased 85 percent of Elvis Presley Enterprises, the business umbrella for Presley’s intellectual property rights and

REPEAT OFFENDERS

The legend lives on: Fans sign a large poster of Michael Jackson outside the public memorial service held at Staples Center, Los Angeles, on July 7. The late star’s continued popularity looks set to generate big posthumous earnings for his estate Graceland, for about $100 million. The overall value of Jackson’s business, were it to be sold in the future like Presley’s was, would most likely be several hundred million dollars, said Mark Roesler, Chairman of CMG Worldwide, a licensing firm that has worked with the estates of Presley, Marilyn Monroe and James Dean. “You have someone who left a mark on six billion people in the world,” Roesler said. “If you put a value of $110 million on Elvis Presley’s intellectual property rights, that’s a baseline. It’s cer-

Bankruptcy has been the specter in the attic for an increasing number of companies over the past 12 months. And while many firms have successfully emerged from Chapter 11, there are some that have bounced back from a second, or even third bust. Of course getting to Chapter 33, as a third bankruptcy is known in legal circles, doesn’t always mean survival. The following are a list of the top eight serial offenders:

1 2 3 4 5 6 7 8

tainly in the hundreds of millions of dollars.”

Jackson’s estate contains some big assets, including a 50 percent stake in Sony/ATV, a music publishing partnership that includes the rights to the Beatles catalog; Jackson’s own song catalog; and Neverland Ranch. But there also are large debts because of Jackson’s free-spending ways. While Jackson’s portion of Sony/ATV was worth an estimated $500 million at the time of his death, he had about $300 million of debt against it held by Barclays.

Trump Entertainment Resorts (3) Levitz Furniture (3) Fortunoff (3) US Airlines (2) Bally Total Fitness (2) Continental (2) Polaroid (2) Steve & Barry’s (2)

Source: Fortune

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UPFRONT 24 FEW AUTO MANUFACTURERS DID WELL IN SEPTEMBER, BUT CHRYSLER WAS AMONGST THE WORST WITH SALES DOWN 42 PERCENT FROM SEPTEMBER 2008. NONETHELESS, CEO SERGIO MARCHIONNE REMAINS BULLISH ON THE FUTURE. There are a number of things that have impacted on market share and volumes in September. We have just come off a substantial inducement to consumption – the Cash for Clunkers program – which was announced at a time when our industrial machine was just about ready to get started up and running. Most of our plants had been out for a substantial part of the spring and summer, and did not come back on until the end of July.

A lot of the inducements that were being offered by American car manufacturers are also beginning to disappear. The heavy incentive checks that one could find in most dealerships are no longer available. It takes discipline to maintain pricing in order to stay profitable in the car-making business, but the benefits of that philosophy are beginning to work their way through.

We are not the only ones adopting this structure. General Motors has become a lot more disciplined on this than we have been. And it is bound to cause a contraction of the position because your starting point was exaggerated and so you need to work through that process of cleansing; it’s painful and it looks ugly.

We have been through this before at Fiat. When I arrived in 2004 we had to go through the same type of painful process of watching market share decline as we cleaned up our commercial practices.

People say ‘what are you going to do to try and incentivize the demand? The real issue is that we need to go back to making products that people want at a price that is accessible and defensible in a competitive framework. All the work that has gone on here since we came in on June 10 has been geared at providing the framework to effectively drive volume over the medium to long-term. September is not an indication of future performance.

Our intention is to improve share from this point on. I’m not getting alarmed. The machine is timed, we’re not bleeding as people think we are, and the level of cost consciousness is probably at a historical high; the real important issue is to try and build a future. And the future is a lot a lot better than the market share in September would indicate.

New Chrysler Group Chief Executive Sergio Marchionne has announced a five-year plan for the US automaker and will unveil a new product line-up in November. “We were surprised by how little had been done in the past 24 months,” Marchionne told reporters at the Frankfurt Motor Show. “But I am now confident that we have the right plan and people in place.”

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THE PRICE OF SUCCESS

CHANGING THE GAME

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Gates (left) kept Buffet (right) off the top spot for the 16th consecutive year

Recessions can be tough – even for the super rich. For only the fifth time since 1982, the collective net worth of The Forbes 400 – an annual tally of the nation’s richest people – has declined, falling $300 billion in the past 12 months from $1.57 trillion to $1.27 trillion.

Warren Buffet, America’s second-richest citizen, took the biggest hit; the Oracle of Omaha lost $10 billion from his personal fortune as shares of his Berkshire Hathaway firm fell 20 percent in 12 months. Buffet is now worth just $40 billion.

Holding on to top spot in the ranking for the 16th consecutive year is Microsoft founder and Chairman Bill Gates; however, his personal balance sheet also suffered at the hands of the downturn. Sluggish Microsoft shares and declining outside investments pushed the software visionary’s net worth down $7 billion in 12 months.

Rounding out the top 10 on The Forbes 400 are Oracle founder Larry Ellison ($27 billion); Wal-Mart heirs Christy Walton ($21.5 billion), Jim C. Walton ($19.6 billion), Alice Walton ($19.3 billion) and S. Robson Walton ($19 billion); media maven Michael Bloomberg ($17.5 billion); and energy titans Charles and David Koch ($16 billion each). The top 10 lost a combined $39.2 billion in the past 12 months, a 14 percent decline.

Several Forbes 400 mainstays fell off the list altogether, including former Citigroup czar Sanford Weill, mall developer Matthew Bucksbaum and condo kingpin Jorge Perez.

The biggest gainer is banker Andrew Beal, who tripled his net worth to $4.5 billion by buying up cheap loans and assets as the markets crumbled last fall.

PERSONAL SPENDING NOT BACK YET While most economists are starting to say the economy is turning around or that the recession is coming to a close, consumers may not be of the same mind. One thing to watch is the way Americans start to spend money again. The results of a new AdweekMedia/The Harris Poll survey show that 79 percent of American adults say they have made cuts in their personal spending due to the economy. Around 32 percent have made a lot of cutbacks, while 47 percent have made some cuts. Of those who have made spending cuts, 76 percent have still not increased their spending. Four percent have increased spending to what it was, while 21 percent have increased their spending but to less than before.

Source: Center for Media Research

hey say the customer is always right – which is exactly what HarrisData concluded when executives at the software firm decided to listen to their customers and give them what they needed to be successful in a tumultuous economy – those items that are critical to mid-sized business success. The creation of the Omni-License, providing essential software features and options, is a totally new offering and HarrisData is the only company providing this unique product. The firm has taken the conventional software model and turned it on its head.

The reaction has been overwhelming, and staff at the family-run HarrisData are enjoying facing off against multi-billion dollar software giants like Oracle, SAP and Infor. “It has been challenging but fun,” enthuses HarrisData President Lane Nelson. “Overcoming the excitement is often more difficult than facing the competition because no other software company does what we do, and it is difficult to believe.”

Nelson continues: “When we perform software demonstrations, our sales people are constantly surprised at the amazement of perspective clients. ‘You mean that we get a fully integrated, manufacturing ERP with a browser and all functionality, including support, maintenance, unlimited users, and the source code? That can be accessed by our sales department from anywhere in the world?

And you can get this implemented in five to seven months?’ This reaction is typical of our new product offering.”

Overcoming such disbelief can be difficult when a business has been abused for 10 to 15 years by its vendor. But word is getting out, and HarrisData, a strong IBM partner, is beginning to see the start of something new occurring – a change to the traditional software offering, bringing huge relief for mid-market companies.

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

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UPFRONT 26 Space tourism: the story so far 1950s: Optimism about rocketry, space stations and Moon-bases. As cold war re1969 alities take over, this mood gradually evaporates 1969: Man takes first steps on moon 1984: First of a series of papers on vehicles for space tourism published by David Ashford of Bristol Spaceplanes, UK 1989: A design for an orbital hotel is presented at the IAF Congress 1993: The Japanese Rocket Society starts a study program on the feasibility of setting up a space tourism business, and establishes its Transportation Research Committee to design a passenger launch vehicle 1999: Formation of Virgin Galactic Airways 2001: Denis Tito becomes the first paying space tourist, launching from Baikonur aboard a Russian Soyuz bound for 2001 International Space Station Alpha. Tito enjoys several days aboard returning safely after 128 orbits in eight days 2003: Scaled Composites unveils the SpaceShipOne suborbital space plane, and its carrier White Knight, at the company’s site in Mojave. SpaceShipOne goes on to break the sound barrier – the first private commercial small aircraft to do so 2004: SpaceShipOne makes first flight to space and after a second flight wins the Ansari X-Prize 2005: Dr Greg Olsen becomes the third space tourist to visit space as a fare-paying passenger. Virgin Galactic starts accepting reservation for suborbital space flights. New Mexico announces plans for spaceport 2006: Royal Aeronautical Society holds its first conference dedicated to space tourism. Space Adventures announces plans to develop commercial spaceport in Ras Al-Khaimah, UAE 2007: Founder of Blue Origin, Amazon.com’s Jeff Bezos, releases a video of its test flight Goddard demonstrator. SpaceX’s 2004 Falcon1 rocket successfully reaches space but fails to achieve orbit. Travelex announces QUID currency for use in space 2008: Scaled Composites releases design details for SpaceShipTwo and White Knight Two. SpaceX’s Falcon1 rocket reaches orbit on the fourth attempt 2009: Russia’s space agency announces that no more space tourists would be taken to the International Space Station after 2009. Sir Richard Branson takes his first flight in VMS Eve, the mothership that will launch Virgin Galactic’s customers into space

SPACE ODYSSEY

Virgin Galactic aims to be the first commercial venture to fly civilians into space, allowing them to experience weightlessness for up to six minutes at a time

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t is the 30th anniversary of the first moon landing this year and, if Sir Richard Branson has his way, we are now just two years away from another giant leap for mankind – space tourism. For Virgin Galactic President Will Whitehorn and his team, the space tourism dream that has been five long years in the planning is now finally becoming reality.

“The spaceship is nearly finished,” he says.

“The rocket motor is now firing and is performing excellently so we’ve gone from seeing hundreds of potential stumbling blocks just a few years ago to seeing no real stumbling blocks now.”

In June, Whitehorn was in New Mexico where ground was finally broken on the construction of the Virgin Galactic’s first launch site: Spaceport America. The 110,000 square foot facility will be the site of a $318 million space launch system that will send its space launch vehicle

VMS Eve and spacecraft SpaceShipTwo into space. On board won’t be professional astronauts but passengers who have paid $200,000 a ticket and undergone just three days training before taking their place in history as the world’s first space tourists.

The hugely complex and high-risk project represents a massive investment for the Virgin Group – $105 million so far. VMS Eve, the mothership that will take the spaceship up to 50,000 feet before releasing it, has already undertaken 16 test flights (with Sir Richard Branson himself on board for one of them) while SpaceShipTwo, designed by renowned aeronautical engineer Burt Rutan, is on target to be unveiled at the end of this year.

Ironically, one of the biggest potential uses for Virgin Galactic’s craft doesn’t involve space tourism at all. Ultimately, Whitehorn believes that SpaceShipTwo could be used as a form of low-cost,

low carbon, high speed commercial air travel – taking passengers from one side of the world to the other, outside the earth’s atmosphere. “I think the potential for that is huge,” says Whitehorn. “We want to give this system the capacity to get from point-to-point outside the atmosphere. That would be a really exciting breakthrough. It means people could travel from London to Australia in two-anda-half hours – and not only that, but they won’t be putting fossil fuels into the earth’s atmosphere in doing so.”

And as interest grows, he expects there to be a wave of private investment into space-related ventures. “Now that the realization as to the potential of the space industry has dawned (and it really has dawned just recently), I think you’ll see a wall of private sector money going in to space over the next 10 years, the likes of which we haven’t seen since the internet revolution.”

SpaceShipOne was the winner of the Ansari X-Prize, which offered $10 million to anyone who could build a spaceship that could carry three adults to a height of 100 kilometers and return to earth safely. The winning spacecraft had to complete a second identical flight within two weeks, using the same craft and replacing no more than 10 percent of its parts

SpaceShipOne was the first private vehicle to fly above the Kármán Line in 2004, which is where the Earth’s atmosphere ends and outer space begins

Spaceport America designed by URS/Foster + Partners. Conceptual image courtesy of Vyonyx ltd

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UNIFIED COMPUTING

BRINGING OUT YOUR MAVERICK SIDE

Server virtualization is driving an architectural shift in the datacenter. It has increased agility and utilization, reduced capital expenditure, but significant challenges remain. The datacenter today can best be described as ‘islands of virtualization’ – technical islands, procedural islands, organizational islands, operational islands – with no innovation in the market enabling these islands to be traversed simply, securely and seamlessly.

The recently announced Cisco Unified Computing System redefines compute architectures to address these challenges by delivering a platform that streamlines datacenter processes, scales service delivery and radically reduces the number of devices requiring setup, management, power/cooling and cabling.

The Cisco Unified Computing System is driving a market transition where new standards, technologies and integration conventions enables IT to organize from a systems perspective instead of a component level, which benefits businesses by:

Organizations are being reminded to nurture their most troublesome talent in preparation for the upturn.

• Reducing total cost of ownership at the platform, facilities and organizational levels • Increasing IT staff productivity and business agility through just-in-time provisioning and mobility for both virtualized and non-virtualized environments • Enabling scalability through a design for up to 320 discrete servers and thousands of virtual machines in a single highly available management domain. Reducing the startup cost of a virtualization initiative by more than 40 percent • Supported by a partner ecosystem of innovative, trusted industry leaders using industry standards.

Cisco’s Unified Compute System delivers a platform that virtualizes the IT assets within the datacenter through a pre-integrated architecture that unites network, server and computer virtualization into a single system that will drive the benefits of virtualization to an entirely new level. www.cisco.com/go/unifiedcomputing

Despite the fact that they often do not utilize ty to cause disruption within a structured orgatheir talents effectively, Judith Germain, MD nization,” she says. “Whilst your maverick at of leadership development company Dynamic work is very articulate, they may have problems Transitions, is keen to remind organizations of communicating with others in a way that their the importance of their mavericks in helping audience can understand and accept. If you ask the business to recover from the recession and your troublesome talent whether you are doing why it is so important to recognize and manage a good job, and they feel that you are not, expect the traits of their most troublesome talent. to receive blunt, to the point feedback on your “The recession means that orgashortcomings.” nizations need troublesome talGermain is also concerned ent more than ever to survive, that senior management may Mavericks should and these individuals need have lost sight of their role in not be ignored and understanding because nurturing talent and could companies that do run they are different from the end up switching back to the the risk of slipping rest of the talent pool. dark days of talent managebehind global Unfortunately the huge focus ment, where HR carried all recompetitors on redundancies and managing sponsibility for such initiatives. ‘survivor syndrome’ of recent months “Historically, there has been a could mean that many managers have taken general lack of accountability for leadership their eye off these hugely valuable but highdevelopment by senior management and maintenance team members,” she says. many organizations had realized this was an According to Germain, mavericks tend to outdated approach, just as the recession hit,” be top performers in companies, but often disshe reveals. “Managers need to be aware that play common traits such as low boredom and it is no longer just HR’s responsibility alone to impatience that mean they often have trouble develop talented individuals – troublesome or articulating what they want or what they mean. not; they must be nurtured by senior manage“A more holistic approach to talent manment. Mavericks should not be ignored and agement is more likely to enable the manager to companies that do run the risk of slipping benurture and develop talent that is often ignored hind global competitors who recognize their or excluded from management development part to play in piecing the business back toprogrammes due to their personalities or abiligether as the economy improves.”

Mavericks – like Tom Cruise in Top Gun – are talented but volatile

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UPFRONT 29

RAISING THE BAR OF EXECUTIVE EDUCATION

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orporations spend thousands of dollars each year to educate their top performers, but are business schools delivering experiences that students will attend enthusiastically and with purpose?

The days of asking high-potentials to sit in a classroom listening to a professor entertain a captive audience with his/her latest research are over. Instead, universities need to provide structured learning that meets the needs and temperaments of companies’ best and brightest.

Here’s how to keep today’s high-performers engaged in the classroom: • Present scholarly research with application and relevancy in mind, using just a few simple models and anecdotes for illustration • Develop cases and discussions that create energized (maybe even heated?) debate on issues of specific relevance to students’ work situations • Use real world examples of people who have wrestled with similar issues and succeeded or failed in the process • Build in opportunities for networking with company peers – from other functions, geographies, or business lines • Design rich dialogues with company executives,

DON’T MISS...

where everyone explores the implications of presented research and classroom discussions • Create in-class learning projects that work on current job responsibilities and that require presentation to a panel of experts at the close of the session • Keep it short: two to three days. Anything more interferes with work and personal commitments • Keep it upbeat, brisk, and purposeful: explore the point, draw relevant conclusions, and move on

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“Where star performers go now, the rest are sure to follow in short order” In today’s business environment, top talent is working flat-out, so they want immediately-relevant, short, focused, classroom experiences that draw on the collective wisdom in the room. Universities need to take notice and adapt accordingly: after all, where star performers go now, the rest are sure to follow in short order.

SURVIVAL OF THE FITTEST An exclusive interview with Chairman and CEO of Adidas, Herbert Hainer

For more information on executive education, visit Northeastern University’s College of Business Administration at www.cba.neu.edu

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COMPANY INDEX Q4 2009 Companies in this issue are indexed to the first page of the article in which each is mentioned.

Accenture 6, 108 Adidas 44 Air Canada 138 Autodesk 108 Avaya 112 Avocent 102, 103 BMC 55, 144, IBC BoardVantage 114, 115 BP Solar 122, 126 British Airways 138 BT Conferencing 42, 121 Burger King 74 Campbell Soup Company 108 Canto GmbH 60 Cathay Pacific 138 CBTS 98, 99 Certeon 88, 89 Cisco IFC, 28, 96 Citrix 90 ClearAction 13, 52 Dell Inc. 56

ECI Solutions 105 E-ISG Asset Management 8 Emirates Airline 138 F5 Networks 73 Gigamon 79 Glenture Group 54, 55 Good Technology 116, 117 HarrisData 11, 25 HP 2, 93, 106, 107, OBC IDC 90, 116 JetBlue 74 Knowledge Shift 53 Lehman Brothers 44 Masdar 132 Mercedes 134 Meettheboss.com 127 Microsoft 56, 118 Miller Heinman 49 Netikus 65 Nike 44, 56 Nokia 118

Northeastern University 29, 136, 137 OpenPro 21, 51 Panduit 4, 104 PE 130, 131 Product Development Consulting, Inc. 108 Prophix Software 83 Puma 44 Radio Shack 74 RightStar 62, 72 Sybase 19, 30, 118 Symantec 8, 66, 67 SysAid 40 TaylorMade 44 TechTrack 70, 71 ThinkITSM 68, 69 Unisys 100, 101 Verisae 128, 129 VMware 90

ALL OUT OF IDEAS What does the US need to do to better nurture a culture of innovation?

132 ENERGY SUSTAINABILITY IN THE DESERT How the UAE’s Masdar project is set to transform the future of sustainable development

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COVER STORY

Refl ections

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on the crisis One year on from the most dramatic few weeks on Wall Street since the Great Depression, what impact has the recession had on America’s businesses as they look to learn lessons from the financial crisis?

By TOM BENSON ike “a massive earthquake” was how one watching Wall Street worker put it. “The collateral damage will be huge,” said another. And as the news broke that Lehman Brothers was filing for bankruptcy last September, neither description sounded like hyperbole.

In the few hours it took for word to filter through that efforts to save the 158-year-old investment institution had collapsed and it was applying for Chapter 11 protection, the financial landscape suddenly became a very different place. Over a breathtaking two-week period, the US government took control of mortgage-lending giants Fannie Mae and Freddie Mac, along with insurance behemoth American International Group. One-time brokerage powerhouse Merrill Lynch rushed into the arms of Bank of America, while federal regulators seized Washington Mutual in the biggest bank failure in American history. Wells Fargo acquired larger rival Wachovia, and numerous other financial institutions applied for federal handouts. At one point, panicked investors even offered to buy US Treasury bills without asking for any return on their investment, hoping to simply find somewhere safe to put their money.

And it wasn’t just the complex world of stocks, bonds, securities and de-

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rivatives that was affected, either. The crisis that started on Wall Street soon spread to other sectors: day-to-day operations became an exercise in survival for companies in every industry and across every continent; it spawned unprecedented levels of government investment in the private sector; and it left local authorities and services reeling from the impact of budget shortfalls that are likely to last for years. By early 2009, when the stock market hit what now looks like its post-crisis bottom, the collapse had vaporized more than $30 trillion – a decade’s worth of investment gains. Today, the Dow Jones Industrial Average stands roughly 2000 points below where it was this time last year.

Without doubt, things are as tough for companies now as they have been for generations. Yet below the sensationalist headlines and high-profile failures, life does go on for the vast majority of American businesses. And while the impact to the economy has been considerable, perhaps now, with the benefit of a full-year of hindsight, is the right time to reflect and put things in perspective. For despite commentators predicting a plunge into the economic abyss, the business of doing business – reducing inefficiencies, keeping costs down, maintaining and improving quality, motivating staff and planning for growth – is not significantly different than it was before those few crazy months last fall.

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fallout from the crisis. “Companies with a clear and solid long-term plan can Indeed, if the last 12 months have proven anything, it’s the value of sound use a downturn to secure an unassailable market position, at a time when their economic fundamentals and the need for clearcompetitors are struggling to survive.” headed judgment. A back-to-basics approach, if you like. As such, the mood at many American Improved self-knowledge businesses is remarkably upbeat. “The chalClearly, staying focused and having a solid lenges are there in terms of how to save money idea of what you need to do to survive and thrive and continue to support the existing business in is essential. “It is about choosing the two or three an efficient fashion,” explains Hong Loh, things around which you can best differentiate Managing Director at global asset management yourself in the marketplace and staying true to firm Legg Mason. “But we also have a priority those,” suggests Stephen Monk, Executive that if the growth comes back, we need to be able Consultant with the Forum Group. “The tradeto support it. So for us, it’s more like a shrink-tooff is that you’re not going to be able to do all of grow program – it’s not just about efficiency, it’s the things that perhaps you had on your strateabout being competitive.” gic agenda; but picking two or three things that “There’s only so much cost cutting and will most add value to the organization will cerMaking better decisions overhead reduction that a company can do,” tainly help channel your focus.”

A study from the Economist Intelligence agrees Rob Solomon, CEO of marketing firm Stephen Perry, Director of Strategy and Unit entitled Management Magnified: Getting Bulldog Solutions. “Eventually you have to get Planning at Xerox Corp., feels that improving Ahead in a Recession By Making Better Decisions back to sitting around the table and asking quesyour knowledge of the firm’s key competencies reveals that executives are listening more keenly tions about what you need to do to find new and capabilities is critical. “We have been quite to customers, broadening information sources prospects and sell them stuff. That’s what busia lean company for a while now,” he says. “And and seeking greater insight from the CFO as a ness is about, after all.” the advantage there is that when you get into a result of the recession.

Such attitudes are typical of businesses crisis, you know where you’re at; not that you’re across the industrial spectrum. For the first landing on your feet exactly, but you know • Survey respondents sought to diversify the sources time in a year, Mckinsey reports that more rewhat your current status is, what your opporof information used to make vital decisions: 46 perspondents to its monthly economic survey extunities are, and you’re better able to readjust. cent looked for more insights from middle manpect their companies’ profits to rise than fall in To some extent, the crisis really makes you agers, 57 percent cited the importance of customers the near term. Product development and longsharpen that whole process a little bit more. It and 33 percent mentioned providers of capital. term planning are high priorities for many makes you check and double-check some companies, and most are optimistic about things that you’re not quite as clear on, and zero • Two-thirds of respondents said that the most imtheir prospects in the longer term. Overall, the in on what’s important.” portant source for good decision-making came responses indicate that a ‘new normal’ is setHe agrees that getting the basics right and from the financial and operational information held tling in – an environment that is less comfortdefining your strategy is key to making longby the finance function and interpreted by the CFO. able for many companies than the one they term progress. “When times are tough, we are knew in the pre-crisis world, for sure, but one often more critical of ourselves,” he says. “That’s • Functions with direct links to customers (sales, marthat can be managed through sound policies natural, and it’s also probably a useful process. keting and customer service) were each mentioned and effective leadership.

But I think if you have a fairly well defined stratby about a third of respondents as crucial to deciIndeed, the most noticeable trend to egy, and if you have the right people in the assion-making. emerge from the crisis is confirmation that signment, I think that you can weather most economic uncertainty puts a premium on storms. Having a solid structure and a solid plan • About 39 percent of respondents cited the strategic good decision-making. Recessions tend to excan help you deal with adversity pretty well.” planning function as important for good decisionpose organizational weaknesses that might Nearly three-quarters of the executives in making. have remained undetected in more settled the Mckinsey survey expect their companies to times; they also open up entirely new opportube in a stronger position in five years than they • Decisions at the worst-hit companies surveyed emnities, as competitors scale back and customers were before the crisis; they also think that their phasized the short-term and tactical, focusing on seek more value. By gathering the right inforindustries will be more consolidated and innosurvival rather than on long-term strategy. mation, systematically analyzing it and routing vative – but will grow more slowly. “It’s very imit to the appropriate level of authority, organiportant to get out of the mentality of only zations can make quick and informed decisions to rectify flaws and seize opthinking in negative terms or believing that things are all doom and gloom,” portunities. “In previous recessions, companies that re-positioned themselves opines Vinnie Aggarwal, Professor in Political Science and Business at the were able to shine when the recovery came,” says Dan Armstrong, Senior University of California, Berkeley. “Companies need to start thinking about the Editor at the Economist Intelligence Unit and author of a recent study on the next step because, as we all know, all recessions end and this one is not going to

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be any different. The question now is how firms can really succeed and gain market share as we look towards the future.”

tunity to start looking forward – to stop thinking in recessionary terms about how to deal with the downturn, lay people off and cut back on budgets, and actually think about expansion, about new sectors that they could go into,” he says.

A question of balance In this regard, recessions exacerbate the tension that all businesses experiA new approach ence in trying to achieve a balance between short-term needs and long-term deOverwhelmingly, the prevailing feeling is one of hope for the future. The velopment and expansion. A significant majority of businesses respond to a more credit crisis has led to many corporate casualties over the last 12 months, and is challenging environment by focusing on costs, customers and survival, while likely to impact the longer-term structure of industries too. Many weaker players only four in 10 – according to the Economist Intelligence Unit – regard the rewill have been squeezed by a lack of access to liquidity for expansion, thus harmcession as an opportunity to invest in product development and get ahead of ing their market positioning – that is if they still exist. But just as many others will their competitors. To capitalize and seize the initiative, optimizing your investment decision-making is key.

“You’ve got a much greater chance of succeeding during boom times because that’s just the way it works; in tough times you don’t have the luxury of making so many mistakes,” explains Krishna Srinivasan, Global President at research firm Frost & Sullivan. “The smart companies that are succeeding, even in this environment, are the ones that are doing a much better job of optimizing investment in their growth. Even as you cut back on those products, markets, applications, customer segments or geographies you’re not doing well in, you have to ensure you reinvest the money into those areas where you do have the chance to succeed – whether it’s a core market or an adjacent Despite fears last fall, we are now six months into one of the mot impressive bull markets in memory: market. So being able to intelligently evaluate the Dow has risen 40 percent since early March where you can shift money from one place to another, where you can have a much better chance of succeeding, is a very imbe able to take advantage of weakened competitors to consolidate market-leadportant part of a company’s strategic diversification.” ing positions and potentially improve pricing, their cost structures may also be It comes down to knowing how to grow effectively. “We’re looking for adsuperior due to their ability to invest or acquire others. These players have the abiljacent opportunities,” explains Sam Valenzuela, Corporate Strategy Manager of ity to enjoy a step change in profitability as they capture market share and raise telecoms provider CenturyLink. “Can we take what we already do well – our curbarriers to entry. Opportunities do exist. rent capabilities and technologies – and apply those to adjacent markets? What “There is definitely room for optimism,” concludes Srinivasan. “However, other markets can we get into, perhaps through acquisition, to complement what there is far too much debate right now about when the boom cycle is going to we already do today, extend our network capabilities and leverage our relationstart and how big it is going to be, and not enough debate about how to posiship with customers outside of our core business? The downturn notwithstandtion yourself to drive growth for the inevitable boom cycle that’s ahead of us. It’s ing, we see identifying new sources of growth as our biggest challenge.” going to happen, and the issue is less about whether it is going to happen in the Such anecdotal evidence suggests that firms are finally ready to look forward next three months or the next six months, and more about what you are doing rather than back, and Berkeley’s Aggarwal believes that with companies once now to start rebuilding your growth pipeline and identifying the opportunities again starting to focus on growth, the economy is in a position to recover strongthat are going to emerge.” ly – a view backed up by recent research. McKinsey reports that 19 percent of surUltimately, what has emerged over the past 12 months is a recognition vey respondents around the world (including 28 percent of those in Asia’s that business cannot afford to remain static, whatever the circumstances. developed economies) believe an economic upturn has already begun, with sucWhilst operationally challenging, periods of recession actually provide the cessive surveys taken since March showing an increase in the hopes of executives perfect springboard for growth when the recession eventually lifts. The most for their national economies. And while it’s been much maligned, Aggarwal feels successful companies never stop looking at opportunities to grow effectively that the strong and swift government intervention seen around the world – but and sustainably. As Jack Welch, legendary former CEO and Chairman at especially in the US – has played an important role in nurturing the fragile confiGeneral Electric, puts it: “If the rate of change on the outside exceeds the rate dence of the business community. “The most important impact of the stimulus of change on the inside, the end is near.” We may be on the road to recovery, packages has been a psychological one, in that it gave business people an opporbut the hard work starts here.

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BUSINESS RECOVERY

F airytalel OF

NEW YORK

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Michael Bloomberg is often referred to as the ‘CEOMayor’; now he’s using his business acumen to help laid-off New Yorkers back to work through a $45 million stimulus package designed to ensure the city retains its status as the business capital of the world. But, asks Senior Editor Ben Thompson, is it working?

W

hen Mo Berkowitz lost his job as a trader at First NY Securities last October, his fi rst reaction was one of shock. “My whole academic and professional career up to that point had been geared towards working in fi nance,” he recalls. “I was happy with what I was doing in fi nancial services, and I thought that’s what I was going to be doing for the rest of my life.” Along with thousands of others, however, Berkowitz was in for something of a reality check.

Last Fall’s economic meltdown hit the fi nancial services industry hard. More than 20,000 securities industry workers in New York have lost their jobs since the recession started, and the outflow threatens to turn into an exodus over the next two years with the Independent Budget Office forecasting another 30,000 job losses in the securities industry alone – or 25 percent of the city’s best-paid workers. By 2011, total financial job losses could surpass 77,000, when revised headcounts at insurers and other institutions are included. Indeed, the footage of laid-off fi nancial services workers leaving Wall Street with their careers in company-monogrammed cardboard boxes provided some of the most enduring images of the human cost of the recession.

The problem for Wall Street’s former Masters of the Universe is that many of those jobs just aren’t coming back.

With many of the biggest casualties of the crisis – such as Bear Stearns, Lehman Brothers, Merrill Lynch and Wachovia – being assimilated into bigger, more stable rivals, headcounts have inevitably suffered as a result. Countless smaller fi rms have disappeared altogether. “People are just not getting rehired,” confi rms Andrew Lubow, a former compliance officer at Bank of New York Mellon who was laid off last November in response to deteriorating market conditions. “They’re either giving those that are still employed their hours back, or doing more with less; the economic recovery’s not really affecting those that were made unemployed at the height of the crisis.” As a result, many A Lehman Brothers employee clears his desk at company former bankers, brokers and traders now face the fact that headquarters on September 15, 2008 for the next few years at least, the fi nancial services world is going to be a much smaller pond than it was before.

Such a scenario poses a significant challenge in a location such as New York, given its reputation as a fi nancial services hub, the huge numbers of people affected and the potentially devastating impact it could have on the city’s economy. “I think there are two challenges when you have a vibrant industry come to such

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a screeching halt,” explains New York Deputy Mayor Bob Lieber, head of the city’s Economic Development Corporation. “One is the potential displacement of workers, and then the other is the potential displacement of revenues generated by those workers. Approximately 10 percent of the private sector workforce in New York City generates 35 percent of our payroll tax, and so losing those high earners is a big blow. The other thing is that for every one worker in fi nancial services, there are approximately two others in the economy who are directly affected by what happens in that industry.”

Lieber’s team identified three basic challenges brought on by the fi nancial services crisis. First, the shrinking of fi nancial sector jobs and loss of institutions like Lehman Brothers and Bear Stearns reduced the critical mass of fi nancial services entities in the city. Second, the sector of the fi nancial services industry in which New York has particularly excelled in recent years, capital markets, was the one hit hardest by the downturn, and its recovery is likely to take several years. And third, the massive layoffs in the fi nancial services industry raised the prospect of a potentially catastrophic loss of a talented portion of the city’s workforce.

The industry has been central to the health of the US economy, but for

New York it is especially critical, contributing 348,000 jobs to the private sector in 2007 – a not insignificant nine percent of the total workforce.

In response to this threat of a damaging brain-drain of smart, ambitious people, the Bloomberg administration is spending over $45 million to turn former Wall Street bankers into entrepreneurs by offering them training, office space and even funding for their startups.

“Many of the folks who are in that industry are energetic people – what I call Type A people – who can do a lot of different things,” says Lieber.

“We’ve worked with a number of different entities to fi nd locations and provide training to some of those displaced fi nancial services workers, so they’re in a position to take the skills and knowledge they have and redeploy it in a different way.”

INCUBATING ECONOMIC GROWTH

T

he fiercely competitive nature of New York coupled with extremely expensive rental costs make the Big Apple a notoriously difficult place to start a business; throw in recessionary conditions and it becomes even harder. But on the 12th floor of 160 Varick Street in the very heart of downtown Manhattan, a new initiative is looking to kick-start the nation’s economic recovery.

By acting as a so-called business incubator, New York is encouraging entrepreneurialism by offering 27 fl edgling companies – handpicked from more than 300 applicants and representing a cross-section of different industries – desk space at an established address, along with access to some of the city’s brightest business brains. To help the 27 succeed, the incubator – a result of collaboration between the City of New York, Trinity Real Estate and NYU Polytechnic Institute – gives them access to business seminars, mentoring services and business networking opportunities. Vitally, the companies are also given access to angel investors and venture capitalists.

The main focus of the project is to stimulate the economic recovery through job creation, as the incubator’s director Bruce Niswander explains. “We selected companies who would benefit the most from what we had available and who could, in the quickest time possible, start creating jobs,” he says. In order for the companies to be selected, Niswander says that each had to prove its “investibility and longevity” with a 24-month plan, addressing products, operations, marketing, selling and staffing. Niswander also meets with each company every month to focus on tasks, budgets and cash flow.

Companies pay as little as $200 per month per desk, a fraction of market value, offering an outstanding opportunity for enterprise-level office solutions at low-level market prices. “We want to make sure as many of them [new businesses] as possible start and grow in New York City,” said New York Mayor Michael Bloomberg in a recent briefing.

“The massive layoffs in the financial services industry raised the prospect of a potentially catastrophic loss of a talented portion of the city’s workforce”

Jumpstarting the recovery If anyone knows how to stimulate growth it is the city’s charismatic leader, one of America’s most successful businessmen. “As someone who started his own business, Mayor Bloomberg knows better than most the impact that entrepreneurs can have on job creation and economic growth,” says Carl Schramm, CEO of the Kauff man Foundation. “His plans should give New Yorkers the tools and training they need to start and grow successful businesses.”

One such initiative is a program called JumpStart NYC that aims to harness the unique skill-sets of fi nancial services workers and put them to use in another area New York is famous for: the entrepreneurial sector. Launched in partnership with the State University of New York’s Levin Institute, the program offers an entrepreneurial training ‘boot camp’ designed to show participants how to apply their knowledge,

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skills and abilities in opportunities beyond fi nancial services, after which they are offered a 10-week unpaid internship at a start-up company with the potential of converting to full-time employment at the end of the placement. “It’s really a two-sided program,” says the Levin Institute’s Tom Moebus, co-founder of JumpStart. “Part of it is to help people make the transition from their existing roles, and then another part of it is to make talent available for other budding industries.”

The scheme has been a big hit with both individuals and participating companies alike. “The program forces us to use all of our business skills, fi nancial skills and marketing skills to really dig deep to discover what other opportunities we can help create,” offers Rodneyse Bichotte, a former corporate banker at JPMorgan and recent JumpStart NYC alumnus. “Even though it’s an unpaid position, it allows us to get back out there and use our minds to help make something.”

Berkowitz, another recent graduate of the scheme, agrees that it has been invaluable in terms of both helping him come to terms with having his chosen career cut short and opening his eyes to new opportunities. “I think any layoff comes as a surprise, and there’s a lot of anger and resentment that usually goes along with it,” he muses. “But after about a week I began to see it as an opportunity to take a step back from my career and reflect on what I was doing.

And I found that what really excited me was not the pursuit of money, which had been my goal in the past, but more the pursuit of knowledge about my own skills and abilities. I’ve always been fascinated by how businesses grow from a one person firm to a 5000-person fi rm, so that’s what led me to consider getting involved in entrepreneurship.”

After his initial boot camp at JumpStart, Berkowitz was placed with a small start-up that designs and develops solar support structures called Solaire Generation. “I did a fair amount of analytical work as well as fi nance, but I primarily did business development and marketing work for them,” he explains. “There were only six staff when I started, but during t time I was there that increased to 10, with three of us from the t fi nancial world. We helped put together a business plan, the w did some audit and analytical work for them and we also we built some predictive models too, so I think collectively we brought to the table a fair amount of analytical skills.”

The placement lasted for an initial period of 90 days, but so mutually beneficial was the collaboration that Berkowitz stayed on for a further two months on a full-time basis and still does project consultancy work for them now. “My passion for the fi nancial markets came from analyzing companies and understanding how they worked, what made them succeed or fail,” he says. “But I realized I could get the same sort of return from looking at a company I was involved in myself.”

Lubow, who interned at digital entertainment start-up MediaMorph, is another to benefit from the opportunities afforded by the program. “It showed me that I can bring my skills to other industries, that I’m not just limited to fi nance,” he says. “It helped me broaden my horizons and sort of take off the blinkers. Startup companies often lack the analytical rigor that you get from working in the fi nancial services industry; it’s a bit of a generalization, but they usually don’t go into

A CULTURE OF INNOVATION

A

longside its stated goal of retaining and growing financial companies and institutions in New York, the city also hopes to promote business innovation through entrepreneurial activity.

“We are taking aggressive steps to put the city in the best position to capture growth, and we’re doing it by promoting one thing more than any other: innovation,” said Mayor Bloomberg on announcing the city’s new initiatives to kickstart the economy back in March. “New York’s greatest strength has always been and will continue to be the innovation, drive and work ethic of New Yorkers. Time and time again, history has shown that our city rewards those who have the courage to pursue their dreams and launch new ideas.”

“New York’s greatest strength has always been and will continue to be the innovation, drive and work ethic of New Yorkers” Of course, the city has a Michael Bloomberg longstanding entrepreneurial spirit. “Aside from the robust infrastructure, entrepreneurs come to New York for its most abundant resource: smart, ambitious and innovative people,” says SecondMarket Founder and CEO Barry Silbert.

“This collection of raw talent is what first drew me to the city over a decade ago and also prompted me to establish my company here. New York can become a real hotbed for innovation and entrepreneurship.”

Other business leaders agree. “The vibrancy of New York City from a business and cultural perspective is a key factor in attracting the best technology talent in the world to our organization,” says Bob Greifeld, President and CEO at NASDAQ. “The city has many innate advantages, including its energy and spirit of innovation. I believe there is a great opportunity for New York City to take the lead in redefining future markets.”

Indeed, the city can attract some of the biggest and most innovative companies in the world. “New York City is one of the world’s best incubators for innovative businesses and Google’s success here is living proof,” adds former Google Americas Operations President Tim Armstrong.

“Due to the depth and diversity of talent in the city, Google has thrived in New York, building up one of its largest engineering centers and making it the heart of the firm’s North American advertising business.”

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$45 million

detail so much because the people are very creative and preoccupied with ideas. By analyzing their operational capabilities we were able to introduce a number of process improvements, and that was what I was able to bring to the table.”

Investment committed to nurturing entrepreneurialism by NYC administration

Redeploying skills Harnessing those abilities is key to the administration’s plans for retaining key knowledge workers and providing an environment that is conducive to starting – and nurturing – emerging businesses and industries. Alongside JumpStart, the city is also partnering with academic institutions, property management companies and commercial landlords to establish high-quality, ready-to-use office space that comes with basic business services and administrative support to serve as what Lieber calls “business incubators”; creating several funds totaling $9-10 million to make angel investments of between $20,000 to $250,000 to New York-based start-ups; launching a business training program called FastTrac to help emerging entrepreneurs, including those displaced from the fi nancial services sector, start new businesses and help existing entrepreneurial business owners run their companies better; and establishing a central information clearing house and support network for entrepreneurs and start-up companies.

Such a wide variety of initiatives reflects the city’s desire to diversify into other emerging industries alongside its traditional focus on fi nance.

“I think that it is important for New York City to remain a global financial services center; we don’t ever want to deemphasize the importance of financial services,” admits Lieber. “But what we do want to do is continue to grow some of the other sectors, whether it be in fashion, greentech, medicine, biosciences, media, entertainment, or other industries. We be-

lieve all those can be very complementary with our financial services sector.”

And if the program is successful, there is no reason why it can’t be expanded to help workers in other struggling industries retrain in order to make the ot successful transition to a new role. The Levin Institute’s succ Moebus believes the newspaper industry is just one sector that could benefit from the application of a similar approach. “You’ve got this high-end talent pool of people who’ve been working in the traditional media area, which is an industry that is shrinking rapidly,” he explains. “Well, what are they going to do to meet that challenge?

Can they learn something in mid-career to transition into a different working environment? It’s about figuring out how can you add value in whatever environment you go into, and I think programs like ours are incredibly useful in identifying those skills and giving people the confidence to make that change.”

Ultimately, the initiatives are an investment in the city’s most important resource: its people. And thus far, it has proven to be a great success. “The greatest asset that we have here in New York City today is not our manufacturing capability. It’s not our baseball teams. It’s the human talent that resides here, and we want to make sure that we continue to be the place where smart, intelligent people have the opportunities to launch and develop careers and work with other smart, intelligent people,” concludes Lieber. “We have a number of different industries aside from fi nancial services that help provide that kind of inspiration. For example, our academic and medical center environment is one of the strongest in the country. We’re also the fashion center of the world as well. We want to retain the talent, the creative minds, the creative energy, so that other creative entrepreneurs want to locate and grow their business here.”

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INSIDE STORY

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SURVIVAL OF THE

FITTEST Its iconic triumvirate of perfectly parallel stripes have been synonymous with sport for decades. But with profits tumbling in the year Adidas celebrates its 60th birthday, Chairman and CEO Herbert Hainer talks candidly about trimming the fat, beating archrival Nike into submission and why innovation is key to this sportswear giant’s future.

By Julian Rogers and Adam Burns

W

hen Barcelona FC’s playmaker Lionel Messi Messi is the latest in a long list of sports superstars to don ‘the put his side two-nil up in this May’s UEFA three stripes’, stretching back to the early days when the compaChampions League soccer final, you could ny was founded by the late Adolf (Adi) Dassler (Das). The say the diminutive Argentinean tore up the bedrock of Dassler’s business strategy more than half a century ago celebration rulebook. There was was to engage with the athletes and pick their brains in to be no acrobatic backflip, no slide across the turf and order to manufacture and refine performance-enno John Travolta-esque hip wiggling against the hancing and comfortable sportswear. It’s an uncorner flag. Instead, in front of 72,000 fans complicated ideology that has stood the test of packed inside Rome’s Stadio Olimpico and miltime, according to Hainer. “Just a few months Number of lions watching around the world on TV, he reago we re-launched the so-called Adi Dassler Adidas group moved one of his glossy blue boots and pressed standards and we tried to educate everybody to employees at the it against his lips in an actions-speak-loudergo the way he did it,” Hainer reveals. “Adi end of 2008 than-words seal of approval. Whether the kiss by Dassler spoke to the athletes when he brought in arguably the world’s finest player was impromptu new and innovative products and tried to make imor planned is irrelevant to Adidas; sales of the boot – provements. We have to make the best products for the personally presented to Messi by Adidas CEO Herbert athletes and this is only possible if you are permanently in Hainer when he dropped by the apparel giant’s German HQ just dialogue with the athletes, if you listen to them and work together.” days earlier – shot through the roof after Barcelona’s victory. It was Hainer, who joined the company as a sales director back in a marketing masterstroke.

1987 before rising through the ranks to become Chairman and CEO

38,982

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become a little bit too self-complacent, a bit too selfconfident,” he recalls with a tinge of annoyance in his voice. “We were not aggressive anymore, the processes were not harmonized and our lack of innovation was shining through.” Hainer says his remit in the top job was to “revolutionize” the company and the Adidas brand.

Restructuring As part of this transformation, he offloaded mountain sports company Salomon, although Hainer opted to hang on to the TaylorMade golf brand. “Golf is a natural sport for Adidas,” Hainer explains. “We began 35 years ago when we made Adidas group golf shoes for Bernhard Langer and for Sandy Lyle.” In 2005, US-based Reebok was bought for has $3.8 billion in order to strengthen the Adidas concept stores and group and challenge Nike. factory Hainer also recognized that R&D was to be the outlets 14 years later, refrains from describing Dassler’s standards as a cornerstone of the company’s future success. Eight back-to-basics approach. Instead, he says it encapsulates the years ago R&D, which employed 30 staff, operated constant effort to manufacture better and more innovative prodwith a management tier between itself and the board. So ucts for today’s sportsmen and sportswomen. And they need to, such Hainer put measures in place to ensure they reported directly is the competitive and fickle nature of the sports apparel market, with to the head of marketing on the board. He also ploughed more money into trends evaporating just as quickly as they emerged. Adidas and market the research facility and doubled the team to 60. “This showed the importance leader Nike still battle to see who is top dog, although the likes of Puma – we gave to the R&D department within the organization.” R&D was also diAdidas’ domestic rival – and specialist sportswear and equipment manuvided into separate units – one facility in Germany and one in the US geared facturers are snapping at their heels. toward the lucrative American sports market.

Ever since Hainer took control eight years ago he has refused to let the At his first press conference Hainer recalls how he placed a major emcompany rest on its laurels. The 55-year-old, who describes himself as agphasis on innovation. He vowed to release one innovative product every seagressive in business and impatient to get things done, pushes Adidas, which son – a completely new product and not just a change of color. This proactive produces 200 million pairs of shoes and 400 million items of apparel a year, approach to change and ambitious vision has made Adidas a different animal. to perform like a lean, mean athlete. “In 2001 we had a great success story be“I definitely believe that we are much faster today,” he says, “much more hind us and four or five good years after the stock market flotation, but we had proactive in how we cater to the market, how we talk to our consumers, how

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60 YEARS IN THE MAKING

1960s ‘Fringe sports’ like athletics see track and field stars donning the three stripes.

Unconventional high jumper Dick Fosbury launches himself up and over in Adidas footwear

1970s 1949

1954

Adidas is registered as a company, named after its founder: ‘Adi’ from Adolf and ‘Das’ from Dassler

Germany football team battle Hungary with a competitive advantage. They are wearing Adidas soccer boots that for the first time feature removable studs

Muhammad Ali and Joe Frazier face each other in the ‘Fight of the Century’. Both wear special boxing boots developed by Adi Dassler

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we bring products and concepts to market, as well as how fast we can react to certain trends. We are bringing permanently new, innovative products to the market, and I think this is one of the key success factors for us.”

He also sees speed rather than company-size being a game winner: “It’s about being faster and not your size; if it was about scale, the dinosaurs would still be alive and all the little animals dead. It’s the fastest one who will win the race.”

Uphill battle Clearly, today’s marketplace is very much about survival of the fittest – even more so since the economic global meltdown and subsequent recession. In August, Adidas reported a massive 95 percent plunge in profits as consumer spending dried up. Sales grew in the Americas but shrunk in Europe and Asia. It was a headline-grabbing downturn in fortunes for the sportswear titan, but Hainer argues that this figure needs to be put into context, especially in a financial year following the UEFA soccer championships and the Beijing Olympic Games. He says higher manufacturing costs and devaluation of currencies like the Russian rouble, UK pound and Argentinean peso had an impact. Adidas also shelled out $100 million on restructuring measures. “Compared to the rest of the world and compared to other industries, I think we are still doing very well,” he insists.

Adidas holds meetings with employees every six months to update them on developments, but during the downturn this has been stepped up to quarterly. Dialogue is paramount in this situation, Hainer reveals. “I want to keep communication going because everyday staff hear negative things in the news and that’s how rumors start. If you don’t talk to people then you never know what kind of rumors they have heard and you cannot correct them if they are wrong.”

In a similar fashion to how he shaved expenditure and remolded the company in the first half of the decade, Hainer says the crisis opened up opportunities to again trim excess capacity. “This crisis has given us the chance to cut down on the excess fat that we gathered over the last eight years. When you are permanently running from one success to the next and from one suc-

1980s Adidas stars Ivan Lendl, Stefan Edberg and Steffi Graf play their way to the top of the world tennis rankings

cessful or record year to the next, you are gaining fat. You are not as aggressive anymore and you’re not as strict anymore on cost controlling and process improvement. So we took the opportunity to cut through, to change the way we do business to a certain extent, to define new processes, to get faster, to get leaner and more efficient.”

Following the cataclysmic collapse of investment bank Lehman Brothers last year, Hainer says he instigated a policy dubbed ‘divest and invest’. On the one hand the company had to slash costs, such as putting a freeze on hiring; but on the other, it needed to continue to invest for the future, including the announcement of increased football sponsorship and investment in company ambassadors. “We have to do the hard and dirty work and to save costs and lose some people to make us leaner, but on the other hand we then must take these savings and invest it into the future of the firm.”

“There is still a lot of opportunity for us out there, be it individual categories or in certain regions of the world” Adidas has dabbled in some shopping too, picking up two small companies – Ashworth (golf apparel) and Textronics (chips and sensors). The latter will boost efforts to implement technology into products for runners and performance athletes, and Hainer is quick to stress that Adidas won’t be cutting back on innovation and product development, especially with a lucrative soccer world cup in South Africa on the horizon. Indeed, Hainer describes the world cup products in the pipeline as amongst its most exciting yet, because “football is in our DNA”.

Ideas factory Of course, new durable and lighter materials are constantly improving products and, ultimately, the athlete’s performance. Take the humble soccer boot, for instance. Forty years ago it was a distinctly unattractive, chunky black leather shoe with half a dozen studs protruding from the sole. Today’s

2000s At the Sydney Olympic Games the most lasting impression is left by the Adidas Full Body Swimsuit, in which Ian Thorpe, Australia’s 17year-old national hero, wins three gold medals and sets four world records

1990s At the Olympic Games in Atlanta Adidas equips 6000 athletes from 33 countries.

These competitors scoop 220 medals, including 70 golds.

Apparel sales increase 50 percent

2009 Lionel Messi shows off his boot after scoring in the UEFA Champions League final, sending F50i sales into orbit

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Taking on America In August 2005, Adidas announced plans to acquire Reebok at an estimated value of $3.78 billion. The purpose of the merger was clear: Adidas was the second-largest sporting goods manufacturer globally, but it struggled in the US – the world’s biggest athletic-shoe market with half the $33 billion spent globally each year on athletic shoes. To date, the union has been a success. The National Football League announced that it has named Adidas as an authorized supplier of footwear for the League, while the firm recently signed an 11-year global merchandising partnership with the National Basketball Association to make the Adidas brand the official uniform and apparel provider for the Number of NBA. TV spots feature NBA stars Derrick Rose, pairs of shoes Dwight Howard, Kevin Garnett (pictured), Adidas produces Chauncey Billups, Tim Duncan and Josh Smith. every year

200 million

boots come in a wide (some may say nauseating) array of colors, are fashioned from tough, lightweight synthetic materials and actively repel water, unlike the previous generation of boot. It probably explains why Messi was so keen to publicly smooch with his F50i.

“A boot used to weigh around 400 grams but today it’s 200 grams, so it’s 50 percent lighter and, of course, if you don’t have to carry so much weight on your foot you can run faster or you can run longer,” says Hainer, a semiprofessional soccer player in his youth. “Modern players run 13 to 14 kilometers in a game but it was seven to eight kilometers 25 years ago. You can’t do it in a 400-gram leather boot sucking in water. The new materials offer functionality, stability and cushioning.”

Perhaps anticipating the next question, he’s quick to dispel the notion that sports equipment can magically transform a Sunday morning player into a professional. It’s the same with golf. “A new golf club cannot make an amateur a professional, but it definitely can improve the game of a normal golf player from a handicap of 25 down to a handicap of 15, because he has the ability to play better with the club.”

Adidas strives to make sport easier and more fun by introducing groundbreaking products, a case in point being a golf driver released earlier this year

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– the R9 sporting an adjustable ankle. Within a week of hitting shelves it was highest selling driver on the marker. It’s similar story with the Reebok EasyTone running shoe with its in-built balance pods that create instability, much like the feeling of walking on a sandy beach.

EastTone, which encourages toning in three areas of the wearer’s leg, has proved a huge hit with people looking to workout. “In my opinion, innovation is the key to success,” the boss acknowledges.

R&D at Adidas adopts both short-term and long-term visions simultaneously. One part is about improving existing products or producing products for new seasons based on existing technologies; the other is starting from scratch with less time constraints in order to find the next big thing. Being able to steal a march on the likes of Nike with a groundbreaking trainer, sweatshirt or football can prove invaluable in the tussle for supremacy. For example, Hainer notes how his company was the first to roll out the ‘intelligent’ trainer two years ago. The shoe could automatically adjust the cushioning by measuring the wearer’s weight and analyzing the hardness of the ground.

“Developments like that take longer,” he explains. “It’s a complicated process to put a microchip into a shoe, ensure it works, and glue together different components like metal and polyurethane.”

Whilst Adidas keeps a watchful eye on what the competition is up to in terms of new products, technologies and sponsorships, the company’s priority is focused solely on it’s own work and the brand. “First and foremost, we

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Herbert Hainer ED BM new:25 June

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look to ourselves, our mission and where we want to be as a company in the future,” Hainer says. “Of course, we monitor our competitors quite closely, and this is not only Nike; you have a lot of other competitors who are good in several individual categories, so you have good running brands, good tennis brands, good golf brands, and so on. If we have to adjust our strategy then we do it, but on the whole we stay in the direction that we think is right for our company and for our brand.”

Not all products, though, are such hot sellers, he concedes. The company has hundreds of staff dedicated to marketing, so Hainer chooses to keep his distance when judging whether a potential product will be a hit. “I’m far removed from looking at every product and saying, ‘this is right or this is wrong, this color I like and this one I don’t,’ because I’m not the target group. Just because I like something, it doesn’t follow that it is the right fit for the market or vice versa. I give the responsibility to the experts and they can work in silence and I keep my distance.”

Despite his reticence to get involved with product development, he recognizes the importance of being seen as an inspirational figure for his staff. It also means practicing what you preach. “As a CEO you are always a role model, whether you like it or not, because people look to you and follow whatever you do, good or bad.” Hainer offers up an example of this philosophy: “If as a CEO you talk permanently about sport and how people should be active but you don’t do any sport, then they will see it and they will not believe you,

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and this applies to whatever you do. There is a saying in Germany, ‘The fish always thinks from the head,’ so your employees believe in what you make them do.” Perhaps unsurprisingly, Hainer is an advocate of sport at Adidas – not just because it’s his industry but because it keeps him in touch with his employees. “I play sport with our people, we play football and run together, which gives you feeling that you are one of them and they can tell me what’s going on at the company.”

Aside from getting sweaty in competitive matches with his staff, the pressing priority for this boss is to put the disappointing results of 2009 behind him and steer Adidas back into positive territory. This he hopes to achieve “as fast as possible” with the help of exploiting new markets.

“There is still a lot of opportunity for us out there, be it individual categories or in certain regions of the world. India will be one of the next big emerging markets and I see plenty of other growth potential for us in the years to come, which is what we are trying to harvest.” In the meantime, the race for sportswear dominance continues to pick up speed.

Adidas has signed lucrative contracts with leading US athletes, including track stars Jeremy Wariner and Tyson Gay (below), and the NFL’s Reggie Bush (right)

OPENPRO AD.indd 1

27/10/09 11:40:48

TROUBLESHOOTER

BUILDING A CUSTOMER-CENTRIC CULTURE Lynn Hunsaker, head of ClearAction customer experience consulting, offers her advice for developing and enhancing customer-centricty.

Lynn Hunsaker says: It’s popular to tout customer-centricity, yet it’s very difficult to consistently demonstrate. The word centric means having a specific thing as the focus of attention and efforts. Customer-centric means that concerns other than the customer’s wellbeing are in the background while the customer stays in the foreground.

That may seem simple enough, yet reality proves the elusiveness of customer-centricity.

In Accenture’s Delivering the Promise study, 75 percent of executives viewed their customer service as above-average, while 59 percent of their customers reported their experience with these companies’ service as somewhat to extremely dissatisfying. Likewise, in CMO Council’s Customer Affinity study, half the companies said they are extremely customer-centric, but only a tenth of their customers agreed.

The building blocks of customer-centric culture are communication, skills, accountability and systems.

Communication The vision and values that top management communicates, both verbally and behaviorally, set the tone and direction. What top management focuses on guides the thinking and efforts of the entire organization. The key is consistency: at every opportunity, continually communicate

the necessity of making it easier and nicer for customers to get and use solutions. Consistency occurs in formal and informal meetings, written correspondence, external messages, and in every business process and management ritual such as performance reviews, annual operating plans, performance dashboards, etc. Consistency builds trust and passion, which are necessary ingredients for true customer-centricity.

At Amazon.com, founder Jeff Bezos once began a meeting by announcing that an empty chair at the table represented the customer.

Throughout the meeting, the executives were compelled to include the customer in the discussion, as if present. This became a habit – the group’s way of thinking and doing.

intrinsic rewards have proven to be more powerful in adjusting a group’s ways of thinking and doing. Risk tolerance and penalties also determine the degree to which customer-centricity takes root. Above all, monitor causeand-effect and also perceptions of fairness in terms of logic and equity; these elements are pivotal to success.

At Enterprise Rent-a-Car, customer sentiment is measured at the rental office level. Only employees in offices that score at or above the overall company average are eligible for promotion, raises or bonuses. At EMC, achieving the target for their leading indicator of customer sentiment, system availability, is a go/no-go determinant of the bonus for the entire company.

Skills

Systems

Customer-centric values and vision must be Systems-thinking means acknowledging the supported by proficiency in related technical big picture and linkages between its comand soft skills. Examine competency requireponents. Scrutinize your business policies, ments for everyone – not just procedures and tools for their customer-facing roles – relcontribution or detraction ative to your customer-cenfrom the goal of making it tric values and vision. Th is easier and nicer for customers includes channel partners, to get and use solutions. suppliers and other external At Dell, SVP of customer entities. Proficiency is the service, Dick Hunter, asked vital link between strategy employees to send him notes and execution. about the inconsistent and At Nordstrom, emdumb things the company was ployees are selected on their doing. Combining this input capabilities to anticipate with customer’s verbatim and meet people’s needs. comments to their call center Lynn Hunsaker, head of ClearAction They’re encouraged to try led to significant changes in customer experience consulting, specializes in customer-centric new approaches to selling the customer experience. culture-building, customer data ROI and cross-organizational engagement and customer service, with Motives are at the heart to deliver brand promises. the mantra ‘use good judgof true or false customerment in all situations’ giving centricity. Customer-centricthem a tremendous sense that they’re trusted to ity as priority number one must permeate the always do right by the customer. entire business, and be un-challenged by other concerns as the organization’s primary focus Accountability of attention and efforts. All other goals are What gets rewarded gets done – whether the more likely to fall into place with consistent rewards are tangible or intrinsic. Interestingly, customer-centricity.

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ClearAction.indd 52

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11011010110101010 0 0 010101010101101010101010101010101010101010101010101010101010101010101010 101011011010 01010 010 01010 01010111010101010101101111101010110 0 0111101010 01010110114110 0 0 0101 1110 0 0111 11011010110101010 0 0 01010101010110101010101010101010101010101010101010101010101010 10101010101010110PROJECT 11010 01010 010 01010 01010111010101010101101111101010110 0 0111101010 0101011011 4110 0 0 01011110 0 01FOCUS 11 11011010110101010 0 0 0101010101011010101010101010101010101010101010101010 10101010101010101010101011011010 01010 010 01010 01010111010101010101101111101010110 0 0111101010 01010110114110 0 0 01011110 0 0111 11011010110101010 0 0 010101010101101010101010101010101010101010 101010101010101010101010101010101011011010 01010 010 01010 01010111010101010101101111101010110 0 0111101010 01010110114110 0 0 01011110 0 0111 11011010110101010 0 0 01010101010110101010101010101010 1010101010101010101010101010101010101010101011011010 01010 010 01010 01010111010101010101101111 101010110 0 0111101010 01010110114110 0 0 01011110 0 0111 11011010110101010 0 0 0101010101011010101010 1010101010Dmitry 1010101Faybysh, 0101010CEO 1010and 101founder 0101010of 10The 1010Glenture 101010101011011010 01010 010 01010 0101011101010101 01011011111Group 01010LLC, 110 0explains 0111101how 010 0the 101alignment 011011411of0 0 0 01011110 0 0111 11011010110101010 0 0 010101010101 1010101010technology 101010101010101010and 10101010101strategy 010101010101010101010101011011010 01010 010 01010 010101 11010101010101101111solutions 101010110 0 0business 111101010 010101can 10114110 0 0 01011110 0 0111 11011010110101010 0 0 01 01010101011help 010achieve 1010101essential 01010101operational 010101010effi 101ciencies.

01010101010101010101010101010101011011010 01010 010 0 1010 01010111010101010101101111101010110 0 0111101010 01010110114110 0 0 01011110 0 0111 11011010110 101010 0 0 01010101010110101010101010101010101010101010101010101010101010101010101010101101101 0 01010 010 01010 01010111010101010101101111101010110 0 0111101010 01010110114110 0 0 01011110 0 0111 1 1011010110101010 0 0 0101010101011010101010101010101010101010101010101010101010101010101010101 01011011010 01010 010 01010 01010111010101010101101111101010110 0 0111101010 01010110114110 0 0 01011 0101101101001010010010100101011101010101010110111110101011000111101010010101101141100001011 11000111 egacy conversions to SAP BusinessObjects Planning and objectives, rather than expense management. Finally, the expenses gen-

LOST IN THE DATA BLIZZARD?

L

Consolidation application yielded outstanding results for erated from the cost metrics would provide a consistent and transparent a multibillion-dollar, 11,000 employee fi nancial services benchmark for evaluating planned expenditures. company. Recently, a multibank holding company, with The SAP BusinessObjects Planning and Consolidation implementapresence in the western United States operating eight bank tion provided the customer with exceptional benefits including timely, subsidiaries with a total of more than 500 branches in 10 states, needed accurate and dynamic data, a 50 percent reduction in time spent on the to reduce time spent on budgeting process, view timely reports and inbudgeting process, enhanced views providing ability to identify risks and corporate value-added analysis for users and management and obtain opportunities by cost center, consistent and standardized application company-wide analysis and reporting to ‘get to the facts quickly’. The tools available across all facilities, rapid adoption due to Excel-based inGlenture Group LLC replaced their legacy system, which was slated to terface, customized business process flows and efficient data hierarchies be sunset, with the latest version of SAP BusinessObjects Planning and and roll-ups to facilitate and support unique reporting requirements.

Consolidation application.

Founded in 2001, The Glenture Group, LLC delivers a unique set of The objectives of the SAP BusinessObjects Planning and Consolidatools and skills to clients that quickly reveal straightforward businesstion conversion were to expand views of information critical analytics that are sometimes lost in the data across companies, gain control over reliability, inblizzard that most organizations have built through crease consistency and accuracy of data and simplify their transaction and enterprise risk performance systhe budgeting process. tems. Glenture helps organizations take simple steps Importantly, the client had recently adopted acthrough the journey of converting complex, cumbertivity based costing (‘ABC’) for profitability analysis some and unresponsive information systems into conand to determine capacity utilization. The next step nected knowledge assets. Glenture is a partner of SAP/ was to build upon these cost metrics by implementing business objects and offers BI and EPM implementaa planning system where baseline expense is derived tion services internationally. from forecasted transaction volumes and rates.

Glenture brings deep experiences that encompass Moving to a driver-based approach was a signifiall areas of strategic management including strategy, cant upgrade to the client’s existing planning process. planning, dashboarding/business intelligence and However, the unit level costs and transaction statistics, management practices. Each area is developed with both historical and projected over multiple scenarios, full integration in mind. Glenture’s projects enable the meant SAP BusinessObjects Planning and Consolidafuture by using the most up-to-date, integrated proDmitry Faybysh is CEO and founder of The Glenture Group LLC. Faybysh brings tion had to manage substantially more data than the cesses. Most information technology applications are 18 years of experience in consulting world-class clients to Glenture. In legacy system. The driver-based approach also required under-utilized or are ineffectively implemented, and addition to being a Certified Public new business logic for projecting new volumes and in most cases 80 percent of the value can be extracted Accountant, Faybysh earned an MBA from Lake Forest Graduate School and a costs, redesigned budget input views incorporating the with 20 percent of the investment. With this approach, Bachelors of Science in Accounting from DePaul University. baseline expenses into resource planning, and new reour clients receive better ROI, faster results and more ports and views for budget management and control. engagement by using what people already own and Properly implemented, the driver-based system feel committed to. makes expense planning a by-product of revenue generation activities.

Glenture serves SAP clients in retail, healthcare, hospitality/serOperations managers simply align their resource plans and budgets vices, fi nancial services and manufacturing verticals ranging in revenue to meet the service requirements of revenue based plans. Executives from $200 million to $13 billion. Glenture’s biggest asset is its employees. and line managers could focus on planning their revenue generating Glenture’s people have multi-layered experience, breadth of capabilities activities, and product pricing to manage margins and achieve profit and commitment to the cause.

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Glenture.indd 54

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THE BIG INTERVIEW

THE

COMEBACK

STRATEGY Once upon a time Dell Inc. was the top computer-maker in the world. 25 years later, founder Michael Dell is tirelessly working to bring the faltering company back from what the media has called ‘Dell Hell’. Rebecca Goozee catches up with the charismatic, if a little jaded, computer king at his headquarters in Austin, Texas, to determine whether the shifts in strategy can help the firm reclaim its title and reign supreme.

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Micheal Dell.indd Sec1:56

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O

n 4 November, Dell Inc. celebrates its 25th anniversary.

With much success in the 1980s and early 1990s – the company was widely admired both in and beyond the technology industry as a model of efficiency and for its shrewd use of IT – you would think Michael Dell’s eponymous firm would have much to celebrate this year.

However, thanks to a series of setbacks and poor decisions – not to mention the financial crisis, which has proved tougher on consumer goods firms than most – the last few years have been tough. The press even coined a name for it: Dell Hell.

It was in January 2007, against a backdrop of these struggles, that the founder of the multibillion-dollar PC-maker returned to his former role as CEO and found himself back in charge after three years away from the wheel. At this point, in January 2007, the company had tumbled from owning over 50 percent of the market in 2005 to around 24 percent just one year later. With an understandably concerned board in front of him, Dell pledged to put his utmost into transforming the fate of the company.

A little under 33 months later, and Dell’s CEO has proved as good as his word, leading from the front and revolutionizing the company’s previous business model from one focused on direct sales over the internet or by telephone as opposed to retail stores, on hardware as opposed to services, and that primarily looked to the American market rather than an international one. While this model had been incredibly successful for quite some time, Dell recognized that it was not built to last; a new approach was required.

Today, Dell has transformed how the company operates, ordering a complete makeover of the earlier model. As soon as he stepped back in to the role of CEO, he immediately began shaking things up, recruiting senior executives from other Fortune 500 companies to lead the various sectors of the firm, including marketing, consumer products, operations and services, as well as rethinking the retail and consumer arm of the business. Often accused of a failure to innovate, the commercialization of brand new technology and the desire to enter new markets is now unwaveringly and resolutely present throughout the business. Dell himself is now focused on a forward-thinking strategy, one that can attract fresh consumers and capture alternative market share – and, once again, he’s got his eye on reaching the top.

Consumer evolution “When Dell began we made a decision to focus first on business customers – the thinking being that the bigger the customer the more share we have,” he explains at the company’s Austin headquarters. “But today, that’s changing and the consumer market has since become a lot more important to us and offers a lot of opportunity to grow. It’s a combination of new capabilities, new products, new design and new people, which combined with a new leadership approach has allowed us to go after that opportunity.”

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Where it all began Dell, notoriously shy of personal questions, was involved with computers from the age of 15 when he took apart an Apple II. From an early age, Dell had an interest in business and by arned the time he was 17, had earned enough money to pay for a BMW by building his own computers and selling them directly to customers at a much lower price than the retailers. He continued the business as he took classes at the University of Texas in Austin and pany called the computer company PCs Limited. With a little help in the form of a loan from his grandparents, Dell dropped out of university to run the fledgling company, which later became Dell Computer Corporation and finally Dell Inc. CEO at 19, Dell has received extensive accolades from publications including Inc. magazine, PC magazine, Financial World, Industry Week and Chief Executive magazine.

“I’m quite certain there won’t be one computer of the future; there’ll be many different kinds.

There’s every shape and size you want to think about: computers in your pocket, computers you carry around with you, computers in the sky, computers on your desk. I think there’s still a lot of work to do in the man-machine interface and visualization continues to be an important motive of accessing information, which is why people tend to be interested in small screens. And small screens are great ‘cause you can take them with you, but actually, people really want to see more information, not less. So if you look at the desktop computers, the screens keep getting bigger and bigger and bigger. I think visualization will play a big role.

Certainly as there’s more bandwidth you’ll have more server and cloudbased computing models.”

Indeed, while Dell is and will remain primarily a B2B company, it has recently been increasingly focused on the consumer side of the market, and as such the channel dynamics have evolved quickly. Dell, with the help of his new executives, has rethought the retail side of the business so that consumers are now able to purchase products through 43,000 retailers, commercial resellers and value-added resellers that handle Dell systems around the world, as well as 50,000 partners on the channel side. “There is no doubt doub that the vast majority of our revenues and profit come from being a business-to-business busines company, which we don’t necessarily think of as a bad thing,” thing laughs Dell. “But our consumer business is now growing quite fast. fas And, you know, in contrast two years ago where we basically to had h zero places where somebody could buy a machine other than the telephone, t now we have 43,000 retail locations where someone can buy b our products. So there have been some fairly notable changes in the t business, for sure.”

And it’s not just how the products are sold that is making a difference fer to the increasing amount of consumer purchases, but also the rang of various products that are available. Dell’s consumer strategy has range change Instead of focusing solely on price or storage capacity (or both), changed. trends are showing that consumers are increasingly attracted to well-designed and stylish machines – something that long-time consumer-focused competitors Apple and HP can attest to. As such, Dell has been looking at the various sub-brands under which products are designed over the past 18 months and re-defined them to appeal to specific consumer groups. For example, Adamo is designed to appeal to the luxury market, focusing on high craftsmanship and experience; Inspiron is a fun, accessible, stylish and high-value brand; and Dimension is the value-driven, cost-orientated brand. Also available is Alienware, for high-end gaming, and Studio, designed for multimedia uses.

After employing Motorola’s Ronald Garriques as head of the consumer division and executives like Ed Boyd from Nike, hired to revolutionize the company’s design focus, there is no doubt that the consumer division has been completely revamped. But what about the rest of Dell and the important business-to-business side of operations? Dell explains that these areas have seen some important changes too. In December 2008, the company was officially restructured into four customer groups: consumers, corporations, SMBs and government and educational buyers. And today, each sector of the company has its own management team responsible for it, as opposed to the old way of doing things that left the organization decentralized and struggling for identity – again this worked while the company was growing back in the 1980s and even the 1990s, but a $60-billion company requires considerably more structure.

Crunch time While all four segments of the company are now functioning much more efficiently, nobody was prepared for the economic crisis that hit just over 12 months ago. Nevertheless, Dell himself continued – and continues – to focus on the positives of the situation. “If you look at what’s going on in the economy today, certainly you have to reflect that in your current thinking. There’s a lot of focus, because of the fi nancial crisis, on cost and cash flow, which is a natural reaction to a crisis. And when you focus on cost and cash flow you start to realize that you want productivity because you don’t get far moving a business forward without it, and following productivity you

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Micheal Dell.indd Sec1:58

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start to think about growth. This might not be the focus that everybody has today, but I feel confident that over time we’ll move back to focus on productivity and growth.”

And Dell certainly looks to be increasing its share of the market, with a boost of 11 percent in revenues in the US and the non-Japan part of Asia from the first quarter to the second this year – encouraging signs for a company that was struggling to grow at all just a few years ago. “Even more than that, when we look inside the quarter, we see from a weekto-week, month-to-month basis, a strengthening of the core business,” explains Dell. And despite the challenges presented by the current state of the economy, Dell himself remains confident of the position that the company finds itself in. “I do think there’s been a deferral in spending, but I think we will see it resume in 2010, probably occurring gradually, at different times for different industries,” he says. “There is a lot of old, outdated equipment out there that will need to be replaced to maintain productivity.”

And in line with this, the launch of Microsoft’s Windows 7 in Q4 2009 and Office 2010 next year could well boost sales at Dell into 2010.

Indeed, the corporate replacement cycle is a big focus at Dell. Companies have deferred purchases to the point where they have four or five-year-old systems that are standardized on an eight-year old operating system – let’s face it, large enterprises never really did move over to Vista – which means the time is ripe for change. “I see the product cycle getting very exciting,” reveals Dell. “When I look at the next six to nine months, I see a few things to get really excited about – the processor from Intel going from the desktop to the notebook, which will drive a huge improvement in performance and power. And Windows 7, which is a massive improvement over prior generations. Plus Office 2010, a dramatic improvement over the previous versions of Office, due out around March, April of next year.”

Grand designs Ed Boyd, who joined the company from Nike, is the man in charge of design and is currently working to make design an integral value at Dell as part of the company’s new strategy. Standing in front of dozens of prototypes for future laptops hanging on the wall in the consumer design lab, Boyd concedes that he wasn’t overly excited when approached by the firm just over 20 months ago. “I was like,

wow, Dell makes great boxes but they aren’t very moving; they need someone who can think beyond just technology. So in the time that I’ve been here we’ve built a very diverse team – we’ve gone from about five people to around 140 – from many different design companies and consultancies.

“We did some research in the beginning and we asked people about customization. People rated Dell as one of the leaders in the industry in personalization and I kind of scratched my head, because when I was at Nike doing NikeID, I never thought of Dell as a leader in personalization. But we realized that we had the customers’ vote of confidence so we started looking at how to individualize the products further.

“It became obvious that it was more about what the product looked like than what was under the hood – what processors were used, for example. So last December, we launched a design studio and set up a gallery to leverage our unique ability to customize products. So now, people can come to Dell, pick their products or a piece of art from an upcoming artist and have it printed on the product in a really beautiful way. And we’ve now got great artists from all over the world coming and collaborating with us too.”

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CANTO AD.indd 1

21/10/09 08:48:01

Solutions and services Dell is in a business where the performance and the use that customers can get out of the products ultimately depends on somebody else’s work: the providers of the soft ware or operating system, such as Microsoft, for example. As such, the health of one company inevitably has a fair amount of impact on the other. So does Dell have any plans to expand the solutions arm of the business? “Dell is evolving itself from a product company into a solutions integrator, where we’re bringing complete solutions to our customers, whether they’re the biggest companies in the world or governments or SMBs or consumers. And those integrated solutions are not just the things that we develop ourselves with the thousands of engineers that we have at Dell, but they also include technology from our partners.”

Within the solutions side of the business, Dell himself believes that there is a lot of potential for the firm in the services sector. “There are some surprising things about our business that aren’t so well known, and one of those is that we have a $6 billion services business,” says Dell. “This is definitely an area of potential growth and I foresee it growing quite a bit.

It’s certainly an area of emphasis for us as we focus on solutions. And I think one of the things we’ve learnt in the last four or five years is that when we went to our customers and said, ‘Hey, we’ve got this new server and it’s got this many megabytes and disk drives’, there were some customers that said ‘great’; but a lot said, ‘we don’t really care about your server because what we want is a solution for our supply chain or our customer relationship management’. And so we really had to build a much stronger solution here. We’re not done yet, but it is a $6 billion business, which is a pretty good-size when you think about it.”

“At just over 10 percent of the business, the services sector is something that Dell has big ideas for going forward” At just over 10 percent of the business, the services sector is something that Dell has big ideas for going forward. “If you look at the size of our hardware business versus the size of the services businesses, of course we want the services side to catch up and be more prominent, and there are lots of ways for us to do that.”

Organic growth will continue to be a part of that, but so will partnerships, he explains – a major step for a company that has not always been a fan of such affiliations in the past. “One of the things you see in this business is that you can’t do everything yourself, it just doesn’t work.

So there are a lot of great companies out there who we’ll partner with, such as the Brocade deal that was announced recently. We’ve done about 10 acquisitions in the last two years, and although I wouldn’t necessarily go looking for an acquisition, we’re going to have a consistent strategy of acquiring new capabilities to enable our business to grow and do more for our customers.”

Only time will tell if Dell can successfully return to the market leader that it once was. From the outside there have been some notable changes,

and from the inside the company has gone through an extensive overhaul.

It is now clear that Dell, the former short-term thinker, has evolved into someone that is planning for the future. And, if he continues to pull off the rest of the changes he has in mind that are currently kept strictly under wraps – including smart phones and social networking – the future could be looking pretty good for the former computer king.

Dell’s best kept secret

Deep in Dell’s Round Rock headquaters resides one of the company’s lowest-profile departments. “I’m going to prove to all the skeptics out there that outside of your desktop, your office and your home, you are in fact using a Dell almost every two hours – and you don’t even know it,” enthuses Josh Kivenko, Global Marketing Manager for the Original Equipment Manufacturers (OEM) market. “The OEM division has been in business for longer than 10 years. We’re global.

We have over 1500 customers in well over 40 verticals and the use of Dell hardware is so diverse. I mean you can go from a kiosk to a customer who’s trying to build their own HP PC solution and resell that to a customer like Google who’s building a network appliance that’s all branded Google and selling that ultimately into a data center. Or an industrial automation company that’s building this hefty enclosure with a desk and a chair and a table and five screens. Or a trading floor solution that is sold into banks that are powered by Dell blades and have an incredible fan and cooling and screen and 3D graphics. All the way through to a company that’s powering switching devices for subway systems.

“There’s no doubt that my division at Dell is an element of a diversified portfolio. We’re a diversity player. We’re not talking about virtualization or systems management or power and cooling – we’re talking about something totally different. Within my group we’re in so many different verticals; there is so much white space out there, which means there’s a big opportunity for us going forward.”

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TECHNOLOGY FOCUS

Innovation in IT With $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance, Wells Fargo faces many of the challenges seen by other financial services IT departments: juggling an increasing focus on security and privacy issues with a desire to become more customer friendly. But this finance giant is also continuing to successfully focus on technological and digital innovation.

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ells Fargo originally began the implementation of its enhanced, companywide innovation capability program back in late 2006, with the goal of driving innovation into its customer experience through information technology and by looking at open innovation techniques to uncover new ideas from employees closest to the customer. Wells Fargo has continued to build upon its existing tools to create a robust capability, designed to encourage open and active participation of all employees in the company’s IT innovation effort.

And it seems to be paying off. In July this year, the company ranked number one in technology innovation on its website by Brookings Institution, a nonprofit public policy organization based in Washington DC, taking top honors for technological and digital innovation. The Brookings Institution evaluated nearly two dozen features of digital innovation, including personalization, interactivity, transparency, PDA access, disability access, language translation, number of online services, privacy, security and user feedback of 68 companies. Wells Fargo was ranked above sites belonging to corporations generally considered industry leaders, including Google, Apple, Amazon and Disney. It’s a major step forward in the delivery of IT services.

“In July this year, the company ranked number one in technology innovation on its website by Brookings Institution” Just how have Wells Fargo reached the top? By focusing on the many online tools and services that it offers customers. “As the first major financial institution to offer internet banking, Wells Fargo has a proud history of pioneering in the digital world,” said Jim Smith, Executive Vice President, Wells Fargo Internet Services Group. “We work very hard to ensure our offerings are user-friendly and innovative. Being ranked number one is a great honor, and we’ll continue to listen to our customers to give them the very best experience when they visit Wells Fargo by computer or mobile device.”

The company also received two Monarch Innovation Awards from Barlow Research for online services for small businesses. Foreign Exchange Online was named ‘Most Innovative Product’ and My Spending Report with Budget Watch was awarded ‘Most Innovative Feature’. Both services are of-

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fered through Wells Fargo Business Online Banking, the firm’s website serving SMBs. “We are honored to receive these awards. Our goal is to give small business customers the services they need to successfully manage their cash flow, as well as save time and money,” said Richard Weeks, Senior Vice President of Wells Fargo’s Internet Services Group. “Our affordable online tools help small businesses boost productivity and profits.”

And Wells Fargo is continuing to develop one particular area of innovation: mobile banking. While the bank currently provides customer notification via text or email for overdrafts for instance, it is currently still working on improving its smart phone application, and is hopeful that it will soon allow for transaction service for wholesale banking customers. One big step towards the goal of innovation in mobile banking was seen in September 2009, when the firm announced its new mobile customer-to-customer payment option that allows Wells Fargo customers to transfer money to each other via the Well Fargo Mobile Banking Service.

“Our research shows there is strong interest in transferring money from a mobile device, as well as online,” said Adam Vancini, Senior Vice President at Wells Fargo Internet Services Group. “Wells Fargo’s secure mobile banking ensures that key banking tasks such as transferring funds, paying bills, receiving alerts and reviewing account balances can all be done ‘on the go.’ We want to deliver a complete set of financial solutions to satisfy our customers’ needs and to deliver those solutions in new and convenient ways.”

All the signs point to the company staying top of the IT innovation league, with a whole host of still-in-development products, ideas and technologies being designed, improved and launched at Wells Fargo Labs. n

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INDUSTRY INSIGHT

THE VALUE OF

AUTOMATION Harnessing new modes of ITSM is driving innovation and business, says Stephen Morton, Vice President of Product Marketing at Symantec.

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lthough cost control has long been a key priority, the economic downturn has placed it at the top of the agenda for many organizations. One casualty of this cost-cutting zeal is hardware, resulting in the need to maintain an increasing number of aging devices. At the same time, additional budget cuts mean that there are fewer resources available for IT support. Consequently, many organizations are turning to business process management (BPM) to address their IT service management (ITSM) needs in today’s tough economy.

Finding ways to manage processes more effectively has become a near obsession for IT executives. In Gartner’s Meeting the Challenge: The 2009 CIO Agenda study, CIOs responded overwhelmingly that the key to improving operations and performance is found in optimizing business processes. That’s where some 1500 CIOs said they would focus their attention and resources in the coming year. In fact it has been a top goal for four years running, according to the same report from previous years.

Cutting costs Lower operating costs and a more efficient staff are key success factors in challenging times. Of course, technology plays a major role. It’s important to remember, however, that reliance on technology also increases IT support workloads and makes non-stop system availability a business-critical issue.

And failure to meet support and availability demands can have serious consequences, including a decrease in responsiveness (and, thus, customer satisfaction), an inability to comply with service level agreements (SLA), and an overall impact on competitiveness.

Doing more with less

costs are not the only benefits. That’s because when IT resources are freed to perform strategic projects, innovation can take root across the business.

Process automation drives efficiency and innovation by allowing IT to offload routine operations and provide self-service options.

Automating repetitive IT tasks such as password resetting can significantly improve customer satisfaction and service levels. Selfservice options dramatically decrease problem resolution time and costs, with a typical self-help price tag of $12 compared to $33 for desktop support per incident, according to the Help Desk Institute.

Symantec believes that an effective ITSM solution must include tightly integrated automation tools, ample self-service options for end users and advanced workflow automation capabilities.

Driving success Th rough integration of native Organizations today are and third-party systems for looking for new ways to impolicy enforcement, change Steve Morton is the Vice President prove efficiencies and reduce management, configuration of Product Marketing at Symantec costs, while leveraging management, and incident with responsibilities for the company’s broad enterprise existing resources. Process management, for example, product portfolio. Morton has more than 15 years experience in IT automation can provide imIT can more easily extend software product marketing and mediate benefits by shortencontrol across both IT and management. ing timelines and enhancing business processes. Addimaneuverability through organizational structionally, an effective ITSM solution should be tures. By automating and integrating business based on an extensible platform with built-in processes, IT organizations – especially those manageability and extensibility. These are key requiring a high level of manual intervention – elements that make it easier to bring remediacan more easily meet their efficiency and qualtion, systems management, security, compliity of service objectives. To get there requires ance and data protection functions directly the adoption of ITIL best practices and proven into the environment to further enhance the ITSM solutions. Greater efficiency and reduced organization’s approach to ITSM. To ensure high availability and prompt IT support with minimal overhead, organizations are going beyond traditional help desk solutions and stepping up their use of IT infrastructure library (ITIL) best practices to improve incident management and enable the automation of core support processes. By doing so, they are able to support users and devices more responsively, resulting in greater user satisfaction, better SLA compliance and lower support costs. In the data center, automation is delivering maximum uptime and a faster time-to-resolution when problems do occur. In all, automated solutions are helping organizations leverage business intelligence, manage IT risk and compliance proactively and adapt with greater agility to an ever-changing business environment.

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INDUSTRY INSIGHT

THE IMPORTANCE OF ITSM Charles Cyna, President and CEO of ThinkITSM, explains why focusing on quality as opposed to quantity can make a huge difference to IT help desk reports.

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major international accountcreate Crystal Reports, ThinkITSM Coach ports ing firm found they were fotheir help desk tool data into a three-dimensioncusing on quantity versus al OLAP cube that is accessible via any web quality when it came to probrowser. The advantage of a cube is that the inducing reports from their IT formation can be manipulated on the fly to allow help desk. In addition, senior multiple views of information, in the same time it management were looking for a would take to load a single way to track IT performance Crystal Report. against goals and the time to build The firm was attracted by the KPI’s in Crystal was considered the consortium that ThinkITSM cost prohibitive. The problems has assembled where leading were compounded with unique ITSM and ITIL practitioners were measurement requirements from charged with building metrics every IT department who need to that would be easily consumable see predominantly the same inforand show information in a way mation, but just for their sphere of that can be easily acted upon.

Charles Cyna, President and influence. The impact was that one Whereas they used to produce a CEO of ThinkITSM, has 14 years plus experience in the person spent nine days per month monthly ‘book’ of reports, now IT service management producing reports in Crystal, exeach department can go online industry. In 2007, Cyna started exploring ways that porting them to Excel and massagand see the information that is organizations of any size could reduce the cost and ing the information to get the right relevant to them, as well as procomplexity involved in look for every department. Even viding much of the same infordelivering IT. more troubling was that the reports mation in a single screen. that were being delivered were not Additionally, the concept of easy to interpret and as such would often go unread.

Wisdom Windows has been introduced, which They found a solution to these challenges analyzes the information in the chart and prowith ThinkITSM Coach, which provides a unique vides recommendations as to why certain perspin on business intelligence for IT. Rather than formance benchmarks might be changing.

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“The benefits of seeing information in a simpler format provides clear results,” describes Maria Ritchie, a former help desk of the year award winner. “We often struggled to identify the critical few from the important many and ThinkITSM Coach really does a great job in making help desk reports relevant.”

“The benefits of seeing information in a simpler format provides clear results” Some of the challenges that organizations face when implementing such a solution is in making the mental transition from a quantity mindset to one that focuses on quality.

Organizations have often been producing the same reports for over 10 years and find it difficult to break the volume habit, even though managers often never even look at the information. Moving to a solution like ThinkITSM Coach asks you to re-think why you are tracking information on your help desk and what decisions could be made if the information was easy to understand.

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EXECUTIVE INTERVIEW

The silver bullet of asset management?

Kevin McGrew, CEO and President of TechTrack Solutions, reveals how to conquer the greatest challenge of asset management: control.

What is the greatest challenge for an IT Asset Manager in the 21st century workplace?

Kevin McGrew. 90 percent of enterprise organizations have no useful processes in place to track and manage the arrival, deployment, active lifecycle and disposition of IT assets, according to Gartner Group. Gartner also notes that 70 percent of CFOs feel that their fi xed IT assets (laptops, monitors, servers, etc.) are being managed inefficiently and erratically.

These execs report that their organizations are often unable to even locate these assets reliably. The greatest challenge for 21st century IT Asset Managers is control. IT asset management is hard, and as technology becomes more pervasive, assets become more mobile and data becomes more sensitive, ITAM is only going to get harder.

Does complexity act as a barrier to entry for firms that haven’t yet enacted any IT asset management protocols?

KM. Not typically, because it’s much more painful to do nothing than it is to do something minimal. In my experience, most organizations at least have some form of ad-hoc solution, such as a spreadsheet. These solutions can be as simple as a single fi le on a desktop, or as elaborate as a network of overlapping worksheets spread across multiple

departments and users. Th is is what we call zero-mile when assessing and implementing ITAM processes in a firm: because if you’re here, you’re not really anywhere.

Eventually, organizations get tired of the hassle, the inaccuracy and the costly mistakes that these homebrew solutions are fraught with and they go looking for a silver bullet. The larger the organization, the larger the bullet that they think they need. That search is where complexity starts to kill.

What are the outcomes of the choices that firms make when implementing ITAM? KM. It depends on how the organization chooses to manage risk. There are a lot of supposedly easy options on the market. eDiscovery is a common fi rst stab at ITAM, and what IT managers fi nd is that the solution works better on paper than in practice. Expensive enterprise repositories are another path that typically doesn’t provide the initial results that clients expect at that price-point.

What these companies are missing is the people element: enterprise soft ware is notoriously user-unfriendly, and the Kevin McGrew has been CEO and President of TechTrack Solutions, 30 percent of its functionality Inc. since 1997, accumulating over a decade of experience that does get used is often misin the IT and fixed asset applied, or worse, half-applied. management markets. McGrew has worked with Fortune 1000, ITAM systems need to be built government and healthcare consortiums to develop holistic, with the end-user in mind, realistic approaches to IT asset because accuracy is king. Most management. repositories have 60-70 percent

data accuracy, and you can’t make executive decisions from that. In the end, these organizations are taking a lot of risk on a businessfunction that their staff doesn’t yet know a lot about. Th is is leading to more pain than even the spreadsheets were causing, and it’s leading to program failure.

How does TechTrack approach the problem of complexity when deploying an ITAM solution?

KM. One of the benefits of having well over 10 years of industry experience is that we know what works and what doesn’t. We see firms typically coming to us after already trying other tools, and we always tell them the same thing: first, simplify. Build business-processes that every employee can use correctly. Any technology that is deployed to facilitate ITAM needs to be end-user driven, not IT driven.

Techtrack reacted to this need by developing a simple mobile (handheld-based) solution for IT Asset Tracking combined with a flexible web-based interface that basically any worker can use, and use properly. AssetManager 5.2 delivers the simplicity to allow workers to realistically capture 99 percent accuracy while still having the full suite of features to expand an Asset Management program over time.

And that’s really the key to conquering complexity and taking back control of the inventory. It needs to be a slow, inexorable expansion of the program over time, keeping pace with the skills and abilities of the IT workers that are using it. You have to walk before you can run, and if you aren’t walking yet, you need to start because your competition already has.

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INDUSTRY INSIGHT

procedures that have been successfully deployed within numerous organizations.

BMC began offering both SMPM and APM ITIL toolsets 18 months ago, and now we’re seeing an incredible 40 percent adoption rate among new customers. Several existing customers have even decided to restart with new SMPM/APM implementations rather than add-on to what they already own. Why? Primarily for the significant cost and time savings, as well as the elimination of common risk factors for a large service management rollout.

Other benefits include: better processes and a focus on people and culture. It’s well known that ITIL is a framework, not a cookbook. BMC’s process model includes detailed work instructions and documentation. The service management tool itself is fully tailored to the SMPM and APM process models so it is guaranteed to work. The biggest delay on any service management implementation is not the technology, Dick Stark, RightStar President, reveals the importance of an but trying to arrive at consensus on foundation ITIL framework and why it is vital to evaluate your approach to data and processes. The use of SMPM or APM implementation. means less time is required for process definition and tool What is your ITIL maturity level? At certification is valuable, that configuration and more time almost every RightStar monthly webinar, we on its own does not guarantee is available for ITIL training poll the audience on whether they use ITIL service management success. and awareness. as an organizational framework for service Certification may be an indiOne recent APM cusmanagement. We’ve found that an evercation that the holder can use tomer, MSI Systems Integraincreasing majority insist that ITIL is their de the ITIL terminology and untors in Omaha, NE, estimated facto service management standard. derstand the processes, but it that it saved months of effort When we arrive on-site for implementadoesn’t provide the exact steps by rolling out Change and tion or upgrade services, however, we discovnecessary for process rollout.

Configuration Management As President, CEO, and founder, er that there is rarely any thought given to the A better use of your organizaat the same time as Incident Dick Stark brings RightStar more than 25 years of experience in ITIL framework as it applies to the technoltion’s training dollars might be and Problem Management. leading, building and managing ogy tool set, i.e., BMC Service Desk Express to begin with a small subset of It realized early on that it technology companies. During his career, he has also led and or BMC Remedy ITSM. Th is shows me that ITIL champions, and then roll lacked the internal process managed technical, consulting and finance operations.

ITIL exists in theory more than in practice out training to all as an exact discipline to roll each process for most organizations.

ITIL blueprint is defi ned. out in a typical phased apIt’s understandable that putting ITIL Secondly, ensure you begin proach, so RightStar helped into practice doesn’t always make the short with Incident Management then Change and MSI ramp up quickly with more streamlined list given the demands IT organizations face.

Configuration Management should follow, processes and separate workflows for problem However, if an ITIL rollout can be done withwith Problem Management not far behind. management. out a large outlay of time and money, it will Service Level Management is also essential.

More than 200 companies have implequickly enable the organization to better deFinally, look at ‘ITIL in a box’ solutions mented the SMPM and APM solutions now, liver what the business wants and expects. So such as the Alignability Process Model (APM) and their feedback has resulted in a set of what are the top three steps to help jumpstart for Service Desk Express and BMC Service processes that are efficient, practical and ITIL in your organization?

Management Process Model (SMPM) for ensure management control. By taking these Firstly, invest in ITIL training, but don’t go Remedy ITSM. These product toolsets allow processes as the foundation of new and existoverboard. We have often seen ITIL Foundaorganizations to quickly roll out an ITIL-based ing service management implementations, tion training being promulgated from the top soft ware solution. The process model is based we ensure that ITIL is implemented right the to everyone in the IT organization. While the upon a set of field-proven process flows and fi rst time.

Implementing ITIL the right way

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CIO STORIES

TAKING CENTER STAGE

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As companies everywhere look to position themselves for the much-anticipated upturn, ensuring your business is able to capitalize on the opportunities offered by a vastly changed market environment is essential. In this, the CIO has a vital role to play.

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nterprises respond to economic challenges in a variety of ways. Most are reactive or staunchly insist on maintaining the status quo just to survive; after all, being a visionary is tough when you are mired in the day-to-day. Leading enterprises, however, view difficult times as an opportunity to pull ahead of the pack and emerge from the crisis stronger and more competitive. As Stanford economist Paul Romer puts it: “A crisis is a terrible thing to waste.”

The CIO plays an integral role in this process. For many companies and industries, the economic landscape has altered drastically in the downturn – so much so that 'business as usual' is no longer an option.

Companies that stagnate quickly get passed by in a rapidly changing global economy; therefore, in order for a business to stay competitive within its industry, it must continually seek to grow. Having the right systems and architectures in place to enable expansion in an organized, organic and sustainable way is a critical fi rst step.

But of course, the modern CIO is much more than a simple systems administrator; he or she is also an indispensable part of the corporate team, and as such must be actively engaged – on a business level – with the organizational needs of the company. After all, as with anything else, growing just for the sake of it is a dangerous proposition; knowing how and why you are expanding is essential, and it’s important to develop strategies for growth to ensure that your business is moving in the right direction. IT must be included in this process.

Identifying what you want to achieve and how you want to achieve it is critical. Are you leaving money on the table in your core business, failing to optimize for cost and revenue opportunities? Do you need to expand your horizons beyond mature or saturated markets? Or renew your core competencies, having hit a wall in traditional lines of business?

How can IT help achieve these aims? A properly implemented growth strategy should identify where you want to go and lay out a roadmap for how to get there, and include a discussion of how technology can help drive these goals.

Now, more than ever before, CIOs are challenged to become masters of change whilst at the same time managing a secure and effective IT infrastructure. The CIO must deliver IT innovation to support an everaccelerating rate of change and empower their organizations to take full advantage of new opportunities. Th is is no small task, but over the following pages, Business Management meets three IT leaders who are working to achieve just that. These are their stories.

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CIO STORIES

Many

happy

returns

As airline pioneer JetBlue enters its 10th year of operation, CIO Joseph Eng explains why a strong focus on the consumer experience keeps clients coming back for more – and how technology is helping the business drive service to new heights.

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urbulence is part and parcel of running an airline; you take the rough with the smooth, try to safely navigate through it as best you can and hope for clearer skies ahead. It’s also pretty handy advice for management in general – as Joseph Eng, the technology tsar at JetBlue, is quick to point out. “I think how you deal with the not-so-good times really defines you as a company,” says the CIO. “It’s a very difficult environment right now, but you just have to face up to that and deal with reality. Hope is not a plan.”

He is talking, of course, about the current downturn; but JetBlue has faced some pretty big challenges of its own over the past couple of years,

launching a host of innovative new services and a redesigned website, and moving to brand new headquarters at JFK’s Terminal 5. Indeed, the carrier has come a long way since its nadir on Valentine’s Day 2007, when an ice storm in the Northeast led to an operational meltdown that resulted in more than 1110 flight cancellations. Such an incident would have crippled most companies founded on the principles of exemplary service, but against the odds, JetBlue has emerged as a stronger entity as a result. How? By redoubling its efforts to delight its customers every time they fly.

First, in the direct aftermath of the storm, then-CEO David Neeleman apologized publicly to over 131,000 passengers affected by the cancellations, offering varying levels of compensation, and was praised for his open, honest approach. One week later, JetBlue also issued a Customer Bill of Rights – a move that was almost as widely reported in the media as the airline’s initial problems – that offers explicit compensation for a variety of departure delays and onboard ground delays. But most importantly, the airline used the crisis as an opportunity to rebuild its technology systems for the 21st century, ensuring it was in a position to deal with any future crises in a much more efficient and customer-oriented way.

For Eng, it is all about having the right foundations in place to be able to deal with the unexpected. “From a technology perspective, we are here

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to enable the business to focus better on the customer; that’ss our mission,” he explains. “It could be how we help our commercial rcial unit in terms of driving a new product and service. It could d be how we help our operations unit focus on running more efficient ient and more customer-oriented operations, or how they deal with ith bad weather and the need to cancel and reschedule flights. Can an we manage that in a more customer centric way?”

Understandably, given the events of two years ago, this is focus on operational excellence has been a key part of Eng’s ’s work since joining the firm early in 2008. “We’ve been work-ing with our operations group to ensure they have the rightt tools and information to enable them to make better decisions, especially as things can develop quite quickly in the New York airspace,” he says with a wry grin. “We’re a very challenging airspace, weather-wise, so we need to ensure our operations group can better handle decisions on what to o cancel and how to reschedule, providing more information to o the customers so we can let them know in advance if we have to cancel a flightt because we’re expecting bad weather.”

Such a technology turnaround is all the more impressive when you consider what else the airline has achieved since Eng took the helm – not least the move to its $743 million state-of-theart home at JFK’s T5. “We only had a small window of transition,, so to engineer a successful move took a lot of planning, a lot off We testing, and a lot of working with our customers,” says Eng. “We st were previously operating out of T6 and so we had to take the last op flight in and push the last flight out of that terminal, close up shop and then move things over and start up the operation in T5 – all on the same night. It was very challenging.” n to Nonetheless, the move ran like clockwork: the fi rst fl ight in the new terminal was a redeye from Burbank that pulled up to Gate h left 11 at 5am, while staff waved off the first outbound fl ight, which for San Juan, 59 minutes later. “We had a very dedicated team that ccess undertook a lot of scenario planning, which was key to the success

“For IT leadership, this is an opportunity to regroup, to prepare for future growth, to demonstrate more value and to engage with the business better” of the move,” he explains. “They looked at all the potential outcomes.

What if this happened? What if that happened? What we would do? Do we have contingency plans for that? Even then, you can have great plans but until you actually work through them all and test them, you don’t know which assumptions work and which don’t quite play out, so testing was important too. You have to be flexible about how you modify the

plans and, in the worst case, have a back-up plan. You have to keep the operations going no matter what.”

Quite apart from the operational side of the move, JetBlue was also keen to ensure the new terminal would be a shining example of the airline’s commitment to the customer. “What we wanted to do with T5 was create a different experience,” explains Eng. “For instance, we reduced a lot of counter positions and put a lot more kiosks out into the lobby, strategically placed where passengers would be passing, in order to speed the check-in process and empower the customer whilst maintaining a secure environment. And because we were starting from scratch, we were able to implement systems that expedite that. Customer service can be delivered via technology as well as by our crew members.”

According to Eng, such an overhaul of its technology systems led the IT department to reassess what its core competencies were. “For example, data center management and network management are very important in running a good operation, but we don’t necessarily need

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to do those ourselves,” he says. “By outsourcing those functions we can get better cost-effectiveness, we can get better capability, and we can allow ourselves to focus on working with the business more while still delivering a very sound and important operation. You need to have a sound operation to even have the ability to talk about new capabilities, but that’s not to say we need to do that ourselves; we can drive a lot more capability and services by partnering with others.” To this end, earlier this month JetBlue signed a six-year agreement giving Verizon management of its data center, network infrastructure and help desk functions; Eng believes the changes to the infrastructure will create more resiliency, but also allow it to scale as the airline continues to grow.

An extensive desktop virtualization rollout has been another key step.

“We don’t have a lot of heavy desktop footprint distributed all over the place because the IT maintenance associated with that makes it very difficult for us to support the equipment we need to support our crew members, so we have been thinning down as much as possible,” he adds.

In fact, focusing on what is important in terms of his department’s ability to add value has enabled Eng to concentrate more retion sources on improving the customer experience. “Innovation is not just about cost reduction, it’s not just about runningg operations; it is about impacting both bottom and top line growth,” he asserts. “How do we innovate with technology? How do we look at the customer experi-

CIO PROFILE

Name: Joseph Eng Company: JetBlue Joined: March 2008 Previous role: CIO, SWIFT

ence and create a better service? That’s what our focus is. We really don’t have any IT projects at JetBlue; we have business projects that just happen to have a large component of technology in them, or where technology is very important to their success. If you’re thinking in terms of IT projects, that to me is a sign that you’re really not aligned or fully engaged with the business.”

One example of this approach is the company’s use of mobility solutions. “For instance, we’re looking into how we can drive more capability onto mobile devices so customers can book their travel, manage their itinerary, get notification when things are delayed, navigate themselves through the terminal to get to the right gate, etc. Again, it’s about making their experience better; everyone has a very intelligent mobile device, so why not make use of that?”

Eng believes it is this level of engagement with organizational goals that separates the best IT departments from the rest – and what enables them to drive their parent companies to new levels of excellence in terms of service delivery. “If IT is going to enable value, we have to be aligned with the business. We have to be engaged with th the business. We have to be in tune with the busi business. And to be successful, it requires the rig right organizational structure and the right le leadership,” he says. “As CIO, I have frequent eengagement with the business leadership.

You have to build a relationship, to understand what they’re doing and what’s on ttheir minds. You also have to provide input, be because I think as CIOs we need to be influent ential. It’s not just about order taking; it’s more about influencing and helping the business shape its agend agenda, enabling the organization to understand what we can aand cannot do with technology in terms of enabling that agenda.”

And while he still maintains that hope is no substitute for proper planning and preparation, Eng does allow room for optimism. Indeed, he feels that despite the tough operating environment of the last 18 months, his organization is headed in the right direction – one predicated on continuing to drive technology as a source of opportunity for business transformation. “It’s certainly been a challenging environment,” he concedes. “Last year, fuel almost went to $150 a barrel; this year, we had a very difficult economic climate. Customers, whether they’re leisure or business, are not traveling as much because of the economic situation, so we’ve felt it just like everyone else and it’s a challenge to make tougher decisions on what we’re going to prioritize.

“But I think we are outperforming the industry because we continue to focus on the customers. People need to travel, and that need is not going to go away. And we want to be ready so that when things start to bounce back, we have the capabilities and infrastructure that will allow us to scale and grow the airline even more, as opposed to emerging from the downturn and finding that we can’t capitalize on the opportunities because we’re not prepared. For IT leadership, this is an opportunity to regroup, to prepare for future growth, to demonstrate more value and to engage with the business better. It’s a challenging time, but it can be an opportunistic time as well. That’s how we see it at JetBlue.”

The move to JFK's state-ofthe-art T5 cost $743 million

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CIO STORIES

Reigning supreme

Raj Rawal, CIO at fast food giant Burger King, understands the need to deliver good service quickly. And as the 55-year-old firm looks to expand its technology menu, the quiet IT leader hopes he has found the right recipe for success.

P

op quiz: how many different ways are there to order a Whopper meal? “More than you might think,” laughs Burger King CIO Raj Rawal. “The different permutations are mind-boggling once you get in to all the various ingredients, styles and ways of cooking that are possible. Operationally, providing the customer with exactly what they want, the way they want it, is a pretty big challenge.” He’s not kidding. The answer, for all you trivia buffs out there, is 221,184.

With annual revenues of over $2 billion, the Miami-based company is the world’s second largest fast food hamburger chain, with close to 12,000 restaurants, two-thirds of which are based in its home market of the US.

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Every day, 11.8 million customers consume close to a million pounds of beef while over 37,000 staff – plus many tens of thousands more employed indirectly in the 90 percent of Burger King restaurants that are operated as franchises – work tirelessly to ensure the customer can ‘have it their way’. “The hamburger business is essentially a commodity business, and it’s primarily driven by operations," says Rawal. “So when you go to Burger King, you want a Whopper Sandwich the way you want it in every single Burger King, regardless of where you are.”

To this effect, Rawal – the former CIO for the Cendant Car Rental Group and architect of that company’s successful integration of its Avis and Budget brands – has implemented a number of measures designed to bring in an element of operational consistency across the organization.

Indeed, on assuming the CIO role in 2005, Rawal faced a number of pressing challenges. One of his fi rst tasks was to prepare the company for its impending (and subsequently successful) IPO. He then began a process of technology standardization that would enable the company to grow its global capabilities, and cites the example of the fi rm’s point-ofsale (POS) system as indicative of the considerable progress that has been made in recent years – and of how far the company still has to go. “In many ways the register in the restaurant is the key piece of equipment for us, and yet until January 2006 we had no company-wide standard as to what register or system should be used,” he explains. “We’ve now established the very first POS standard across the company and the franchise restaurants, and are in the process of migrating to that standard – as a brand, we’re over 40 percent moved over to the new POS standard and have set January 1, 2014 as the date at new by which all restaurants must be on that standard.”

With the POS standard in place, Rawal explains that the company can now start driving further system and process consistency across the organization. “We’re implementing what we call a standard naming convention, so that a Whopper, for instance, has the same number identifier across er any Burger King restaurant, whether sible company or franchise. That wasn’t possible n allows with the old system,” he says. “Th is then

CIO PROFILE

Name: Raj Rawal Company: Burger King Joined: February 2005 Previous role: CIO, Cendant Car Rental Group

There are 221,184 different ways to order a Whopper meal

us to do more in terms of collecting and analyzing information, and enables us to see what we need to do to be better, to be faster, to be more successful as a corporation and a brand. Being able to really understand how the business is doing compared to last week, last month or last year, for example – by time of day, by a particular product or by a particular geography – are things that are very logical and reasonable to expect, but up until now we have not had the basics in place to be able to do that.”

The ability to drive higher operational efficiency in the restaurants is another area set to benefit. “Labor scheduling, inventory management and many other things that were not previously available at the restaurant level are now becoming possible as a result of this focus on standardization,” says Rawal. “If you look at a restaurant, food and labor are the top two costs. So if we can help manage that better – which is

w what we’ll do with the new inventory and labor managem ment systems – we’ll be making a dramatic impact to our

bottom line.”

As well as revamping the customer-facing side of tthe business, the back office is also set for an overhaul. ““One of the initiatives that we’re very actively engaged in is laying the foundation for consolidating what has historic torically happened in different parts of the world at each of the Bu Burger King offices,” he explains. “We don’t need different people, different processes, different technologies – and all the associated costs – when we’re doing very similar functions, such as fi nancials, HR, fi xed asset management and other back-office processes. Now we have a platform in place in the US to manage all of that, we can absorb the work that was happening outside into that platform, leveraging the process capability and the shared services environment. That is making a huge impact to the corporation.”

A key decision was to embrace the concept of outsourcing, which has long been a key strategic area for Rawal, a 20-year exponent of the model. “We all have limited resources, whether that’s measured in dollars, people or time, so we need to think about how best we want to apply those resources,” explains Rawal. “And if I can get more value for my company by applying my limited resources to do something strategic rather than just keeping the lights on, then I have no problem outsourcing certain day-to-day functions. My view has long been that if they’re

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not core competencies, then we don’t necessarily have to expend the he time, effort and resources doing them. It’s worked successfully at other organizations I’ve been involved with, so I’ve seen fi rsthand nd the kind of results that are possible.

“At Burger King, we have outsourced the data center, the help p desk and the break/fi x support; we’ve also outsourced all the software maintenance and development,” he continues. “As a result,, the IT team we have here is now primarily focused on project management and business analysis.”

It’s an approach that has served Rawal well; outsourcing noncore systems and parts of the IT operation allows him to concenncentrate on delivering the long-term road map for Burger King’s g’s reorganization of its technology function. As he puts it, you need to “clean up the essentials” before embarking on anything bigger. “While innovation obviously has a huge role to play in the longer term, I feel a responsibility to clean up the basic things that need to be done first – standardize systemss and processes, maintain cost-effectiveness and deliver stabilityy he on that over a period of time – before I feel able to jump into the nd latest buzz topic out there. We have to lay the foundation and sithen demonstrate success with that foundation before the business will seriously consider doing anything more ambitious.” urNonetheless, he is conscious of the fact that such restructurocks ing, whilst important in terms of putting the right building blocks -add in place, is not in and of itself going to deliver significant value-add come over the long-term. The second part of the challenge is to become a partner that develops and delivers new ideas. “Innovation iss not just about technology, it’s about people,” insists Rawal. “It’s about having people with the capability to build a relationship to influence the business in a very credible way. It’s developing and selling ideas and having them become a part of the organization’s own idea of itself and what is possible to deliver on. To this end, I’ve developed a training program where I hire local, new graduates and run them through four assignments over six months, three in IT, one outside of IT, to develop different skills and ways of looking at the same problems. It’s about the people being transformed themselves; if you get that right then ultimately the team will deliver on the innovation end of things.”

As Rawal points out, this sense of teamwork is a key reason for Burger King’s success – and thanks largely to the efforts of its soft ly spoken CIO, IT is an increasingly important part of the company’s corporate team. “Credibility is extremely important,” explains Rawal. “It’s important in everyday life, whether it’s at church or school or at home; it’s important at work. And I think it’s the foundation of any good relationship. It allows for a lot more opportunities once you have a decent relationship in place based on credibility, and so a major part of my focus has been on pushing the IT organization to be more of a business partner. Of course, we still have full accountability and responsibility for the services delivered, but we are increasingly looking at improving the relationship management aspects of our role and what we can bring to the table in terms of business value.”

Even so, he concedes Burger King still has much to accomplish. “We need to catch up before we start saying we’re going to lead,” he says. “A few years ago we didn’t even have a POS standard and didn’t collect

any data in our restaurants; I could not have told you how many Whoppers we sold in the last hour in a particular restaurant. When you’re so far back in the pack, to start shouting, ‘Wait, I’m gonna lead’ is pretty crazy.”

One area he is committed to looking at, however, is how to better engage the consumer. “We need to consider engaging them in every which way we can before they come into the restaurant, when they’re at the restaurant, and as they start leaving the restaurant,” he says. “And I think mobile apps and social networks are going to be the means by which we reach out and touch consumers. For example, we are already the leader in terms of allowing our guests to have their sandwich exactly the way they want it. But what we want to do now is allow that guest the opportunity to have it their way before they arrive, through their mobile device, via the internet at their desk, wherever; to start looking at, to start thinking about, to start planning their sandwich so it is just the way they wanted it when they come in; to really have the experience enhanced with things that we can provide based on their preferences from the past or other demographic information that they made available to us previously. And then how do you maintain that structure so it stays upright when people change, when menu items change, when price changes, when restaurant managers and marketing managers change?

So we need to do everything so that it is sustainable long-term.”

For Rawal and his team, such attention to detail is a no-brainer; after all, it’s an essential part of ensuring that the customer – as well as the burger – remains king.

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CIO STORIES

New beginnings Starting a new role in the midst of a recession – not to mention a wideranging turnaround exercise at your new firm – is tough by anyone’s standards.

RadioShack CIO Sharon Stufflebeme explains how to get off to a fast start in a tough climate.

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he first 90 days of a leadership role is a critical bedding-in period for any executive. Some like to hit the ground running and get their hands dirty straight away; others like to sit back, get a feel for the culture and use that first couple of months as an opportunity to see what needs to be done. For most, however, it’s a combination of both – and RadioShack’s new CIO Sharon Stufflebeme is no exception.

“It’s been a hybrid approach for me, for sure,” she says enthusiastically of her first few months. “On the one hand I’ve been watching and learning,

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gathering information, and trying to formulate some sort of strategy map for how IT can help drive the business based on my findings since I first got here; but on the other, by necessity I’ve had to get my hands dirty, as there were a number of existing projects in flight that needed to be seen through to completion – and projects that don’t get completed don’t create opportunities for new initiatives to come through and get started. So it’s really been a balancing act between strategy and execution – which I guess is what the CIO role is all about.”

She’s certainly no stranger to implementing technology projects in the fast-paced world of consumer retail; her previous experience as CIO at convenience retailer 7-Eleven taught her some valuable uable lessons on how to communicate the value of IT in a store tore environment – not least the importance of setting out ut a technology road map early on. “I came into an organization that needed a lot more support from an operational performance standpoint, and a lot more coaching and guidance from a daily activities standpoint,” she recalls. “So one of the things I learned quickly was how important it was to communicate, early and often, about where we were y. going to both the team and the rest of the company.

unprofitable business streams (the firm has now posted sales in excess of $4 billion for the last three years and is expected to stay above the $4 billion sales level for 2009 and 2010) comes a renewed focus on the customer experience that management hopes will leverage the firm’s existing brand capital, whilst at the same time repositioning the company for a rapidly changing retail environment.

“The marketplace perception is that we’re a place where you go to get components and accessories, and people love us for that,” says Stufflebeme.

“But they don’t always realize we sell all these other products. They don’t realize we sell national brands and very high quality electronics in our store stores. For instance, we are one of the largest retailers of ccell phones in the country – it’s 30 percent of our busi business – but that’s not necessarily the perception pe people have of us. So that’s one area of focus for u us – closing the gap between customers’ views about where we are versus where our business actually is.”

A big part of this repositioning is being done tthrough a major marketing exercise that will se see the company adopt ‘The Shack’ as a branding plat platform. Definitively not a renaming strategy, the move – at least according to a company statement – is aimed at “contemporizing “ the way we want people to think about our brand brand” and will, executives hope, speak to consumers in “a fresh, new voice” that reinforces RadioShack's authority in innovative products, leading brands and knowledgeable, helpful associates. It also involves taking on more of a customer advocacy role. “We want to move away from being seen as just a retailer of specialized products to more of a place where customers can come to get great advice on all types of products,” says Stufflebeme. “It’s the reason we offer a variety of different carriers in our stores in terms of cell phones. We feel we can do an outstanding job providing good guidance to those customers to make sure they get a phone that they love, a phone that they don’t want to return, that they live with for the term of their agreement. So

The company has 35,000 employees across 4450 stores

Putting together the strategy map was key to this.”

Such a step is essential to achieving what Stufflebeme og becomes calls “IT accessibility”, where the use of technology more transparent throughout the organization. “There’s a real danger that IT becomes a ‘black box’ where it gets translated into techno-jargon that doesn’t mean anything to anyone outside the IT department,” she says. “I wanted to change that and make IT more accessible – and thus more valuable – to the rest of the organization. I wanted to communicate where we are going in IT, and why this is relevant to where we are going as a company.”

Even so, she concedes that it took her the best part of a year to put ay-to-day runsuch a plan together because she was “so mired” in the day-to-day oid in her new ning of the department – a scenario she was keen to avoid ategy map imrole. “On coming to RadioShack, I started work on the strategy mediately,” she explains. “I wanted it to be both a unifyingg plan and a living document, so the idea of just draft ing it and getting it out in front of people was really important. It enabled me to say to people, this is where I think we need to go; if you don’t agree, that’s great, but let’s talk aboutt what’s wrong with that now and then figure out where wee he need to tailor it as the business moves forward and as the organizational needs change.”

And at RadioShack, things are changing quickly. The The company has approximately 35,000 employees across 4450 450 company-operated stores, 1400 dealer outlets, 600 wireless eless xico, phone kiosks and 200 company-operated stores in Mexico, and is looking into business intelligence solutions to help protlines vide more and better information to the staff on the frontlines Mobile of the organization. It recently signed deals with both T-Mobile ith all and Verizon to ensure it has important relationships with four major wireless carriers in the United States. And hot on the inating heels of a three-year corporate turnaround aimed at eliminating

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that’s another goal for us: to make sure that we can help understand the customers’ needs and provide them with the right solutions.”

To help achieve these aims, over the next 12 months Stufflebeme’s team will be implementing a new company-wide POS system along with a state-of-the-art replenishment solution, as well as piloting a loyalty program. Providing assortment and merchandising support in terms of product insights through business intelligence and better analytics will also be key going forward. “There’s a lot going on,” she says.

Clearly, technology has an important role to play in transforming both the way stores operate and how customers perceive those stores. “We brainstorm with store operations and with merchandising around what we can do to improve the customer experience – whether it’s having the right products, whether it’s having the right accessories, whether it’s having the experience in terms of staff knowledge,” says Stufflebeme. “We look at how we can guide the customer through the selection process, how we can provide them with the answers that they need. And then we also need to think about how we can execute the transaction in a way that’s very seamless for the customer.”

She uses the example of a cell phone transaction. “In the United States, this can be a fairly complicated and lengthy transaction,” she explains. “So from a store operations point-of-view, how do we balance a lengthier transaction – in excess of 30 minutes, say – with a 30 second transaction where a customer is just buying a cable for their home cinema system? You don’t want a line of customers looking to make 30 second transactions backing up with while you’ve got a 35 minute transaction in process at the register.

So how do we streamline that process? There are a lot of technology opportunities there in trying to figure out how to meet that customer need.”

In this respect, Stufflebeme is a firm believer in the idea that technology is an essential driver – rather than just an enabler – of the organizational goals of the business. “I really do see us being able to help the organization move forward,” she asserts. “For one thing, I see mobile devices experiencing a tremendous convergence. You’ve got net books crossing over with PDAs and laptops. You’ve got GPS functionality on cell phones. We’re seeing a tremendous amount of convergence. And I think that RadioShack, with our business in mobility and our strong intent to be a customer advocate in mobility, is going to be very well positioned in this regard. I think IT has a

CIO PROFILE

Name: Sharon Stufflebeme Company: RadioShack Joined: June 2009 Previous role: CIO, 7-Eleven

really important role to play in helping the organization move forward and ensure it addresses those changing consumer dynamics. We’ve got to provide leadership in making sure we’re more flexible and quicker to market in terms of new features, functions, products and services, while at the same time keeping the company running from a day-to-day operational standpoint. It’s a huge challenge.”

But as much as it is important for IT to take more of a lead role, Stufflebeme e believes it is also critical that individual elements of the organization take greater interest in (and responsibility for) technology projects tio – particularly when it comes to corporate sponsorship. “I think that the lion’s lio share of the initiative should be sponsored by the functional area that’s going to achieve the benefits,” she explains. “And if the benefits are th sa savings in IT costs, I don’t have any problem sponsoring that initiative be because that’s the budget I’m supposed to be the steward over. If it’s about ha having the right plan to make sure we’re as efficient and effective as possible, I don’t mind owning that, either. But if certain projects are going to sib benefit merchandising or store operations or the finance department – and be they’re the ones who are going to achieve those cost savings or revenue th bu bumps – then I think they should own those projects.”

Of course, this can only happen once Stufflebeme’s goal of IT accessibi bility has been achieved and everyone in the business understands the true va value of the technology at their disposal. “It’s about transparency, to a large ex extent,” she concludes. “I want full transparency to be given to the rest of th the organization so they understand what we’re doing and why – and how it can benefit them. That’s so important.”

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ASK THE EXPERT

Maximizing WAN optimization Donato Buccella reveals the major trends driving the evolution of WAN optimization technologies.

V

irtualization and cloud computing (private or public cloud services) are major trends that are driving more and more traffic over wide area network (WAN) links. These trends require a shift in the way business managers view enabling the access to such centralized resources as applications, servers, storage and management systems by geographically dispersed users, whether they are in a branch office, connecting over the internet or subscribing to an application provider. A successful deployment of centralized services requires that the user experience (application response time and data transfer time) is as close as possible to what users would experience accessing the same resources over a local area network. The WAN’s inherent latency issues and the cost of network bandwidth are

technologies to deliver deployment flexibility, consistent performance and scalability in order to be cost effective. WAN optimization technology integrated with virtualization is the virtual network that carries this new generation of computing services.

There are differences in the way WAN optimization and application acceleration vendors approach virtualization. Certeon believes that WAN optimization must seamlessly integrate with an existing virtual infrastructure and therefore it must be delivered as a standard workload or virtual appliance (VA) that is hosted in an enterprise-class hypervisor, such as VMware ESX or Microsoft Windows Server 2008 Hyper-V. In this way, the WAN optimization solution gains all the functionality provided by the virtual infrastructure vendor, such as high availability and centralized management

“WAN optimization technology is a fundamental component for the successful delivery of cloud services” major obstacles to business managers’ efforts to deploy these new computing paradigms in a timely and cost-effective manner. WAN optimization technology is a fundamental component and a requirement for the successful delivery of centralized services or cloud services. Since cloud services’ infrastructure relies on virtualization for its implementation, the right WAN optimization solution utilizes virtualization

via the virtual infrastructure vendor management system. Being a VA allows for the effective utilization of resources in existing physical hardware without requiring dedicated hardware to just support WAN optimization. A WAN optimization VA can be provisioned (allocate CPU, memory and disk resources) according to the required load (number of connections and bandwidth) for a specific application. The fact

that a VA interfaces with the virtual network capabilities of the virtual infrastructure provides much more flexibility to support different network topologies and connection types.

Other vendors try to provide virtualization technology (virtual machine hosting software and hardware) embedded within their dedicated WAN optimization hardware. These offerings are underpowered and do not integrate with enterprise hypervisor-based virtual infrastructures, such as VMware ESX or Microsoft Hyper-V. Another key factor is scalability. Virtualized WAN optimization must linearly scale as resources are added. Independent testing from The Tolly Group bears out the performance and scalability benefits that a VA, such as Certeon’s aCelera, brings to virtualized enterprises. aCelera Virtual Appliance soft ware supports VMware ESX/ESXi and Microsoft Hyper-V hypervisors. The Tolly tests demonstrated that aCelera, running on an industry-standard server, can achieve a 99 percent reduction in remote file access response time over a highlatency WAN. In addition, aCelera supports over 50 percent more concurrent accelerated connections than competitive hardware appliances. These tests also showed that aCelera utilizes less than 30 percent of the system’s CPU and memory resources, enabling room to scale the number of accelerated connections as needed, without requiring a ‘forklift’ upgrade to a larger system. aCelera soft ware also reduces network bandwidth utilization by 95 percent, enabling you to leverage your existing WAN infrastructure and eliminate the cost of purchasing additional bandwidth. In pricing analyses, where an aCelera configuration was compared against single-purpose hardware appliances, aCelera showed a more than 60 percent reduction in network optimization capital, operating and network bandwidth costs.

Increased WAN optimization, application performance, and scalability, as well as reduced network bandwidth utilization, are the cornerstones of enabling virtualization and cloud computing environments. In order to support these dynamic environments, your choice of WAN optimization and application acceleration solutions requires the basic dynamic principles that only virtual appliances can deliver.

Donato Buccella is Chief Technology Officer at Certeon.

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IT MANAGEMENT

The promise of

desktop

virtualization The desktop virtualization market is booming.

Business Management speaks to IDC’s Michael Rose to discover why organizations should be looking at it as a way to improve ROI, consolidate applications and increase performance.

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A

ccording to IDC, spending on virtualization soft ware and services is expected to exceed $15 billion worldwide by 2011, up from $6.5 billion in 2006, and the desktop virtualization market alone will make up a staggering $2 billion of that total. With the market growing at such a rate, what specific advantages does desktop virtualization offer? “It’s a complicated question,” explains Michael Rose, Research Analyst for IDC’s Enterprise Virtualization Soft ware Program. “There are a couple of limitations specific to desktop virtualization. However, when you use it in specific cases, such as to consolidate images and applications and move to more of an on-demand terminal type of computing model, what we found in our research is that specific operational costs associated with desktop management can be quite drastically reduced in the ROI associated with moving to a desktop virtualization model.”

Cost is obviously a key strategic factor in the uptake of desktop virtualization, but some companies are still fi nding it hard to calculate the cost benefits of the emerging technology.

Rose advises businesses look to a couple of factors. Firstly he suggests that IT organizations currently do not necessarily take into consideration all of the cost components of their desktop environment, for example power consumption.

“When most desktop managers do an ROI study they don’t consider power consumption because it’s not part of their budget – they’re not paying for power so they don’t care. But even things that are more directly related to the business, such as costs associated with user downtime, can be almost entirely eliminated with desktop virtualization. A lot of factors aren’t taken into consideration that can have a significant saving for the business, maybe not for the direct expense of IT but in terms of enabling business value, it’s a key tool,” says Rose.

Secondly, Rose highlights that one of the problems IT organizations have when they think about desktop virtualization is the perception that there will be significant capital investment required up front, particularly in today’s environment with limited budgets and access to capital. However, he believes that there are things that organizations can do in terms of how they architect a platform in order to address many of those costs. By moving to a completely standardized desktop environment without any user customization for example, it allows the company to scale down to a more terminal type of computing model, while continuing to enable full user flexibility. “The really big advantage of desktop virtualization over terminal services is that it can allow you to build the kind of model that can scale,” adds Rose.

Beyond cost challenges, desktop virtualization can address other issues that IT departments are currently facing, particularly around management and security. “Instead of managing a bunch of fully independent physical PCs with completely unique operating systems, such as applica-

tions and user data, you can move to a completely centralized model where you can build and move to one standardized OS image and one set of applications that can be managed,” says Rose. “That one stack can be managed as a whole diverse set of users accessing that one stack, and that really goes a long way in simplifying PC lifecycle management in terms of patching, OS migrations, all that stuff. So it’s really about the operational improvements and server-based computing platforms.”

While there appear to be a whole host of reasons for adopting desktop virtualization, there are a number of reasons that mean integrating the technology into the business may not be so simple. Rose cites traditional IT challenges and immature technology as the main reasons. However, it seems that all is not lost. While desktop virtualization has been around for some time, it is only now that some of the basic requirements are being fulfi lled so that it is possible to move between the OS image and replicate images off of that one standard OS. “There are some basic need-to-haves in order to make virtualization really usable for most organizations. A lot of things need to happen around improved performance and profi le management

“The big advantage of desktop virtualization is that it can allow you to build the kind of model that can scale”

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Top 10: Best practices for desktop virtualization 1. Deployment planning: target particular areas one by one to gain understanding on how to support the new environment.

2. Evaluate thin clients: keep in mind the software footprint of the device.

3. Change your processes: processes will change, don’t forget to train your helpdesk on troubleshooting.

4. Prepare desktop technicians: their job will change and they will have to know how to use the new software.

5. Admin separation: keep the management of the server infrastructure separate from the management of virtual desktops.

6. Server infrastructure: the virtual desktops will be running on a server farm that needs to be HA enabled. If one desktop goes down, it could take out a whole number.

7. Marketing plan: develop a marketing plan to sell virtual technology to users.

8. Corporate security: determine security policy and have it built into the solution, it will minimize rework later.

9. Multimedia: thin clients aren’t there yet with multimedia, it’s best to leave high-end users with their desktops for this application.

10. Work from home: there are design considerations that can be made up front that make enablement of the virtual desktop through the internet easier later on.

Source: Baseline

enablement. But we’ve come a long way and the products that are out there today, the VMware viewers and desktop products, provide a decent set of capabilities that could actually enable a business to adopt desktop virtualization as a technology within their organization.”

In terms of the traditional internal IT challenges, Rose believes that it is necessary for an IT organization to think about desktops differently when they are thinking about implementing virtualization, which requires a big change in terms of who owns control of what. Many IT managers are reluctant to give up control of their environment to server admins and are opposed to working with them and the virtualization team every time they want to instigate a change, mainly because it adds an extra layer of complexity. “It really is a complete revolution in the way you think about desktop management,” explains Rose. “And as a result of that it can be very difficult to adopt innovation that has absolutely nothing to do with technology.”

Indeed, desktop virtualization involves a complete change in management style and model, and to large extent means throwing away the old way of doing things. Rose points to the traditional desktop management model that has been around since the mid 1990s: “For about 15 years we have been doing things a certain way. Th inking about managing a PC through its lifecycle a certain way, best practices have been built up over the years, really entrenched within IT. And now you have virtualization – a new technology that is ultimately limited – that is saying that you now need to think about desktop management completely differently. You need to think about this centralized image management model and a desegregation of the application and user setting and managing separate tiers within a stack. That is completely about-face and that is not like trying to move enterprise IT management, it’s like trying to move the Titanic, and it is just going to take a very long time.”

So, just what should we expect from desktop virtualization in the next five years? Well, Rose believes that while the technology will be a lot closer in two years, there is always a lag in terms of adoption. “If you look five years out, there’s no question in my mind that desktop virtualization will be an integral part of desktop management,” says Rose. “It’s going to have very high levels of penetration across IT organizations in terms of adoption but in terms of the amount of users to whom it’s deployed, it will probably still be very small.” Rose goes on to explain that he does not think the figure of users will go up in the future mainly due to the technological limitations associated with the architecture that will limit the use to a purely tactical solution. “However, in the long run, probably in the next six to 12 months you’ll start seeing solutions that enable desktop virtualization to move out from the server based computing realm and into the distributed computing realm. So you’ll have some kind of virtual machine capability on your local PC that allows you to do local execution and run your computer like normal, but it will still allow IT management to manage that in a centralized manner. So you can still move to a consolidated set of applications and take all of those benefits associated with desktop virtualization and extend that out to be deployed across the entire organization, which centralized desktop virtualization, as it exists today, will never be able to do.”

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ASK THE EXPERT

impact, as thin clients and servers dynamically regulate power usage. Thin clients offer up to 80 percent power savings over traditional desktops and their packaging is one-third the weight of equivalent desktop packaging, improving transportation fuel efficiency and further reducing an organization’s overall carbon footprint.

Although the business benefits of client virtualization may be apparent, reservations still linger about the user experience and complexity of virtual environments. What may be unknown are the numerous recent and coming advances in virtualization technologies that have addressed these very issues. Server and thin client hardware has become radically Roberto Moctezuma, Vice President and General Manager more powerful. HP thin clients offer dual core processors that can support workstation-class Desktop Solutions at HP, discusses the many flexible technology 2D and 3D multimedia and real-time collaboalternatives to the traditional PC. ration. The user experience now rivals that of e are approaching cause of the low frequency of failures and the traditional PC, as multimedia compression and an inflection point speed of resolving issues remotely, employees USB device management continues to evolve where organizations are able to maximize their productivity and with each new major VDI soft ware release. that had delayed IT minimize downtime due to PC issues.

Another advancement is the capability of deployments and Second, client virtualization can help IT manageability tools to span both physical projects are once again beginning to plan their businesses achieve regulatory compliance and virtual environments, eliminating a level next technology refreshes. In fact, a recent requirements and minimize data security of complexity previously added by moving to report by Deutsche Bank estimates 10-12 perand privacy issues. With no local data stored a virtual environment. IT can now use a single cent growth in the PC industry over the next on the thin client device, everything from paset of tools to manage virtual and physical dethree years as this refresh cycle accelerates and tient records to sensitive intellectual property vices with the same people, using the same proas companies look to invest in technologies is stored securely in the data center. Risks of cesses, under the same governance guidelines. that help address their most pressing business end-user error and regulatory non-compliance These challenges are not unique to enterand IT challenges, which include data security, are virtually eliminated. prise organizations. SMBs have these same manageability, flexibility and lowering total Next, these technologies are also extremely issues and the advent of simpler, plug-andcost of ownership. flexible, easily scaling capacity as your workplay client virtualization solutions featuring Th is makes now an opportune time for force expands and contracts with the market. more user-friendly interfaces make client organizations to look at alternative client With easy to update and virtualization technology a computing solutions and determine if distribdeploy thin clients, hundreds feasible solution for them. Oruted PCs are the most effective and efficient of users can be quickly added ganizations such as schools, way to tackle these challenges. Because of the during times of growth small businesses and emergadvancements and maturity of client virtualwith the addition of a single ing markets can now meet ization technology, HP believes that these soserver in the data center. their computing needs with lutions are now primed for broad deployment This centralized computing limited capital and technical to directly address these pressing issues. model also assists with busiskills with today’s solutions.

How does client virtualization help solve ness continuity and disaster The traditional PC is business challenges? First with operational recovery, keeping business only one of many choices for cost savings. Because the compute resources running by providing emorganizations today. Now is are all centrally located within the data center, ployees secure, remote access the time to rethink the PC, the end-user only has a thin client at the desk. to end-user applications and and HP is ready with flexible Roberto Moctezuma is the Vice Desk-side break/fi x visits are virtually elimidata from virtually any intechnology alternatives that President and General Manager for HP’s Desktop Solutions nated, as thin clients have no moving parts and ternet connection. will help organizations be Organization – the global business unit that focuses on the soft ware or image issues can quickly and easily Finally, client virtualizabetter prepared to meet their emerging client virtualization be addressed remotely by an IT administrator. tion also helps corporations business goals, today and in market and related areas.

Not only is the cost of support reduced, but bereduce their environmental the years to come.

Rethinking the PC

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ANALYST VIEW

down to maybe 10 or even 20 sites. Now we’re seeing customers wanting to go from 60 sites down to five or six; a really dramatic level of consolidation.”

Before the recession hit, says Bailey, most companies were addressing this trend by building new datacenters; however, that activity has all but stopped in light of the capital constraints. “There are very few companies today that are building brand new datacenters from the ground up relative to where we were just before the recession hit, and it’s basically because no one has $100 million to build a new datacenter,” she explains. “What this means is that we expect to see a lot more retrofit activity, as more CIOs look to extend the life of their existing datacenters versus building new ones.”

This has also resulted in a complete redesign of the datacenter floor. “Modularity has become king as companies look to make The datacenter continues to face mounting the datacenter more predictable,” says Bailey.

“Companies don’t necessarily want datapressure from new technology introductions centers based on a one-off custom design. and a lack of standards in design. IDC’s They want something that’s predefined and Michelle Bailey explains what the datacenter predictable over time, and has a measurable of the future might look like. power density footprint to it.”

But the fundamental game changer has been server virtualization. “We had reached ccording to recent research, the datacenter is una tipping point around the economics of the datacenter where we couldn’t dergoing a complete transformation at the moment. really do much more, and virtualization has been a way to help drive “The rulebook that we’ve been operating under for consolidation, bring down the footprint and help customers get another the last 20 years or so is really being thrown out the year or two out of their datacenters simply by lowering the physical size of window,” says Michelle Bailey, VP of Research for the infrastructure,” explains Bailey. “It’s been very disruptive, but we’re at Enterprise Platforms and Datacenter Trends at IDC. the beginning of server virtualization and its impacts on the datacenter.

“As a result, we’re seeing many different approaches to building, designing What’s coming next is a real change in the way we manage systems. Back and operating a datacenter take place.” in 1996, there were about five million physical servers installed worldAnd while a lot of attention is being focused on so-called Web 2.0 wide, whereas today there are about 30 million. But what’s been interestdatacenters – mega datacenters with very high power densities being coning over that timeframe is that spend on servers has actually remained structed from the ground up as a single, tightly integrated system by the flat. The server market tends to hover at around $50-60 billion annually, likes of Google, Yahoo! and Amazon in order to run the cloud – Bailey and it doesn’t change too much from that. What has changed has been the maintains that it’s really the enterprise datacenter that continues to drive cost of administration of all of those 30 million servers, which has grown the market. “The real driver is the datacenters that companies have ownerright along with the installed base. What’s also grown is the cost to be ship of and operate,” she says. “I think if this recession hadn’t come along able to power those servers, turn them on and then cool them. It’s become then we would have seen more activity around hosted, outsourced or Web a very significant cost on the electricity side, and also a very significant 2.0 models, but the recession has forced many companies to think about business cost.” not just the reinvention of their own datacenters, but also how they source Thanks to virtualization, however – along with the downturn in the for those.” economy – the server market for 2008-2012 has flattened out for the first IDC believes there have been three key drivers in transforming the time. “We’ve never seen this before,” says Bailey. “We’ve seen downturns datacenter. “Far and away the number one change that we’ve seen has during the dotcom implosion, but it was a very short-term implosion; what been site consolidation,” says Bailey. “The level at which these consolidawe’re seeing now is fewer systems going into the market, and we continue tions have been taking place is something that we haven’t seen before; it to believe that for the next five years that’s how the physical infrastructure used to be an organization would be happy if they could go from 40 sites will look.”

Datacenter transformation

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What will continue to grow though, says Bailey, is the number of virtual machines. “You’re getting 10-20 virtual machines per physical server, and what we’re seeing is virtual machine sprawl, where the number of virtual machines is growing in the same way that we saw the physical infrastructure grow previously. We’re looking at somewhere around 120 million virtual machines installed on a worldwide basis, and we’ve never seen growth like that in the server market ever before.”

But with every virtual machine needing to be patched and managed and upgraded just like a physical server, Bailey believes this could present a huge management problem if customers don’t start changing the way they manage their server infrastructure. “Server virtualization is helpful in terms of being able to deploy systems more quickly. It definitely helps in being able to lower hardware maintenance. But what it hasn’t helped address is the bulk of system administration – taking care of the OS, doing all the patching, the upgrades, etc. That continues to be a problem, and in fact, if we believe our own numbers, that management actually gets worse with the broad adoption of virtualization.

“Customers have to start thinking differently about the management of virtual machines, because we can’t continue to allow virtual machines to grow unchecked,” she continues. “There are very few policies being put in around the lifecycle management of a virtual machine – only 20 percent of customers are even thinking about lifecycle management around virtual machines – and the types of tools that we think we’ll need to see in the market are the those that allow you to move virtual machines around, allow you to add resources on the fly, allow you to create what we call the dynamic IT datacenter: a datacenter that can ebb and flow with changes in the business.”

Bailey says the core to that dynamism is mobility – being able to move virtual machines from one physical server to another – and cites the

adoption of VMware’s VMotion tool as a good example. “We know that there’s good adoption of VMotion today. About 80 percent of customers are using it, but they’re not using it in the way you might think. They’re still using it manually, and what they’re not doing is using policy-based automation tools to allow the mobility of virtual machines around the datacenter. There’s a lot more to explore in this area – for instance, if you can move a virtual machine from one physical server to another around the datacenter, that’s high availability like we’ve never seen before in the X86 marketplace.”

In fact, Bailey feels we’re only just starting to see what the impact of server virtualization will be. “Every day I’m learning something new about what the advantages are, as well as what some of the hurdles are going to be on an ongoing basis,” she says. “And it’s causing datacenter operators to think completely differently about many adjacent technologies, too. We see them having to rethink hardware that they’re buying; there’s much more importance attached to shared storage and network planning and capability is also receiving a lot of attention. In terms of management, I think it’s going to create more of a crisis than it’s solving on the hardware and consolidation side.”

However, there’s no doubt the benefits will far outweigh any potential challenges. “For example, moving virtual machines from one datacenter to another gives you the ability to do site recovery with virtualization,” she enthuses. “It really does change the way that customers can think about doing that at a price point like we’ve never seen before. Disaster recovery is a little way off. You still need a dedicated network and we see most customers still using traditional replication tools to make that happen, but you can bet that over the next several years that’s going to be something that gets baked into virtualization technology, and so it’s a real game changer.”

DATACENTERS

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EXECUTIVE INTERVIEW

Mark Fulgham Vice President of Data Center Solutions for the Central Marketing Organization of Cisco, reveals how the company is focusing on a systems approach to datacenter virtualization.

Can you outline the main business challenges in the datacenter and explain how you are tackling these business challenges at Cisco?

Mark Fulgham. Cisco has focused on datacenter virtualization as the paradigm shift to address the real challenges of the CIO – why? Because it remains largely a collection of technologies that each CIO’s team or their respective proxy has to design, assemble and manage. Cisco began looking at systems, applications and network architectures, not just networks. We began to see the network not as plumbing, but as a platform and as the preferred vehicle for this virtualization journey.

Case in point: as the virtual machine became the new atomic unit for datacenters, the Cisco unified fabric was there to create the physical to virtual abstraction – simplifying infrastructure, unifying a tangle of interdependencies and converging discrete networks into one that could deliver ubiquitous connectivity and hardware location freedom.

With network, compute and virtualization platforms converged, Cisco has been able to focus efforts beyond abstraction to automation, from unified fabric to unified computing – and to a simpler architecture that extends the lifecycle of capital assets and enables more effi-

cient, flexible and available business processes. Unified computing will move us from hardware to soft ware provisioning of the network and the workload. Total provisioning freedom of the infrastructure will allow CIOs to focus on the data and information contained within the lines of business and decision support systems.

In a difficult business climate the IT department must accomplish more with fewer resources. How are advances in datacenter technology helping accomplish more? What are you doing in this sector?

MF. Datacenter virtualization provides us with an opportunity to sand-box and standardize physical platforms while redefi ning what is core and context to IT. By standardizing the HW IT infrastructure (network, compute, storage, hypervisor, management) there is huge personnel productivity to be recovered because automation can model and perform repetition and maintain trust policies for HW IT infrastructure. IT teams can focus on the SW IT infrastructure (O/S, application, database and data) as the new way of delivering IT to business

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INNOVATIVE DESIGN FOR NEXT GENERATION DATACENTERS Taking a ‘clean slate’ architectural approach to datacenter infrastructure, Cisco has introduced the Unified Computing System to unite compute, network, storage access and virtualization into a scalable, modular architecture that is managed as a single system. The Unified Computing System is the first offering in a new family of products that complements the Cisco datacenter portfolio. Key Unified Computing System elements include: • Compute: Cisco designed an entirely new class of computing system that incorporates the new UCS B-Series blades based on the future Intel Nehalem processor families (the next generation Intel Xeon processor). The blades offer patented extended memory technology to support applications with large data sets and allow significantly more virtual machines per server.

• Network: The system provides support for a unified fabric over a low-latency, lossless, 10GB-per-second ethernet foundation.

This network foundation consolidates what today are three separate networks: local area networks, storage area networks and high performance computing networks. This lowers costs by reducing the number of network adapters, switches and cables and by decreasing power and cooling requirements.

• Virtualization: It unleashes the full potential of virtualization, by enhancing the scalability, performance and operational

because of simplified operations and amplified opportunities. Internal IT resources can evolve into a utility that responds to requests through the creation of virtual machine containers that do not require months of lead time to plan, prepare, procure and provision. Developers can easily create virtual machines and load them with applications. Managers can quickly allocate resources to meet the dynamic needs of production workloads.

What does your collaboration with Intel entail and what value does it bring for Cisco’s clients?

MF. Intel and Cisco have worked

Mark Fulgham is Vice President of Data Center Solutions for the Central Marketing Organization of Cisco. Focused on Cisco’s Unified Computing and Data Center Virtualization programs, Fulgham is responsible for product marketing and field enablement, partner marketing, datacenter architecture, and processes and operations.

closely on a shared vision for the future of enterprise IT infrastructure – the cloud – and work closely on enabling technologies. Case in point: when you look at the challenges of virtualization you will quickly see that Moore’s Law is alive and well – customers are not CPU bound they are memory and I/O bound so Cisco worked very closely with Intel on their latest Xeon 5500 series ‘Nehalem’

control of virtual environments. Security, policy enforcement and diagnostics features are now extended into dynamic virtualized environments to better support changing business and IT requirements.

• Storage access: Provides consolidated access to both storage area networks and to network attached storage. Support for a unified fabric means that the system can access storage over ethernet, fibre channel, fibre channel over ethernet or iSCSI, providing customers with choices and investment protection.

In addition, IT staff can pre-assign storage access policies for system connectivity to storage resources, simplifying storage connectivity and management, and helping to increase IT productivity.

• Management: Management is uniquely integrated into all the components of the system, enabling the entire solution to be managed as a single entity through the Cisco UCS Manager, which provides an intuitive graphical user interface, a command line interface and a robust application programming interface to manage all system configuration and operations. This helps to increase IT staff productivity, enabling IT managers of storage, networking, compute and applications to collaborate on defining service profiles for applications. Service profiles help to automate provisioning and increase business agility, allowing datacenter managers to provision applications in minutes instead of days.

CHALLENGES OF THE DATACENTER Every business event generates an IT transaction in the datacenter. Cisco has listened very carefully to the real challenges of CIOs today as they look to tomorrow: • • • •

How to bring together competing server, storage and network teams How to open up existing data center silos How to break free of endless location, hardware, provisioning and business process constraints How to retire business risk, increase business agility and align technology with business and financial realities

architecture to take advantage of memory expansion capabilities allowing for more memory per chipset to address large memory footprints as well as accommodate more memory per virtual machine.

What can we expect to see from Cisco in the coming 12 to 24 months?

MF. Simply stated a systems approach to datacenter virtualization – we want to help our customers by developing turnkey systems that reduce the need for buying individual components and then integrating them into a system to service business applications. We want to bring to market virtual blocks of HW IT functionality, which are available at the right price and the right size.

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EXECUTIVE INTERVIEW

Following the green brick road Steve Herman, Vice President of Data Center Business Development at CBTS, gives the low down on data center dos and don’ts.

What would be your top tips on how to go about getting the most out of your data center? Are there any important dos and don’ts?

Steve Herman. First, be aware of the future, but do not try to future-proof. Customers in our facilities continue to add storage capacity and processing power at a very progressive rate. To this end, plan for the growth and ongoing needs of the data center, but do not try to over-build or over-engineer the facility for massive power density. Over-building the facility day-one traps capital, increases operating budgets and dilutes the value of the data center to the business.

Secondly, know your data center’s capabilities and limitations. Many data centers I have seen have been constructed over a period of years and many times these facilities have seen ongoing modifications. As infrastructure is added to the facility, it is critical that the facility not go through ‘organ rejection’, thus leaving a point of failure that was not present or even known.

Thirdly, establish and adhere to strict process and procedures for operations excellence.

We have all seen data centers that have cardboard boxes stacked to the roof, or cabinets of spaghetti wiring, the semi-hot/semi-cold isle deployments, and one of my favorites, the MIA maintenance program. You have invested time and energy into your data center processes, it is criminal to allow them to be compromised. The core of the data center is to support the business, make sure your facility is doing just that.

Finally, follow the green brick road. The day of reckoning is coming; where metrics for power consumption and exactly how/where the power is actually being consumed is in

Virtualization is possibly one of the most overused (and, for that matter, misused) terms in networking today; nevertheless, its potential – when implemented correctly – is enormous. What are the benefits of virtualization and what role do you play in this sector?

What is the key challenge that organizaSH. X86 virtualization allows us to transform tions are facing in terms of gathering and servers and storage into network devices. managing data? How does your solution Through virtualization and effective cloud help overcome this obstacle? architectures we can provide ubiquitous, inSH. Organizations are now facing the exploexpensive computing resources that will make sion of storage. If you conthe hypothetical utility sider one vertical of storage models of the past a sus– video, it is mind-bending tainable and profitable how much data customers reality for the future. Over are storing; video for surthe next year you will see veillance, online social netthe term cloud computing works, entertainment and so slowly replaced by virtual on. CBTS provides enabling datacenter. Cloud will be technology for corporarelegated to the public tions to deploy their storage internet space. CBTS’ role requirements. We provide is to address the unique premier data center facilities concerns of enterprise located within a geographic business customers lookarea that are interconnected ing to realize the cost with a private and redunadvantages of utility comSteve Herman is Vice President of dant DWDM network. Th is puting without sacrificing Data Center Business Development at CBTS. He is responsible for data network enables customers security and control. center site analysis and procurement, data center construction and data to perform real-time replicacenter migration and integration for tion of storage across subWhat new developenterprise customers. millisecond primary and ments can we expect to redundant network paths. Thus, if customers see from you over the next six to 12 months? desire to utilize the facilities for a worldwide SH. As a tier-2 data center provider, we will production SAP deployment, we can provide expand our flexible solutions outside our current footprint. You will see announcements the enabling services. If a customer’s business over the next six to 12 months demonstratdriver is to deploy an archival solution (ofing our national expansion of our data center fload the labor intensive backups), we provide footprint. that enabling service. our near future. These metrics should help you manage your facility and tune the infrastructure to maximize its capabilities. Now is the time to start, leverage the metrics to make data driven decisions regarding the lifecycle of the current facility.

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EXECUTIVE INTERVIEW

The datacenter of the future Jody Little, Vice President of DCT Service and Solution for Unisys, gives her thoughts on datacenter transformation by utilising cloud computing.

In these tough economic times more needs to be done with less, and business requirements may keep growing alongside IT that isn’t flexible or efficient enough. In your opinion, how should IT departments better align business demands to IT? Jody Little. First map your unique business value chain to understand how the business functions and drives value. Then design the digital supply chain services that help the business perform. Next, begin to transform your IT into an efficient and high-performance environment by leveraging the latest approaches such as IT automation and cloud computing.

How can IT departments take advantage of the economic benefits that cloud computing promises?

JL. The immediate hurdle for most enterprises is a lack of experience with cloud computing.

The key to realizing economic benefits is to identify which workloads to move to the cloud, which to keep internally and which require a hybrid cloud model. Unisys delivers a range of cloud transformation services that do exactly this; they help clients accelerate transformation while mitigating unnecessary risk.

Where can some of the savings be realized?

JL. According to IDC, the average datacenter today spends 60 percent of their budget on administration while servers are 90 percent underutilized. According to Unisys best practices, combining IT automation and virtualization enables server utilization to increase to the 50-80 percent range. Plus, IT automation for many tasks can reduce associated administrative costs by up to 97 percent. Cloud computing can enable a shift from capital costs to a pay-

as-you-go model, where you pay only for what is used. Finally, in addition to quantitative financial savings, use of cloud services can help realize faster speed-to-deployment benefits.

What makes Unisys’ approach to datacenter transformation and cloud computing unique?

JL. Unisys follows a results-focused methodology. We work with your business and IT organizations to determine the critical linkages between the business and the technology that supports it. Projects can be quick, with high immediate impact, or longer term and transformative. Unisys believes strongly in jumpstart tools that help realize benefits quickly and allow a series of measurable results leading to the end-state. We also recognize the need to minimize disruption, so we typically recommend starting with what you have. Our transformation services expertise enables flexibility to start where the client is today and assist them along their journey through a complex multivendor environment to wherever that journey leads, be it an internal datacenter, an internal cloud, an external cloud or hybrid. This approach helps leverage existing investments and reduces unnecessary new expenditures.

How does cloud computing play into datacenters of the future?

JL. Cloud computing is a convergence of IT capabilities that lead the way to reduced datacenter costs and improved efficiency. Cloud is essentially a highly consolidated and automated environment available to run client workloads on demand. Cloud computing can be internal or external for example, the Unisys Secure Cloud Solution, hosted in our outsourc-

ing datacenters, delivers on-demand services ready to run business applications securely. It can be more cost-effective and less risky to run some workloads in the Unisys Secure Cloud, with its patent-pending Unisys Stealth Solution for data security than it is to run in-house.

Some will find that hybrid models are a good fit, while others will decide that using Unisys blueprints to stand up their own internal clouds is best.

As Vice President DCT Services and Solutions, Jody Little leads the solutions portfolio team at Unisys, which assists clients in aligning IT to business objectives in pursuit of a realtime enterprise.

Case studies: savings • Commonwealth of Pennsylvania: $317 million has been saved by consolidation and efficiencies, while another $240 million in savings are expected over the next five years • For ourselves: Unisys internal IT group reduced the number of datacenters from 50 to two, yielding $500 million in savings over five years, with an additional $324,000 per-year savings in annual server maintenance costs through consolidation and virtualization.

Visit the Unisys.com website for other case studies where these data center transformation projects have yielded impressive results.

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INDUSTRY INSIGHT

Green IT. Blah. Blah. Blah.

No offense intended. But how will we ever attain green anything when over a third of IT managers are in the dark about what their power consumption is and nearly half only know the aggregate usage, by Carla White, Director of Product Marketing at Avocent.

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here’s no arguing the moral value of a greener IT infrastructure, especially considering just how much these beasts in our basements consume. A 2007 US Environmental Protection Agency study found that data center energy utilization had doubled between 2000 and 2006, representing about 1.5 percent of all US energy consumption – almost twice as much power used by all the color televisions in the country. That trend is expected to continue, with power consumption doubling again by 2011.

Power consumption You may be aware that a typical server consumes 190 watts. But did you realize that this only represents 41 percent of power usage for that server? Add in uninterruptable power supplies (UPS) and HVAC for each unit, and the number jumps to 418 watts. That equates to $439 a year and a staggering 3.66 tons of greenhouse gasses emitted annually. Multiply that by hundreds of servers, all running an average of 88 percent of the time, and you get idea. It’s what you don’t know that makes the difference.

A recent Aperture Research Institute study states that half of the data centers do not have the ability to track power from individual assets – more than five million servers in the US alone.

But that statistic may be misleading. Most data centers actually have at least some of the equipment needed to track power usage; they just don’t know how to mine that data to give a single master view of energy consumption trends.

Green IT: What to look for The hardware portion should deliver dependable: MONITORING: Real-time data collection, metrics and reporting, from sources including multi-vendor power distribution units, HVAC and UPS ACCESS: Enterprise-class appliances that allow remote access and power control of heterogeneous servers and network devices The software side should enable: CENTRALIZATION: A single holistic view of the entire IT infrastructure INTEGRATION: Gather and integrate information from a wide variety of collection points INTUITIVE OPERATION: An easy to understand interface that presents the data collected in a dynamic way PLANNING: Data about every asset should be accessible for creation of ‘what if’ scenarios for informed changed management before a single device is moved, added or changed

A smart solution Yes, the obstacles are many, from a multitude of machine and operating system types to legacy connectivity systems, diverse data formats, and manual processes. But they are not insurmountable. Proven, powerful solutions are out there ready to integrate all of that data flowing in from various devices to facilitate a deeper understanding of your IT environment.

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Any power management solution you consider should be rich in features and function on both the hardware side (monitoring, connectivity and control) and the software side (management, reporting, planning).

With a proper combination of power control hardware and power management appli-

ances, you can quickly identify hot spots in the data center, such as idle or underutilized servers and inefficient legacy devices, plus better understand usage patterns to enable power throttling during regular periods of low activity. It can also help you plan ‘greenly’ for any change coming down the road.

“Most data centers actually have at least some of the equipment needed to track power usage; they just don’t know how to mine that data to give a single master view of energy consumption trends”

Green Green represents more than just the environment. It’s the color of money saved as well.

Enterprises that have implemented efficiency initiatives have seen on average a 19 percent reduction in total IT power consumption, with some even enjoying upwards of 60 percent according to the Enterprise Management Associates Survey 2009.

Avocent’s suite of systems management tools and products can help you effectively achieve your green goals (environmentally and cash-driven) through proper power management tools.

Our industry-leading solutions enable complete monitoring, management automation and detailed reporting on energy usage from the data center down to the rack, not only creating savings in actual energy consumption, but in manpower, time and effort.

Carla White joined Avocent in 2003 as a product manager for desktop products and later for DSR products.

For more information, please visit www.avocent.com

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ASK THE EXPERT

THE BACKBONE OF BUSINESS OPERATIONS Group Vice President of Global Sales & Marketing for Panduit Corp, Ron Partridge, reveals the importance of physical infrastructure for business functions.

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he physical infrastructure is truly the ‘backbone’ of business operations. It is comprised of passive and active components, intelligent devices, and hardware and soft ware that are used to connect, manage and automate five types of systems – power, control, compute, communicate and security.

Without a reliable physical infrastructure, enterprises face the potential of serious risks.

For example, cabling problems or security breaches within a physical infrastructure can negatively impact network services levels, which can result in poor customer service and lost sales, lower employee productivity, and even damage an enterprise’s reputation. The cost of this downtime can range from $20 million per year for retail enterprises to more than $200 million per year for fi nancial services firms, according to the North America Cost of Downtime study done by Infonetics Research.

In the future, the challenges around power, cooling, space, transport, speed and performance will become more pronounced in the data center and IT enterprise environment. As this occurs the relevance of the physical infrastructure will continue to increase dramatically.

Reliable infrastructure While having high quality, and highly reliable components is a critical prerequisite, present and future challenges require a unified, integrated approach across all elements of the physical infrastructure.

These components, devices and software need to be tightly aligned with the logical systems architecture to provide an integrated solution that optimizes availability and lowers risk and cost.

A second requirement is to take an integrated lifecycle management approach that spans the planning, design, deployment and operations phases of the physical infrastructure. A welldesigned infrastructure will be optimized for power and cooling capacity, space, and performance while helping to deliver scalability and security that minimizes network interruptions to enable business continuity.

Thermal management The deployment of high-density blade servers and storage devices in the data center has resulted in spiraling rates of power consumption and heat generation, presenting new challenges to traditional cooling sys-

tems. Effective management of the physical infrastructure can help to manage heat more effectively by optimizing airflow throughout the data center to improve cooling system efficiencies, prevent hot spots and enhance sustainability.

Hot exhaust from equipment can circulate back to the equipments intake, causing equipment to overheat and potentially fail.

Likewise, cool air may bypass the intakes and compromise system efficiency, raising cooling costs. To combat these risks, cabinet systems can integrate cooling conservation techniques such as exhaust fans that move air through the equipment from side to side, vertical exhaust systems that act as chimneys to move hot air up and out, and innovative cable management.

There are floor-sealing grommets that lock in the cool air, reducing bypass air by as much as 16 percent. The possibilities are endless.

Savings We have determined that a well designed physical infrastructure that integrates these kinds of leading solutions can save as much as 25 percent on their energy costs. One area of opportunity is integrating intelligent management of the network’s physical infrastructure.

Th is integration offers real-time monitoring

Ron Partridge is Group Vice President of Global Sales & Marketing for Panduit Corp., where he is responsible for the Global Strategy, Global Marketing, Global Sales, USA Sales, and all international business units of Panduit.

and visibility into dense physical infrastructure connectivity across remote locations to identify unauthorized changes or security risks and alert IT managers, deliver guided patching and troubleshooting, and to automate system reporting. As it monitors connections with detailed reporting, it also delivers visibility for improved asset tracking and capacity management, which can contribute to a lower TCO. To learn more please visit Panduit on our website at www. panduit.com/upi, www.panduit.com/datacenter call on 800-777-3300, or send an email to cs@panduit.com.

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INDUSTRY INSIGHT

The five requirements of building converged infrastructure architecture Virtualized: Server virtualization is not enough. All resources including servers, storage, networking, and power and cooling, must be virtualized. This approach enables application environments to be moved around anywhere, anytime, on the fly. This improves IT flexibility and response to business requests.

A new era of IT Paul Miller reveals why HP is betting big on converged infrastructure as the next generation of IT. Today, businesses have a window of opend result is the same set of problems, only portunity that opens once in an economic cycle created by another technology. By the end – the short pause before the return to growth. of this year, virtual servers will outnumber Th is is the time when smart CIOs bring their physical servers for the fi rst time in history. best ideas to the table to reap the most from the Some estimates predict that by 2012, there upcoming economic rebound. Th is economic will be over $100 billion spent in additional cycle is unique because it is being matched by operating costs required to manage the exan inflection point in IT, where the converplosion in virtual servers. gence of new and existing technologies creates HP believes that the only solution to sprawl new opportunities. is to bring together techFrom green IT and nology in a fundamentally virtualization to cloud different way. We call our computing, all of today’s strategy, the HP Converged mega-trends predict that Infrastructure; a next-gentomorrow’s businesses will eration IT architecture that be built upon a converged unites virtualized computinfrastructure. The traers, storage and networks ditional lines that divide with facilities into a single the datacenter today will environment optimized for quickly begin to merge. any workload. Inside, all For years, IT organizations resources are controlled by have been adding servers, a shared-services model that storage and networking adapts application environdevices to keep pace with ments to instantly respond to Paul Miller is Vice President, Marketing, Enterprise Systems and business applications and business demands on the fly.

Networking for HP’s Enterprise the terabytes of data they HP believes that the end Business unit, responsible for promoting the company’s servers and generate. Over time, these result of this strategy will storage systems worldwide. resources became locked usher in a new area of IT, up in countless technology creating a $35 billion dollar stacks, each devoted to a particular application market by 2012 in the process. Making this or line of business. a reality in today’s economic reality means The most common reaction to these issues that convergence must be able to take existing today is to accelerate server virtualization.

However, the explosion of virtual servers has created a new issue called ‘virtual sprawl’. The

investments into the future, without starting over. Only HP has the portfolio, partnerships and expertise to make this vision a reality.

Resilient: With every application sharing a common pool, every level of resiliency must be available and built-in. But because the number of applications will grow, the baseline of availability of all shared resources must be higher, and disaster recovery capability must be standard.

Orchestrated: Converged infrastructure requires a shared service management model where the orchestration of all infrastructure resources is based on pre-defined templates and policies.

This means that standard processes and best-practices get hardwired into the system and governance and compliance is enforced by the system, eliminating human error and variation.

Optimized: A converged infrastructure must be able to optimize the use of resource for any workload, anywhere. Based on service requirements, the infrastructure should be able to adapt to a wide variety of demands in the most efficient way to meet different demands for performance, resiliency and efficiency. This means the infrastructure must continuously optimize supply to meet application demands.

Modular: Moving to a converged infrastructure can’t be a ‘do over’.

It should start with your current investments and take them forward.

That’s why modular designs that HP has pioneered, plus a commitment to open standards is critical. This approach also gives IT the ability to extend new capabilities and scale capacity over time.

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THE BIG DEBATE

ALL OUT OF IDEAS?

The financial crisis has had a big impact on American innovation, reducing access to capital and intensifying a culture of risk aversion. So does the US face an innovation crisis? And how serious is the threat to America’s innovation leadership?

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A

merican industry has a history of paranoia when it comes to technological superiority. If it wasn’t the Russians and the space race, it was the Japanese and their manufacturing models. Now it’s the Chinese and the Indians challenging American dominance in an area critical to long-term growth and economic health: innovation.

Since the mid-1990s, the United States has reduced the intensity of overall R&D funding as a percentage of GDP at the same time that the nature of global competitiveness in business has fundamentally changed; more companies are turning to low-cost, offshore locations to help them do more with less, and as these emerging economies mature, so does their capacity for sustaining a culture of innovation.

Many think that the US economy is losing its traditional strength in the area of innovation. A recent report by the Information Technology and Innovation Foundation suggests that although the US ranks sixth among 40 nations and regions in terms of innovation and competitiveness, its progress has slowed to a crawl in these areas. “All of the 39 other countries and regions studied have made faster progress toward the new knowledge-based innovation economy in recent years than the United States,” says ITIF President Robert Atkinson.

The financial crisis has not helped, either, reducing access to capital and perpetuating a culture of risk aversion. “Precisely at the time when we most need longterm risk capital to plant the seeds for the next generation of breakthrough innovations and to fuel sustainable job growth in America, these factors have conspired to drain the risk capital that is the lifeblood of our economy,” argues venture capitalist Pascal Levensohn.

Of course, not everyone buys into the idea that the situation is critical. Last year, the RAND Corporation published a study arguing that the US continues to be the leader in science and technology. “The United States accounts for 40 percent of the total world’s spending on scientific research and development, employs 70 percent of the world’s Nobel Prize winners and is home to three-quarters of the world’s top 40 universities,” it said. Even so, the report warned against complacency. “The US continues strongly, but the rest of the world is coming from behind and catching up.”

So what does the US need to do to better nurture a culture of innovation?

Where is the biggest challenge likely to come from? And do we need another Manhattan Project to help channel the innovative potential of America’s scientific, R&D and business communities? Business Management asked a panel of experts for their views; the results were illuminating.

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GUSTAF SAHLEN

Senior Manager, Fast Innovation & Growth, Accenture

ANDRE TEXEIRA

Head of R&D, Campbell Soup Company The biggest challenge is to deal with the unknown. Innovation is something that people have grown to believe is a wonderful thing. I’ve never met a CEO who doesn’t like innovation, just as I’ve never met a mother who doesn’t like to say her child is creative. But since everybody believes innovation is a good thing, it becomes harder to manage the unquantifiable elements of the innovation process: the unknown, the unexpected, the failures. And in reality, innovation – in most cases – leads to failure rather than success. It’s very difficult to manage the expectation of 100 percent success when it is seldom the case.

In some ways the old one percent inspiration, 99 percent perspiration rule still applies, except that the inspiration is now facilitated by the multidisciplinary nature of innovation. We are working a lot less in silence than we used to in the past, which means that a lot of inspiration comes from the crossfertilization of ideas, from learning from each other. So probably that one percent has increased a bit.

I think that we still look at most processes in corporations – innovation included – very much like a relay race, but we’re moving gradually toward more of a rugby scrimmage model, where everyone actually pushes together rather than moving forward individually. One of the ways companies are achieving this is to have environments and forums and working groups that involve people from different disciplines learning from each other – not just sharing what we know, but rather learning the things that we don’t know that we know, which is probably the most important thing when you’re working in a team. You need to have a free dialogue where people learn what they can from others and then make better decisions. Decision-making continues to be one of the most difficult pieces of the innovation process.

The current economic downturn has had a huge impact. In a downturn the key message is to focus on the core business; just as we kept hearing for many years that innovation would be the most important engine for growth during the good times, when you have a downturn immediately that focus shifts on to your core business. It means, as they say in Texas, that you have to learn how to whistle and chew gum at the same time – focus on the core yet maintain the long-term growth strategies – which is very, very difficult.

The important thing is to be able to focus. I always like to use the analogy that we need to have a telescope and a microscope in our hands at all times so that with the telescope we can gaze at the stars, while with the microscope we can see everything in minute detail. But for heaven’s sake don’t get those two instruments mixed up.

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It’s quite clear that people still think innovation is critical, and it’s also clear that companies still invest heavily in innovation. But what we have seen is a shift towards more incremental innovation – innovation that is lower risk and more focused on the short-term, as opposed to what is termed ‘breakthrough’ innovation that involves long-term investment and higher risk.

And I think that is a big problem for companies today: that they feel forced to focus on low-risk innovation. If you look at breakthrough innovation, there you have quite a high interest in combining different innovative dimensions – you combine, for example, the product innovation dimension with the business model innovation dimension with the market innovation dimension and the process innovation dimension. It drives collaboration and a different level of problem solving. Unfortunately, companies tend to focus too much on incremental innovation – even more so in today’s tough economic situation, where risk aversion is probably the main stumbling block to developing a sustainable culture of innovation. Companies tend to be even more risk-averse when markets are depressed, and I think that this is a structural problem in almost all industries – that they tend to focus on too many low-risk, short-term projects.

So how do you address this? First of all you need to think of innovation as a business discipline, not as something creative that is happening deep in the R&D, marketing or design departments; it’s something that you need to manage like any other business discipline in the company. So having a structured approach towards innovation is essential, and you need to have three main components. You need to have foundation. You need to have conversion. And you need to have consistency. Foundation is your ideas, your strategies; conversion is how you convert all these ideas into viable business concepts; and consistency ensures that you don’t do this just once a year, but you do it over and over again. So by combining these three main components, you will achieve a high value from your innovation investments.

Someone suggested to me recently that America’s position as an innovation powerhouse was under threat from countries such as India and China, but I’m not sure I agree with that. I would say that most of the innovation that I see in the emerging markets is still of the more short-term variety, and more focused on product line extension. whereas the big innovations, the breakthrough innovations, are conducted in the main corridors of the major R&D centers in the developed world. I do think that will change – and I definitely see it changing when companies decide to focus on developing products specifically for the emerging markets – but for now America’s ability to combine all the innovative dimensions and its level of expertise mean it will remain an innovation leader.

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RICHARD TAIT

Principle, Product Development Consulting, Inc.

TOM WUJEC

Senior Fellow, Autodesk I actually don’t think that entire regions are more or less innovative than others. But do America, Canada, Europe – even Asia – face an innovation crisis?

You bet they do, because the challenges we face now are more profound than ever before. Let’s break down what innovation actually means. First of all, innovation is the capacity to recognize problems to be solved. Second, it’s the capacity to generate insight into the solution of those problems. Third, it’s the capacity to formulate a clear picture, vision or strategy of what the solution could actually be. Next it’s the capacity to develop something that is technologically feasible. And then finally, there’s the marketing and the execution side of things.

The United States is very good at many of those areas, while India is terrific at others. I think what’s going to happen is that different businesses will propagate to different regions based on the resources and the strengths of those cultures. So, for example, a firm moves to India. Does that mean India’s more innovative? Well, there aren’t as many technological resources and deep investment pockets available in India as there are in other parts of the world, so perhaps it’s for other reasons. Maybe it’s because India’s got a very strong educational system and they’re hungry for new ideas. Infosys and many other companies are, of course, testament to that. It’s natural that many industries that depend on human capital will migrate to India.

Where we have technological innovation, I think we’re going to continue to be very strong in the United States and Canada because we have depth of expertise and a strong history here. Will that move to other parts of the world? Absolutely. We’re seeing huge R&D labs being developed throughout Taiwan and China, and there’s a very strong chance that the United States is going to lose some of its leadership in terms of technology innovation.

I think the heart of innovation is the development of small, effective work teams. Innovation doesn’t really occur in companies; it happens in relatively small teams, perhaps eight to 20 people, who work together to solve problems.

Look at organizations such as Google. It’s a huge organization, but the actual innovation takes place with relatively small cells of individuals. What we need to do in North America is develop a series of techniques to make these teams far more creatively effective. And that means not only giving them the right tools, but also the right culture to be able to do all the things an innovative company needs to do. To have the freedom to generate new ideas; to have the time to clarify what problems they’re trying to solve; and to distribute those problems through other parts of the organization to come up with effective solutions. Culture and process are the two drivers for innovation, and when you have that, the other things will follow.

We define innovation as not just creativity, but creating new value in the marketplace. And one of the challenges that we face when we start talking about innovation with our clients is that they think of innovation as innovation for itself. But we believe that innovation for itself is not enough. It’s the output of innovation, the new value that you create for your customers, which will provide the competitive advantage for you in the marketplace.

How do you go about doing that? I think the big challenge that most companies have in today’s tough economic climate is finding the resources to commit to creating new value. They spend all their time just trying to stay on top of difficult economic situations. They’re not finding it easy to invest the key resources needed to create innovative ideas. So do we face a crisis in innovation? I think it’s less a crisis of innovation as a crisis in being able to take the steps to make innovation happen. People are always willing to look for and identify new opportunities, but that’s just the front end of the innovation process. It’s finding the resources and the capabilities – all the pieces that companies need in order to take that concept of what’s possible and turn it into a reality – that is the difficult part.

People often ask me where the real danger will come from. Is it China? Is it India? I think the real issue is having our own people willing to step up and make the necessary investment and resource commitments; to take the time and energy to structure an approach that enables them to really understand what it is that customers are looking for, and then to invest their time, their energy, their people and their resources to go and systematically deliver that value.

People have suggested another Manhattan Project, but I’m not sure this is the answer. If you look at the Manhattan Project, it was massive numbers of people all structured around a single goal. But the power of the American enterprise system comes from the proliferation of smaller players, all doing different things and often working independently. They look for areas where needs are not being met, address them in small ways, and then grow and grow and grow. The Manhattan Project was large-scale innovation. But I think we need to encourage more small-scale innovation and enable that to flourish more than the large-scale stuff.

In fact, North America could be its own savior. The energy level of entrepreneurs, if you’ve ever talked to them, is phenomenally high. What you want to do is enable them to flourish. Give them the tools they need to help structure their efforts. Give them the support structures to enable them to really understand what will work and what won’t, and they will take it from there.

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TECHNOLOGY

KEEPING INNOVATION ALIVE Lorie Buckingham, CIO of Avaya, reveals how the communications giant cultivates a culture of ideas and why it is prepared to fight the battle of open standards.

In recent years there’s been a lot of talk about the promise of unified communications. Why is unified communications such an exciting development, and what business advantages does it offer to companies large and small?

Lorie Buckingham. Unified communications has been talked about for a while. I’m actually more enthusiastic about it now than I used to be, and the reason for that is the former solutions were very location-based – whatever equipment that was in that building, whatever capabilities it had, that’s what you were able to get. But people don’t work connected to a building, people work connected to other people.

What’s so exciting now is Avaya Aura, and we’re the fi rst ones out with this. It’s a unified business communications solution that is run out of your data center, so now you’re connecting up to people, you’re not connecting up to locations. I can coordinate through voice, video, IM and Web 2.0 and I can manage and control that, and it has the capabili-

ties that you need, no matter where it is, anywhere around the world.

One of the reasons corporations haven’t done it before, or that you see CIOs hesitant, is that it seems more exciting to collaborate outside of your enterprise than inside, and a lot of that is because you haven’t been able to manage, control or secure it. With Avaya Aura, you can manage it, it’s secure and you can control it and that’s a whole different world – you can now start giving the capabilities to your employees inside the organization in a way that’s okay with your company and your policies, and it starts becoming just as exciting having those capabilities inside as outside.

Improving innovation has long been a mantra among corporate leaders from all industry verticals. Achieving it is another thing altogether. What are the keys to creating a culture of innovation?

LB. Well, recently at Avaya we’ve been talking about our product road

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map, strategy and what we’re doing in terms of what we’ve been working on from an innovation perspective. Interestingly enough, first of all, there has to be spending money and it has to have people focused on it. It can’t be a part time.

The next thing is how do you bring innovation into your corporation, and I think with Kevin Kennedy, our new CEO, and the team that we’re working with, we’re doing a better job at bringing innovation into the company and I’m very excited about that.

Then you have all these ideas and the next big challenge is how to pick which ones to pursue. A lot of times the great ideas die, even though they’re right there in front of you, because the right leadership isn’t in place, and that takes leaders saying, “Here are 20 ideas. Let’s not let them fight with each other. They’re not all the same. These three are pretty incredible, and we could get them in our road map in the next six months, 10 months, and so let’s take the chance. Let’s do it.” And that’s really where the leaders take personal involvement in making sure that, “Ok, out of these, let’s take these three, and let’s actually make them come to reality.” So that’s the other side of it, where you’ve got the engine creating it, but you don’t do anything with it, which you see happen a lot in corporations.

It’s hard to make happen in a corporation when you’re worried about the global economic crisis but I think if you don’t focus on innovation and you’re not learning it’s just a matter of time before it dies out.

Despite the promise of unified communications, some hold the view that putting all your communication applications in one basket means a single point of failure. Would you agree with that view?

LB. It matters how you architect. When I’m talking about, for instance Avaya Aura, it can connect up with site systems not just from Avaya, but from other providers too. A couple of things can happen in this case: fi rst of all, if you want to make sure it has capability all the time, you might redundantly put the equipment across the two of them.

With other sites you want to make sure that voice is never down, because you need to be able to call out. Now, that is automatically ensured and so even if the main system is down, it can still make phone calls – it might not get all the fancy video conferencing but it does have that safety net, and that’s already built in. I think that proves that it matters how it is architected.

We’ve strived to keep our architecture open, so we don’t force customers to use only our solutions. We are different in that way in that you could have our open control Aura, and you could have different things underneath, because the idea is that over time you might want to use something different for video on day one to day two as that evolves, too.

So we’re not trying to force customers to go to just one solution, but it is architected so it can recover and it can keep you operating, and we haven’t yet had any problems.

Lorie Buckingham: Our company’s vision and philosophy is open and lets you communicate How is the development of open standards helping to drive this market? Have we yet reached a tipping point regarding the acceptance and adoption of open standards, do you think?

LB. I have a CIO perspective on this, as you can imagine, and I’m very pro open standards. It’s always frustrating to me when, you know, I want to use something from company A and company B, and one’s not open, and I’ve then got to do a lot of custom work. Custom work costs money, it breaks easier and it takes longer to deploy, so I am very pro the open standards, and it’ll certainly make a difference to the way we all communicate.

Our company’s vision and philosophy is open and lets you communicate. I’m not saying I don’t use companies that aren’t as unique, but I’m not that interested in them. I don’t think the battle’s over; we’re almost certainly still in the battle between open and closed standards.

This year, the hot technology topic is undoubtedly cloud computing. Do you see this as the next big technology movement or just industry hype?

LB. The cloud is here, and it is here to stay, I don’t think it’s a question at all. It’s an interesting topic though; people talk about the cloud like it should be something specific. It’s not and I don’t buy that at all.

You should be excited about it because it’s fast, it’s very adaptable and there’s no capital expenditure outlay, which are all good, positive points, and more and more people are going use it. The trick is to figure out what’s right for your company to be in the cloud and what’s not and then to be able over time to move in and out or between them, as new developments happen.

It’s defi nitely here to stay, especially through Salesforce and Google.

There’s a lot going on in the cloud, and you’ll see, working with some of our partners, that some of our solutions will start to be hosted on and become more cloud-based – where people talk to you about putting it up in the data center. You can imagine someone buying that as a service, and so we’re working on that.

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THE NEXT BIG THING

Buyer beware Caveat emptor, or let the buyer beware, particularly in regard to secure portals and communications, says Joe Ruck, President and CEO of BoardVantage.

When it comes to board content, clients almost always engage IT, since nobody can afford to make a mistake in front of the chairman.

However, lower down the organization, junior staff might access confidential sales projections and product plans, and see no harm in putting that content up on a free service. Needless to say this presents a real security vulnerability.

“You cannot do due diligence by surfing the internet or skimming PowerPoint”

T

he schedules of senior leadership teams are often driven by M&A discussions, reviews of the company’s top line and other highly confidential matters. But the means at their disposal to conduct these communications are less than satisfactory. Email is the usual default, but although email offers the benefit of immediacy, the medium is crippled by the notoriously weak security, and the fact that email clients were not designed for downloading and organizing large files and other high volumes of information. It is not surprising, therefore, that so many management teams are now looking at the range of web-based collaboration systems now available.

When it comes to hosted services, there is a huge spectrum of capability, yet hidden behind glitzy websites it can be hard to discern the wheat from the chaff. It is made worse by the fact that many hosted service providers actively try to cut IT from the decision process by appealing directly to the business users. In doing so, critical IT functions such as ensuring security and system reliability are short-circuited.

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Unfortunately, some vendors border on the unethical by inviting free sign-ups from corporate email addresses to set up a company account for the sole purpose of inviting further company staff.

This practice lends an aura of respectability to the trial encouraging customers to put confidential content on these systems.

It is fair to say there is still a perception that IT and the business are not aligned. Nicholas Carr’s (in)famous 2003 HBR article IT Doesn’t Matter, simply put into words what many in These vendors adopt this stance because IT the business had been thinking for years. But, can make life difficult by asking whatever shortcoming IT has pesky questions about security, in relation to serving the busioften requiring proof, visiting ness, it is important to realize the vendors data center or inthey do have specialist skills sisting on an ethical hack. This and by cutting them out of the is a process which is very familevaluation process for a hostiar to my company, ed service provider you are esBoardVantage, which makes sesentially denying yourself of cure collaboration portals for important insurance. You canboards and senior leadership not do due diligence by surfing teams. Procedures like these are the internet or skimming time-consuming and expensive, PowerPoint. Do you know Joe Ruck is President and but they are effective in rooting what Systrust is, or the differCEO of BoardVantage.

Previously, Ruck was senior out the dogs, so they serve a purence between level 1 and level 2 vice president of marketing at Interwoven and has pose. In fact at BoardVantage SAS 70 compliance? How do held sales, marketing and we welcome IT involvement in you know the vendor really has executive positions at Sun Microsystems, Network the sales cycle – there is no faster the backup systems they claim Appliance and Genesys Telecommunications, way for the prospect to see the in place? These though, are subsequently acquired by depth of our own internal precisely the sorts of questions Alcatel. processes compared to our that your IT department can competitors. It is however, a dishelp answer. tinction few business people would be able to Buyer beware means getting IT involved make on the basis of a simple demo. first – do not just sign up blind.

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INDUSTRY INSIGHT

The device dilemma The tug of war between employees’ mobile demands and IT’s security needs.

E

mployees are increasingly insisting on using their favorite mobile devices for corporate data and applications access regardless of their company’s approved platform, according to a new survey of IT Directors in American and British enterprises. What’s more, even when the IT department says no, it appears that employees are attempting to use their own devices anyway, resulting in consequences to the enterprise in terms of not only administrative costs, but even more significantly, security.

Vanson Bourne, an independent technology market research specialist, surveyed 300 IT decision-makers in companies of 500 employees or more. The results show a rebellion in the making. Nearly 80 percent of companies reported an increase in the number of employees wanting to bring their own devices into the workplace in the last six to 12 months. In addition, two-thirds of IT managers have been under more pressure to

increase compatibility with people’s personal handsets in the workplace. The iPhone is by far the most requested device, with 82 percent of respondents saying users are most regularly requesting support for this device. Regardless of the device of choice, companies are hearing

“Which devices are employees flocking to?

According to the survey, the iPhone, by a long shot. The iPhone has changed the game for mobile computing” that they must support each new platform as it gains popularity; three-quarters of the companies in the survey said they must provide support for multiple platforms.

Given how many mobile devices go missing, even one unsecured device creates significant exposure. No CEO or company board of directors wants to face a lawsuit because of employees losing the organization’s sensitive data.

Yet so many smartphones containing sensitive data are lost or stolen each year. Perhaps what’s most concerning is that three-quarters of those surveyed say they are worried that staff will fi nd other ways to access corporate networks through their chosen device, with or without the IT department’s help, while nearly 30 percent have experienced a security breach based on the use of an unauthorized device.

Until now, IT directors without a deep bench have had to say no. Saying yes to supporting new platforms and devices meant configuring and securing each device manually – not exactly feasible in a company with hundreds or thousands of employees using half a dozen different platforms. Even then, variable approaches from one device to the next made it difficult to know with certainty that security measures, such as on-device data encryption, were being implemented in a consistent and enterprise-grade manner. IT professionals would much prefer to be able to say yes – just over half in the US would if they were assured of security and management.

Which devices are employees flocking to?

According to the survey, the iPhone, by a long shot. The iPhone has changed the game for mobile computing, and more than 80 percent of respondents are getting requests for iPhone support. At the largest companies in particular (those with 3000 employees or more), IT managers are also under pressure to support new Android devices and Palm Pre, while continuing to support Windows Mobile and Symbian.

The research validates everything that our customers have told us anecdotally – they want to bridge the gap between the device choice their users are demanding and the management and security they require. With its Good for Enterprise and Good for Government products, Good Technology is uniquely suited to bridge this gap by combining an exceptional user experience for mobile collaboration with government-grade mobile security and management.

For a full version of the report, including a breakdown of responses by geography and company size, please visit www.welcometogood.com/device_dilemma/

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rganizations today are looking at mobility as a strategic tool and in these challenging times are expecting increased productivity from their mobile workers.

Organizational efficiencies have no doubt improved and while many people believe the end user receives all the benefits, thinking about all the processes for a particular application, mobility improves the company all the way up. “Colleagues of that mobile person are communicating in a much faster, more real-time perspective,” explains Stephen Drake, Program Vice President for Mobility and Telecom at IDC. “Those that are receiving the data that need to do something with it are doing so much faster and in a much more accurate way. It improves the entire organization’s workflow if you will.”

In terms of deployment, Drake believes a key issue management teams need to consider is identifying the types of employees that are being considered as po-

O

tential mobile workers. “You need to understand what applications you’d like to roll the mobility out to, because typically as organizations look at this there may be multiple business units or multiple types of workers that they’d like to roll this down to. While it may start as one group, understanding the best group to start with is critical and demonstrates how you can leverage whatever deployment you initially make for other business units that are waiting in the wings,” advises Drake, who goes on to identify two sets of workers. The first kind are the horizontal workers, those in sales or management that may start to mobilize though mobile CRM or mobile sales automation. On the other side are the vertical workers, who are perhaps out in the field or are technicians, and are looking at very different applications and devices, instead of email they will be looking to use a specific vertical or composite application, for example.

Willie Jow, VP of Mobility Product Marketing at Sybase, believes that there are two further key issues that management must consider when eval-

According to IDC, the mobile enterprise application market will surge to $3.5 billion by 2010, and in the grip of a recession, with strict budgets and cutbacks in place, it seems few organizations can afford to be left behind. IDC’s Stephen Drake reveals the multiple business benefits of enterprise mobility.

Mobilizing the workforce

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uating enterprise mobility. Firstly, he says that management must ensure investments are considered ‘future proof’. “Deployment of enterprise mobility evolves through the years because devices change, the backend systems change and the business processes change. You want to deploy a strategic platform that supports a heterogeneous environment and allows for flexibility and scalability,” suggests Jow. Secondly, despite the numerous benefits to an increasingly mobilized workforce there are also a number of risks associated with the use of mobile devices, including the loss of sensitive data. “The introduction of innovative mobile technologies that provide employees with a competitive advantage must be balanced with IT governance that ensures the safety of your organization’s data and assets,” says Jow. And, in terms of developing a plan around managing and securing devices in terms of a large mobility deployment, Drake is keen to highlight the importance of securing devices before a mobile solution is rolled out, for example, device management, device wipe, device lockdown, software distribution and inventory, is critical.

“Compliance is another issue,” explains Drake. “On a PC or on an officebased device it is unthinkable that items would exist without being com-

pliant, whereas with mobile devices, well, many organizations don’t even know what’s out there. The awareness and recognition at the point of rolling out these applications to the user is a critical area in terms of device management and security.”

Beyond security and compliance, there are a number of challenges to implementing, developing and deploying mobile applications, not least the mul-

“You want to deploy a strategic platform that supports a heterogeneous environment and allows for flexibility and scalability” Willie Jow tiple providers involved. “You’ve got software issues from the back end systems, down to the mobile device and the software and applications that reside on the device, so you’ll have software players involved, you’ll typically have a mobile operator as well as perhaps a systems integrator, and it gets complicated with these multiple moving parts involved. One of the most crit-

A global alliance In August 2009, the worldwide leader in software and the world’s largest smartphone manufacturer entered into a global alliance to deliver a new solution for mobile productivity. Microsoft and Nokia are set to begin collaborating on the design, development and marketing of productivity solutions for mobile workers, which IDC estimates to reach one billion worldwide in 2011.

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ical aspects is to trust your providers so that you feel comfortable and understand the delivery and complexity of mobility,” says Drake.

While there are currently “multiple moving parts” involved in the deployment and operation of mobility devices, more integrated partnership offerings are emerging, offering mobility as a service. Drake believes that the emergence of these all-in-one providers is encouraging and believes it may well affect the uptake of mobility technologies. Also becoming increasingly common is the increased integration of partnerships, for example the likes of RIM with IBM and EDS. “We’ve seen the likes of Sybase, for example, part-

works. That said, the software is progressing: “If you look at the devices that have come out in the last two years from RIM to Apple and Nokia, we are seeing some incredible devices that are beginning to catch up to capabilities allowing people to do much more than text, voice and email. And that’s where we’re starting to see the catch-up from the devices and networks and software all come together, we’re at a pretty exciting point where this is beginning to happen,” says Drake.

With the infiltration of consumer devices into the enterprise, Jow believes that there has recently been a shift in the mobility paradigm, which is reshaping the industry. “This ‘consumerization of IT’ has repercussions well beyond the device types that enterprises must support. I believe it “‘The consumerization of IT will will fundamentally change the mobility landscape and the traditional fundamentally change the mobility role of the information worker. Information workers will have access landscape and the traditional role to business critical information, along with instant connections to the of the information worker” contacts and resources needed to utilize that information, from anyStephen Drake where at any time. This causes a step change in the productivity levels we already see increasing with mobility solutions today,” explains Jow. So, what does Drake predict for the future of the mobility sector? ner with Samsung,” says Drake. “So the idea of these players coming togethWell, he expects to see continued growth in the software space and double-digit er to deliver much more integrated solutions, delivering a strong partnership growth in the key areas around mobile middleware, mobile device manin that they know each other quite well in the delivery of their solutions, and agement and mobile security, and a drop off in the mobile phone space, it’s not four or five different providers clumped together but companies who although the smart phone market is expected to grow. “We expect to see understand and recognize each other’s solution.” a big turnaround mid to late 2010 and continued growth opportunity over There is no doubt that there has been more activity over the last year or the next few years, particularly in the software space,” says Drake. two, with a deeper level of integration being seen. Larger system integrators are “Carriers are seeking out the idea of leveraging their networks for data sergetting involved in earnest and changing the way that solutions are being offered. vices and that will continue to be a very big growth component for the carLooking at the key criteria for choosing a next generation mobile platform, Drake riers. And all of that plays in as these pieces come together that really help believes that first and foremost it is crucial to look at the provider and do some the idea of business mobility, so we’re fairly bullish over the next several research into their history of delivering solutions as well as the history of the busiyears in terms of the growth opportunities there.” ness itself; the technological liability is just as important as the financial liability.

“Having an offering that’s kind of built on some of the next generation techWorldwide Mobile Workers Forecast: 2011 nologies, whether it’s web services based or allows for rapid application of development, can be quite proprietary, which is something to watch out for.

Getting your hands around an organization that can deliver a platform that’s Asia Pacific based on standards is important,” says Drake. “It will also be critical to have some 66.8% United States key components, like device management and security, baked into the platform.”

11.9%

Technology There is no doubt that technology has had an impact on the mobility sector. Networks, processing power, storage capacity and the devices themselves have dramatically improved and the growth of operating systems and the maturity of some of the operating systems have made devices increasingly effective. “The move towards a web-based or standards-based architecture on the platform side provides the ability to leverage some of the Web 2.0 technologies that allow for a much better integration with an organization and enable a much more rapid deployment,” explains Drake.

“In the past, applications could take six months to a year to build, whereas today people are building them in days and weeks, which is a huge jump.”

However, despite the increasing improvements in technology, Drake is keen to point out that challenges still exist and that limitations mean that devices still require back-end integration with intelligent technologies. He believes that the real need for software will continue to be vital over the next couple of years, even with much improved devices and net-

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Western Europe 9.3%

ROW 6.7%

Source: IDC

Japan 5.3%

PROJECT FOCUS

The key to successful video conferencing Jeffrey Prestel, General Manager of BT Conferencing Video Business Unit explains the vital role of managed services in video conferencing.

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n today’s fast-paced business environsoft ware applications that allow for easy online box package. This combination of conferencment, you are beyond busy. It is more scheduling via our Engage Meeting Manager ing quality and support reliability maximizes critical than ever that your video tool, as well as auto-launching of calls, usage the return on your investment by driving user system performs efreporting and remote adoption through training, reporting, ease of fectively, your interequipment monitoring of use, and a repeatable, consistent user experience. nal users maximize the use of your video technology.

To learn more about the power of BT’s video and you are able to show Also, when you need managed services and other leading conferROI on your video investexpert support, you’re asencing solutions, join us as a VIP at this year’s ment. So how can you do this sured that only trained BT Video User Experience event (VUE) in New in an easy, reliable, affordConferencing technicians, York City in mid-November. While at the able way? Managed services. with years of experience VUE, you’ll have the opportunity to network Simply put, managed services in providing customer with peers and industry experts, experience allow a conferencing supplier support, answer your serthe latest equipments solutions from Cisco, to fully support your video vice calls. Wherever you LifeSize, Polycom and TANDBERG, and gain facilities and infrastructure, operate, our global team is critical information on increasing user adopleaving you to focus on other ready to meet your needs. tion and maximizing the ROI of your video Jeff prestel is General Manager of BT Conferencing’s Video Business key areas of your business.

And, whether you’re utilizconferencing program. For more information unit, and has nearly 20 years of Most companies do this to ing Polycom, TANDBERG or to register for this free event, please send experience. Up until BT’s recent acquisition of wire one, he was senior gain a lower cost of capital and or Cisco, our managed your full contact information to vue@btvideoVP of Sales and Marketing at Wire One Communications, where he led labor, and for a single point of services are available to conferencing.com. If you’re unable to attend a global team to deliver over $140 accountability for service and simplify management and the VUE in November, please visit www. btmillion in revenue through the sale of video and collaboration solutions. worry-free conferencing. use of video conferencing. conferencing.com, or call 1-888-947-3663 to Managed services allow With our One Source speak to BT Conferencing representative. you to have confidence in your equipment, as services, you choose the right custom mix of As General Manager of BT Conferencing’s Video Business well as increasing user satisfaction and adopconferencing services to support your unique Unit, Jeffrey Prestel has nearly 20 years of marketing, product and sales management experience. tion of the technology. It’s a win-win situauser requirements, not a standard, out of the tion for both you and your video users. Your end-users get repeated positive experiences on video calls, and you get to champion video as One Source One Source services are a custom mix of conferencing services to support unique a cost-effective communication tool, while user requirements: reducing other significant expenditures, such as travel.

BT’s managed services offering is a powerful and affordable approach to maintaining and monitoring your video conferencing investment, ensuring that your system is ready when you need it. Our services give you access to the largest technical staff in the industry, who maintain the most comprehensive listing of certifications across all manufacturers’ products. Our services also provide for web-based

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One Source for Cisco TelePresence combines Cisco’s TelePresence technology with BT Conferencing’s services, allowing you to interact and experience high performance immersive conferencing.

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SUSTAINABILITY FOCUS

With a long-term goal of having 100 percent of its power supplied by renewable energy, Walmart is transforming every aspect of its energy consumption using a combination of solar and wind in a smart and innovative approach to conservation and sustainability.

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n recent months, Walmart has been ramping up efforts to refresh its stores through improving customer experience, as well as concentrate on a sustainable approach to energy consumption.

And the company has made steady progress over the past couple of years improving both the sustainability of products and stores, and at Walmart’s Sustainability Milestone Meeting back in July, CEO Mike Duke revealed that the retail giant is preparing to both accelerate and broaden the hard work in this area. Unveiling the creation of a Sustainability Index, Duke hopes to bring about a more transparent supply chain, drive product innovation and, ultimately, provide consumers with the information they need to assess the sustainability of products.

“I want to call on all of us – retailers, suppliers, NGOs and universities – to work together to create the index, to share our information, and shape it into a powerful tool,” says Duke. “If we get it right it will mean more innovative products that lower carbon output, that promote clean air and water, and that create a more transparent and responsible supply chain.”

And while work is continuing around the sustainability index to drive a better supply chain, there is no doubt that the stores themselves are undergoing a makeover to improve their efficiency. “Early on, we sought ways to reduce our energy use, to improve efficiency of our truck

fleet – all under the guise of our over-arching goal, which was to be supplied 100 percent by renewable energy,” says Matt Kistler, SVP for Sustainability at Walmart. But, it is not just the truck fleet that has seen an improvement in energy efficiency – as part of its commitment, in November 2008, Walmart announced a major purchase of wind energy that will supply up to 15 percent of the retailer’s total energy load in approximately 350 Texan stores and other facilities.

Walmart also announced it was expanding its solar power program in California. In April, the company revealed that it plans to add solar panels on 10 to 20 additional Walmart facilities in 2009 and 2010. This commitment is in addition to the 18 solar arrays currently installed at Walmart facilities in California. “Increasing the use of solar energy is the right thing to do for the environment and makes tremendous business sense, especially in these economic conditions,” said Kimberly Sentovich, Walmart’s California Regional General Manager. “Thanks to Governor Schwarzenegger’s leadership, California is an excellent environment for us to grow our investment in renewable energy and help create more green jobs for America. Walmart is excited to continue collaborating with our partner BP Solar on expanding our solar footprint.”

“All over the state we are harnessing the power of the famous California sun and creating energy that is pollution free,” says Governor

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Opposite: California Gov. Arnold Schwarzenegger (R), Wal-Mart VP Kimberly Sentovich (L) and Executive Director of the Environmental Defense Fund David Yarnold (C) tour a solar panel installation on the roof of a Sam’s Club store in Glendora, California.

Schwarzenegger. “This project is all about taking bold action so we can see solar panels on commercial rooftops all across California while putting people to work. Walmart’s action helps prove that even in an economic downturn, it is possible to get serious about clean, renewable energy.”

Walmart is indeed committed to expanding its solar presence in California and as construction nears completion on this group of 10 to 20 sites, the company will evaluate the feasibility of expanding the program to yet further additional sites. The company will take into account a variety of factors, including available locations, economic conditions, energy prices, as well as local, state and federal renewable energy policies and programs. “Walmart is a leader in implementing cost-effective clean energy solutions,” explains Christopher Lau, World Resources Institute’s California Green Power Group Manager. “With this commitment to expand the use of solar power, Walmart demonstrates that businesses can pursue long-term sustainability goals during tough economic times to the benefit of the environment, customers, and bottom line.”

And it is not just California that is benefiting from solar power, in Puerto Rico, the company is planning to outfit up to five stores with solar panels this year, and expects the project to expand to 22 stores in the next five years. Additionally, Walmart de Mexico will eliminate approximately 140 tons of CO2 emissions annually through the completed installation of more than 1000 solar panels on the roof of the Bodega Aurrera Aguascalientes.

“We are harnessing the power of the famous California sun and creating energy that is pollution free” And continuing its commitment to energy conservation and environmental sustainability, Walmart opened the latest of its high-efficiency pilot stores (HE3) in Youngstown, Ohio in August. The HE3 pilot, implements the latest phase of technologies, including a water-source heating, cooling and refrigeration system, where water is used to heat and cool the building, a secondary refrigeration loop that is expected to reduce the initial charge by 90 percent, and an active dehumidification system.

In addition to the innovative features of the HE3 pilot, the Youngstown Walmart includes the leading energy efficient technologies found in the company’s prototype stores, including: LEDs in refrigerated and freezer cases; daylight harvesting technology; reflective white membrane roof; sensor-activated low-flow bathroom faucets and high efficiency urinals and toilets; recycled construction materials, such as fly-ash, slag, internally colored concrete floor and plastic baseboards and chair rails.

“Walmart continues to stay on the leading edge of sustainable building practices,” says James McClendon, Director of New Format Development. “Our ongoing commitment to operate in a more energy efficient manner, while working to reduce our greenhouse gas emissions has resulted in this latest pilot of energy efficient stores.”

ICTs can combat climate change According to market research firm Ovum, the information and communications technology industry has three distinct, critically important roles to play in addressing climate change – and all three present significant business opportunities.

“The role most often discussed is how to make computing and networking themselves more energy-efficient,” explains Ovum Senior Analyst Warren Wilson. “But to focus only on this direct energy consumption is to ignore larger opportunities elsewhere.”

Substituting low-carbon technologies for traditional, high-carbon functions – such as virtual meetings instead of corporate air travel – presents another significant opportunity, and one that involves a broader set of ICT vendors and solution providers than the first.

But the most critical role for ICT in combating climate change – and the greatest untapped business opportunity – is also the least understood, Wilson says. “Using ICT to monitor, measure, analyze and minimize the impact of manufacturing, buildings, vehicle fleets and other operations that account for the vast majority of energy consumption and carbon emissions is critical,” he explains.

In Ovum’s Straight Talk Monthly newsletter, Wilson explains the increasing urgency of addressing climate change and discusses the growing economic and regulatory incentives for the ICT industry to embrace its role. He also examines the skepticism directed toward ICT vendors over some of their environmental claims, pointing out that while some of these claims do amount to ‘greenwashing,’ the term has been too widely applied – which has obscured the importance of certain technologies to help solve the climate change problem, even if they weren’t developed for that purpose.

“It’s important to take a broad view of both the problem and the potential solutions,” he says. “Technologies developed to improve business operations or even software development can pay dividends in carbon reduction, and these gains are no less real than if motivated solely by environmental concerns.”

According to Wilson, the key point is to recognize the business benefits many organizations can achieve by addressing energy efficiency, and the business opportunity this represents for the ICT vendors that serve them.

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ASK THE EXPERT

GREENING THE ENTERPRISE For most businesses, especially consumer-facing businesses, the question is not whether to install solar energy products, it is how to do it. Marshka Kiera, BP Solar’s Global Marketing Director, reveals the key points to consider.

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takeholders are bombarded with news stories about the effects and simply buy the power under a Power Purchase Agreement (PPA). of climate change and the need for sustainable alternatives to When Wal-Mart, a recognized leader in sustainability, made the demeet energy needs. They are demanding that business leaders cision to add solar systems to some of their California stores, they didn’t step up and start doing something to make want to be in the solar business – they just wanted a difference. For retailers in particular, going green green power at a competitive price. That’s what they is no longer simply a differentiator, it is the price of got when they partnered with BP Solar, who designs, admission to access the market ruled by environmenbuilds, maintains and operates the rooftop systems, tally aware consumers. And today, that is virtually all selling the power to Wal-Mart through a PPA. consumers.

Similarly, FedEx Ground, the small-package shipAmong the many options available in the marping unit of FedEx Corp, selected BP Solar to install ketplace, it is tempting to look for the lowest initial and operate the solar system on its distribution hub in cost to purchase your solar system. But the more New Jersey. When completed at the end of the year, it important consideration is the lifetime value of the will be the nation’s largest rooftop solar installation. system. Th is includes the up-front cost, as well as Under a PPA, the green power produced will provide the energy it produces over its life, which can vary up to 30 percent of the hub’s annual energy needs. significantly between systems and is influenced by Companies with a big brand to protect are not factors including degradation rates, reliability and interested in ‘green washing’. They know that conMarshka Kiera is currently BP Solar’s quality. The best solar suppliers back their products Global Marketing Director. She has sumers are far too savvy to fall for anything that previously held various sales, marketing with solid warranties. looks like an attempt to just appear environmentally and general management roles in Choosing an experienced system designer and Australia, the UK, Poland and the US. responsible. They want brand synergy and the piece For the last 13 years she has worked for highly trained installer is critical to the proper opera- BP’s lubricants, fuels and retail divisions, of mind that comes with partnering with another big joining BP Solar in 2009. tion, efficiency and safety of your system. Be certain that brand. BP Solar, with nearly 40 years of success in the you select experts that have a solid track record designsolar sector and backed by BP’s strong reputation and ing, installing and maintaining solar systems similar balance sheet, fits the bill. to yours. Talk to others in your business segment about their experience What Wal-Mart, FedEx and other progressive companies have with solar companies to find out who delivers on their promises. in common is strong leadership that has a vision of what they want to Decide what level of direct involvement works best for you in the achieve. Their commitment to social responsibility and the bottom line design, installation and ongoing operation of your solar system. While makes green energy projects successful. BP Solar is a proud contributor some companies opt to own the solar system, finance it themselves or to that success. secure third party financing, many are choosing to stick to what they know, For more information please visit www.bpsolar.us

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TROUBLESHOOTER

DRAWING THE LINE

Paul Hepperla, Director of Sustainability Solution at Verisae, offers his advice on where the carbon footprint starts, ends and the paradox in between. tiple divisions, subsidiaries, partnerships, or joint ventures involves a dizzying array of discussions, radical collaboration among partners and related third parties. It demands extreme transparency.

Quantify emissions

Paul Hepperla says: Regulatory bodies worldwide are beginning to mandate carbon emissions management and reporting. An enterprise carbon footprint is a mosaic of emission sources, spreading across a global stage, and extending to the asset level throughout hundreds of facilities.

Organizational boundaries Organizational boundaries set the requirements for emission calculations. They define your enterprise structure from the perspective of emissions reporting. They determine which of your Scope 1, 2 or 3 emissions to allocate to your footprint and in what proportions.

Boundaries are based on either the equity share or operational control approaches.

The equity share approach is based upon each entity making up a larger enterprise and its share of economic interest. The percentage would reflect the extent of rights or ownership each entity has based on its profit and loss as reported against the parent enterprise. The control approach requires 100 percent reporting of all emissions from all operations under the entity’s operational or fi nancial control.

The organizational boundaries established for your initial carbon baseline are of strategic and fi nancial importance. Deciding between equity share or control approach across mul-

It is advised to account for emissions to the lowest level possible. This means tracking to a very granular level. If you don’t, you may face the consequences of an inventory that is fraught with brand, corporate and financial risk.

If you are publicly announcing your baseline or promoting reductions, you must answer the following with great certainty. First, you must audit your carbon inventory and verify its accuracy. Second, you must communicate transparently to all interested parties who may enquire. Third, you need to create a sustaining platform to support reductions.

porations report differently than ‘S’ corporations. Likewise, the equity share approach has a different impact on your carbon footprint than operational control.

These inherent uncertainties of materiality can be a result of rounding errors, numerical mistakes or non-specific emission sources. Still this only accounts for emissions materiality at the facility level unless there is a push to collect asset level data. Any difference between true emissions and derived emissions due to the inaccuracy of materiality will account for a variance of +/- five percent.

What is less damaging: a reporting error at the asset (lbs), the facility (ton) or the enterprise (MT) level?

Enterprise visibility

The source of greatest enterprise risk is the ‘guessed carbon footprint’. It relies on assumptions and estimates without the automated Material emissions sourcing of emissions data. It is not practical, Most organizations begin measuring cost-effective or an acceptable risk to aggregate emissions using spreadsheets and manual data emissions data across locations, assets or the collection. Perhaps you’re supply chain partners withbasing your approach on a out the proven enterprise well-known reporting protools. tocol or a commandeered Verisae’s Sustainable Retemplate. Maybe you are source Planning (SRP) platstarting with ‘educated form offers: visibility to the guesswork’ to piece tolowest level (i.e. ‘the Asset’); gether your carbon story. an integrated carbon soluYou’re wondering: how do tions to mitigate the variance Scope 1, 2 and 3 emissions risk; a means to optimize oraffect my emissions; how ganizational boundaries; and Paul Hepperla is the Director of do third party logistics ways to collaborate outside of Sustainability Solutions at Verisae. considerations affect my your own enterprise. emissions; and how does It is tracking emissions each facility’s determination of materiality sources to the asset level that will unlock a dataaffect my emissions? driven foundation for informed decision-makProgressive enterprises do leverage autoing and allowing you to gain unprecedented mated tools to help. Unfortunately, even these visibility of your true carbon liabilities or assets. leaders may be defining organizational boundVerisae offers an enterprise carbon accounting aries without a strategic mindset. The approach (ECA) solution to enable your distributed enteran enterprise takes with their carbon reporting prise to measure, monitor and actively manage is not unlike tax or financial reporting. ‘C’ corcarbon emissions – globally.

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ASK THE EXPERT

Measuring corporate environmental footprint Nuno Da Silva, Managing Director of PE Americas, reveals the best methodologies for measuring an organization’s environmental impact.

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requently I get asked for guidance on the best methods for measuring an organization’s environmental footprint. Questions tend to be about whether measurement should be based strictly on collecting emissions and energy use data from operational and facility sites; how best to determine green house gas (GHG) emissions; if tracking other environmental outputs like water is important; and whether a product-based approach should be used so as to understand the footprint each product has, considering not only the manufacturing process but also customer usage and disposal.

Pressure on the environment requires every company to realize its entire direct and indirect environmental impact and to become more sustainable. A company’s impact on the environment, however, doesn’t stop once its product or service is delivered to the customer or distribution channel. The environmental impact of how a product is used and ultimately disposed of is typically controlled or heavily influenced by the product’s design, recommended use and disposal methods. Companies therefore need to integrate an enterprise-wide emissionsbased approach with an assessment of product/ services to fully understand their complete environmental footprint. By identifying all direct and indirect environmental impacts, your organization will be able to target hotspots or key areas to implement sustainable initiatives.

The GHG protocol established by the World Resource Institute and World Business Council for Sustainability categorizes GHG emissions into three scopes – 1, 2 and 3 – and is being adopted by many companies worldwide.

Scope 1 represents the direct GHG that compa-

nies emit; Scope 2 is the indirect activities that pair of jeans environmental footprint due produce GHG emissions such as electricity; and to the water and laundry detergents used in Scope 3 is for all other company consequences cleaning. Subsequently, Levi’s launched a that indirectly add to GHG. campaign to educate customers on the negaI point out the GHG protocol because it tive effects of detergents and effective methods reflects the expectation that watch groups, for cleaning jeans. government and consumers have for environEstablishing initiatives, setting goals and mental corporate responsibility. The market monitoring results are the natural next steps realities are that a company’s environmental once your organization has compiled a comresponsibility doesn’t stop when its product plete environmental footprint assessment. or service leaves the dock. Measuring beyond There could be initiatives that quickly reduce the gate (manufacturing/assembly of prodenvironmental emissions or implement susucts) and analyzing distribution, use and tainable practices. There will also most likely be disposal (landfi ll, incinerated, recycled, mateopportunities to reduce the footprint through rial returns) can in some cases product design changes have a larger impact on the and uses that have a environment then the manulong-term effect on the facturing process itself. The lowering of your compamost popular technique for ny’s footprint. All these measuring environmental imactions have positive impacts of a product or service is pacts including lowering a lifecycle assessment (LCA). costs, enhancing sales to LCA methodology considers ‘eco’ oriented consumers the environmental outputs for and improving relations the manufacturing processes with government agenand materials that go into cies and environmental The Managing Director of North producing a product but could watch groups.

American operations at PE, Nuno da also include distribution, use The global business Silva has led projects addressing every aspect of product sustainability, from and disposal. community has a tremeneco-design tools to sustainability branding.

A classic example is Levi’s dous and long-term chaljeans. Levi’s conducted a well lenge to make significant publicized cradle-to-grave lifecycle assesschanges in the way we design, manufacture, ment for a pair of cotton jeans measuring all distribute and influence the use and disposal of environmental inputs/outputs associated with our products/services. The first step, however, growing and harvesting cotton, jean producis to understand all the environmental impacts tion, distribution, customer use and ultimate on local, regional and global arenas through a disposal. What Levi’s discovered was the use comprehensive approach to measuring the corcycle was by far the biggest contributor to a porate footprint.

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GREEN PRACTICES

Against the backdrop of the UAE’s extraordinary oil and gas reserves and some of the world’s highest per-capita energy consumption and waste generation, the Masdar development looks set to transform the way developers look at the issue of sustainable development.

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bu Dhabi has a bold plan: to transform itself into a world leader in sustainability and newer, cleaner energy technologies. At the forefront of this vision is the construction of a city of 40,000 inhabitants with a zero-carbon footprint that will be powered entirely by renewable energy – a surprising goal, given that the emirate sits atop nearly one-tenth of the world’s oil reserves. Why is a nation so rich in hydrocarbons focusing on developing alternative energy sources? “The answer is simple,” says Sultan Al Jaber, Chief Executive Officer of Masdar, the developers planning the city.

“Number one, because we can. Number two, because we should. And

because this is a logical step and a natural extension for our involvement in the energy markets.”

Masdar promotes a long-term commitment to meeting the world’s growing energy needs in an environmentally sustainable manner, through the development of innovative and sustainable technologies.

Th roughout the world, leading universities, research centers and manufacturers are making great strides in the advancement of renewable energies and systems. The Masdar development will bring all these together in one ambitious plan.

For starters, the city will be car-free, powered by renewable energy with services digitally managed and providing real-time information.

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With a maximum distance of 200 meters to the nearest transport link and amenities, the compact network of streets will encourage walking and is complemented by a personalized rapid transport system. Shaded walkways and narrow streets will create a pedestrian friendly environment, while surrounding land will contain wind, photovoltaic farms, research fields and plantations, enabling the city to be entirely self-sustaining.

“There is nothing like this in the world,” explains Al Jaber. “We are creating a synergetic environment; it is a true alternative energy cluster.

Here you will fi nd researchers, students, scientists, business investment professionals and policymakers all within the same community. It will be a living example of sustainable development that will position Abu Dhabi and Masdar at the forefront of intelligent resource utilization. And it will combine the talent, expertise and resources to enable the technological breakthroughs necessary for truly sustainable development.”

It’s a sizeable undertaking. The masterplan sets out a vision for a compact campus-style research and development infrastructure that provides a blueprint for a sustainable, socially vibrant mixed-use community. Special economic zones will attract the best in the fields of manufacturing and provide employment for the emerging students. The creation of new production facilities will help the region become an exporter of new technologies and a positive engineering base.

The blueprint documents encompass waste, energy, water and transport infrastructures as well as other aspects such as lifestyle, cultural heritage, climate and biodiversity. “We believe that a blueprint for sustainable urban development on the Masdar site is possible by combining innovative energy and environmental technologies with traditional principles of climatic and culturally responsive city planning in compact settlements throughout Saudi Arabia and other parts of the world,” says Al Jaber.

“For the fi rst time in history, more than half of the world’s population now lives in cities, with their traditional energy inefficiencies, waste and pollution,” he says. “We must fundamentally re-think how cities can conserve energy and other resources. We must heavily employ new technologies and even create new urban models, as we are doing in Masdar City. Abu Dhabi recognizes that a range of solutions are required to meet future energy needs, and Masdar reflects our leadership’s strategic vision to continue its role as a global energy leader.”

It is a compelling, if somewhat ambitious, vision of the future. But even with the backing of the Abu Dhabi government and an increased public appetite for greener, more environmentally friendly projects, the development faces some significant challenges – not least of which is the global economic slowdown. For one thing, the price of oil – Abu Dhabi’s most valuable resource – has plummeted to less than a third of its peak value last summer. In addition, the investment climate has slowed significantly as access to the credit markets has tightened.

“We cannot ignore that 2008 has been a difficult year,” admits Al Jaber. “The scale of the world’s financial challenges has had an impact on nearly every sector in the global economy, including renewable energy.

The lack of available capital and lower oil prices has certainly created some doubts about the renewable energy sector and whether it can maintain its relevance and continue attracting investment in these difficult times. However, we should not accept this perspective. Renewable energy continues to make absolute sense, even in difficult times such as these.”

Desert bloom The Masdar Headquarters, currently under construction in the sands outside Abu Dhabi, will go beyond zero net energy: it will be the world’s first mixed-use, large-scale positive energy building. And it will utilize pioneering, never-before-seen technology to get there.

The design takes it cue from centuries of indigenous architecture, marrying historically successful building strategies for the climate with the latest technology and innovative building systems – including some developed especially for the project. The design includes numerous systems that will generate a surplus of the building’s energy, eliminate carbon emissions and reduce liquid and solid waste. The complex will utilize sustainable materials and feature integrated wind turbines, outdoor air quality monitors and one of the world’s largest buildingintegrated solar energy arrays. Compared with typical mixed-use buildings of the same size, Masdar HQ will consume 70 percent less water.

“The Masdar Headquarters will set a new paradigm for the way buildings are designed, constructed and inhabited,” says Gordon Gill, partner at architecture firm AS+GG, the company behind the design. “The project represents the perfect integration of architecture and engineering, resulting in a dynamic, inviting building that outperforms any other structure of its type in the world.”

“As a positive energy complex, the project will have a far-reaching influence on the buildings of tomorrow,” adds AS+GG’s Adrian Smith.

Masdar City will be constructed over seven phases and is due to be completed by 2016. The headquarters building is part of phase one and will be completed by the end of 2010.

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EXECUTIVE INTERVIEW

have a solid, well-earned reputation for delivering programs that help employees get their existing work done smarter, better, faster, and that build pipelines of talent who can roll up their sleeves and produce results. And because of our strong corporate relationships driven out of 100 years of cooperative education, companies in the area know us and love us. Our students have delivered for them for years, and they have no reason to doubt that our professors won’t deliver for them too.

What are the most successful programs that you’ve been a part of, and why are they so successful?

BC. Success for us is that we deliver against the articulated needs of our clients. Th is could mean a half-day workshop in fi nance co-developed and taught with the CFO; or a four-and-a-half day off-site working session that generates new businesses resulting in millions of incremental revenue. Or it could mean Beth Cliff reveals how The Northeastern University College of delivering an accounting certificate program Business is competing in the increasingly crowded executive on a corporate campus, at lunchtime, so that education marketplace. employees don’t have to take much time away from the job but are still learning concepts room is a natural progression of this tight relaHow did you get involved in the field of exand skills that will help them do their job tionship: our clients’ successes are our successes. ecutive education? better – and retain them longer – while they This is a new business model that asks faculty to Beth Cliff. It was one of those serendipitous earn credits towards a potential MBA degree. participate in ways they haven’t had to before. things – a professor friend of mine from busiThese programs are successful because they Not everyone will want to do it; not everyone ness school was working for a great executive involve a relationship with a buyer who has will be able to do it. The emphasis on relationeducation consulting fi rm in Boston – sadly, shared with us his/her problems – and opships will require a different kind of staff, too no longer in existence – and I ended up there. portunities – and we’ve been able to create – those who come from the It was nothing I had planned, but it was pera learning solution that adbusiness world and know what fect. I come from a long line of educators, dresses them head-on. Th is heavy pressures businesses are but I went to business school. So I became an requires a level of innovaunder, and what responsive, reeducator, but of business people rather than tion in the classroom and liable client service looks like. high-school students. in the design process that is, perhaps, uncharacterisNortheastern is a fairly new What do you think is the biggest challenge tic of the more traditional entrant into the executhat executive education faces in the next open-enrollment programs. tive education space. How few years? How can you overcome it?

And it requires both faculty do you compete in such BC. This industry is getting saturated, fast: lots and staff that are willing of new entrants seeking to capitalize on traa crowded marketplace, to try new things, to build ditionally fat margins and seemingly-endless especially in Boston, where and create, and to track and Beth Cliff is the Director of Executive Education at the demand. At the same time, open enrollment there are so many business report back results. My own Northeastern University College programs have become expensive relative to schools? experience is that this kind of Business and has participated in all facets of corporate education. other learning alternatives – especially when BC. It isn’t easy, that’s for sure. of innovation, flexibility She ran OD and Training at CVS/ pharmacy, and worked at PepsiCo, travel is included – and they are not customized But we have a terrific reputaand responsiveness can be Pepsi-Cola and The Travelers. enough. Focusing on a few strategic partners tion for experiential learning rare in university-sponsored and getting to know them very well, as North– Business Week has ranked executive education, but I’m eastern is doing, can be a key differentiator. us number one in internships for a number pleased to report that it’s what drives NorthCustom solutions using real work in the classof years running – and this sets us apart. We eastern’s success, for sure.

Top of the class

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The high life

This issue Business Management brings you the lowdown on the best first class air travel facilities from around the world.

>>> Emirates Airline With seven course meals served on bone china tableware on tables laid with fine linen and flowers, Emirates’ first class passengers soon forget they are onboard a plane.

An advanced hand-held controller allows passengers to personalize every aspect of their experience and those in the A380 can enjoy the comfort of a fully flat bed complete with massage facilities. When first class passengers land, Emirates’ fleet of complimentary chauffeur-driven cars are on hand to take them to their next destination.

<<< British Airways British Airways’ first class facilities have been designed with country house hotel luxury in mind. Passengers are provided with handmade spa products by the British chemist and perfumer D.R. Harris and flat beds are decked out in Egyptian cotton bed linen and velvet cushions. The menu has been created by some of the world’s finest chefs and a bistro selection is also available. There are over 200 in-flight entertainment channels on offer, including an extensive movie library.

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>>> Cathay Pacific With more space than ever before, Cathay Pacific’s new first class offering is more of a suite than a seat with enough room to invite a guest. Awake, you will enjoy a comfortable seat, exceptional food, incredible entertainment, a massage function and mood lighting to enhance your flying experience. Asleep, you’ll dream in one of the biggest beds in the sky at an incredible 81 inches long.

<<< Air Canada Designed to provide you with your own personal space that is ideal for a good night’s sleep, each executive swuite reclines into a fully flat bed at the touch of the button. Armed with a comfy pillow and duvet and fully equipped with all the latest in-flight amenities, including a 12-inch touch-screen TV with noise-canceling Sennheiser headphones and a selfserve stand-up bar, you will arrive at your destination completely refreshed.

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On the shelf

From some of the greatest speeches of all time to hip hop superstar 50 Cent’s business advice, Business Management covers the best of this quarter’s business book releases.

The 100 Insight and Lessons From 100 of the Greatest Speeches Ever Delivered, by Simon Maier and Jeremy Kourdi An insightful guide to the greatest speeches ever delivered, The 100 addresses the important subject of communications by showcasing the best communicators of all time and explaining what they did, what happened as a result and why they succeeded. Barack Obama, Jack Welch, Aung San Suu Kyi, Socrates and Charles Dickens are just some of the great communicators featured in this book.

BM says: Even in today’s high-tech world words remain a powerful tool, and the way they are used can still mean the difference between success and failure. The 100 provides invaluable insights into how to become a skilled orator for today’s age.

The Future of Work

By Richard Donkin The Future of Work presents a cohesive argument for a fundamental change in attitudes to work – one that could create a healthier society capable of meeting the expectations and concerns of a developing economy. By looking at the forces shaping the future of employment, this book concentrates on seven significant themes underpinning change in the modern workplace: demographics, talent, measurement, networks, health, age and leadership.

BM says: Separating popular myths from truly transformational trends, Donkins has produced a fascinating read for anyone with responsibility for people at work. An essential guide for using technology to intelligently manage your staff.

The 50th Law By 50 Cent and Robert Greene Part strategic manual and part rags-to-riches memoir, The 50th Law is a unique project combining rapper 50 Cent and author Robert Greene who offer unique advice on how to win in business and in life. The book shows how power and success can be yours if you overcome your fears and features 50 Cent’s incredible life story interwoven with practical business lessons and wisdom from history’s most remarkable figures, including Catherine the Great, Confucius and Napoleon.

BM says: A sequel to Greene’s successful 48 Laws of Power, The 50th Law is a fantastic follow-up and an interesting mix of self-help and historical analysis. A thoroughly remarkable perspective from which to view both business and life.

Daydreaming

By Simon Clarkson What was the topic of Martin Luther King’s era-defining speech? Was it a SMART goal? Was it a personal development plan?

Or was it a dream? In his debut book, Clarkson explores how ordinary people achieve goals – big and small, consciously or otherwise – by creating a compelling vision of the future. The book describes how to harness the power of dreams, showing what happens when you see something in your mind’s eye and revealing how to use that to achieve your aims.

BM says: Part-journal, part-self-help book, Daydreaming explores the power of visualization in setting and achieving your goals. As Clarkson explains in this touching, funny and immensely readable book, there’s much more to daydreaming than having your head in the clouds.

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36 hours in…Austin Find out how to make the most of your spare time in the Texan capital’s high tech hub.

IN THE KNOW Austin, capital of Texas, is the fourth-largest city in the state and the 15th largest in the US as well as being home to a thriving business community, stunning natural beauty, incredible sports sp teams and amazing live music. The area was settled in the 1830s on the banks of the Colorado C River and in 1839, it was chosen to become the capital of the newly independent Republic R of Texas. The city grew throughout the 19th century, becoming a center for government m and education, and although it went through a lull in growth from the Great Depression, Austin A continued its development into a major city, emerging as a center for technology and business. b Today, Austin is considered to be a major technology hub with thousands of graduates each year from the engineering and computer science programs at the University of Texas at Austin providing a steady source of employees that help fuel the city’s technology and defense industry sectors.

The Four Seasons Austin

SLEEP The Four Seasons Austin has long been regarded as the stalwart of power players and the combination of politicos and Austin’s most powerful business people, plus the location, which is within walking distance of the Austin Convention Center, makes this hotel perfectly placed and offers the opportunity to network in the elevator.

The Driskill Hotel, the oldest operating hotel in Austin, opened in 1886. Originally built by Col. Jese Driskill, the hotel underwent an extensive renovation in the late 1990s and has since functioned as one of the main gathering spots for the city’s political elite for decades.

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Eddie V’s

TIME OFF If you haven’t managed to catch any live music yet, it would be criminal not to. In this live music-mecca, Austin is home to legions of musicians and nearly 200 performance venues. Host to the ever-popular South by Southwest festival, this event has mushroomed from a local gathering to a 1800-band, 80-stage extravaganza of music, fi lmmaking and interactive activities featuring performers from all over the world.

DRINK The Belmont, Austin Texas The Stephen F. Austin Hotel Hote Bar, is a popular location loc for politicians c and lobbyists Did you kno w?

EAT doing d business at the Austin was voted Lamberts Downtown nearby n state Capitol Greenest Ci ty in Barbeque is a relative newbuilding, b and best of America by MSN comer to the downtown all, al the terrace offers a dining scene, but is already a great grea view of the Capitol hit with customers. Indeed, the too. Otherwise, O why not barbeque fare has made it on to Austin channel A ti h l your inner Frank SinaBusiness Journal’s ‘Best of Dining’ survey and the tra at The Belmont, a throwback brisket is absolutely delicious. Housed in one of to vintage 1960s Las Vegas and Palm Springs. The two-storey bar and resdowntown’s oldest buildings, this is a great spot to taurant fronting West Sixth Street draw a diverse clientele, grab some food and listen to some great live music from well-heeled business execs to urban hipsters, as well as spot a few fellow business executives. with live music on the outdoor stage a staple.

If you are looking for an upscale seafood resTerrace59, so named for the 59 stairs up to Texas Long Island Iced Tea taurant then head to Eddie V’s, with an army of the terrace, is at Speakeasy and is one of the most loyal customers, including Lance Armstrong and Jake Gyllenhall. Likewise Sampaio’s is a bright yet cozy restaurant that brings Brazil to Austin.

Choose from an excellent feijoada, Brazil’s national dish, and appetizers like Brazilian cheese rolls and chicken-fi lled empanadas.

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famous outdoor spots in Austin to take in the view of downtown. With lit palm trees, a full service bar and hip music it is a chic and elegant way to winddown after a busy schedule. The main entrance is found in an alley off the main street, completing the feel of a tucked away 1920s bar.

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TAKING IT SUPPORT TO THE NEXT LEVEL Doug Mueller, Corporate Architect at BMC Software, reveals how improvements in mobile technology are offering new possibilities for increasing IT responsiveness and effectiveness.

M

obile technologies are revolutionizing the way people do business, particularly in IT. Mobilization enables support staff to respond to and manage a wide variety of issues from the field, without having to check in at their desktops. Remote personnel can be alerted to urgent issues immediately and enter quick requests or do instant checks on key issues. They can get accurate data in a format appropriate for the job, as well as provide up-to-date information to the service desk, to business decision makers, and to users.

A mobile device, such as a BlackBerry, can be useful for recording tickets when service level agreements (SLAs) are not being met, for checking items in violation, or for monitoring critical situations. Technicians can remain where they are most needed, while retaining the capability to monitor and record data.

Here are some best practices to help your organization get started on mobilization: Focus on key processes to mobilize: As you move to a mobilized service desk, begin with key processes that stall because someone isn’t sitting at his or her workstation. For example, you can use mobile technologies to remove bottlenecks and improve response time related to approval processes. When making choices about areas to mobilize, consider the volume of data to be entered and how the mobile staff will interact with the system. Be sure that the mobile devices can handle the desired interactions. Focus on optimizing the four or five key features that will most efficiently mobilize your service desk.

Select applications for mobilization that are ‘point focused’ or that require a quick request or status check: Determine when the support team needs to do specific, quick actions that don't require a large quantity of data – or constant connectivity. In these situations, the technician can take action to move the process forward from a mobile device. Other examples include doing quick requests and escalations, which also entail reassigning or escalating a process that’s not moving, is out of support, or out of SLAs.

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Don’t try to do everything using mobile devices: Taking customer calls and entering trouble tickets are not the best uses of mobilization, unless you streamline the effort with templates. Typing large volumes of data is time-consuming. So don’t plan to mobilize these functions until you can minimize the data input.

With a mobile service desk, the support person must also deal with wireless network problems and the interactions with all the other network providers. When a network goes down and users are experiencing difficulties, it’s important to figure how the support person can load applications and track them remotely. You will also need to identify how security issues can be resolved.

Automate Manual Processes: If you require paperwork for approvals, turn that into a digital approval and automate the approval process. Mobilization enables shared logic across many different situations.

Information about approvals goes across many processes. The interactions within the processes of key functions should be integrated and available to your staff. Then they won’t have to look in numerous locations for purchase requests, vacation requests, and so on. A single approval list can be available on the mobile device.

Realizing the results: Mobilization makes service much more efficient and timely. Technicians in the field can become more efficient because they have instant access to information and can update records from anywhere. If they need additional data, they can simply request it or link to it from their mobile devices.

Improvements in mobile technology are offering new possibilities for increasing IT responsiveness and effectiveness. Mobile interaction with key business processes is a critical part of an integrated strategy not only for managing IT, but also for improving the business.

For more information on this topic, visit www.bmc.com/aeroprise.

Visit www.bmc.com for more information about BMC Software.

29/10/09 15:07:41

WWW.BMC.COM

BECAUSE I.T. BUDGETS ARE SHRINKING, NOT I.T. RESPONSIBILITIES. BECAUSE EXTRACTING EVERY OUNCE OF EFFICIENCY IS THE ORDER OF THE DAY. BECAUSE I.T. SHOULD DO MORE THAN KEEP THE LIGHTS ON AND THE SERVERS RUNNING.

BECAUSE BUSINESS RUNS ON I.T.

© 2009. BMC Software, Inc. All rights reserved.

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