www.bme.eu.com • Q1 2010
IN THE DRIVING SEAT Cranking up Volkswagen’s IT with CIO Nick Gaines
FOOD FOR THOUGHT Why sustainability is top of Nestlé CEO Paul Bulcke’s agenda PLUS Cloud computing: the truth behind the hype
“bigsoftie I’m a
really ”
Football boss Karren Brady on breaking stereotypes in business
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ED NOTE BMEU3_jan10 25/01/2010 15:06 Page 7
FROM THE EDITOR 7
Technology matters Investing in innovation is imperative for companies hit by recession.
W
hile the effects of the recession are still being felt across many industry sectors, judging by the interviews in this issue, spending on IT projects is still in full swing. Few companies have been untouched by the downturn with budgets slashed across the board and job cuts being announced daily. But, IT seems to be one of the few areas that is still regarded as a high spending priority. Take Kier for instance. As one of the UK’s biggest building firms, it has been hit hard by the recession, with orders for new projects in the UK believed to be down by around 60 percent according to the property consultancy Vail Williams. In this issue we meet the company’s Head of IT, Terry Walker, who says he believes the worst could be yet to come for the industry, as orders for new projects dry up. However, despite these harsh conditions, IT projects remain on course, with the company
“The trick is that most working
having recently signed a €5.5 million contract with Cable & Wireless for a new communications infrastructure. The same is true for Volkswagen. Like all automobile manufacturers, it faced some of the worst conditions in its history last year. However, as we hear from its UK CIO, Nick Gaines, the company’s plans to overhaul its entire IT infrastructure and re-engineer core processes have been untouched by the recession. These stories reflect the fact that IT is being used by companies as one of the most powerful weapons in their arsenal when it comes to fighting back against the downturn. The short-term cost of investing in new IT systems is no longer difficult to justify, even in these conditions, because of the longer term return on investment and innovation – in particular the ability of technology to win customers and customer loyalty. Volkswagen for instance, is investing in a complete overhaul of its sales and CRM systems in a bid to speed up the sales process and thus increase
“The first thing that we’re proud of is the
customer satisfaction. It is also looking to invest in the future in social networking related technology, which would encourage Volkswagen car owners to let the world know about their latest purchases. Meanwhile Kier’s new communications network – though a huge financial investment – will greatly improve the speed of communication between customers and those building projects on the front line, whether at home or abroad. It’s a true sign of the times that technology no longer comes at the bottom of companies’ spending priority lists. And even more so in a climate where they are looking for every opportunity to slash costs in other areas.
Diana Milne Editor
“The roadmap is all about a clear
women have two personalities. They
fact that we’ve followed customer de-
and straightforward framework
have their home personality and their
mand and listened to customers. That’s
outlining our strategic direction,
work personality and the trick is not
always been a problem in a large compa-
which everyone at our company is
to let either of those personalities
ny because there are so many people
aligned with and implements on a
drain the life out of the other”
with opinions”
daily basis”
Karren Brady, Vice Chairman of West
Al-Noor Ramji, BT Group CIO
Paul Bulcke, CEO Nestlé
Ham United (page 28)
(page 44)
(page 40)
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CONTENTS 9
Food for thought Nestlé CEO Paul Bulcke on sustainability and the role the world’s biggest food company has to play in improving global health
32 28
34 In the driving seat
Playing to win
Volkwagen UK’s CIO Nick Gaines lifts the lid on his company’s IT roadmap
Karren Brady, football boss and star of TV’s The Apprentice, talks exclusively to Business Management about doing business in a man’s world
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CONTENTS BMEU3_july09 25/01/2010 13:11 Page 11
CONTENTS 11
EXECUTIVE INTERVIEWS 55 Odd Sverre Østlie, TANDBERG 65 Ravi Pather, Psytechnics 94 Dr Joseph Reger, Fujitsu Technology Solutions GMBH 112 Mark Creasey, iEnterprises Europe 120 Thomas S. Senger, Kofax 126 Thomas Bostrøm Jørgensen, LUUP 132 Chris Methven, IHS
44 A sharper focus Al-Noor Ramji, BT Group CIO, reveals how the telecoms giant plans to keep ahead of the competition
50 Building connections Kier Group’s Head of IT Terry Walker on building an IT infrastructure to support the construction giant through the downturn
58 Straight talk How Vodafone is taking a standardised approach to IT in a bid to slash costs
ASK THE EXPERTS 63 Ben Hobby, BT Conferencing 70 Thomas Jell, NETGEAR 82 Sarah Whipp, Symantec 88 Floris van den Dool, Accenture 100 Brian Klingbeil, Savvis 102 Fredrik Ring, Logica Group 118 Colin Rowland, OpTier
58 66 Welcome to the cheap seats Find out what Europe’s most controversial budget airline is spending its IT budget on with Ryanair’s Head of IT, Eric Neville
48 Xavier Martin, Alcatel-Lucent 72 Kris Hardinan, Siemens Enterprise Communications 78 Roger Hockaday, Aruba Networks 86 Stephen Hoare, Kensington Security 92 Geert Jansen, Red Hat 108 Christina McKeon, Infor
With Saumya Upadhyaya of Frost and Sullivan
96 On cloud nine 74 The big question
INDUSTRY INSIGHT
90 Optimisation through virtualisation
IT managers reveal their top technology priorities in Ernst & Young’s latest Global Information Security Survey
80 Spinning the security web Frost & Sullivans’s Ekta Aggarwal puts IT security under the spotlight
We investigate the myths surrounding cloud computing
104 Switching channels John Linwood, Chief Technology officer at the BBC, on why the broadcaster is undergoing a digital revolution GOLD SPONSOR
84 Business, interrupted Disaster recovery experts offer their advice on claiming compensation for business losses
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CONTENTS 13
114 Staying one step ahead Standard Life’s CIO Keith Young reveals how technology keeps the insurance giant ticking
REGULARS
122 Takeaway technology Meet the woman behind the technology transforming the takeaway food industry: Jane Kimberlin, IT Director of Domino’s Pizza
128 Action on energy EU Energy Commissioner Andris Piebalgs explains the progress Europe is making towards securing sustainable energy supplies
134 Are you being served? Business Management grills Maguerite Sequaris, CEO of the hospitality trade association HOTREC, on the issues facing the industry GOLD SPONSOR
16 The brief 18 News 26 In my view 138 City guide 140 Books 142 The knowledge
123 128
114
The Park Hotel, Bremen, Germany 23rd - 25th February 2010
Chairman/Publisher SPENCER GREEN
CIO Europe Summit 2010 The CIO Summit is a three-day critical information gathering of the most influential and important CIOs from across Europe.
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UPFRONT THE BRIEF
16
Fellow eurozone recession victim Greece may have returned to economic growth, on paper, in the third quarter of 2009, but its debts – the heaviest in the EU – have dealt a devastating blow to the country’s long-term economic future. Currently its debt is estimated at a massive 113 percent of GDP. Its budget deficit, meanwhile, amounts to 12.7 percent of GDP. The country’s government has recently embarked on a three-year plan to cut its budget deficit to 2.8 percent of GDP by 2012. However, a poll by Reuters shows analysts see a one in five chance that the country will seek a financial bailout from the EU this year. Meanwhile in December, the ratings agency Standard & Poor’s downgraded Greece’s credit rating Spain’s recession is and claimed the country predicted to last was not capable of imwell into proving its financial situation without EU support. Ireland is another country that has emerged from the recession, but with its economy anything but intact. In December the government announced its GDP had risen by 0.3 percent in the three months to September, beating market predictions of a 0.1 percent rise. However, overall in 2009, the economy contracted by seven percent compared to the previous year. Industrial production dropped by 10 percent while investment fell 35 reveals we haven’t seen percent and construction, the previous driving force behind the economy, plummeted by 34 perEU average and rates are expected to cent. The situation has forced the reach 20 percent by 2011. The councoalition government to introduce try’s beleaguered housing market is drastic cuts, including slashing the source of many of its woes. public sector pay by five to 15 perAccording to Moody’s prices there cent. Meanwhile, the country has have fallen by 9.5 percent from their been left with a budget deficit worth highs in 2008 and oversupply in 12 percent of GDP. Spain, which has around 1.5 million 2009 was a very bad year for vacant homes, will lead to a “long peIceland and with the country under riod of adjustment” for the country’s mounting pressure to pay back a €3.6 housing market. billion loan to Britain 2010 looks as
2010
THE BIG PICTURE How a closer look at Europe’s financial situation the back of the recession. When it was announced in November that the eurozone economy had emerged from recession, the future looked bright for the region as a whole in 2010. But a closer look at individual countries paints a very different picture with many predicted to suffer the long-term effects of the downturn, well into the year ahead. Spain is believed to be the country that will take the longest time to
recover. In its latest gloomy outlook for the country, the risk measurement agency Moody’s predicts that Spain’s recession will last well into the second quarter of 2010. Meanwhile its GDP will grow by just 0.2 percent this year and unemployment will exceed 19 percent. By December 2009 3.9 million people in Spain were out of work – 25 percent more than a year earlier. Its unemployment rates are twice the
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UPFRONT
THE BRIEF though it won’t be much better. In 2009, Iceland’s economy suffered the biggest fall in its history. The third quarter saw its GDP tumble 7.2 percent year on year while national output fell by 5.7 percent. The country went into complete economic meltdown following the collapse of its banking system. Together its three biggest banks owe over €42.5 million to foreign lenders and the government has been forced to seek billions of dollars worth of aid from the International Monetary Fund. The Organisation for Economic Co-operation and Development has forecast that its economy will contract further this year. Meanwhile the country’s government has predicted that growth will not return until 2011. The countries of Eastern and Central Europe have been hit just as hard as Iceland and worse than most other European countries, particularly as there were already existing structural economic problems, inflation and budget deficits in many of those countries. Bosnia, for instance, had an unemployment rate of 40 percent in 2009 and its GDP contracted by three percent. It already had €45 million in loans from the European Bank for Reconstruction and Development. Bosnia has now received a €1.2 million loan from the IMF. The Baltic states have also been hit hard. Latvia has suffered the hardest with unemployment currently at 17.2 percent and external debt worth 124 percent of GDP, 90 percent of which coming from loans. Estonia has debts worth 116 percent of GDP and Lithuania suffered a massive 22.4 percent decline in GDP in the second quarter of 2009. These details show that while the EU as a whole may have emerged from the recession, enjoying growth of 0.2 percent in the third quarter, there is a long way to go before the finer details of the big picture tell the same story.
17
EUROPE’S NEWS IN PICTURES
Police remove an anti-war protestor after he displayed a burning mask outside the Iraq Inquiry in London
People walk in front of the Yeni Cami Mosque in Istanbul at dusk. Istanbul has been designated as European Capital of Culture 2010 for a period of one year during which it is given a chance to showcase its cultural life and development
Several hundred people enjoy a flashmob snowball fight, which was organised through the internet between people living at Berlin's districts of Kreuzberg and Neukoeln. The freezing January weather gripped Europe causing mass disruption and heavy economic losses
A security officer demonstrates a new full body scanning machine on trial at the UK’s Manchester Airport. The scanner x-rays to the depth of 10mm to produce an outline of the person's body which is then used to detect concealed, potentially dangerous objects
French soldiers carry the coffin of Philippe Seguin, the former French politician and president during his funeral ceremony at Les Invalides in Paris
Job seekers wait to be assisted at a state labour office in Szekesfehervar, Hungary. Hungary's jobless rate rose to a record through November, leaving Europe’s most indebted eastern European nation to hand out more welfare payments
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GERMANY New figures released by the Federal Statistics office show that Europe’s biggest economy shrank by five percent in 2009. The slump represented the biggest contraction since World War II for Germany, which emerged from recession in the second quarter. The government currently predicts growth of 1.2 percent for 2010, however some analysts predict this forecast will be increased to 1.5 percent. Carsten Brzeski of ING Financial Markets told the BBC: “The recession is yesterday’s story. Today’s story is the ongoing recovery. We expect the Germany economy to be the growth engine of the eurozone in 2010.”
FRANCE The French banking giant Societe General (SocGen) has revealed it expects to write down a further 1.4 billion euros in risky assets. SocGen announced it expected its profits for the fourth quarter of 2010 to come in significantly below analyst expectations of between €850 million and €960 million. Shares in SocGen tumbled 5.9 percent following the news. The bank had already recorded write downs of €1.9 billion in the first quarter and €1.7 billion in the second quarter.
UK The UK faces a higher education meltdown if government plans to cut funding go ahead, the leaders of the country’s top universities have warned. The Russell Group, which represents top UK universities, wrote in the Guardian newspaper that education standards would be severely affected by the cuts. “It has taken more than 800 years to create one of the world’s greatest education systems and it looks like it will take just six months to bring it to its knees”, the article stated. Universities across the country are facing cuts of over €1 million over the next three years.
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EUROPEAN NEWS
SPAIN Spain’s economic woes continue with new figures showing the number of people out of work rose by 543,657 in December compared to November. The year closed with almost four million people unemployed across the country, 794,640 more than in 2008. Employment in December fell particularly sharply in the country sector, plummeting by 7.56 percent followed by a fall of 2.31 percent in the industrial sector. Foreigners fared worse with unemployment rising by 37.85 percent in 2009 overall.
19
GREECE Herman Van Rompuy, the EU’s new permanent president has met with the Greek Prime Minister George Papandreou and announced the country is now taking steps to address its crippling debt and public deficit. The country is currently burdened with debt worth 113 percent of its GDP. The country’s recently elected socialist government was given until the end of January to present its crisis plan for tackling the situation to the EU. It has pledged to reduce the deficit to 8.7 percent in 2010 by cutting state spending and tackling tax fraud. Mr Van Rompuy said he was confident the Greek government was taking the necessary steps to address the situation.
ICELAND The Icelandic president has re-ignited a diplomatic row by refusing to sign a plan to repay the €2.6 billion the country owes to Britain. The UK government paid compensation to UK savers who lost money when the internet bank Icesave collapsed. However, Olafur Ragnar Grimsson then declared that this decision had failed to take public opinion into account and he has called a referendum. Speaking in a televised statement, he said: “The people must be convinced that they themselves determine the future course.” This drew a jubilant response from Icelanders, one fifth of which had signed a petition opposing the repayment plan.
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UPFRONT COMPANY NEWS
SIZE MATTERS
20
Small businesses are out of touch with modern working practices such as home-based workers, according to a survey by OneDrum. The survey warns that small businesses should streamline working practices and deploy flexible working practices to increase staff productivity. Key findings of the survey included the fact that over 80 percent of employees stated they would be productive working from home and less distracted by interruptions. Despite this, 61 percent of employers never offer employees the option of working from home. Even though one third of employees said they could do all or most of their job from home, 55 percent of employers failed to see that flexible working could increase employee productivity. Phil Flaxton, CEO of Work Wise UK, said: “Employers looking to get the most from their workforce need to consider smarter and more flexible ways of working. There are a number of technologies that support a productive home working environment.”
COLD CALLING
NextiraOne assembled and tested the OmniPCX system in Bremen then trained a member of A UK telecommunications specialist has suc- the Alfred Wegener how to use it. Project managceeded in installing the world’s most southerly er Gerold Prehn said: “We transferred our knowcall centre. The call centre was implemented at how directly to the Alfred Wegener Institute so the Neumayer III Research Station in the South that we could keep everyone’s costs for this proPole, which is operated by Germany’s Alfred ject to a minimum. Otherwise both the travel Wegener Institute for Polar and and the installation costs would have Marine Research. The research been astronomically high.” A supply station, which was equipped The team also faced the ship only travels to with a call centre by challenge of being able to the Neumayer NextiraOne, acts as a base provide ongoing support Research Station in the South Pole every for scientific research in the once the solution had been South Pole. It is also used as a installed as the Polastern relogistics centre for expeditions search and supplies ship serving into the South Pole and for polar the base only travels there every six aircraft. It is manned by a team of nine months. “We put together a comprepeople all year round, and the workforce swells to hensive set of every possible spare part as well as 30 during the Antarctic summer. individual manuals and documentation develFollowing the completion of the call centre, oped specially for the Alfred Wegener Institute a direct satellite link now connects the Alcatel- in order to make the system as easy as possible to Lucent Omni-PCX Enterprise system at the base understand and operate for the researchers at the to the German institute’s headquarters in station,” said Axel Hustedt, System Specialist at Bremerhaven. NextiraOne.
six months
FAST FACT
THE RESULTS ARE IN
123456 is the world’s most popular password according to the latest report by security firm Imperva
According to Business Week, Apple and Microsoft are in discussions to replace Google as the default search engine on the iPhone. Business Week sources claims that any Bing-iPhone deal would likely be short-lived as Apple looks into the possibility of its own search engine. Apparently, the ultimate concern is search advertising – Google has grabbed 65 percent of the traditional PC-based search market in large
part because it has had far more information about what people are looking for and can use that to refine its search algorithms. If Apple cuts this data supply off, Google is at risk of losing its edge in search. And while there have been long-running disputes between Microsoft and Apple for some time now, it is thought that Microsoft is considered much less of a threat in the emerging world of mobile computing. Plus, Microsoft’s search technology is gradually being viewed as a strong alternative to Google’s.
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COMPANY NEWS
21
THE FUTURE’S BRIGHT Job seekers face a brighter future in 2010 if we are to believe figures from the Association of Executive Search Consultants, which recently conducted its 2010 Member Outlook Survey. The figures revealed that 91 percent of executive search consultants have a neutral to positive outlook for the business this year. 77 percent of those questioned said that they were expecting revenues to increase in 2010 and over half reported plans to take on more consultants this year. Areas expected to see the most growth this year are the healthcare/life sciences and energy/natural resources industries.
The results show a vast improvement in attitudes since December 2008 and twice as many candidates are now considering a career move compared with 2009. “There is a discernible change in the attitude of senior executives as they compare and evaluate opportunities within their existing workplace against new opportunities elsewhere. It is often in turbulent times that unusual career openings occur for talented executives and those willing to consider a move can be highly rewarded,” said AESC President Peter Felix. Commenting on the findings, he said: “These outlook results for 2010 indicate very strongly that the executive search business, and thus the senior executive hiring market has turned a corner. It is
indicative of a new spring in the step of top management of organisations and a realisation that with a new environment decisions about the quality of executive teams are of paramount importance. I am very pleased to know that our member firms, representing the highest quality in the worldwide executive search profession, are again able to view their market place with a degree of optimism.”
HAVE WE UNDERESTIMATED THE FEMALE CONSUMER? Women in the workforce
Female consumers
Women account for 57% of students in higher education worldwide
$ trillions
Women’s control of consumer spending 6
5
Percentage of purchases made or influenced by women
Women spend over 70% of consumer dollars worldwide
4
40% of businesses in the US are owned or co-owned by women
64%
Total Controlled by women
$20
3
But only 38 of the top 400 companies are run by women
“Despite women’s dominant buying power, many companies continue to market mostly to men and fail to explore how they might meet women’s needs” The Female Economy by Silverstein and Sayre
trillion
Amount women globally control in consumer spending. This is estimated to increase to $28 trillion by 2014
2
Spain
Canada
Italy
China
France
UK
Japan
0
Germany
$
US
1
Women on average only earn 77 cents for every dollar men do
World’s largest economic opportunity? 2014 (est)
$18 trillion
2009
$13 trillion $6.6 trillion $4.4 trillion
$1.8 trillion $1.2 trillion Female income
China’s GDP
India’s GDP
Women now drive the world economy, controlling $20 trillion in consumer spending and earning $13 trillion a year. Women represent a market bigger than China and India combined.
Source: CNN Boston Consulting Group Harvard Business Review
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JOBS OF THE FUTURE If you’ve ever dreamt of being a versal and personal branders to space pilot then 2030 could be help people establish their own your lucky year. A report has brand across social networking suggested that it could become a sites. It also predicts that police ofregular job in 20 years, along- ficers will be needed to monitor weather manipulation and side, virtual lawyers and that electronic waste avatar managers. data managers will The UK Surgeons be needed by government rewho are able to people who port into the give people want to avoid jobs of the fubeing tracked ture offers a capacity will be in online. fascinating indemand by 2030 Meanwhile, sursight into the geons who are able to world of 2030 emgive people extra memory caployment. Other professions that it claims will be in demand pacity will also be in high demand. The report was commisinclude farmers of genetically engineered crops and livestock, sioned by the Department for specialists in climate change re- Business, Innovation and Skills.
extra memory
GLOBAL PERSPECTIVE The latest issue of the Business Management Middle East edition talks shop with self-made billionaire, entrepreneur and philanthropist MUKESH ‘MICKY’ JAGTIANI. This is the rags-toriches tycoon who started with a single baby clothes store in Bahrain and built a retail empire. “I believe innovation is the fuel that keeps the busness going...If you don’t innovate and evolve with your customers you will simply fade into oblivion,” he says. To read more go to www.busmanagementme.com
CLOUDING OVER
FAST FACT
percent are concerned about scalability. The biggest concern, howA survey of CIOs, IT directors ever, which is bugging 65 percent and senior IT managers at large of respondents, is vendor lock-in organisations has revealed that for cloud services. The results show a need for more soover half use or are planphisticated tools to ning to use cloud monitor and concomputing. The biggest concern trol cloud usage However, only bugging around and the move14 percent ment of applicahave a solutions from cloud tion in place to of respondents is to cloud. vendor lock-in for manage the cloud services Moreover, accordtechnology. The ing to 53 percent of resurvey commissioned spondents, introducing by Zeus Technology shows that government standards and legisalmost half of senior IT staff worry lation to control clouds would also about lack of cost control in relaboost adoption rates. tion to cloud computing while 27
65%
Barack Obama is the politician over
40% of the UK population would want to be stuck on a desert island with according to a poll by PRS for Music
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EUROPE’S BEST CITIES TO WORK IN Key Each colour represents the category on which the rankings are based Each circle represents the individual ranking of the city within the categories
Paris London
Frankfurt
Barcelona Brussels
Madrid Munich Amsterdam Milan Berlin
Top cities of each category
Overall
London
Cost of staff
London Qualified staff London Quality of telecommunications London External transport links London Easy access to markets
Bucharest
Birmingham Climate the government create Dublin Availability of office space Berlin Value for money of office space
Languages spoken
London London
Internal transport
Barcelona Geneva
Quality of life for employees Freedom from pollution
Source: Cushman & Wakefield
MONEY DOESN’T MATTER
hit: “Financial skills came to the fore as the scale and the speed of the credit crunch and recession Accountants are no longer essential on the caused panic in many boardrooms. But acboards of global corporations. That’s according countancy skills have had their day in the sun to the latest research by McKinney and for 2010 the skills being prized are Rogers, which claims that the top those abilities linked to achieving four skills required to help comgrowth – leadership, sales, innoFinancial skills came to the fore panies out of the recession are vation and strategic skills. as the scale and the leadership, strategy, innovaHe goes on to say that exspeed of the tions and sales skills. ecutives wanting to succeed in Financial skills meanwhile the boardroom should prove and recession caused come in fifth place. The survey they have these skills: “The panic in many was conducted on behalf of message for executives looking to boardrooms McKinney Rogers by Acritis which succeed in the top boardrooms, parsurveyed 100 senior directors in FTSE and ticularly those with specialist skills such as fiFortune businesses. nance and marketing, is that once again it is Chris Hart, a partner at the firm, claims the personal skills around seeing and shaping the results prove accountants no longer enjoy the big picture that matter to other executives – not prestige they once did when the recession first your ability in functional areas.”
credit crunch
GETTING CONNECTED Over 80 percent of businesses across Europe now have broadband connections, according to figures by Eurostat, the statistical office of the European Union. A survey of broadband penetration was conducted amongst businesses across Europe, and the results of the survey have shown that broadband technology is now helping the majority of European companies to do more business via the Internet. Access to broadband means that businesses are able to sell and buy goods online far more easily, enabling them to cut costs whilst increasing profits. The study indicated that 12 percent of turnover for these companies was attributable to business conducted online.
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EMERGENCY PATCH FOR EXPLORER
DID YOU KNOW? Spam containing hijacked IPs tripled in December 2009, meaning it is more important than ever now to delete all spam. Symantec’s latest spam report, The State of Phishing, claims that this spam, also known as Dotted Quad spam, has shown a marked increase, with a particular emphasis on targeted brand attacks in which popular websites are spoofed. Globally, the UK was targeted as a top three for brand attacks just behind the US.
FAST FACT
4500 memory sticks were found in UK customers’ pockets when they were taken to be washed at dry cleaners, according to Credant Technologies
cies in several countries, including France, Microsoft has released an emergency outGermany and Australia, recommended that of-band patch to fix the security breach in users switch to alternative browsers. A its Internet Explorer web browser. spokesperson for rival Mozilla said that daily Attackers exploited the vulnerability in sevdownloads of the company’s Firefox browseral recent high-profile targeted attacks, iner by French Internet Explorer users doucluding the recent Trojan Hydraq attacks bled to about 80,000 after France against Google and several other issued its recommendation. companies. Internet Explorer The rise is similar to that exversions 6, 7 and 8 are affected Number of Firefox perienced by Mozilla and by the vulnerability, as they downloads daily by Opera Software ASA of make up the bulk of the verFrench Internet Norway for their browsers sions used today. However, Explorer users since in Germany. Mark Miller, the only in-the-wild exploit the warning Director of Microsoft’s code for this vulnerability detect-
80,000
ed thus far is confirmed to affect just Internet Explorer 6. Joshua Talbot, Security Intelligence Manager at Symantec Security Response, commented, “Based on our inthe-field detections, this security vulnerability has only been used in a very limited number of targeted attacks so far; however, they appear to be very high profile attacks. The most likely attack vector used in the incidents seen thus far is targeted emails containing legitimate-looking attachments or links to web sites sent to high-level employees. When the attachment is opened, an exploit for the vulnerability springs into action and the computer becomes infected.” The release of the patch comes after government agen-
Trustworthy Computing initiative, said the company had been “working around the clock to develop and test a security update that will eliminate this problem” and couldn’t release a fix sooner. He added that Microsoft is in touch with government agencies around the world about this most recent security issue.
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UPFRONT
COMPANY NEWS
25
GREEN GETS THE GO AHEAD
COMPANY FOCUS Underinvestment in IT has cost companies that difficulties in finding the right information customers during the recession and has dam- when they need it has cost them business. aged innovation according to business leaders. Hanif Lalani, CEO of BT Global Services, They told an international study by BT Global said: “This research provides a snapshot into Services that IT budgets cuts in the rethe current mindset of global CIOs cession are impairing business perand senior executives, and it There is a growing formance. The Enterprise should act as a call to action on consensus that Intelligence survey, was conkey issues such as the role IT ducted across 13 countries and plays in driving global busiinvolved identifying the chalness success. The research will be rewarded lenges faced by European CIOs. as we exit the also highlights that in the currecession According to the survey a quarter rent climate, CIOs face key deciof senior business executives believe sions about how they approach the IT budget cuts have harmed innovation while upturn, when it comes, to ensure they thrive. 23 percent say this has stopped them from win- There is a growing consensus that innovation ning new business. Over a quarter complained will be rewarded as we exit the recession.”
innovation
BILLION-DOLLAR BEHEMOTHS The film and videogame industries have been locked in a head-to-head scrap to relieve consumers of their hard-earned cash this winter – but it seems we can’t get enough of both. Hit game Modern Warfare 2 has made over US$1 billion in worldwide VS sales since its release in November while James Cameron’s 3D film Avatar has also racked up over a US$1 billion worldwide. The revenues show the enormous draw of two separate entertainment platforms that, in recent years, have been fighting over their tarTHE BATTLE OF THE get demographic. BILLION-DOLLAR ENTERTAINERS $7.20*
$59.99
average unit cost
$1.37bn amount earned $1bn to date 13.01.10 (worldwide)
$230m $150m $990m
Titanic
$1.8bn *Average US cinema ticket price Sources: www.telegraph.co.uk | www.imdb.com | gamespot.com
production budget advertising budget profit to date
other big earners (worldwide)
$50m $200m $750m
Guitar Hero III
$2bn
World of Warcraft
$100m per month
According to research firm Frost & Sullivan green IT projects are gaining traction within tech companies despite the recession – as long as they can prove a conclusive ROI. In its third annual Sustainability in Telecoms: Return on Environmental Investments report, the research firm indicated that cost savings, better differentiation and improved brand loyalty were all key drivers for investing in green projects. Principal Anaylst Sharifah Amirah said: “The amount of environmental investments in the ICT sector should at least double in the next two to three years. Despite the lack of concrete frameworks at the 2009 Copenhagen summit, individual governments, stakeholder and consumer pressure will continue to drive businesses to adopt more sustainable operations.” However, the report cautions that measurement frameworks for most are still at a very early stage, due to being held back by a lack of standard measures and the difficulty in measuring non-tangible benefits.
TECHNOLOGY INVESTS ICT firms are still attractive prospects to private equity investors. A report by business and financial advisors Grant Thornton UK LLP claims ICT firms are still the overwhelming favourite for private equity investors looking for their next big opportunity. The report surveyed 40 leading private equity investors that back ICT firms in the UK. It recorded that 84 percent said their firm planned to undertake an acquisition in the UK ICT market over the next 12 months. Wendy Hart, Corporate Finance Advisory Partner at Grant Thornton, said: “Our survey indicates that there will be stiff competition for quality ICT assets in the coming months. 72 percent of existing private equity backers of ICT expect an overall increase in investments in the sector and an increasing number of private equity houses are looking to move into the ICT space.” Green IT was also named as an attractive investment proposition by 39 percent of respondents.
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UPFRONT IN MY VIEW
26 DELL INC. FOUNDER AND MULTIBILLIONAIRE MICHAEL DELL REFLECTS ON THE COMPANY’S SUCCESS AND ITS FUTURE FOLLOWING ITS 25TH ANNIVERSARY CELEBRATIONS 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. 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. Our consumer business is now growing quite fast. In contrast to two years ago where we basically had zero places where somebody could buy a machine other than the telephone, now we have 43,000 retail locations where someone can buy our products. There’s a lot of focus, because of the financial crisis, on cost and cash flow, which is a natural reaction to a crisis. When you focus on cash and cash flow you start to realise you want productivity because you don’t get far moving a business forward without it, and following productivity you 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. Dell is evolving itself from a product company into a solutions integrator, where we’re bring complete solutions to our customers whether they’re the biggest companies in the world or governments, 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. One of the things you see in this business is that you can’t do everything yourself. It just doesn’t work. 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.
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UPFRONT
COMPANY INDEX A SWEET DEAL
27
said: “We are determined that the levels of investment that take place at Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure.” Cadbury employs 46,500 people worldwide and has its UK sites are in Bourneville, Birmingham, Somerdale and Bristol. It was founded in 1831 and has grown to become the world’s largest confectionary group.
The future of the UK’s Cadbury no longer hangs in the balance after Kraft Foods’ bid to take over the 150-year-old chocolate maker was finally accepted. It paid €10.4 billion in an offer worth around €6 per share. The deal is the culmination of five months of bartering by Kraft whose initial offer was described as “derisory” by the Cadbury The board. Speaking after the board deal is worth was urged to unanimously back Kraft’s latest bid, Roger Carr, Chairman of Cadbury, said: “We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft foods has made to our heritage, values and people throughout the world. We will now work with the Kraft Foods management to ensure the continued success and growth of the business for our customers, consumers and employees.” There has been concern that the takeover could lead to job losses, however, Prime Minister Gordon Brown has said he’ll work to ensure that Cadbury’s UK employees are not put at risk. He
€10.4 billion
COMPANY FOCUS Fashion retailer Primark’s meteoric success shows no sign of abating with the latest figures showing its sales grew strongly in the last quarter of 2009. Associated British Foods, which owns the chain, said sales rocketed by 19 percent in the 16 weeks to January 2. It now anticipates a “substantial” rise in full year profits. There are 196 stores across Europe and last year the British retailer opened its first stores in Germany, Portugal and Spain. Its growth comes as other retailers such as Next and H&M feel the pinch of the economic recession. Its owners say it has benefited from a move towards buying cheaper clothes.
COMPANY INDEX Q1 2010 Companies in this issue are indexed to the first page of the article in which each is mentioned. Absolute Software 76 Accenture 88 Aer Lingus 66 Alcatel Lucent 10, 48, 49 Amazon 96 AMR-Partners 96 Apple 144 Aruba Networks 32, 78, 79 BA 66 BBC 104 Birmingham City 28 Blue Coat Systems 15 BT Conferencing 4, 63 BT Group 44 Business Week 20 Cable & Wireless 34 Cadbury 29 Channel 4 28 CRM Association 110 Dell 28 Denon 144 Domino's Pizza 122 easyjet 66 Ernst & Young 74 European Commission 134 Facebook 80, 104 Fijitsu Technology Solutions 94, 95 Flybe 66 Frost & Sullivan 80, 111
Google 144 Grand Hotel Europe 138 IHS 132, 133 Hotel Astoria 137 Hotel Augustine 135 HOTREC 134 HTC 144 IBM IFC IDC 74 iEnterprises 112, 113 Infor 108, 109, IBC Kempinski Hotel 138 Kensington Security 86, 87 Kier Group 50 Kofax 120, 121 LBC Radio 28 Logica 102, 103, OBC Luup 126, 127 McKinney Rogers 23 Meet The Boss 87 Microsoft 24 Mobile World Congress 61 Mothercare 28 Néstle 40 Netgear 70, 71 NewsGator 12 Nortel 39, 58 OpTier 118, 119 Psytechnics 64, 65
Redhat 92, 93 Ryanair 66 Savvis 100, 101 Siemens Enterprise Communications 8, 72, 73 Sony 144 Standard Life 114 Symantec 6, 82, 83 Tandberg 2, 55, 56 Tata Consultancy Services 34 The Schumacher Group 96 T-Systems 34 Twitter 80, 104 UNESCO 138 Vodafone 58 Volkswagen 34 Work Wise UK 20 Yahoo 104 Yankee Group 96 YouTube 80
FAST FACT Less than
10% of IPv4 (the fourth version in the development of Internet Protocol) addresses remain unallocated, according to Number Resource Organisation
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COVER STORY
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PLAYING TO
When Karren Brady took over as the first female boss of Birmingham City FC in 1993, she quickly built a reputation as a hardnosed businesswoman who could beat the men at their own game. But, as she prepares to embark on a new TV career, she tells Diana Milne her fearsome reputation is undeserved.
A
s the first woman to conquer the male-dominated UK football in-
dustry, you’d expect Karren Brady to be a pretty tough character. So it comes as a surprise when she claims to be anything but. “As much as I’m portrayed as quite ruthless, I’m actually a big softie really,” she says. “I like to think I’m firm but fair.” She may deny it but becoming the Managing Director of Birmingham City aged just 23 took guts and a very tough skin. Brady describes the challenges of taking on the job: “Well it was quite difficult when I took over in 1993. I remember going to an away game at Watford and asking the guy at the desk where the director’s box was. He said ‘Yes dear, the wives go to the ladies room’. And I said ‘Actually I’m not the wife of the director, I am the Managing Director.’ And he put on his glasses, looked at me and said: ‘Oh yes, you’re that woman. Stay here and I’ll have to find out what to do with you.’ Because that’s what it was like in those days. There were no women around.” Brady goes on to describe the “blatant sexism” that existed in football during that time and the way this was conveyed in media coverage of her appointment. “I remember I had to go to a Football League tribunal because Birmingham had been accused of poaching a manager. I was on the train to London and the person opposite me was reading the Daily Mirror newspaper. When he opened it I saw a picture of myself on the back page wearing a short skirt with the headline ‘Sex Shooter: Brady will do a Sharon Stone in front of the tribunal.’ People talk about sexism today, but in those days it was absolutely blatant.”
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Karren Brady with former Birmingham City Chairman David Gold. He and David Sullivan now own a 50 percent share in London football club West Ham United, where Brady is now Vice Chairman
The winning streak
be doing something different to me. I do have to sit there and say to myself In the 16 years that she managed Birmingham City Brady did everything ‘Board meeting or sports day, board meeting or nativity play?’ When you’re she could to eradicate sexism. By the time she left, following the takeover of at the board meeting you’re wishing you were at the sports day and when the club last October, 75 percent of its senior management team were you’re at sports day you’re wondering what’s happening at the board women – a far cry from when she was the only person wearing meeting. I think the trick is that most working women have two skirts in the boardroom. And Brady had successfully proven personalities; they have their home personality and their work the point that women can succeed in a male-dominated personality and the trick is not to let either of those personworld. Three years after she took over, the club posted its alities drain the life out of the other.” first profit and in 1997 it launched on the stock market, Not surprisingly, the challenges faced by working of Birmingham City’s valued at the time of the float at UK£25 million. During mothers in business is a subject that is very close to her senior management her time at the club she increased spectator numbers heart. She believes strongly that the UK government were woman when from 6000 to a sell out capacity of over 30,000 on averdoes not do enough to support women by providing afKarren Brady left age. And by 2002 the Blues had finally won a place in the fordable childcare options. “One of the issues is working the club Premier League. In 2007 the club was valued at over €68 milwomen trying to get the government to allow affordable, lion and last year was sold for €94 million. quality childcare and allowing that to be tax deductible. If Football is not the only area in which Brady has honed her busiyou’re a working mother and you have to employ someone to look ness talents. She sits on the board of several major corporations, including the after your children why shouldn’t you be allowed to deduct it?” Women in baby clothes giant Mothercare and the broadcaster Channel 4. Her achievebusiness is not the only issue bugging Brady. She is critical too of the supments are all the more impressive given that she has successfully juggled her port provided by the UK government for small businesses, claiming that the career with family commitments, bringing up two children with her husband, red tape involved inhibits entrepreneurship in the country. “I think there’s the Canadian footballer Paul Peschisolido, who played for Birmingham City an awful lot of red tape for businesses and I think that small businesses for two seasons. She admits she sometimes struggled with her dual commitshould be able to have a lot of that taken away from them. There’s an awful ments: “It’s a constant struggle and I think anybody who says it’s easy must lot of difficulties with small businesses employing people as some of the
75%
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Career woman Karren Brady began her career as an 18-year-old at the global advertising agency Saatchi &Saatchi before becoming Junior Account Executive at London’s LBC Radio. She took on the role of Birmingham City Managing Director in 1993 and increased its value to over €68 million during her time in charge. She is a popular media figure, having hosted her own TV show the Brady Bunch and presented several TV shows including Loose Women and Live Talk on ITV. Brady has written four books, a factual account of her first season at Birmingham City, two novels and her latest book, about successful women in the business world. She is also a columnist for The Sun newspaper, The Evening Mail in Birmingham and The Guardian newspaper and in 2008 launched her own magazine, Today’s Business Woman. Brady sits on the board of the business board of the mental health charity Scope and is the Ambassador for Birmingham Women’s Aid. She is currently Chairman of the music magazine Kerrang! and is a Board Director of Mothercare, Channel 4 Television and Sport England. She was made a Fellow of the Institute of Sales and Marketing in 2008 and has won a string of business awards, including Natwest’s Everywoman Award in December 2008.
“
rules and regulations make it very difficult for them to expand in the way that they would.”
Pastures new Brady hopes her latest incarnation – as the replacement for Margaret Mountford on the hit BBC television series The Apprentice – will give her a platform from which to address some of these issues but also to help to encourage budding entrepreneurs. As the sidekick to Sir Alan Sugar on the show which airs this summer, she will be responsible for overseeing the candidates hoping to become Sir Alan’s apprentice as they take part in various moneymaking challenges. And she says she is very much looking forward to passing on what she has learnt. “I’d like to be able to tell them where they are going wrong and how, if they’d tweaked their ideas, they would have been better or easier to communicate. I think one of the most amazing things I’ve learnt about doing this is how the show is actually like holding up a mirror against the contestants’ own personalities and allowing them to develop, and actually teaching them a bit of tough love as well. I think one of the most important things about The Apprentice is that the people that come through the process actually learn something from it.” Brady is also a big advocate of the concept of learning from a mentor as an apprentice. After all, it was through being taken under the wing of David Sullivan, the owner of Birmingham City, that her own career took off. She was
A word from the wise Karren Brady’s advice to job hunters As the UK plunged deeper into recession last year, Karren Brady was recruited by the UK morning TV programme GMTV to advise job seekers on how to get back into the workplace. Here she gives a sample of the advice she doled out to viewers:
“The thing to do is to get your confidence back. When you’ve lost your job your selfesteem goes and your confidence goes and that’s one of the hardest things to overcome. What I look for when I employ people is enthusiasm. And I think when you display those key skills in an interview, you stand out.” “Writing a professional CV is very important indeed, as is practising for your interview. Little things like remembering what interview you are going for may sound obvious but this is very important. A lot of people apply for so many jobs that they lose track of who they’ve actually applied to. Doing some research on the company they are going to see is crucial.” “When you’re actually in the interview you should try to strike the balance between talking about yourself and being interested in what the person has to say. So I would say treat job applications like any other business project in terms of having a plan. You have to remember that the person on the other side of the table is going to see 10 other people who are equally qualified. Think about what would make you stand out.”
”
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“
I think one of the most important things in business is if someone in the business likes you and puts you under their wing and guides you to better things A life changing moment
”
Brady’s meteoric career rise suffered a temporary blow when she was diagnosed with a potentially fatal aneurysm in her brain, which was discovered in February 2006. At the time she was given the choice of an operation that carried a high chance of a severe stroke or the insertion of a coil to break up the aneurysm that carried the risk of death on the operating table. She opted for the coil, a decision she describes as the toughest in her lifetime, and thankfully she lived to tell the tale. The incident, she says, served to reaffirm her life goals – but also forced her to take time out to enjoy the perks of her lucrative career. “I understand, when people get very ill, that they look at their life and say ‘I hate my job, I hate my husKarren Brady increased band, I want to change everything and go off around the Birmingham City’s world.’ But I think that it made me reflect the fact that acvalue to over tually I really did like my life and I wanted to live it for as long as possible,” she says, adding that she decided that she deserved a well-earned break: “My best friend was brought during her time in charge up in Hong Kong and for years I’ve been saying that next first spotted by him when she was selling radio airtime on time I’d go back for a visit with her. But I could never fit it in. London’s LBC radio. At the time she told entrepreneur Sullivan After my illness I did fit it in and it made me realise that you’ve got that if he bought advertising from her and it didn’t increase his sales she to do some of the things that you’ve planned to do otherwise what’s the would give him his money back. He bought the slot and his sales increased. Later point of working so hard for them?.” Brady went to work for him and it was her that persuaded him to buy Despite having said previously that she doesn't see a future for herself Birmingham City. Describing the influence this early mentoring had on her cain football, shortly after being interviewed by Business Management Brady reer, she says: “I think one of the most important things in business is if someaccepted the post of Vice Chairman of West Ham United, which is now one in the business likes you and guides you, puts you under their wing and owned by her former bosses David Gold and David Sullivan. And, having guides you to better things. I certainly had that in my Chairman David Sullivan, already stirred up controversy by suggesting the club changes it name to who took a keen interest in my career and did a lot of mentoring for me and that West Ham Olympic if they move to the London 2012 stadium, it seems was very important and key to my own success.” Brady is back on top form and still playing hard ball. n
€68 MILLION
Courting controversy Last summer saw the end of a two-year police investigation into alleged tax irregularities by Karren Brady and the former Birmingham City owner David Sullivan. The two had been arrested by City of London police officers in 2008 then again in early 2009 as part of a wider investigation into corruption in football. It is believed the investigations centred on tax matters involving two footballers. Following the news that the investigation was being dropped, the following statement from the law firm BCL Burton Copeland was issued: “David
Sullivan and Karren Brady are pleased to confirm that following a two year investigation by City of London Police and Her Majesty’s Revenue and Customs into Birmingham City Football Club they have today received written confirmation that a decision has been taken that no proceedings will be instituted. Whilst always confident of this outcome, the period of the investigation was understandably a stressful time and David and Karren are now happy to put the matter behind them and look forward to the future.”
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AUTOMOTIVE INDUSTRY
In the
DRIVING SEAT Since taking on the role of CIO of Volkswagen UK, Nick Gaines has changed IT from a taboo subject to a key element of the car giant’s business strategy. Diana Milne reports.
A
ny CIO who inherits an outdated and inefficient IT infrastructure has a tough job on their hands. But when Nick Gaines took up the role at Volkswagen UK in 2008, he faced the added complication of disparate systems across the company’s various brands and an unproductive outsourcing partnership. Immediately he set about the task of first fixing the technology basics before starting to implement a unified IT infrastructure across the group. Describing the system in place when he took up the role, he says: “Basically we were in a position where Volkswagen had become a large business but we hadn’t invested much in our IT infrastructure for a number of years. A lot of our systems were written 20 or 30 years ago and were running on some mainframes that we operate from our business in Spain. And to say these systems that run our core business are ancient would be an understatement.”
Ringing the changes A particular concern, for Gaines, was the fact that the UK’s core online sales system was run on an outdated
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mainframe system based at a Volkswagen plant near Barcelona: “The system was based on the old green screen variety of mainframe, and this is what our retailers used to sell cars. So whilst we may have an amazing presence on the internet, hidden behind all of this was some pretty ancient stuff. On top of that we were running computer rooms that should have been demolished as health hazards,” he jokes. Gaines blames the state of the company’s outdated IT infrastructure on the fact that nobody within the company had previously taken charge of the situation and developed a road map to change it. There was also, he says, a lack of understanding of the link between IT and the company’s business objectives: “I would say the best description is that no one had loved the IT. And that alignment between what the business needed and what the IT was doing was disconnected.” Gaines was determined to change this and immediately set about creating an agenda for change, starting with phase one, “fixing the basics”. This involved replacing Volkswagen’s core sales and CRM systems and rebuilding its IT infrastructure to put in place proper project and programme delivery methodologies. It also involved putting in place an “IT service management culture” and rebuilding the IT team. He and his team have only just completed this phase and have so far replaced the core sales systems for the Skoda and Seat brands. A new data centre has also been put in place, following the migration of data from Volkswagen UK’s previous facility in Milton Keynes. Gaines hails the project a success so far: “To run a project for two years then bring it in on time, cost and quality is a rare event in the IT industry. So to do it when you’re changing everything around at the same time is an interesting challenge.”
Joined up thinking The second phase of Gaines’ action plan is to develop core IT systems that can operate across Volkswagen’s different global businesses and brands. Explaining the thinking behind the project, he says: “What we try to do is, rather than having unique brand-specific and market-specific solutions, with each brand and country doing their own thing, I’ve been working with my colleagues across the rest of Volkswagen and we are choosing common systems and hosting them as shared services to a number of different countries. Some of my colleagues have said, ‘we’re giving up some local autonomy’; but in reality we’re gluing together the business and exploiting capabilities on a global scale.” As well as creating common core sales, vehicle logistics and CRM systems; this involved the virtualisation and building of new data centres and replacing outdated operating systems: “I had a very large number of old servers and other obscure operating systems, which were based on unmaintainable hardware, so we’ve virtualised almost everything and then rationalised out the variations of databases, middlewares, operating systems and so on and that’s been quite an interesting activity.”
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within the business: “Forget building infrastructure and new applications. By far the biggest journey for our business has been to build a different culture both within IT and between the business and IT. Because at the end of the day we’re not here to do IT. I’m here to sell more cars and more parts, to sell more finance and to drive down costs. IT is just my specialist skill and the extra value I can add. I position IT as the tool with which we can transform the way we do business.” In order to achieve this, Gaines had to build a team with the right attitude, and to recruit members who were “motivated emotionally by the business outcome and not the technical purity or esoteric, architectural beauty of IT”. He believes he has achieved this, creating a team behind him with the right attitude towards IT within the organisation: “The MD said to me the other day that the IT folk have now got a spring in their step. They’ve got a smile and a positive attitude. This is a huge personal journey for most people and we’ve made some tough decisions along the way.” Volkswagen Group Perhaps the biggest mark of how successThe Volkswagen Group, fully Gaines has raised the profile of IT within headquarted in Wolfsburg Germany, is Volkswagen has been the fact that despite the one of the world’s leading automobile harsh economic conditions, particularly in the manufacturers and Europe’s largest auto industry, investment in technology and carmaker. In Western Europe one in Gaines’ ambitious plans to overhaul the IT infive new cars is manufactured by frastructure have not been affected: “I’m very Volkswagen and in 2008 the group lucky that we have an enlightened board in increased the number of cars delivered Germany as well as the board in the UK who to customers to 6.257 million. recognise that there’s a huge opportunity to inCorrespondingly, its group sales rose to novate in the sales process and IT is pivotal to €113.8 billion. that. As a result of that my strategic proThere are nine car brands grammes to rebuild the infrastructure and remanufactured by Volkswagen: engineer the core business processes remained Volkswagen, Audi, Bentley, Bugatti, untouched by the recession. Our board voted to Lamborghini, Scania, SEAT, Skoda and protect them throughout this time and that’s Volkswagen Commercial Vehicles. Each been incredibly positive.” brand operates as its own
When it came to transforming Volkswagen’s IT, re-assessing the company’s outsourcing arrangements was high on Gaines’ agenda. With this in mind, last May the company signed a five-year contract with India’s largest IT firm Tata Consultancy Services (TCS). The agreement will see TCS support Volkwagen’s business transformation programme and its move to a standardised business platform. The move represented the first time that Volkswagen had implemented a mixed onshore and offshore model for its IT systems. The company also has outsourcing agreements with Cable & Wireless, which handles its telecommunications needs, and T-Systems, which maintains mainframe applications. Gaines describes the advantages of having agreements with multiple outsourcing partners: “What we’ve been able to do is significantly improve service delivery performance and cut costs as Nick Gaines well because we’ve been matching the capabilities of our partners to the needs of our business better. If you only have one partner then it’s inevitable they won’t be a good match across all the different things that you want to do and also getting a bit of competition in the mix encourages a better level of performance.” He said that in terms of outsourcing agreements the company had learnt from the experiences it had with a previous outsourcing partner: “For a long time we were working with a single outsourced partner and the relationship wasn’t very great. I think that the challenges we’ve had in the past were almost because we’ve been a little bit too hands-off as a customer and so we’ve adopted a different stance now which is about driving the performance of our partners a bit more proactively and that’s been pretty successful.” Gaines goes on to say that the new arrangements with outsourcing partners have already improved the efficiency of Volkswagen UK’s day-to-day operations.
Building bridges
independent entity. In total, the group operates 61 production plants in 15 European countries as well as sites in the Americas, Asia and Africa. It has nearly 370,000 employees worldwide who produce over 26,600 cars each day. Volkswagen’s cars are sold in over 150 countries.
It has been all the more important for Gaines to prove the validity of his IT projects, given what he describes as the previously vast gulf that existed between those working on the technical side of Volkswagen and those in the boardroom: “When I arrived IT wasn’t even the whipping boy. It was almost regarded as something you didn’t want to be anywhere near. It’s hard to put it into words, but people had the lowest possible view of IT in our business.” He says his proudest achievement to date as CIO has been transforming that attitude and raising the profile of IT
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The technology horizon
Though Gaines and his team are still deeply entrenched in the transformation of Volkswagen’s IT infrastructure and services, he is already looking ahead at how the company can further capitalise on emerging technologies, such as cloud computing. Because it outsources so many elements of its IT, Volkswagen is already a user of cloud computing technology. Gaines says he is impressed so far with the speed with which cloud technology enables technology changes to take place: “The interesting thing about cloud computing is the time-to-market speed. You can implement change quicker when you remove the dependency on the end device
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Notable subsidiary brands and date of acquisition
1964
1990
1998
1998
1999
2000
2009
Brand headquarters Production locations Countries where VW is sold
€1.5 billion
6.3 million
370,000
operating profit
vehicles sold
€77.2 billion
26,600
employees worldwide
group sales revenue
cars produced each day
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or the end infrastructure.” He adds, however, that for him the most interesting aspect of the technology in the year ahead will be security – a key challenge for Volkswagen with its disparate brands and global operations: “To bring together cloud-delivered services, internaldelivered services and conventional services the biggest challenge for a large enterprise like ours is security. Particularly when I’ve got a heavily outsourced supply chain, globally delivered services from our factories around the world and UK delivered services both from our outsource partners and from here. Actually creating the right security model to match the service to the business is really tricky stuff.” He says this issue becomes even trickier for companies moving from delivering services predominantly internally to delivering cloud services: “The issue is where the boundaries are and how you design security when you’ve got a virtual supply chain running a virtual infrastructure for a virtual business.” As well as cloud computing, Gaines is keen to harness the power of social networking in order to increase loyalty among Volkswagen customers
and spread the word about its products: “A customer who has a great experience with us will become an advocate and they will help to sell more cars. They might be tweeting about their new Skoda or whatever and the value they generate could be huge. So we have to be there delivering services that support that world. The change in consumer behaviour is a really exciting place for our business. I think it will drive innovation in the year ahead.” Gaines labels himself a “nerd”, describing his obsession with the latest technologies as “my secret vice”. But he says it’s not IT itself that excites him but its role as a business enabler: “The technology is almost irrelevant to me. All these different technologies are merely different ways of delivering services. What really matters is matching the service you deliver to the needs of the business.” And it’s this ability to translate technology from geek speak to business case that has helped Gaines to put IT at the heart of Volkswagen’s operations.
“The challenges we’ve had in the past were almost because we’ve been a little bit too hands-off as a customer”
1 in 5 new cars in Western Europe are produced by Volkswagen
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MANUFACTURING
FOODFOR THOUGHT Nestlé’s financial performance in 2009 was, despite being positive, hard for CEO Paul Bulcke to swallow. This charismatic boss sees last year as a blip for the Swiss food and drink giant as he sets his sights firmly on establishing Nestlé as the world leader in nutrition, health and wellness.
A
s for many other organisations, 2009 was a tough year for Nestlé. Its recently announced nine-month figures showed that the food and drink company had managed organic growth of 3.6 percent in the first three quarters of the year, down from 8.9 percent for the same period in 2008. However, in a business environment such as today’s any growth is positive and CEO Paul Bulcke is keen to put these figures into some kind of perspective. “They come on top of many years of strong performance, which delivered profitable growth period after period, year after year,” he says. “Let us just look at the past three years for example. For the period of 2006 to 2008 our sales and constant currencies are up 27 percent and our EBIT increased 43 percent with significant improvements in EBIT margin and the return on investment capital. We invested CHF 29 billion in growing our business. CHF 14 billion of that in capital expenditures and CHF 15 billion in acquisitions. At the same time we returned a total of CHF 28 billion to our shareholders, CHF 12 billion from dividends, which increased 55 percent over the period and CHF 16 billion from our share buyback programs.” Behind these numbers, Nestlé has continued to pursue its aim of shifting away from just being a food producer to a company profile that gives equal
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weight to health and wellness. Giving structure to this transformation is a ‘road map’ that clearly sets out where Nestlé is headed. “The road map clearly defines what we want to be as a company,” Bulcke continues. “We want to be the world’s recognised leader in nutrition, health and wellness, and also the reference at the same time for financial performance in our industry. It defines what we want to leverage to succeed. First, our product and brand portfolio backed by strong R&D capabilities, our unmatched global presence in the world and our people, values and culture. It defines also where we see opportunities for particularly accelerated growth in nutrition, health and wellness with emerging consumers and our properly positioned product initiatives and out-of-home consumption and in premiumisation. “It then also defines how we deliver efficiently and effectively every day, to consumer relevant innovation and renovation across our brand and product portfolio, to continuous improvement of our operational efficiencies by having our products wherever the consumer looks for them, and by communicating and connecting better with our consumers. That is what the road map is all about, a clear and straightforward framework outlining our strategic direction, which everyone at our company is aligned with and implements on a daily basis.”
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Aside from Nestlé’s financial ambitions, the company is also taking a crunutritional status intakes and dietary habits of different populations in order sading approach to major global social issues. “At the beginning of the 21st to best target consumer needs.” Nestlé has been fortifying food and beverages century, malnutrition remains one of the most serious problems facing hufor many years now and has a large product portfolio, largely focused on demanity,” says Bulcke. “It is an underlying cause of around 35 percent of deaths veloping countries. A key line is in fortified milks, which have the significant in children under five years old and mainly in the developing countries. benefit of being comparatively cheap to produce, enabling them to be affordMicronutrient deficiencies exist in iron, iodine, vitamin A and zinc in both able for those in most need. By the end of 2010, these milk products are hoped adults and children. These deficiencies are especially common in Africa, to be available to millions of consumers in over 70 countries. For a compaSouth Asia, and Southeast Asia. Overall one-third of the world’s ny whose relationship with the developing world has drawn conpopulation is deficient in iron, iodine, vitamin A or zinc, or siderable controversy in the past, it would be easy to dismiss a combination of them. Severe iron deficiency exists in these efforts as little more than a smokescreen aimed at Nestlé runs Africa and in parts of Asia and South America, causing patching up a tarnished image. However, Bulcke insists that nutrition education delay in mental development in children and reduced Nestlé’s efforts are motivated by a balanced combination projects in physical performance. Vitamin A deficiency is particof business imperative and social responsibility. ularly severe in South Asia and Sub Saharan Africa, re“It is our hope that our strategies in product fortification sulting in blindness and increased susceptibility to will over time contribute significantly to the eradication of infections. Iodine deficiency is more scattered across the malnutrition and of micronutrient deficiencies around the globe and is also responsible for impaired mental developworld,” Bulcke states. “This mapping activity is a good example ment, and widespread zinc deficiency leads to poor growth of how our business activities link up with society in a responsible and and reduced immunity.” sustainable way. We call this creating shared value. In this particular case Bulcke clearly believes that Nestlé is uniquely placed to address some of we are contributing to the solution of a public health problem with products that these issues. “Over one billion Nestlé products are purchased every day address the nutritional needs of specific parts of the population, and in doing so around the world, which are or could be carriers of micronutrients,” he conwe serve both society and our shareholders at the same time.” tinues. “We are now mapping out our product fortification efforts against Sustainability is an increasingly vital component of how just about every known micronutrient deficiencies across the globe. Working with local health industry does business. It’s therefore no surprise that Nestlé is devoting plenand nutrition experts, we are analysing local nutrition landscapes including ty of resources towards addressing it. The company is increasing its use of
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Fairtrade products across its brands and recently announced that the exNestlé was founded in the 19th century on the bedrock of infant formutremely popular KitKat chocolate bar will now be made from Fairtrade la, a product designed to improve the health of consumers. In light of the huge sourced cocoa. In addition to partnering with organisations like Fairtrade, upswing in popularity of so-called ‘functional foods’ with positive health Nestlé is also working on its own initiatives. The Nestlé Cocoa Plan was anbenefits this marks the company out as being significantly ahead of its time. nounced in late 2009 and builds on the company’s efforts to help farmers by “It is the core,” confirms Bulcke. “It is the soul of our strategy. We have a bringing its plant science knowledge to bear to ensure a steady and sustainroad map and we have put in the centre the ambition to be a recognised able supply of cocoa in years to come. Recent history has seen an unprecedentleading nutrition, health and wellness company. We have said also that we ed rise both in chocolate consumption and cocoa prices, so it is vital for a massive are driving a very important R&D structure that is inspiring our strong confectionery producer such as Nestlé to have a secure portfolio and brands, so we are focusing on several supply of raw materials. Supplies of cocoa and coffee, platforms for that.” 60/40+ another major part of Nestlé’s business, depend upon Key to keeping Nestlé at the nutritional cutting Nestlé’s 60/40+ concept is the farmers at a local level and as a result, the company will edge is a commitment to continuous innovation. tangible expression of the be investing CHF 460 million over the next decade on Bulcke describes a perfect situation as one where the company’s vision. Increasingly the a range of initiatives to keep the beans flowing in. product portfolio is in a constant state of churn, so consumer is looking to food to “These cocoa and coffee sustainability programs are that new developments and nutritional benefits can provide nutritional and health part of our commitment to carry out our business in a be incorporated without delay. But improving prodbenefits – not at the expense of responsible and sustainable manner, and in line with ucts is only part of the story. Consumers need to untaste but in addition to it. As a our values and our principles,” says Bulcke. “Over the derstand exactly why nutrition is so critical. “This result the company aims to make 10 years since we created our sustainable agriculture whole thing is linked to information, to inform the products that achieve both 60/40 initiative, millions of farmers have benefited from our people about nutrition,” Bulcke says. “There’s nothconsumer taste preference and a free technical assistance. This is a strong holistic proing with less present education in general than nutrinutritional advantage. This means gram with our agriculture suppliers. It aims to improve tion. I remember when I was in school we never had that not only should six out of 10 efficiency and risk management in the supply chain a one-hour course in nutrition, and yet at the same consumers prefer the Nestlé and it supports sustainable development in agriculture. time it’s so important in your life and you have to take product to a competitor’s Today our company provides free technical assistance nutritional decisions. Everybody has to make nutriequivalent but that there should to over 600,000 farmers.” tional decisions several times during the day decibe a nutritional plus too. But sustainability isn’t purely an issue for farmsions, so we are not prepared for that. Governments Nutritional assessment is carried ers and suppliers. It permeates right through the orare starting to be involved here. out by R&D nutritionists and ganisation to the impact of how products are “We as a company have a nutrition compass, generally compares a Nestlé packaged and produced. “We have invested 250 which is on every Nestlé product. Consumers see a product with the main competitor million CHF250 this year alone in sustainability compass that gives some comprehensive information product. The nutritional projects in our own factories and operations,” that helps to induce that better awareness and unassessment examines the levels of Bulcke continues. “These include renewable enerderstanding of what nutrition is all about. In the nutrients and the intrinsic value of gies, reducing water usage, and improvement of framework of creating shared value we have also ankey ingredients in our products. our overall carbon footprint. Bottle light weightnounced that we’re going to drive a global push The potential contribution the ing is just one of these projects among many of the through the market that gives kids a global nutrition product makes to daily needs for a recent capital investments we have made in suseducation program. We already have quite comprehealthy balanced diet can then be tainability. Nestlé Waters continues to be the hensive programs in 30 countries that we do togethdetermined. The assessment leader in PET bottle light weighting. Since its er with local authorities to educate kids on nutrition identifies nutritional strengths and launch in 2007 the Eco Shape bottle in the United because, the multiplying effect of educating kids also weaknesses, and provides States alone has saved around 100,000 tons of for the future but in their families, is quite dramatic.” direction for product improvement resin. In energy savings this would be equivalent As 2010 kicks off, Nestlé is ready for another big leading to nutritional superiority. to 78,000 cars taken off the road this year. We year. As befits the biggest food company in the world,
60/40+
launched a ultra-lightweight 1.5-litre bottle in Spain last year for Nestlé Pure Life, which is the world’s lightest bottle of its kind. This bottle is being rolled out now in other countries. We believe that it is important that our shareholders, consumers, customers, suppliers, other stakeholders and the public at large understand how we positively link up our activities with society in a responsible and sustainable way and this is what we mean by creating shared value, and the role it plays in the convergence of growth, sustainability, and nutrition. In fact, this is the key to creating and maintaining trust with society in general.”
it is pursuing a global vision, one that has the potential to bring big rewards for shareholders and consumers alike. Bulcke recognises the responsibility that a multinational of Nestlé’s size has and also understands the power it can wield. “We put nutritional values into our food and our portfolios, that has a broader context of also affecting nutritional decisions by the people so they go for more balanced and healthier diets in their lives,” he says. “This is a very global equation that we have to be part of and actively drive our knowledge through this whole process. It’s a very, very important thing that is so close to what we want to do as a company.” n
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TELECOMS
A sharper
focus
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In today’s fiercely competitive telecoms space, BT is seeking to diversify its revenues to cater to changing communications trends. But morphing yourself from a predominantly telco business into a global network and IT services provider creates unique challenges, as Joaquín Schmidt learns during an interview with BT Group CIO Al-Noor Ramji.
BT recently merged its CIO and CTO functions. Why was this decision taken – was it about making cost savings and better efficiencies within the group or for other reasons? Al-Noor Ramji. I wouldn’t be stating the truth if I didn’t say that we did save money. But that wasn’t the intention. The issue was to accelerate what we call ‘concept to market’. In plain English, it’s about making sure we deliver new products faster to the marketplace by hooking up the research functions, innovation functions, all the way through to the marketplace. Th is has become crucial for us because you have people worrying about the top line as well as the bottom line. Also, you need to make sure that people who are working in similar disciplines interchange, so there’s no silos between and far more opportunity to advance in one of the fields. For instance, lots of architects would like to get into research and vice versa. The size of the CTO function wasn’t huge and we will grow it as we need to as opposed to, just going in one direction. We also need to make sure things happen faster so bringing two organisations together was one way of making this happen. The third reason was about convergence. We’re increasingly getting soft ware lead-in, regardless of whether it’s network or product or IT. You can’t install a new network now without soft ware being the long pole in the tent.
BT operates in more than 170 countries
Do you foresee a trend developing and other companies bringing the two roles and departments together? AR. I spent most of my [working] life outside telcos where it is completely normal. I always had a CTO reporting to me. It’s more to do with telcos, I think, than anything else, where the CTO used to run the networks and research and so on, and the CIO ran what you would call the OSS (Operational Support Systems) side. As soft ware begins to play a bigger role you will begin to see more companies following the way Google has done things with no separation between the CIO and CTO. Vodafone, for example, has gone the other way and the CIO reports to the CTO. So yes I do so see this happening more and more but I don’t know whether it could be called a trend. It should certainly happen if soft ware is a prime driver.
Could you explain about the benefits of the creation of your five Global Development Centres and the reduction in complexity that the Virtual Data Centres (VDCs) will deliver?
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How do BT’s VDCs help in slashing your carbon footprint? What other initiatives are you undertaking in an effort to be more ‘green’? AR. The green issue is something we have been doing for a long time and believe in a lot. The VDC obviously has different flavours, including power savings. Most servers in a data centre are running at between 5 to 15 percent and at the top end, where people are really good at managing servers, they run at about 30 to 50 percent. By virtualising that layer, you immediately get a reduction in power consumption. And by structuring your data centre in such a way that you only blow air. For example, you suck out air from the top of a rack, whereas typically what you do is you’re blowing cold air either from the top or from the bottom and you’re trying to cool the whole room. On the next layer you’re virtualising the CPUs to actually cross-share. Whereas before you would have disaster recovery as a separate thing, you no longer need that because one data centre will serve as a back-up for another. Or in the same data centre, you’ll get virtualisation both within and across data centres. That gets rid of the whole data centre, if you’ve have enough data centres. Clearly, if you’ve only got the one then it doesn’t save you anything. 21CN is one of the biggest IT programmes in the world. What lessons have you learned from this huge project and how much has it delivered thus far in cost savings from the original UK£1 billion target? AR. The total cost savings so far amounting from the switchover to our 21CN network are UK£600million. In terms of lessons learned, when you’re running a very large programme you forget the human element, because you focus on the technology and the massive spend as well as the excitement around building something new. There has to be a migration to be done because you can’t move everyone overnight from one system to another, or one network to another, because, quite frankly, most of the
Blue-sky thinking AR. First and foremost in a global organisation, which also does so-called outsourcing and offshoring, you need to distribute the people to be near customers, to be with their colleagues and to be organised in such a fashion that the ‘lead to cash process’ is laid out on the floor. If you imagine that going from initial lead or a contract with a customer all the way to billing and then getting paid for it, is a lead to cash process. So how do you lay it out physically on a floor, in a building? Then you combine situating the customer in the middle of it, although the customer comes and goes as you develop things, and link them up by white boarding and video linking in such a natural way that people will actually speak to each other to avoid travel. Avoidance of travel has fi nancial advantages and it speeds up collaboration because you just speak. The microphones are hanging off the ceiling like lights so you speak normally, share things on a white board and you touch it with your fi nger. It is about a little bit of technology, a little bit of physical collaboration, and a little bit of lay-out which forces people to think through what their customer is going through. As you can imagine, if 24 steps were taking six months to get through it would tell you pretty quickly the customer isn’t going to be too happy. As well as massive savings in collaboration, we found at least a 30 percent saving in costs.
BT subsidiary launches mobile ‘cloud’. Dubbed “Silicon Valley’s first phone company”, Ribbit Corp. was snapped up by BT in 2008 for US$105 million. The business recently launched Ribbit Mobile, a free web-based service that allows mobile phone users to manage calls, messages and phones in the ‘cloud’, as the company’s founder and CEO Ted Griggs explains: “The basic idea is that if you have a mobile phone and you have a computer, it links them together, so that if you’re not able to answer your mobile phone, you can answer it on your computer. If you’re not able to answer it on your computer, it will take a message and transcribe that message into text, and then it will send that back out to you, either as an email or an SMS.” Ribbit Mobile’s target market is the mobile professional and the service will work on almost all of the 60 million mobile phones in the UK today. “In the future, no one will buy a mobile phone without a cloud backup,” says Griggs. “Ribbit Mobile represents the first step in that future.”
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customers don’t care. Unless you give them something brand new, they don’t want to move. The migration period takes a long time, and people don’t plan for the migration period as much as they plan for the destination. It’s a bit like the desire to get to the top of Everest. You assume you are just going to land by helicopter when in fact you forget you need to have ropes, tents and oxygen on the way up. So I think the lesson learned was migration planning, which is a lot bigger than just the fi nal destination would lead you to believe. For example, part of our plan is to replace the little electronic messages that come up at bus stops to tell you how long it will take for the next one to arrive. Th is is run by an ISDN line so when do you plan to disconnect it and connect it back up? Another example is Barclays. When do you migrate the whole bank to the system? They won’t take very kindly to you slipping in the odd branch here and there. These sorts of exercises need to be planned very carefully.
“We’re proud of the fact that we’ve followed customer demand and listened to customers. That’s always been a problem in a large company, because there are so many people with opinions” The next lesson was that people needed to be trained in a very different skillset when you make massive changes. They are used to repairing things that go wrong or they’re used to doing a tiny bit of building but when you’re replacing the whole country’s networks and platforms and systems, suddenly the amount of new stuff you do is enormous. It’s a bit like living in a house and then learning how to build one – it’s not at all the same thing, right? I can do some repairs to a house but I couldn’t build a new one. Also, the silos that we had, had to be broken, whether there were network people not speaking to systems people, across all lines of business. They all had to sit together and work together. Presumably the planning that has gone into 21CN has been intense? AR. I’ll give you an example: you may need a new kitchen but most of us don’t build kitchens for a living. If you did, however, you would be very careful to make sure the plumber arrived just before the electrician, who arrived just before the cabinetmaker and so on. You can forget this in a large project. People will say, ‘I turned up and the site was closed so I went home’. The guy who went home creates problems for the guys who then turn up later. So the synchronisation of humans and the careful treading of work was enormous. We had 20-odd vendors who had to arrive, and they themselves were outsourcing to others, so it was a big people coordination task.
Whilst you were undertaking 21CN, the full force of the recession struck. How are you being affected by the downturn – are budgets being cut and are you being asked to do more with less? AR. Of course, most of us in the world are being affected but the good thing is that we were on target. We were heading that way anyway because of our past investments in 21CN, but, in particular, the ‘right fi rst time’ programme that we ran. The programme yielded a lot of benefits, which reduced costs anyway, while the number of customer complaints has declined so he’s the number of phone calls. Again, we’ll give you that data if you wish. But that resulted in cost savings anyway fundamentally. Then we had our platform programme, 21CN, which allowed us to cut costs. We’re now putting in a new operating model, which will reduce costs even further. I guess next year we’ll get another similar amount out. So over three years, we’ve saved a lot of money. BT has transformed itself from a telco business into a global network and IT services company. What’s been the secret of BT’s transformation and what technology milestones are you particularly proud of? AR. Th at’s a good a question. The fi rst thing we’re proud of is the fact that we’ve followed customer demand and listened to customers. Th at’s always been a problem in a large company, because there are so many people with opinions. A couple of times we were messing around with technology for technology’s sake. We were thrilled that we were going to be the world’s fi rst all-IP network and so on. However, the customers really do want faster speeds and they want different products. From the competitive landscape point of view, we’re in fairly good shape, because we have the biggest ethernet footprint across the UK. So competitively we’ve improved. I think the milestones were obviously 21CN, the Ethernet programme, the BT Home Hub, BT Vision, the fibre rollout and Ribbit (see box out). These are BT milestones so I’m not trying to take the credit. However, I am probably most pleased with being able to give more than two million customers a home hub. It’s easy to do these things in small numbers or give them to one bit of the country, but rolling them out nationally is totally different. What gives you the biggest buzz about being CIO at BT? AR. Getting customers together with the coolest technology. For instance, my mother-in-law has a problem with mobile phones. She asks me why we say they are easy to use? I tell her they’re easy to use because you press the green button and then you dial the number, and then you press a red button. But she says ‘Why is it red to stop and green to go’? Then I realised it’s because she’s Indian and red is a good thing in India. Like the Chinese stock market, for example, when it’s red, it’s up. As a Brit, I think red must be a bad thing – stop. On iPhone there is an application for this problem, which is a pretty cool technology. When we see a new technology we have to consider whether we can get it to 10 million people because we are a scale company – a big company. We have to do things for a lot of people. We will never beat your one-man band who will do things for one customer. So bringing customers useful technologies and in scale are the things that give me the biggest buzz.
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INDUSTRY INSIGHT
market share and become more profitable. This implies that CIOs need to focus more on the essentials. Two trends will emerge: • All-IP, service-aware networks will become the norm, supporting applications from the core (or the carrier’s point of presence) to the device, which is not possible with heterogeneous technologies. • Managed communications services models will be favoured for OPEX-based deals. We believe carriers will play an increasingly important role in helping organisations be dynamic.
Unified communications simplifies communications
Becoming a dynamic enterprise Xavier Martin offers an insight into the challenges enterprises are facing in today’s turbulent business environment and how becoming a dynamic enterprise helps address these problems.
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lobalisation is transforming competition into a fast moving target. The competitive landscape changes every day, enabling new and innovative services to be launched rapidly, creating an unanticipated threat for enterprises. We believe the companies that will succeed in this global market transformation are the ones that interconnect their core assets – namely their network, people, and processes – with real-time communications to harness a hidden wealth: the knowledge of their employees and partners. Knowledge is the real competitive differentiator that no one can copy. We call these companies “dynamic enterprises”. One way to address competitive challenges while increasing collaboration is through Web 2.0. Its services are increasingly important for a company’s performance and we believe that they will become the ‘de facto’ foundation for collaboration. Knowledge is probably one of the most scattered resources in an organisation, and this phenomenon cannot be fi xed through business applications. Enterprise objectives are less about technology and more about positively influencing its business performance. Our vision is that IT departments will shift from technology houses into internal business service providers, delivering the digital weapons to help their business units gain
Unified communications (UC) has been perceived so far as the crossroads between the telecom and the IT worlds and, in many cases, companies have struggled to demonstrate a clear ROI. We believe that the UC market as we know it today will transform into what we call ‘contextual communications’, where real-time communications offered by UC techniques will be embedded into composite applications that aim to serve specific business needs. UC’s role will not only be to simplify communications, but rather to make sure that there’s no latency in communications between people during critical business instances, such as a sales negotiation. Then UC’s contribution to business will become indisputable.
Increasing customer satisfaction So far customer service excellence has been the primary vehicle to measure customer satisfaction. In some situations, customer service agents’ skills are not sufficient for providing the right answer at the right moment, (first contact). Organisations should consider expanding customer service beyond the contact centre walls, by integrating company experts into the process. For example, in our Genesys offering, we provide agents with the ability to reach an expert during an interaction with a customer through the integration of presence-based UC and collaboration features embedded into their screen pop-up application. This is a single market and integration naturally happens as long as a company understands the combined value of the components of a dynamic enterprise: network, people, process and knowledge. We’re used to getting a dial tone and internet access. Communication now has little value, it’s almost a commodity. However, if companies consider it part of a broader scope, which puts business imperatives at its centre, then it becomes a real differentiator in a Web 2.0 world where collaboration is the name of the game and will be for many years to come.
“One way to address competitive challenges while increasing collaboration is through Web 2.0”
Xavier Martin is is VP of Strategic Marketing at Alcatel-Lucent Enterprise &Vertical Markets – a position he has held since 2002. Prior to this he was Worldwide Marketing Director for Contact Center Solutions, Communication Applications and Unified Communication solutions. His career includes 20 years of management experience in software solutions, database management systems, business intelligence and contact centres.
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CONSTRUCTION
Building connections Having just signed a €5.5 million contract with Cable & Wireless to build a new communications network, Kier Group’s investment in IT shows no sign of being dented by the recession. But while technology remains a top priority for the construction giant, head of IT TERRY WALKER tells Business Management that there are tough times ahead in 2010.
have put their money where their mouth is in a way. They are sharing the load with us. Taking the risk. We’re currently in the process of migrating to Cable & Wireless and are still actually fi nishing that off. We’ve been going on that for about six months now. And we’re letting some of the BT lines just run out naturally. Why is it so important for a company like Kier to have a robust communications infrastructure? TW. We have offices and sites across the country and obviously the sites are fairly fast moving. Some can last as little as 12 weeks and others go on for years. Any company needs good internal communications. But when you’re dealing with construction you have to set up a site at very short notice and we’re dealing with very large clients. We work in frameworks and we have to be able to both tender electronically and receive instructions electronically so when we go on site we need to have access to all the contract documents and be able to deal with amendments electronically. We also need to be able to run collaboration soft ware on site. Th is may be mandated by the client and if we don’t have that we can’t start. We
What were the reasons behind the company’s decision to migrate to a Cable & Wireless communications network? Terry Walker. We’ve moved to Cable & Wireless because we felt we’d get a more responsive approach and more of a partnership approach with them. So far that’s proven to be the case. Prior to that we’d been with BT for 10 years. There was a lot of dissatisfaction with BT: it has been broken into various parts and it’s very hard to fi nd a way through that. The organisation is not transparent to the client and I didn’t feel that they were sharing our problems. There was a lot of pain but it wasn’t being shared. Mainly it was to do with getting sites set up quickly. Getting people on site to do the telecoms work when they said they were going to be there. And resolving issues that came up. And it was just not happening in a very effective way. Did you consider contracts with other communications and networking companies? TW. There was a tendering process and we took the view because we’re pretty stretched resource wise that we would use a third party company for this. They are called Total Network Collective. They fronted it for us and they did a very good job. We did a virtual RFP first and they recommended companies which they thought would meet our requirements. We chose Cable & Wireless because we felt they were onboard in terms of a partnership approach. We wanted shared responsibility for resolving the issues. And one of the key things was that we signed up to a performance bond, so if they don’t perform then we get some sensible recompense for that. With BT they do pay if they don’t respond in time but they pay nothing that’s worthwhile. It means that Cable & Wireless
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Kier employees on site
can’t dig a hole, we can’t do anything because we don’t have the detail we need. So it’s critical these days that as soon as we start on site we have the comms infrastructure in place. The comms lead time is the biggest issue for us from an IT perspective. What new technology will Cable & Wireless’s WAN introduce to Kier’s construction sites? TW. Cable and Wireless have got some interesting new products which I think will help us. We’re going to get some more bandwidth on site. And whereas in the past people would just want email, now they are using collaboration soft ware. We’re also using document management systems and web based systems so we need to move a lot of data rapidly to and from the site. Mainly we’re going to get better bandwidth than we’ve had before and resolve any issues we had.
Reading Central, a joint venture with Invista Real Estate
What are the challenges involved in running technology on so many different construction sites and are there uniform systems across all your sites? TW. We offer different types of products depending on the size of the site. If I’ve got a short run 12-week site then I’ll probably put in broadband. Where we’ve got a large project, say building a prison that is going on for two or three years, then we’ll put in pretty much office based comms. At one end of the spectrum the main criteria is to get a rapid site set up as fast as possible. On the other hand we want resilience and back up and stability. Therefore we over engineer the line to some extent.
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Left to right: recent Kier developments. The Port of Liverpool wind farm
Lingfield Park Racecourse
Can you describe a particular project the company is working on and the IT set-up on the construction site? TW. One we’re doing currently is a prison called Featherstone Prison in the West Midlands and we’re putting in several bandwidths there. We are going to sell some of that bandwidth on to our contractors. So rather than them having to set up their own comms we are going to provide the whole comms side. Cable & Wireless provide the line and are helping us to set up the technology and they are helping us to subdivide the technology so we can sell on the link to our sub contractors. So it’s a close working relationship with them to get that set up. Kier works on many international projects, including in the Middle East and Dubai in particular. Do you run the same systems in those countries as you do across UK sites?
TW. Not directly because in Dubai, for instance, the cost of comms is very high and the cost of putting a line back to the UK is prohibitive. So they use their own local internet service providers in Dubai. Working in Jamaica, we do have comms directly to Jamaica. And they use our systems based in the UK. It depends which country we’re working in and the cost of putting in the solution. Dubai is particularly difficult because the comms costs are very high. There is a big difference in costs in Dubai compared to the UK. We’re just looking at doing some work in Saudi Arabia and that also represents a bit of a problem for us. Th is is to do with the infrastructure because the places where we work are not necessarily next to any major conurbations. It will be dealt with locally. How high a priority is IT within Kier and how crucial is it to the smooth running of its operations? TW. It’s pretty critical these days. A large part of our business now is also support services. That is very much process driven and the IT systems drive the business. Support services is a 24/7 365 days a year operation so keeping that up and running can be quite a challenge. On the construction side we’re moving to a more rapid site set up pace. We are also moving higher volumes of data and we do rely on IT for receiving all this information. IT is seen by the management as a business tool. We have a top-level steering committee, which is a subset of the board so it is seen as important. Traditionally IT spending in construction is not as high as some other industries but I do I think that is increasing slowly. And I think IT is more important than ever now in terms of communicating with the client and managing the business.
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The new UK Supreme Court, converted from the historic Middlesex Guildhall in London’s Parliament Square
What IT projects will you be working on at Kier in the year ahead? TW. Th is fi nancial year we’re not looking at new projects, we’re looking at consolidating what we’ve got. There’s a lot of work going into buying better so we’re reviewing all our suppliers. The Cable & Wireless choice was one of many buying operations we’ve got going on. We’re currently looking at hardware, voice and printing. g. We’re doing a lot to try to buy better and standardise what we’ve got. Is managed printing services an area that you will be looking at in particular? TW. We’re going to look at that. It will be difficult for us to do but we’re certainly going to move along that way. We’re going to go out with a tender in the next couple of months. We’ve currently got far too many printers of too many different varieties across the group, bought in different ways. So we need to buy better, standardise and reduce the asset base. Are there any other aspects of IT that you could considering contracting out? TW. Not specifically at the moment. We’ve got a good in-house team and we can do most things ourselves here, more cost effectively than going outside. We go outside for specialist help with back up all our systems and we do that extensively. With our in-house team we don’t really need to rely on outside people too much and we can probably do that more cost effectively ourselves. Many European companies are currently considering the benefits of cloud computing and virtualisation. Are these areas you and your team are looking at?
Kier Group employs more than
TW. We have had a look at that. We think that will come in but I don’t think it’s in its full form that we can use at the moment but we’re keeping a close eye on it. We’re moving heavily worldwide along the virtualisation route because tha that will save us costs and reduce the hardware rrequirements. We are looking at servers because for a given investment I can reduce the cost of running a service. I don’t need to buy new hardware every time and it gives me a lot of benefits in terms of disaster recovery. I can recover a system very quickly if it is virtualised.
11,000 people
The global construction industry has been hit hard by the economic downturn. Has this affected spending on IT within Kier? TW. Yes, in the last year we’ve made a move to centralise our IT. In the past we’ve had a hybrid model. Centralising IT has resulted in some cost savings coming out of that. We’re also looking at putting in an asset management system, which would include both hardware and soft ware. We’re fi nding that hardware is sitting around in various offices. It’s spare and not used whereas I could use that elsewhere in the group. Soft ware, we could put in soft ware harvesting so that if somebody is not using an application we could take it back and reallocate it to another person. There is uncertainty. We are not sure where the bottom of the downturn is going to be in terms of construction. We are thinking it will probably be late this year that things are going to get quite tough. We are building projects that were designed before the recession now and there is not enough stuff going through the design phase for us to build later in the year. The private sector has been badly hit and we’re doing quite a lot of
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public sector work and that has held up well but that may be affected by a change of government so there’s a lot of unknowns at the moment. Does this situation make it difficult to forecast what should be spent on IT projects in the year ahead? TW. Yes it does. We’re going into the budgeting process for next year and I don’t quite know what the fi nished position will be at this point. I’ll go
“There is uncertainty. We are not sure where the bottom of the downturn is going to be in terms of construction” A Kier housing development with a wish list then we’ll have to look at whether we can justify that. The situation is very patchy. Some bits are looking quite positive but other bits we just don’t see the work coming through because of the private sector. We think it will be very difficult for the next 12 months at least. You have worked at Kier for 10 years. How would you describe the experience of working there and how has it changed in the time you have been there?
TW. It’s very big. It has traditionally been largely decentralised so it’s quite difficult to co-ordinate things such as IT across the group. Centralising IT has been quite a challenge for the group to get their heads around that but it’s throwing up a lot of savings. I’d say also that Kier is a very people orientated company. There’s now much more business understanding of the need for IT and there’s a better understanding of the value cost model. I think we’re moving in the right direction. We’ve achieved a lot in Kier in the last decade.
Kier was instrumental in creating the largest liquefied natural gas terminal in Europe at Milford Haven in South Wales
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EXECUTIVE INTERVIEW
A global meeting place Telepresence heralds a new era in videoconferencing that attempts to put people from all over the world in the same room. To discover more, Business Management speaks to Odd Sverre Østlie of TANDBERG. How can telepresence deliver tangible benefits and even a competitive advantage for organisations today? Odd Sverre Østlie. Organisations that have greater access to experts make quicker decisions and those who work closely with customers, suppliers and partners are more likely to be successful. Telepresence makes this all possible. It enables people to collaborate face-to-face regardless of distance, resulting in reduced travel and costs, all whilst unifying the organisation and increasing productivity. It is visual collaboration taken to an entirely new level, where thousands of details seamlessly work together to provide an immersive, natural forum that helps ensure everyone is on the same page. Research from the Aberdeen Group demonstrates that telepresence helps build customer relationships by enabling a 21 percent faster response time. This also helps to generate 22 percent more revenue from existing customers. Moreover, the instant face-to-face collaboration with experts and decision-makers anywhere in the world that telepresence enables, helps speed up decision making and time to market. What are the main drivers behind the adoption of telepresence? Is it cost savings, fluctuating fuel prices and meeting ‘green’ targets or are there other reasons? OSØ. Costs savings, fuel prices and green targets are all drivers in the uptake of telepresence. Cost savings deliver the clearest ROI for telepresence and are typically measured as the money saved on the transportation, hotel, food and incidental costs associated with inperson meetings. A Forrester Research report published in February found that companies using telepresence save about 20 percent on travel annually. Moreover, a strategically placed telepresence implementation can pay for itself in a year or less. In tough economic times, cost savings from travel reduction alone can justify new
technology deployments, but many innovative companies have had the foresight to implement telepresence as a way to help achieve their environmental sustainability goals, such as TNT. The global express delivery company implemented telepresence as part of
rewards for using video to incentivise employees. The programme has been a huge success. Employees have fully embraced visual communications and the company has saved over 80,000 business trips during a three-year period. Vodafone has also saved more than
“There are also productivity benefits that can be gained with telepresence. For example, the time saved and confusion eliminated by replacing phone and email communications with face-to-face video collaboration” its ‘Planet Me’ programme and estimates a 20 percent reduction in travel, which has significantly reduced carbon emissions. There are also productivity benefits that can be gained with telepresence. For example, the time saved and confusion eliminated by replacing phone and email communications with face-to-face video collaboration. Who hasn’t been on an audio conference call wondering who – if anyone – was listening to them, or struggled to be heard while others talked over them? In addition, replacing an in-person meeting with a videoconference can save hours or even days in travel time. That is time that can be spent working more productively or even at home with family and friends. Can you recount a recent solution you provided for a client and how it created better efficiencies? OSØ. The mobile operator Vodafone started using TANDBERG video conferencing in 2006 and it has transformed the way the company does business. Vodafone introduced a company-wide video conferencing programme that included ‘VC lounges’ and
17,000 tonnes of CO2 from a reduction in business travel. As technology evolves what does the future hold for telepresence? OSØ. The future for TANDBERG telepresence is focused on making the experience more accessible and easier to tailor to any organisation’s unique setting. One size does not fit all for telepresence; that’s why we have already created options that scale to the scope of a deployment. As we move forward we expect to see telepresence develop into two main streams; the traditional formal, fi xed-format (for generation X), and a more fluid, informal style (for generation Y). For the latter, expect to see increasingly immersive display types, interactive and touchsensitive technologies and closer integration with advanced collaboration tools for people who are comfortable with technology. The future of telepresence will take the new way of working to the next level. Odd Sverre Østlie, Vice President, Telepresence and Advanced Solutions Group, TANDBERG, is responsible for go-to-market strategy, overlay sales and integrated solutions for telepresence and unified communications including PC-based video.
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Straight talk It has taken 25 years for Vodafone to mushroom into the world’s largest mobile telecoms firm. But with the company looking to slash huge costs on the back of the recession, we catch up with Group CIO Albert Hitchcock to discover how he is making cuts and why the telecoms industry is racing into a “rich world of capabilities”. What is the role of IS in these challenging times? Albert Hitchcock. I think IS has a very valuable role to play in companies that are going through a lot of change, and my view is that the IT function actually has a unique position. It looks right across the business, understands how the business runs, understands the business processes, and has a unique viewpoint really on how to optimise business. So in challenging times, obviously the ability to configure the business processes, look at how business functions get optimised together, look at the whole as opposed to each of the parts is quite a valuable thing to be able to do, so IS is quite well positioned to do that.
Within Vodafone, as within all businesses, you have the sales side and you have the business side. They have different dynamics – one is quick, demanding immediate responses while the other is slightly more thorough. Do you find that IS has to manage the tension between the two? AH. Yes, it’s interesting really. I think there are a number of different facets to how we manage a business such as Vodafone. Clearly we have to run a very tight operation. We have to deliver very high quality service to our customers, and so there’s a very high quality focus within the environment in terms of driving continuous improvement and driving the
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KPIs (key performance indicators) and the key metrics of how we deliver a quality service. At the same time, we have to be agile. We have to do a lot of new things – experiment with new technologies, bring about business change and drive new revenue streams. So we have to manage that duality, all this solid, down to earth business processes to drive the quality aspects but at the same time respond to new internet trends, new revenue opportunities and move very quickly in a fast development cycle.
But what about the so-called ‘legacy’ employees who have been in IT for a number of years and perhaps don’t have those skill sets at time when IT is changing incredibly quickly? AH. I’m a fi rm believer in giving people lots of experience in their careers, so moving people around between functions, both within technology and outside of technology. The traditional approach would be that you joined and IT organisation as a systems analyst and you typically rose through your career in a stovepipe. If you started off as a UNIX administrator, you may become a UNIX programmer and then you may run a data centre team before becoming a data centre manager. Th is keeps people very siloed in their experiences and their knowledge when we’re looking for very rounded people in technology, so we’re looking for people to understand infrastructure, but we’re also looking for them to understand applications. We’re looking for them to understand business processes. We’re looking for them to become very comfortable working with business managers and people in other functions. So getting people to move around in technology is one thing that we’re trying to encourage between networks and infrastructure applications, but also getting people to move in and out of technology. Why don’t we take people out of technology
So how can the CIO be a better business partner? AH. My view is IS has to be at the forefront of the business. I think in the past, it was very easy for the IT function to be a back office function sitting remote from the business running things like data processing or ERP systems. I think businesses were quite comfortable with that in a way because it was almost a necessary evil. In 21st century business, IT really drives a lot of business, and most Albert Hitchcock businesses around the world could not survive without an effective IT function. I think because of the way business is carried out today and because of the reliance of business and IT on each other, it’s very important that the CIO and the IT leadership team in an organisation are very much at the forefront of driving business change. THE RIGHT NUMBER With it having moved from being a back office function to very much being a front office function, it puts a lot of emphasis on the skills and the capabilities of the IT organisation. No longer is it adequate just to get a computer science degree and to just focus on the technical aspects of the job. I think Vodafone increasingly IT professionals have to be was formed confident at communicating. They have in 1984 as a to be good leaders. They have to inspire subsidiary their teams. They have to be able to unof Racal derstand the business dynamics of the Electronics business they’re in and contribute to Plc. those business decisions, so it requires a much more rounded set of skills and a much more business orientated set of skills. A lot of IT professionals are perhaps not so comfortable with that aspect. So a 21st century business has to be at the forefront, has to be contributing to business decisions and business outcomes in a very different way.
Currently boasts
323 million customers
Employs
79,000 people worldwide
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A view of where Vodafone has operations, subsidiaries, affiliates and network partners
Vodafone’s operations, subsidiaries, affilates and network partner
and put them into marketing? Why don’t we get some marketing people in technology? Why don’t we move some fi nance people into technology? It will create a much richer base of experience because I think it’s through this widening of experience that we become more rounded in our outlook. We get a better understanding of how business operates end to end. We become much more comfortable with contributing to business decisions. We become more consultancy based, not in a bad way, but in a way of being able to understand how you blend technical requirements with business requirements. At the end of it not only do we want very well rounded, seasoned technology professionals, but also business professionals. Vodafone has plenty of technology partnerships. How much is developed in house and how does the CIO decide what to build and what to buy? AH. I split that into two areas. Clearly we are very much involved in the build side as it relates to new technologies that are at the forefront of changing our customer experience, and so we do have an R&D function. We are developing products and services very much at the leading edge. If I contrast that with what I will call the more traditional IT focus of running internal systems like BSS, OSS, ERP, we’re moving much more into a packaged, out of the box type environment. Because Vodafone is a relatively young company, we don’t have the encumbrance of the mainframe legacy era so a lot of our applications are packaged applications anyway. We are focused on whether we can simplify that landscape because we have many packaged applications across the company. We’re very much on a path to reduce the number of discreet technologies we have and move much more into a standardised footprint, which is packaged, off the shelf soft ware not in-house written to reduce the cost and com-
plexity of integration. So we have two contrasting situations: product development, where we’re looking to be at the forefront where we’re doing stuff in-house, but also working with best-in-class suppliers and providers in terms of evolving the whole customer experience and then the in-house applications – the in-house IT of how we run the business whilst moving to a much more standardised footprint. What then for you would be meaningful IS metrics? AH. I think there’s always a combination. Clearly, we have to run a very high quality service delivery, and so there’s a whole set of metrics around data centre performance, network performance, both for our internal employees as customers and our external customers. So those are traditional IT metrics that we would apply like most companies would apply, but increasingly we’re also looking at business effectiveness metrics. In other words, how does IT influence revenue? How does IT help reduce churn? So we’re increasingly looking at IT performance in a business context. Creating that linkage between the IT dashboard, if you like, and the business dashboard is something that we’re very focused on. And how do you balance the need for autonomy from each business line with the need for synergy across the entire enterprise? AH. Th is is a challenge. Clearly, local country businesses or operating companies need to be very close to their customers so they arguably need to do things at a local level. Th is means driving customer relevancy and driving very high quality service to our customers. Each of the countries in which we operate have different statutory and legal and market conditions that have to be taken account of. Having said that, a lot of what we do in every single country can be very similar so we’re looking at how we can blend the standardisation roadmap with the needs for local services and the needs for local requirements. We are driving a very big focus on
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can streamline and simplify the business and processes, the more we can take out in terms of technology cost.
standardisation but we’re also conscious that in certain situations there will be local country needs that have to be adhered to. It’s about achieving that balance so we see the benefits of standardisation plus the benefits of being able to respond to local market needs. There’s still a long way to go and that will drive a lot of benefit for us. Vodafone plans to shave a mammoth €1.1 million off of costs by 2011, How are you looking to reduce operational costs and how are you working around any actual impact on the IS function? AH. Like most businesses on the planet right now, we’re looking at cost clearly, and it ranges right across the spectrum of technology – everything from the very standardised approaches of how you take out infrastructure costs, application costs. For instance, every company’s probably considering things like data centre virtualisation. We’ve had a big programme looking at reducing cost in the data centres, driving out the utilisation of our equipment, putting in place standards across our infrastructure environment, moving to a standard PC image across the company, moving to a standard hardware across the company and driving procurement practices with our providers renegotiating contracts. All these things are not specific to telecommunications or Vodafone. I think pretty much everyone’s looking at this right now but we’re doing a lot of that. We’re also looking at our business processes and how we can simplify them. A lot of the technology complexity has come about because of complexity in the business processes and the fact that we do things differently, so we’re looking at how we can standardise a lot of that and how we can start working much more in a single way across the globe. Once we start unifying those business processes and improving those areas and streamlining those areas, we can start to take away some of the technology complexity. So it’s a very tight linkage here between complexity business processes and costs in technology. The more we
Is it not the case that you would be doing this regardless of any economic downturn and this is simply a smart thing for Vodafone to do? AH. Yes, I think so. When I came into the role it was clear that we needed to simplify some of the aspects of IT and we have been on a simplification journey. The current economic climate has brought that more into acute focus so it’s important we do those things faster than we would have done normally. It’s important that we focus on those in terms of the priorities so that we can get costs out of the business quickly in order to put more emphasis on the speed of delivery of those cost saving programmes and improve the speed of how we drive the simplification agenda. I think it’s a good IT practice in any company to be very conscious of cost. I’m not creating future legacy. I’m not creating future cost. The role of IT leadership in a company is to think business, to think shareholder, to think customer impact, and so cost is one of those very important aspects that needs to be managed as part of an ongoing, professional delivery of services. You spoke about standardisation and the more near-term goals. What is the longer-term vision for Vodafone and what are your key strategies to achieve these targets? AH. It is very much about balancing the running of the business at an optimal cost base and a high degree of efficiency and we’re doing a lot of benchmarking externally with the various benchmarking organisations around the world. The other side is the innovation side of the equation, which is how do we deliver the most compelling end user, end customer experience? How can we bring technology together to drive the convergence of services and capabilities, whether those are internet-based services, VoIP, presence, content, widgets, applications and so on. We’re moving into a very rich world of capabilities that we’re offering to our customers and technology needs to be at the forefront both in terms of creating the vision but also the roadmap of how we deliver it into the business, We’re on the forefront of a very large change because we’ve spoken about these sorts of technologies for a number of years, but it’s really happening now in 2010. These technologies are reaching a level of maturity where they’re real for the fi rst time, so it’s quite exciting now that we can actually look at creating a roadmap where we know there are going to be tangible assets in the next few years that will make a substantial change to the environment. Albert Hitchcock took over the reins as Group CIO of Vodafone in August 2007, following some 14 years with Nortel where he saw it through its economic crisis in 2001. Hitchcock, who holds electronic engineering and systems engineering degrees, is responsible for Vodafone Technology Information Services Organisation and the IS strategy and functions within Vodafone and its operating companies.
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ASK THE EXPERT
Putting telepresence to work A look at how to find a virtual meeting solution that is both technically sophisticated and cost effective.
BEN HOBBY
F
inding the right solution to meet your business goals is critical. It is important to start with your business needs and objectives and build a solution from there. For example, researching and understanding how many meetings can be replaced with conferencing and the number of people that need access to facilities. These key factors along with overall business objectives such as cutting carbon emissions and travel costs will help determine the right solutions for you. Travel costs for face-toface meetings are a major avoidable cost, but only if the alternatives to doing business are economically viable, user-friendly and business quality. Audio, web and videoconferencing offer such solutions and increasing numbers of organisations are discovering the business benefits they can help deliver. These solutions are the means by which people can experience effective, unified and realtime collaboration. As an example, experience with our customers shows that for an organisation of 10,000 people, typical travel costs for faceto-face meetings are approximately €117. Conferencing typically replaces 52 percent of face-to-face meetings, yielding a €1.33 million P&L saving. Carefully matching the communication medium to the message is critical to the success of communication. Nonverbal cues delivered faceto-face (in person or over video) can determine the success or failure of communication. Video
allows full interactivity and immediate feedback. Telepresence takes this to the next level with lifesize, crystal clear images, as well as rooms built to give you the experience of being in the same room. In today’s business landscape, factors such as global and dispersed workforces, minimised budgets, and increased corporate social responsibility have also positioned video as an obvious and necessary communications tool. With video, the ROI benefits commonly identified as having the most immediate impact are the efficient use of executive time and reduced travel. However, video also serves as a critical communication tool in preserving the face-to-face phase of relationship management, across departments, businessto-business and between partners.
“Global and dispersed workforces, minimised budgets, and increased corporate social responsibility have positioned video as an obvious and necessary communications tool” Investment in video systems is one thing, but investment in managing those systems and full usage and adoption is another. The financial and environmental benefits from increasing use of conferencing can be quantified. However, it is easy to overlook the human factor issues when trying to change the meetings culture. To get widespread adoption, you have to get people using the technology, and experiencing how valuable it can be. A significant amount of effort and ongoing user support is required to maximise the
use of audio and videoconferencing, such as experience in driving and setting up adoption programmes, training, helpdesk support and proactive service monitoring. BT Conferencing provides tools that track usage of systems and calculate the savings, not only in numbers of flights and miles, but also, using your metrics, the amount of money and CO2 saved. Using these tools you can show figures on the ROI in video. A major electronic manufacturer has saved itself over €1.7m within eight months by utilising a fully managed Cisco Telepresence solution. In today’s uncertain environment it is very important to keep your key employees and business functions working effectively. Establishing a conferencing culture, whether this be audio, web and/or video, means that when there are obstacles to working, whether they be adverse weather conditions or a power cut in your office, your business is ready to communicate effectively through this, wherever your employees may be. The key element is making sure this is in place before a crisis takes place. When looking to implement a conferencing solution, there is no one size fits all approach. The right solution, that will give you maximum return, will be dependant on your individual business needs, objectives and budget. This is where BT Conferencing and Cisco can work with you to establish what is right for your organisation. With more reasons to implement a solution, why not contact us for a free consultation. Ben Hobby leads the video product, service and marketing operations for the EMEA region at BT Conferencing and has been in the conferencing industry for 12 years. Prior to BT Conferencing, Hobby was with Wire One where he focused his efforts on managing and driving international sales efforts. He holds a degree in Management Studies from Reading University.
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EXECUTIVE INTERVIEW
A 21st century way of working To get the lowdown on the burgeoning telepresence market and how it can revolutionise the way you do business, we talk to Psytechnics’ Ravi Pather
Your solution focuses on telepresence application performance and service level management. What does this mean and what benefits does it deliver for telepresence users? Ravi Pather. Telepresence brings expectations and in order to meet those expectations and maintain confidence in the service, a user experience (quality of experience) based approach to service and performance management is needed. Th is is not business as usual, relying on traditional network-focused tools and metrics that drive an estimation of service performance. Users expect consistent service levels and good customer support, so telepresence performance and service level management means that if and when things have gone wrong, IT can not only acknowledge the problem exists, but can repair it quickly and in the first instance, using the right resource, typically proactively before users notice any degradation in service levels. How does it reduce IT operation and support costs? RP. One of the largest challenges to any IT organisation supporting real time voice and video is the lack of visibility for actual call performance based on the user experience, particularly in the multi-vendor, multi-device world now deployed. The IT cost burden is from this lack of visibility with the wrong tools and service management processes in place and a reliance on working reactively, waiting for problems, rather than proactively avoiding
problems. Far too much time and resource is wasted in problem management, escalating problems to the wrong resolver or support resource and having support calls bouncing across the IT organisation trying to fi nd the correct owner who can identify the problem and provide the fi x. The Psytechnics solution provides the necessary call detail supporting the Level 1 service desk (problem acknowledgement, problem escalation, proactive service management), the Level 2/3 support teams (advanced diagnostics and root cause analysis, proactive problem resolution) and business and operations management (real time service level visibility and reporting, trend reporting, SLA compliance reporting), providing highly accurate and efficient service management process support. The telepresence sector has mushroomed recently. How are you assessing the market at the moment and does the recession mean more organisations are looking to cut back on their travel and carbon footprint? RP. Th is market is growing rapidly with telepresence use driven by the need for increased collaboration and communications effectiveness, helped by improved multi-vendor interoperability, reduced equipment and travel costs and carbon savings. In support of this, many
enterprises are looking at outsourced telepresence and video conferencing services to help reduce capital expenditure as well as the IT operating and support costs derived from the increased management and deployment complexity. In that respect many service providers are reviewing their service offerings in terms of the breadth of services as well as how to differentiate themselves with a significant focus on managing the customer experience as well as the business model supporting the service itself. Those enterprise organisations that will manage telepresence in-house are in many cases reviewing their IT support processes and tools having learned the hard way from their earlier VoIP experiences. What do you think will be the catalyst for widespread telepresence adoption? RP. Improved collaboration and communications effectiveness is aided by technology simplification, multi-vendor interoperability and price reductions. Simulating face-to-face meetings in a telepresence suite, or being able to talk face-to-face with a customer or colleague from the desktop by simply clicking an icon has revolutionised the adoption and use of this technology; it’s as simple as making a phone call. However, maintaining adoption, use of and confidence in these services is through the delivery and management of a consistently good user experience. The impact of this rapid evolution of enterprise communications is further disaggregation of the communications delivery infrastructure and requires a common view of service performance over a wider range of network elements and communications devices. In short, the management of the performance of enterprise communications becomes more difficult with the complexity unified communications inevitably brings.
Ravi Pather is responsible for developing and implementing Psytechnics’ ‘go to market’ message and models driving revenue growth into key European enterprise and telecoms markets. He brings more than 15 years of seasoned leadership and experience, previously building Intellidens’ European operations and developing its multi-million dollar European customer base.
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AVIATION
WELCOME TO THE CHEAP SEATS Budget airline Ryanair may be best known for its low prices, but when it comes to investing in technology it is prepared to spend big bucks, as Head of IT Eric Neville reveals to Diana Milne.
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D
espite the seeming unpopularity of its charging policies and the introduction of a raft of new ‘hidden costs’ for passengers, Britain’s most successful budget airline, which featured in the BBC Panorama documentary Why Hate Ryanair earlier this year, continues to go from strength to strength. In the first six months of 2009, its total passenger numbers rose 15 percent to 36.4 million and it currently carries more people across Europe than any other airline. It’s a major achievement in economic conditions that have left its larger rivals floundering. Indeed in a recent interview with the UK’s Times newspaper, Ryanair’s CEO Michael O’Leary boasted that his airline could soon topple British Airways as the UK’s dominant carrier: “It is hard to know when it will happen because it is hard to keep up with how fast BA’s passenger numbers are declining. We will overtake them at some point.”
Behind the scenes The airline’s success is due not only to its aggressive pricing strategies, but also to the work going on, unseen by the public, in its back offices to streamline the carrier and support its rapid growth. Head of IT Eric Neville is behind the technology driving the airline’s success. Despite predictions by the aviation technology provider SITA that investment in airline IT is expected to drop to an all-time low this year, he is upbeat about the prospects for Ryanair’s own IT expenditure. “Obviously we’re looking at anything we can do to reduce the cost of what we’re doing. Everybody in the industry is. But at the same time we do realise that to change your processes you have to invest. And sometimes you have to spend money to save money.”
With this philosophy in mind, Ryanair recently awarded a €15 million contract to Cable & Wireless to manage its European IT and communications network in the 151 airports to which it flies. Under the terms of the contract, Cable & Wireless will provide an ‘always on’ communications network for the airline, which will cover all passenger interactions with the airline, including check-in kiosks, and each Ryanair site will be connected to a secure wide-area network. The arrangement will dramatically improve Ryanair’s operational effectiveness, says Neville, who explains how, under the previous system, Ryanair would have to apply for licenses from the telecoms authorities of the countries it flies to for back-up broadband connections. It will save costs and improve efficiency by using VoIP as part of the Cable & Wireless network. “In the current set up, we have hundreds of invoices every month from telecoms providers. We also have outbound voice charges. At the moment we pay local rates to the local telecoms providers, which are higher compared to what you’d pay if you had a consolidated voice offering. The new system will reduce the voice costs for everybody and centralise the billing and invoicing process, which currently creates a huge amount of work for our finance department. This will be a much simpler model.” The system will improve the reliability of Ryanair’s communications, supporting such crucial parts of the operation as the timely taking off and landing of flights. “Obviously these time slots are quite crucial,” says Neville. “If there’s critical information that needs to be passed around, then you need a robust telecommunications infrastructure in place to make sure the communications are clear and reliable. More robust telecommunications technology will also support the introduction of Ryanair’s self-service check-in kiosks, which currently operate in 10 airports. The Cable & Wireless network will ensure that there is a reliable communications link back
From left to right: Gerry Lawlor, Cable&Wireless Worldwide; Sean Mahon, Cable&Wireless Worldwide; Michael O’Leary, CEO, Ryanair; Eric Neville, Head of IT, Ryanair
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Budget airlines 25
13
countries
950 routes
29
countries
countries
380 routes
184 routes
Countries served
Routes by airline
€3010 million Ryanair is Europe’s biggest airline in terms of passenger numbers
7.5 million
£2622 million
43.7 million 50.9 million
€594 million
Passengers travelled (2008)
2008’s revenue
200 165
3000
73
5262
6107
Number of employees
151
(number of aircraft)
airports
113
774 km
to the main Ryanair IT system, as Neville explains: “Cable & Wireless will be providing the primary circuit and the back-up circuit for the kiosk so that it can get back into the overall reservation system to process the data. So locations with kiosks, such as Stanstead or Girona, will be very reliant on our infrastructure to make sure they keep running.” Looking ahead, Neville predicts some major changes to the way airlines operate and to the passenger experience in particular. While self service-checkin may seem a forward-thinking concept, it is just the tip of the iceberg according to Neville, who predicts it won’t be long before paper boarding passes no longer exist and passengers hold all their flight details on their mobile phones. “In an ideal world, passengers would be able to just scan their mobile phones in order to get on to a flight. That’s the direction the airline industry would like to go in because it’s easier. But obviously you’re dependent on airports having this functionality. And that’s probably still a bit of a way off. But this is one of the projects we will be looking at because we think that in the future the mobile phone will be a major part of how passengers interact with the airline.”
airports
Big spenders
66 1277 km
airports
1300 km Number of airports served
Average route distance
Source: Figures from respective websites
RYANAIR TIMELINE
For now, however, he says he and his team have “an endless stream of projects” they are working on, with none, he claims, threatened by the economic downturn and the reductions in IT spending across the European aviation industry. “I have enough proj-
1990 Ryanair accumulates UK£20 million in losses and goes through substantial restructuring. The Ryan family invests a further UK£20 million. The airline is re-launched under new management. It moves to a single aircraft fleet type, scrapping free drinks and meals on board and reducing the lowest fares from UK£99 to just UK£59 return. Passengers: 745,000
1985
1986
Ryanair is set up by the Ryan family with a share capital of just UK£1, and a staff of 25. The first route begins operating daily from Waterford in the southeast of Ireland to London Gatwick. Passengers: 5000
Ryanair launches flights from Dublin to Luton after obtaining permission from the regulatory authorities to challenge the British Airways and Aer Lingus duopoly on the route. The launch fare of UK£99 return is less than half the price of the BA/Aer Lingus lowest return fare of UK£209. Passengers: 82,000
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1991 The company switches its main London base from London Luton Airport to the new London Stansted Airport in Essex. Despite the impact of the Gulf War, Ryanair makes a profit for the first time, of UK£293,000 for the year. Passengers: 651,000
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ects to keep me going for quite a long time here,” he says. “There’s no plan to end any of them because ultimately the projects we are doing are either beneficial to us, the customer or to streamlining the process.” Indeed, he goes on to say that automation of some processes could ultimately help airlines to steer their way through the downturn: “If you look at us, 99 percent of our bookings come through the web, which obviously saves costs. Simplifying the process of getting people from the check-in area to the aircraft is what we want to look at now, which is why we’ve introduced the 100 percent check-in system. As much automation as possible is what we’ve got to try and aim for.” While Neville is optimistic about Ryanair’s plans to continue spending on IT improvements, he is aware too of the challenges posed by working in such a security conscious industry, particularly when it comes to the handling of passenger information. Neville says one of the biggest problems around such data regulation is the lack of a common European standard across the region. “One of the biggest challenges we have is regulatory requirements. There’s obviously a huge drive right now for passenger information. My biggest issue with that is that there is no single European
Cheap Thrills Ryanair is Europe’s largest budget fare airline with 32 bases and over 950 low fare routes across 25 countries, connecting 151 destinations. By the end of 2009, Ryanair will operate a fleet of 200 new Boeing 737-800 aircraft with firm orders for a further 102 new aircraft, which will be delivered over the next three years. Ryanair currently employs a team of more than 5000 people and expects to carry approximately 50 million passengers this year alone.
common approach to what information has to be passed where and how. We have one central reservation system, but the Spanish have requirements for data to be transmitted in one format then the UK needs it in a different format. It’s a huge challenge for us because regulatory requirements can suddenly change and then we have to spend six months on a project to work around that. It’s not just a simple code change. It would be lovely to see one consolidated European standard rather than individual mandates coming in from different countries all with different requirements.” The greater focus on passenger information in light of tightened airline security means that Ryanair is now required to gather more passenger information than ever before. That, coupled with the increase in passenger volume, means the airline’s IT system has to process more information than ever before. Th is, he says, does create some technical challenges: “The sheer volume of what we put through the system each day is huge. We have millions of hits each day to our system, particularly when we have our free seats sales, and we have to cater to that. Th is means having a scaleable 100 percent uptime solution and a robust disaster recovery plan in place.” Despite the enormity of the operation he is supporting, Neville’s IT team still only consists of 26 members of staff in what he describes as a tight knit company. “Generally here everybody works hard and it’s a good group. Everybody here is in the same building, and we’re all in a very ‘on top of each other’ environment.” This, he says, makes the process of asking Ryanair’s management for funding for IT projects relatively easy: “You go in, you put your case together and it’s a yes or no. It’s as simple as that. You don’t have to go to America or someplace else for approval. Realistically, you just put your case together and if it makes sense, we do it.” It’s just such a no frills approach that has made Ryanair the aviation giant that it is today. But if Neville has anything to do with it, the airline certainly won’t be cutting corners when it comes to technology.
1995 Ryanair overtakes Aer Lingus and British Airways to become the largest passenger airline on the Dublin-London route (the biggest international scheduled route in Europe). It buys four more Boeing 737s from Transavia bringing the fleet to 11 aircraft. Traffic for the year exceeds two million for the first time. Passengers: 2.26 million
2005 Five new bases are launched, at Liverpool John Lennon Airport, Shannon in the West of Ireland, Pisa, Nottingham East Midlands and Cork, giving the carrier a total of 15 bases throughout Europe. Passengers: 30.9million
2008
2000 In January, Ryanair launches Europe’s largest booking website – www.ryanair.com. Within three months the site is taking over 50,000 bookings a week. Passengers: 7 million
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The EU Commission’s Charleroi case, which claimed Ryanair’s low cost agreement at the airport was funded through a subsidy or state aid, is dropped. The airline announces half-year profits that are 47 percent down on 2007’s interim profits due to soaring fuel costs. Traffic, however, grows by 19 percent. Passengers: 50.9 million
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ASK THE EXPERT
SECURING THE CLOUD Cloud computing may be all the rage these days but it throws up its own unique security headaches for CIOs, according to Thomas Jell.
M
aking the move to cloud computing is a key strategic commitment that can transform productivity and business agility. The critical issue is security; you need an infrastructure protected at every step to allow the full deployment of applications and services that will deliver the phenomenal returns a private cloud architecture can bring. The latest developments in Stream Scanning Technology and Distributed Spam Analysis from NETGEAR are unlocking the full potential of cloud computing for businesses of every size. The pace of change in the online world seems only to be matched by the ability of hostile users to develop ingenious new ways of bypassing trusted security systems. The figures, as always, are alarming. Gartner tells us that in 2007 the number of web-hosted threats increased 800 percent, while another recent study found that 79 percent of webhosted threats come from legitimate sites, which have been hijacked by hackers. Then we learn that attackers broadcast an average of 40,000 computer security threats each day – 15 million each year – at an estimated cost of €70 billion per annum. Yet the reality is that security technologies have taken a major stride in their battle against the ever-changing threats. When it is protected by the intelligent and proactive security solutions now available, moving to the private cloud is a practical, productive and cost-effective strategy.
Unified defence NETGEAR's patent-pending Stream Scanning Technology is designed to accommodate the unique needs of a virtualised or cloudbased infrastructure. The NETGEAR ProSecure STM family of web and email threat management appliances incorporates both Stream Scanning Technology and Distributed Spam Analysis, giving organisations a unified defence against some of the most sophisticated threats now circulating the internet. Stream Scanning Technology brings
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network security fully into the online world by operating in the same way as the threats it is facing. Conventional computer security solutions use batch scanning, in which a file must be downloaded completely before it is scanned, causing unacceptable latency in the network. The new ProSecure ap-
In comprehensive benchmark testing, NETGEAR Stream Scanning Technology consistently performed five times faster than traditional batchbased solutions. Independent tests by Miercom also demonstrated that the ProSecure STM family stopped over 50 percent more threats than com-
“Attackers broadcast an average of 40,000 computer security threats each day at an estimated cost of €70 billion per annum” pliances deploy Stream Scanning Technology to begin the scan as the first packets arrive, rather than waiting for a complete file. If there is a threat, it is detected sooner, and if the file is clean it passes through the defences with negligible disruption.
petitive products tested, including more than 99 perent of all spam and email threats. Tests were also conducted on the NETGEAR ProSecure UTM family of Unified Threat Management appliances, focusing on their ability to stop malware and viruses. A Proactive spam partnership of two leading indeprotection pendent test laboratories in NETGEAR's Distributed Germany, AV-Test GmbH and Spam Analysis focuses on the The Tolly Group, found threat carried by email and emProSecure up to four times ploys a cloud-based architecture to more effective than competitor apply an unprecedented level of soproducts. phistication to its defences. The soThe NETGEAR ProSecure lution consists of two elements: the STM family includes the ProSecure STM gateway security ProSecure STM150, STM300 appliance, and the NETGEAR and STM600 models. It has been Spam Classification Center for insuccessfully implemented in a Thomas Jell has been Managing Director of the-cloud Distributed Spam wide range of industries – from NETGEAR Germany for threeAnalysis. The STM appliance comgovernment, to healthcare, to and-a-half years. Having initially joined the company as municates with the Spam retail – with deployments ranga Retail Account Manager in 1999, he is now recognised for Classification Centre in real time, ing from small companies with building the NETGEAR home obtaining up-to-the-second inforfewer than 50 users, to geobusiness in Central Europe. mation on spam and malware outgraphically dispersed networks breaks. All types of email-borne comprising thousands of users. threats can be detected and classified instantly, based As the private network moves to the private on the analysis of more than 50 million sources cloud, it now has the intelligent security it needs around the world. to reach its full productive potential. n
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INDUSTRY INSIGHT
Making out-tasking work for you Kris Hardiman lifts the lid on the importance of smart sourcing, due diligence and strategic risk partnerships.
nications), or out-tasking of functions within general operations where it makes most sense (i.e. service desks or network monitoring). Out-tasking can offer key fundamental advantages over outsourcing: to test the validity of your business case on a lower risk basis, and also, to retain a stronger mix of strategic and operational control in your operation. Th is decision – to out-source or to out-task – represents one of the core pillars of your smart sourcing business case and strategy, either as a step or a destination.
Be diligent in your diligence
T
imes are tough. With pressure still on both the top and bottom line, IT professionals are fi nding it harder than ever to walk the tightrope of operational efficiency versus building for growth – something not made any easier by the global economic meltdown. But there is good news. Despite our shared economic challenges, the world of IT innovation has proved fertile ground over the past few years, with growing momentum and maturity around solutions such as ‘cloud’, FMC and unified communications, together with the continued growth of more established sectors such as out-sourcing and out-tasking. So why does out-tasking continue to be a strong proposition, especially in a downturn? Simple, it’s one of the few IT propositions able to make an immediate and tangible impact on cost reduction. Whereas many other technology promises wander into the murky waters of ‘productivity gains’, out-tasking with elements of service provision and technology change (at an agreed, recurring cost) does stand out in the mist as a true, measurable beacon for cost reduction and transparency. But it’s not just about cost. The strategic value of out-tasking is what really gives it meaning and traction with the forward thinking, strategically oriented IT professional – those looking at where
Understanding what you have in your network, where it is, and exactly how much it costs to support appears easy but, in reality, it’s difficult to pinpoint with accuracy. Don’t be fooled by a provider that claims to magically achieve a full understanding of what you, the network owner, sometimes struggle to achieve. It’s important to test your potential provider. What is their process for diligence and auditing? What is the typical cycle? What are the timeframes for different site profi les? What tools do they use? And most importantly – what happens when their fi ndings are not accurate or are vastly different to yours? Who validates and how? The bottom line here is that if you get the audit wrong, you’ll undoubtedly run into avoidable challenges further down-stream.
their business needs to get to – how they will fund the transformation, where they will fi nd the skills and how they will keep the core of their operation agile. Th is is the real potential of the out-sourcing. But for many, this is also the elusive grail of out-sourcing, and for some, the unfulfi lled promise. So, how do you make out-tasking and out-sourcing work for you? Out-tasking: In reality, there are many factors involved Collaborating on risk in building and running a sucTh is is where the differcessful out-tasking operation, ence between providers really but experience has shown three starts to materialise. Within factors, in particular smart this strategic partnership you Kris Hardiman is VP of Services sourcing, diligence, and ‘risk are considering, there are some Marketing for Siemens Enterprise Communications. Having worked collaboration’ make the real key questions to consider: who’s within the field of IT Sourcing for the past 10 years, Hardiman difference in setting up a sucresponsible for system uptime? has held positions in global cessful model Do you have an explicit plan for service portfolio management, sales and marketing. Siemens Smart-sourcing: Single demarcation of responsibility Enterprise Communications is a global provider of UC services IT outsourcing agreements and resolution? But so much and solutions. are right for those who can more importantly, when things maximise the benefits of taking everything do go wrong, what is the provider’s answer out of house, but for many others this route beyond ‘service credits’? What will they do represents a path that is too extreme. In such to ensure system recovery and where have cases, you may wish to consider out-tasking as they done it before? And lastly, what is your your starting point. By out-tasking, we mean provider prepared to put into contract to unone of two things –either the out-tasking of derscore their commitment to de-risking your ‘towers’ within your IT enterprise (i.e commucontinuity and quality of service?
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IT SECURITY
big THE
QUESTION
Senior IT professionals from 1900 organisations in over 60 countries were interviewed for Ernst & Young’s 2009 Global Information Security Survey. Here Business Management reports the survey’s main findings and the pressures currently being faced by IT security managers.
H
ow do you protect your organisation’s brand and reputation in an environment of change? How do you identify and manage new risks? How do you overcome increasing challenges to deliver an effective information security programme? How do you comply with new regulations and industry requirements? These are just some of the questions that information security leaders are struggling with – and must find answers to – if they are going to outpace change and protect their organisation’s most critical information assets. Over the last year, we have witnessed a global economic downturn become a crisis for many countries and many organisations and we have seen the competitive landscape drastically altered for many industries. Although there are signs of economic recovery, the impact of these difficult times will continue to be felt by many companies as they reshape, restructure and reinvent themselves. Information security leaders are facing considerable challenges as a result of the current environment. It would be naive to think that information security has not also been impacted by economic pressures; the need to reduce costs and provide more results from investments already made extends to all areas of the enterprise, including the information security function. To support this statement, there is evidence from our survey that many more organisations are struggling with a lack of skilled and trained information security resources. Our survey respondents are also reporting that finding
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adequate budget for information security is a major challenge for the coming year. These are clear indicators that information security is not immune to external economic forces and must find ways to improve efficiency and effectiveness while keeping spending to a minimum. The current environment is also producing a rise in both internal and external threats. Our survey participants reveal a growing concern with reprisals from recently separated employees as well as noting an increase in external attacks on their company websites and networks. Regulatory compliance is also top of mind for information security leaders, and our survey confirms that it continues to be an important driver of information security improvements. Several industries and countries are moving toward more regulation, primarily related to data protection and privacy. Correspondingly, companies are reporting an increase in the cost of compliance as the complexity and the number of regulations also increases. In this 12th annual global information security survey we take a closer look at how organisations are specifically addressing the changing environment, including the risks, challenges, increasing regulatory requirements and new technologies.
Managing risks In the last several years, we have seen a shift in the way technology is being deployed to support the flow of information. The increasingly mobile and global workforce, coupled with the rapid adoption of broadband and over-the-air technologies, has changed the way many organisations use technology and information. As a result, it has expanded or perhaps even eliminated the traditional borders of the organisation and the conventional digital perimeter paradigm. Organisations must now adjust their information security risk management approach – from ‘keeping the bad guys out’ to protecting information no matter where it resides. We consider this to be a more ‘information-centric’ view of security and a more effective approach. Not surprisingly, improving information security risk management was the top security priority for our survey participants, with 50 percent of respondents indicating that they plan to spend more and 39 percent planning to spend relatively the same amount on this initiative over the next year. In addition to the technology shift, the current economic environment is fuelling an increase in the number of threats organisations are facing. The increase is driven not only from external sources – our survey found that 41 percent of respondents noted an increase in external attacks – but also from within the organisation: 25 percent of respondents witnessed an increase in internal attacks, and 13 percent reported an increase in internally perpetrated fraud. A structured and repeatable risk management approach is the core element of an information security management system (ISMS). It is also the approach chosen by a majority of companies to address their information security risks. Our survey results show that 44 percent of respondents currently have an ISMS in place or are in the process of implementing one, with another 32 percent considering an ISMS solution. Information security standards are also playing an increasingly important role in shaping the ISMS for many organisations. Although only eight percent of respondents have achieved formal certification, 36 percent of respondents indicated that they are using the ISO/IEC 27001:2005 security standard as the basis for their ISMS. Standards can provide organisations with a set of leading practices related to information security risk management and are a logical starting point in developing an effective and comprehensive ISMS. In 2009, the primary challenge to effectively delivering information security was the lack of appropriate resources, with 56 percent of respondents ranking this as a high or significant challenge; this is an increase of eight percentage points compared to our 2008 survey results (48 percent). In somewhat of a contradic-
tion, our respondents indicated that the two leading areas for reducing spending over the coming 12 months will be for outsourcing services (18 percent) and in-house staffing (16 percent). It appears that although organisations recognise the availability of resources to be their most significant challenge, only 20 percent of respondents plan to hire more in-house resources and only 14 percent plan to spend more on outsourcing to help alleviate this issue. Allocating adequate budgets to information security continues to be a challenge in 2009, with a total of 50 percent of respondents ranking this as a high or significant challenge; this is a very notable increase of 17 percentage points over 2008 (33 percent). This is also particularly interesting in light of the fact that 40 percent of respondents indicated that they planned to increase their annual investment in information security as a percentage of total expenditures, and 52 percent planned on maintaining the same level of spending. The survey results clearly show that information security budgets are not being significantly reduced, nor is the security function being asked to take on more responsibility than in previous years. So why do organisations continue to struggle to find adequate security budgets? One contributing factor may be that 44 percent of the organisations that participated in the survey still don’t have a documented information security strategy. In the absence of a wellthought-out information security strategy, it will continue to be difficult to articulate and build the business case for an appropriate budget allocation, particularly in today’s economic climate. The lack of a cohesive strategy also makes it difficult to prioritise spending decisions and to ensure that scarce resources are being allocated to where they will provide the most benefit. It is more important than ever for organisations to develop comprehensive, riskbased security strategies, prioritising spend based on the value of the assets at risk, both in order to justify budget requests and to make sure that they are getting maximum benefit out of those budgets. It has long been generally accepted that authorised users and employees pose the greatest security threat to an organisation and that raising and maintaining the awareness level of those people is a crucial part of an effective information security strategy. In spite of this knowledge, this remains a significant challenge and a significant issue for many organisations. While most organisations (74 percent) have a security awareness programme, less than half of all respondents indicated that their programme includes such things as: updates and alerts on current threats (44 percent), informational updates on new hot topics (42 percent), specific awareness activities for high-risk groups such as social networking users (35 percent). Furthermore, only 20 percent of respondents indicated that they measure the effectiveness of their awareness programmes and modify those programmes based on the results. Given that the challenge associated with organisational security awareness has not been reduced over time, it can be concluded that many current security training and awareness programmes are not working as well as they could be. It should also be noted that 73 percent of respondents have no plans to outsource their security training and awareness programmes. Yet, when we look closer at the 12 percent of respondents who currently outsource this activity, we find that organisational awareness is less likely to be a significant challenge. In fact, it does not make it into the top three challenges for these organisations. This may illustrate the fact that more organisations should begin to look for outside help to design, execute, monitor and (or) measure the effectiveness of their security training and awareness programmes. Regulatory compliance continues to be one of the top priorities for organisations and an important objective of the information security function. When
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asked about the importance of specific information security activities, 46 percent of respondents indicated that achieving compliance with regulations was very important with an additional 31 percent considering it important. This is not surprising, given the considerable attention and focus on compliance efforts over the last several years by most organisations. When we asked how much companies were spending on compliance efforts, we found that 55 percent of respondents indicated that regulatory compliance costs were accounting for moderate to significant increases in their overall information security costs. While this number is down from 65 percent for the preceding three years, only five percent of respondents plan on spending less over the next 12 months on regulatory compliance. This may be an indication that organisations are spending too much of their security budgets on demonstrating point-in-time compliance as opposed to implementing a comprehensive information security programme where compliance is a by-product and not the primary driver. The point is further supported by the fact that only 36 percent of our survey respondents have deployed a solution for continuous monitoring of security controls. Moving to a more risk-driven security programme and leveraging continuous compliance monitoring technologies may allow organisations to reduce the amount they spend on demonstrating compliance and either reduce their overall security investment or focus it on more value-added information security services. Data protection and privacy are key components of regulatory compliance and are gaining more attention from governments and regulators. The number and complexity of privacy-related regulations is increasing; yet, 68 percent of respondents stated that they have a clear understanding of the privacy laws and regulations that may impact their organisations. In addition, 63 percent of respondents indicated that they include privacy requirements in contracts with external partners, vendors and contractors. Although it is encouraging that companies are recognising their privacy requirements, it is also clear that far too few organisations have taken the necessary steps to protect personal information. Only 32 percent of respondents have produced an inventory of information assets covered by privacy requirements, and an even fewer number (26 percent) have con-
ducted an assessment of the personal data life cycle (gathering, using, storing and disposing). Our 2009 survey shows that companies and information security leaders are facing an environment of change; escalating levels of risk, new challenges and increasing regulatory complexity are now driving information security decisions. Companies are also struggling to leverage new technologies – to get the most benefit and cost savings possible – while understanding the potential security impact to the organisation. Our survey also revealed that many organisations continue to be challenged by a lack of skilled information security resources and inadequate budgets. These challenges have been identified in our previous surveys, but this year, they have become more significant, driven by
heightened economic uncertainty. To address the risks and challenges of the changing environment, information security leaders are abandoning the old paradigms and taking a more information-centric view of security. It is a more flexible, risk-based approach that is focused on protecting the organisation’s critical information, and more suited to supporting a connected business model and today’s increasingly mobile and global workforce. By leveraging the information in this survey and taking action on the suggestions for improvement, organisations can achieve more effective information security and continue to outpace change.n Visit www.ey.com/lessons-from-change to learn more about Ernst & Young’s recent research and the resulting eight performance goals that companies are, or should be, adopting to prepare for the rebound.
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ArubaNetworks Ed_4August 25/01/2010 11:37 Page 78
INDUSTRY INSIGHT
Rightsizing the network Enterprise Wi-Fi networks can radically alter the ways organisations deliver information to their employees, explains Roger Hockaday.
I
n a time of economic restraint, IT organisations are under pressure to do more, with less. Budgets are flat – or falling – and companies are forced to look carefully at their network infrastructure and ask if it provides too much, at too great a cost? The need to cut expenditure and be more efficient has resulted in many organisations reassessing traditional approaches to networking: Ethernet to every desktop has been the mainstay of enterprise networking for over 20 years, but it is increasingly looking like a technology that is fast approaching its ‘best before’ date. High-speed Wi-Fi (known as 802.11n) only became a standard in 2009 but already accounts for nearly a quarter of all enterprise wireless sales. Improvements in signaling and a much higher data throughput means it offers not just a far more reliable and faster connection than 802.11a/b/g wireless networks, but it can be used as an alternative to traditional wired networks. An alternative that is much lower cost to install and operate. A modern wireless network based on 802.11n offers: • A reduction in power consumption of 90-95 percent compared to an equivalent wired solution • Price per megabit is 30 percent cheaper than traditional wireless solutions • The opportunity to create a ‘blended edge’ network – a network offering wired and wireless connectivity at 50 percent of the cost of a wired network Migrating to a ‘blended edge’ of wireless and wired networking is now a well-established business practice; wireless networks are very secure, they meet the needs of a workforce that expects mobility within the office, and they can save considerable budget even when used to supplement an existing wireless network – a process known as Rightsizing. The experience of organisations
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Roger Hockaday
“The pressure for efficiency and savings in today’s economic environment makes the deployment of wireless networks an imperative for organisations of all sizes”
which have deployed wireless networks is that users readily switch over from wired to wireless connections. Microsoft operates one of the largest wireless networks worldwide, with over 11,000 Aruba wireless LAN access points. It recognises that three-quarters of their employees use the wireless LAN every day – and 70 percent of employees believe that the WLAN saves them at least five hours of work time a week.
In a telling sign, more CEOs are now directing their respective IT organisations to investigate all, or mostly wireless access techniques when moving to new offices. The experiences of consultants KPMG is a salutary lesson to organisations planning to deploy ‘wired only’ networks. Their plan to move 2800 employees into a new purpose-built 60,000 square metre office near Amsterdam called for 55 wired switch chassis with 260x 48-port switch cards and 18,000 cables at a total cost of €4 million. Instead, they adopted a new rightsized network edge, halving the size of their wired network and deploying a pervasive wireless LAN with 240x 802.11n Aruba access points. The firm realised a €1.4 million saving, and expects an estimated €530,000 drop in recurring operational costs each year. The savings in operational costs were more than enough to cover the costs of the new wireless LAN. Even those organisations that already have a wired infrastructure in place can benefit from rightsizing and see savings in operational expenditures. Companies benefit from significant reductions in annual maintenance costs from stopping support on unused switch ports (some 20-40 percent of access ports are typically not used day to day, and every 48 ports can cost €1400 per annum in maintenance fees). Organisations also benefit because they no longer have to budget €1000 or more for each employee move, addition or change. The benefits of WLAN technology are well understood; users have demonstrated an affinity for the technology, and clearly prefer it over wired networking infrastructure. The pressure for efficiency and savings in today’s economic environment makes the deployment of wireless networks an imperative for organisations of all sizes. n Roger Hockaday is the Director of Marketing for Aruba Networks, EMEA. The author of numerous articles on wireless networking, and a well-known speaker, he combines extensive experience of wireless (and wired) networking with the application to real world business.
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WEB SECURITY
Spinning the security web Ekta Aggarwal of Frost & Sullivan on why the internet has ushered in a new era of security threats for businesses.
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he phenomenal rise of the internet means that it has become one of the most popular methods in the world for circulating information. Consequently, even traditional media such as TV, radio, etc, have undergone significant change. Therefore, today, for most enterprises, internet-based business models have become a communication enabler. The increasing dependency of organisations on information technology to manage inter-firm relationships is also a consequence of the way the business communication landscape has evolved. Users are embracing the social and collaborative dimension of the web, with the need to access information anywhere, anytime or on any device. Also with the need to network with peers, prospects and friends, collaboration has come to the forefront through the usage of blogs, IM and various other means.
Web 2.0 Within this increasingly digitised world, the concept of Web 2.0 tools has emerged and its use is only growing. A large number of organisations are using collaborative technologies such as blogs, podcasts and wikis to communicate with internal employees and also customers. Because of this, we are witnessing a shift from traditional media to social media. Platforms such as Facebook, Twitter and YouTube, have transformed the way enterprises communicate today. With vanishing perimeters and the obvious advantages that these interactive technologies bring, the imperative to be informed of the security challenges and threat vectors enterprises can be exposed to is also very high. Phishing, spyware and data leaks risking cor-
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porate data security are just a few examples. The availability of stored information at just one click has created additional risks, leading to possible data loss. In addition, the growing number of remote workers, either working from home or locations away from the office can make corporate networks vulnerable to security breaches, hence making the security of intellectual property, a prime concern. Companies need to look at ways to control the content that is being posted on the web by employees, especially in the light of growing social networking sites and the focus on the protection of intellectual property. Industry reports also indicate an increasing number of security incidents reported every year, emphasising the need for enterprises to draw attention to web security. With this increase in the adoption of Web 2.0 technology and escalating security issues, enterprises today are facing challenges from the ever increasing complexity of security threats. Th is has been a major driver for the adoption of web content security solutions. Enterprises are espousing web content security solutions to help them determine and limit the entry of the information that is harmful for their corporate networks.
undesired sites. However, today, the trend has extended towards inbound content fi ltering as well. The integrity of data traveling within an enterprise which is exposed to inbound threats such as viruses, malware and spyware can no longer be ignored. Deployment of security merely at the perimeter level or pure web fi lters has failed to protect businesses from the fast evolving web-based threats and therefore, is no longer regarded as sufficient. Conventional antivirus soft ware is no longer sufficient when it comes to protecting against evolving Web threats. Hence, both inbound and outbound protection has become necessary. Moreover, a multi layered approach is required to address the web
Conclusion It is evident that the web is fast becoming a tool through which threats can permeate and pose danger to confidential data. And the emergence of Web 2.0 technology with its open content sharing environment, besides altering the business communications scene, has undoubtedly changed the threat landscape. While the greater interactivity offered by Web
“Conventional antivirus software is no longer sufficient when it comes to protecting against evolving web threats. Hence, both inbound and outbound protection has become necessary”
Complex networks Besides the changing business communication landscape, the growing complexity of networks is compelling the need for web content fi ltering. The IT network infrastructure is no longer effortless with the large number of PCs, servers, routers and switches that need to be dealt with, increasingly by the system administrator. Moreover, the network architecture is also undergoing a lot of change due to changing business models. Th is compound network environment is also bringing increasingly complex threats to the forefront. To tackle this increasing complexity of threats, web content fi ltering solutions provide an excellent match for the corporate need to prevent information and data leakage. However, the continuous evolution of security threats means that organisations need to keep upgrading their security mechanisms to safeguard themselves. The current threat landscape and demands have also changed the role of IT security. Historically, web security was more outward focused for example, URL fi ltering to prevent access to
external expertise can be leveraged. With this, the market is likely to see an increase in traction in OPEX-based solution models. Hence, an increasing number of vendors in the web security landscape, are offering SaaS-based solution models today.
threats. Th is encompasses deploying security at three layers: in the cloud, at the internet gateway and at the end point.
Market growth Due to increased awareness about the disruption that the web can cause to an organisation, it is expected that the global web security market will register a double-digit growth rate in the next few years. With regards to the deployment of web security solutions by product type, the market for soft ware products continues to maintain its dominant position. Under the growing pressure to reduce costs and maximise resources, organisations are choosing to transition to SaaS web security solutions and leave the management of the complex networks to service providers where
2.0 has resulted in positive benefits for enterprises, it has also led to the exposure of more security loopholes. Not only do organisations need to fight the threats but also to grapple with the changing threat landscape. New and sophisticated forms of attack targeting new technologies such as VoIP, online social networks, etc are continuously changing the face of the threat landscape. Proactive and not reactive web fi ltering measures can only help enterprises keep up with the changing content. Hence, there exists a greater need than ever before for enterprises to view and practice security more as a continuous process than a one time investment. Ekta Aggarwal is Senior Industry Analyst for Information and Communication Technology at Frost & Sullivan’s South Asia and Middle East practice. For feedback/ enquiries contact tanu.chopra@frost.com.
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ASK THE EXPERT
The anatomy of a data breach Sarah Whipp on why data breaches happen and how to prevent them occurring.
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or companies with critical information assets such as customer data, intellectual property, trade secrets, and proprietary corporate data, the risk of a data breach is now higher than ever before. In fact, more electronic records were breached in 2008 than in the previous four years combined. In a world where data is everywhere, it has become harder than ever for organisations to protect confidential information. Complex, heterogeneous IT environments make data protection and threat response very difficult. Yet today’s businesses depend upon their security teams to ensure that information collaboration and sharing by an increasingly mobile workforce remains safe and secure. While the continuing onslaught of data breaches is welldocumented, what is far less understood is why data breaches happen and what can be done to prevent them. In order to get ahead of the data breach challenge, it is essential to understand why they occur. Third-party research into the root causes of data breaches, including data from the Verizon Business Risk Team and the Open Security Foundation, reveals three main types: well-meaning insiders, targeted attacks and malicious insiders. Well-meaning insiders who inadvertently violate data security policies continue to represent a major factor in the occurrence of data breaches. In a 2008 survey of 43 organisations that had experienced a data breach, the Ponemon Institute found that over 88 percent of all cases involved incidents resulting from negligence. Driven by the rising tide of organised cyber-crime, targeted attacks are increasingly aimed at stealing information for the purpose of identity theft. More than 90 percent of records breached in 2008 involved groups identified by law enforcement as organised criminals. Such attacks are often automated using malicious code that can penetrate into an organisation undetected and export data to hacker sites. Malicious insiders constitute a growing segment of breach drivers, and a proportionately greater portion of the cost to business of data breaches. The Ponemon study found that data breaches involving negligence cost €138 per record while those caused by malicious acts cost €156 per record. With the regularity of data breaches making news headlines, it might seem reasonable to regard data breaches as an inevitable by-product of our connected world, a cost of doing business that we must simply learn to live with. A closer view of the facts, however, suggests that this is not necessarily the case. Symantec’s security expertise, global intelligence net-
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work and real-world experience with customers combine to inform a more confident perspective.
How to stop breaches By following a risk-based and content-aware information security strategy that incorporates multiple solutions working together in concert, data breaches are preventable. Here are six steps that any organisation can take to significantly reduce the risk of a data breach using proven solutions: • Proactively protect information with a unified data loss prevention solution. • Automate the review of entitlements to sensitive data. • Identify threats by correlating real-time alerts with global security intelligence. • Deploy a multi-layered combination of security solutions to stop incursion by targeted attacks.
“Well-meaning insiders who inadvertently violate data security policies continue to represent a major factor in the occurrence of data breaches”
• Establish network defenses to detect and block data exfiltration. • Integrate prevention and response strategies into security operations.
Getting started For many organisations, the process begins with a data breach workshop. The Symantec Data Breach Workshop helps organisations to quickly identify their confidential information and accurately identify and quantify their risk of a data breach. To schedule a Data Breach Workshop or to see a full copy of the ‘Anatomy of a Data Breach’ whitepaper, contact Symantec at http://go.symantec.com/one-breach. n Sarah Whipp is VP of Marketing for EMEA at Symantec. She joined Symantec in July 2009 after nine years at McAfee, most recently as VP of EMEA Marketing. Symantec is the world’s fourth-largest software company and a global leader in providing security, storage and systems management solutions.
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DISASTER RECOVERY
O
n December 11, 2009 at 6am, it was precisely four years since the Buncefield disaster started. On that fateful day in 2005, the explosions were heard some 125 miles away and windows reverberated as millions of gallons of jet fuel exploded and went up in roaring flames. Four years on and the business owners hit by the disaster are still suffering sleepless nights, with many still fighting for compensation for both insured and uninsured losses. Even when the material damage claims are done and dusted, there is still an ongoing battle over business interruption and loss of profit claims. It can be a shock to many, having worked late into the night every night, called in favours and leaned on credit agreements to return to
trading, to fi nd that a battle remains to receive fair and reasonable compensation. Real speculation can be involved in guessing when and how much compensation a company will receive. Sadly, it is becoming the norm that cases such as this drag on for years. Traditionally, an insurance company would evaluate and pay appropriate compensation fairly quickly. But the principle of subrogation, whereby the insurer will launch proceedings against whomsoever it deems liable for the accident, almost inverts this. Insurers are now often reluctant to pay out in the first place if receiving compensation for itself looks unlikely. Th is adds to the difficulties of winning this battle for insured losses; however for uninsured losses, the trials are in a different league, so much so that often the affected company and its insurer join together and sue the party considered to be liable for the loss.
Business, interrupted Shock disasters such as ďŹ res and oods can prompt a lengthy compensation battle for both insured and uninsured losses. Forensic Accountant Jeffrey Nedas and Loss Assessor Stewart Dymant offer their advice for best dealing with these sensitive situations.
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And the knock-on effect often means that uninsured losses can be more substantial. For example, a company may be compensated for a site being inoperable for 12 months as an insured loss. But a fi re at a facility that feeds through to other locations can not only grind your logistics to a halt, but can cause the loss of contracts you expected to win or grow. Potential customers suddenly worry that you cannot cope with demand. And the effect of this may go well beyond your policy’s indemnity period.
“A fire at a facility that feeds through to other locations can not only grind your logistics to a halt, but can cause the loss of contracts you expected to win or grow” Such was the case for one company affected by Buncefield. With a major contract almost in its grasp, the prospect pulled out, fearing the company would be unable to cope with their demands. That prospect has since expanded greatly, and the contract clearly would have done so proportionally. With this in mind, the real loss incurred was actually around five times that of its insured losses alone. Any companies working in high-growth markets face similar battles to regain their losses, particularly if they cannot prove their case.
Saving data Recording more data before and after an accident means a better chance of recovering insured and uninsured losses. Keep up-to-date records of: • Relationships with all new business prospects and clients • Company accounts and any data accumulated since • All emails held by the organisation • Everything you have had to spend since the interruption occurred ruption. Before the event, and as a day-to-day rule, ensure you have a sufficiently long indemnity period. Companies with a 12-month period. invariably fi nd this is too short. If you need to keep the premium down, discuss increasing the excess on the policy, and remember that insurance premiums qualify for Corporation Tax relief. Also ensure that up-to-date management accounts records, evidence explaining good/bad months and details of contracts you expect to win are kept. And be ready to provide evidence of the size and likelihood of winning bids in progress. A company’s greatest chance to strengthen its case, and shorten the legal action, comes in the first 24 hours following the incident – in fact these hours are critical to your claim, so treat the site as you would a crime scene, and freeze the scene as long as possible in order to gather data and get as many photographs and witnesses recorded as possible. Doing so will give you the best chance of surviving a Buncefield situation. It also helps to bring in a specialist loss assessor to liaise with the insurance company. They can often assist with big issues, such as setting up new premises and sorting out issues with the insurer quickly and will prepare and negotiate claims with insurers and loss adjusters. Finally, after the event, continue to monitor your marketplace, as well as who won the contracts that you have lost as a result of the interruption. Tallying this information against the successes of those companies will help build your case. And remember, never write a ‘quick win’ into your cash flow – it can take several years to get everything you are owed, even when you have a strong case. When shock interruptions to business happen, companies suddenly need to learn the strange realities of compensation, or else their future trading, as well as their present, can be damaged irreparably. If businesses only ensure they are well protected before, well-informed during and ready to act after such incidents happen, they will be able to survive and succeed in practically anything.
A company’s greatest chance to win compensation is in the first 24 hours after an incident
Be prepared There are certain activities that can help prevent the worst-case scenario, before, during and after a business inter-
The circle of subrogation Subrogation means the aftershocks of an accident can be felt for years. For example: • Company A suffers a fire, and receives compensation from its insurer • The insurer sues the landlord to recover the payment, claiming it was his responsibility under the lease to provide working sprinklers • The landlord sues the facilities company, as it paid them to maintain the sprinkler system • The facilities company sues the manufacturer, claiming the sprinklers were faulty, and so the circle continues
Jeffrey Nedas is a Forensic Accountant at Jeffrey Neads & Co, and Stewart Dymant is a Loss Assessor for Harris Balcombe LLP.
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INDUSTRY INSIGHT
top theft takes place in what seems like a safe environment. And if you haven’t experienced it before, you may not be expecting it happen. It’s interesting to consider whether, if you owned a bicycle worth over €1000, you would leave it anywhere unlocked? Probably not. And a laptop is even more valuable, when you consider its vital role at work. At Kensington we want to help businesses to secure their laptops and to protect their organisations from unnecessary costs, loss of revenue as well as valuable data. Our mantra to all businesses is, ‘log-on, lock-on’. Every day when people log-on to their office network we’re encouraging them to lock-on at the same time. We’ll help you change the culture in your company to take security seriously and avoid the risks of theft.
The right choice
UNDER LOCK AND KEY Stephen Hoare takes a closer look at the often overlooked issue of laptop security.
T
oday, business owners and managers face a serious issue caused by the growing use of laptops by their employees. The issue is, of course, theft. Laptop theft, is a much bigger concern than just the cost of the replacement hardware. There’s also the responsibility to all company stakeholders for the loss of what could be highly valuable and confidential information. We have all heard the stories in the media of prominent government individuals with laptops, containing critical information, that have mysteriously gone missing. For organisations there is also the cost in time, of missed work and setting up the new laptop. The cost of losing just one laptop can easily add up to a considerable amount of cost and pain for the user and IT manager. Nearly all businesses today use laptops. We love their flexibility and transportability. They’re also easy to lose. It’s a fact that 90 percent of UK businesses have experienced laptop theft. Most laptop theft is opportunistic. Someone leaves their laptop unguarded on a
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Kensington is the perfect business partner for laptop security because we invented it. We’ve developed a range of innovative laptop locks suitable for all types of business. Our products include: Laptop locks: Our award winning MicroSavers range features super strong carbon tempered steel cables to keep your laptops on your desks. Portable locks: Today’s mobile workforce is putting organisations at risk everyday. That’s why we have designed a range of popular portable locks for use on the move. Custom Keyed locks: Because we know that all businesses are different, we have a range of custom lock solutions. This means you can order your set of locks with an individual ‘master’ key for each lock, ‘like’ keys that open all the locks or a ‘single keyed’ solution.
desk, meeting room table, conference chair or in a hotel room – just for a few minutes. And when they return it has gone. The chances of seeing it again are minimal. So, what can we do about it?
Education One of the main barriers to laptop security is a cultural one. We estimate that 95 percent of laptops are sold without a lock. So we don’t automatically associate the two items. Often a lap-
Service and support: We’re on hand to help with issues like lost keys and forgotten combinations. We also supply internal marketing posters, adverts and information to spread the message to your employees. Remember to ‘logon, lock-on’. n Stephen Hoare, Security Business Development Director at Kensington Security, has developed a deep understanding of the challenges that face organisations. He positions Kensington as a partner rather than a supplier, offering value added services which help businesses with bespoke physical protection solutions, deployment and compliance measures unique to their requirements.
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Accenture ATE_7:4August
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ASK THE EXPERT
HEAD IN THE
CLOUDS Cloud computing is the buzzword on every IT leader’s lips, but despite its benefits the cloud throws up its own security concerns says Floris van den Dool.
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hile the economy shows some signs of strengthening, executives are still pressured to cut costs but continue tol deliver business-critical functions and solutions. One of the key trends that Accenture sees is increased interest in cloud computing as an opportunity to reduce both capital and operating expenditures. Although there is growing recognition of cloud computing’s benefits, progress is snagged on concerns about IT security. The threats include the very real dangers of data theft and compromise, loss of service and phishing incursions. Four major security concerns worry businesses, which channel partners must address in order to capitalise on opportunities around cloud computing. First, they struggle to trust new and unfamiliar cloud providers as part of their extended enterprises. Will providers treat customer data with the same care? Where exactly is the data being stored? Second, they question whether cloud providers have enough infrastructure security to ward off cyber attacks. Third, do cloud providers have the mechanisms to manage, measure and report on industry regulations? And can they be accountable if they fail to comply? Lastly, who will be held responsible for service level guarantees and business continuity?
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There are several actions that make sense for channel partners to follow right now to address these issues. Accenture’s empirical IT security work over many years with a wide range of organisations, shows that the following fundamentals apply to cloud computing initiatives:
Carry out a cloud risk assessment Business and IT leaders must weigh the criticality of applications and data and decide what is ‘cloud appropriate’. Gauge what risks they are willing to take – for example, whether to move new product data or customer data to the cloud – in context of the benefits and the laws and regulations that apply to where the data physically resides.
Get to know key cloud providers As with any outsourcing arrangement, carry out detailed due diligence on providers’ performance, including their financial performance. Confirm that they meet key standards. For example, regulations, standards, guidelines and codes of practice such as ISO 27001.
Analyse the data flow This calls for charting the lifecycle of the relevant data assets, from development to their destruction. IT managers must know where data is at all times so they can help confirm that it is being
stored and shared in compliance with local laws and industry.
Manage compliance The regulatory complexities are enormous when doing business in multiple nations: some governments regulate the physical locations of the servers where organisations keep their data. Leaders cannot expect their cloud providers to ‘be compliant’ for them. But they must expect them to provide what is needed to help achieve compliance.
Help strengthen continuity What happens if something ‘breaks’ while in the cloud? How is the data owner notified, and how quickly? How is the data recovered? These are the basics of best practices in business continuity, and they apply just as much to cloud computing as to any IT outsourcing arrangement.
Educate, communicate Train employees on security policies and procedures and be very clear about how those policies and procedures relate to the cloud. For example, employees must adhere to corporate IT security policies when exploring cloud services for workrelated activities, such as testing a new IT service or storing data. At this point, what is needed in the channel and beyond is a rebuilding of trust as well as a renewed sense of perspective – a realisation that as with any other technology development, cloud computing initiatives come with their own unique set of risks and rewards. But the cloud must not be treated as an unknown to be wary of. Implemented and managed properly, it should not add risk. Ideally, it should do the opposite. The fundamental question is one of balance – weighing, as accurately and in as much detail as possible, the risks of a data security breach against the power of the cloud to directly address many of today’s most pressing business issues.
Floris van den Dool is the Executive Director responsible for Accenture’s Technology Consulting-Security business in Europe, Africa and Latin America (EALA). He has 20 years of IT and IT security experience and assists many Accenture clients with the implementation of security from a business, technology and process point of view.
iStrategy Europe 5th-6th October 2010 London, UK At a 5 star venue TBC Transforming the Enterprise with Digital Expertise
Participation in Social Media and Interactive Marketing is no longer revolutionary.
it’s crucial.
In 2009, companies with dedicated social media activity boosted sales by over 18%, while those with minimal or no presence saw a 6% decrease. As 2010 marks a shift in consumer mentality from recession to recovery, companies must adjust their strategies according to how customers make purchasing decisions. Brand differentiation will be key, and companies must be at the forefront in areas like social web, mobile apps and SEO in order to create a distinguished customer experience. iStrategy October 2010 marks the next step in your marketing strategy. Here, you will learn: • The biggest trends in consumer spending online • Innovative technologies for communicating with customers and how to best implement them
• The top 10 most important factors in your social media strategy • How to measure your social capital and monetize your efforts • Hot buttons to bring people to your web store front • How to find your best fit in integrating email and social media • How to deliver a response-driven, relevant message The simple truth is that there is no magic one-sizefits-all marketing mix. iStrategy will arm you with the deep understanding of aligning social media and digital strategy according to your organization’s processes and operations to achieve the objectives you’re after. Join us in October to network, share ideas, and most importantly find out how to build your marketing strategy to its fullest potential.
For More Information, Please Call: Max Ford, Global Event Director. Tel: +44 (0) 117 915 4753. Mobile: + 44 (0) 7798 820 711
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VIRTUALISATION
Optimisation through virtualisation
Saumya Upadhyaya of Frost & Sullivan explains how companies can get the best out of virtualisation technology.
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nterprise computing is expected to do the same amount of work, if not more, irrespective of the business environment that the enterprise operates in. However, with budgets on a downslide, enterprises are exploring means to improve the utilisation levels of their current technology assets and cater to their mounting infrastructure needs. Enterprises across the world are aiming to transform their rigid data centres into agile environments, which can provide rapid scaling and sharing of infrastructure resources. Over the years, enterprises have built up silos in infrastructure, often leading to over provisioned, unmanageable infrastructural components. Virtualisation enables these enterprises to benefit through better use of existing resources, achieve agility in deploying new environments, maintain a significantly smaller hardware footprint, and a reduce in the cost of computing infrastructure resources. It assists IT administrators to optimally exploit resources and achieve significant costs and business benefits.
Virtualisation in action Globally, virtualisation has long been portrayed as a technology that would change the dynamics of enterprise infrastructure. Virtu-
alisation is shaping up to be one of the major trends that influence the end-to-end infrastructure of an enterprise, namely server, storage, network, application, desktop and so on. The ability to consolidate dispa-
“Enterprises across the world are aiming to transform their rigid data centres into agile environments, which can provide rapid scaling and sharing of infrastructure resources.� rate infrastructure elements, increase utilisation levels and minimise the mounting space and power expenditures are a few of the key drivers for the adoption of virtualisation solutions. Enterprises with a large computing infrastructure are the fi rst to adopt virtualisation owing to the benefits that consolidation brings to space, power and cooling expenditures. Server virtualisation is the forerunner in the adoption of virtualisation, primarily because of the visible benefits of consolida-
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tion, reduced operating expenditure, and limited impact to user operations. Since its introduction, server virtualisation has been growing at a rapid pace. Enterprises with large server farms are expected to increase adoption and benefit the most out of server virtualisation. When implemented the right way, virtualisation has a proven record of providing considerable reductions in direct infrastructure costs, indirect costs such as optimised IT infrastructure performance, business continuity and stability, as well as capacity management. For instance, power consumed by servers and cooling systems could be reduced by between 60 to 70 percent and the space requirements reduced by a factor of the number of virtualised servers per physical server. Similar to server provisioning, storage infrastructures across enterprises are over provisioned due to storage silos created by different business units within the same organisation. As a result, enterprises typically buy almost double the amount of storage they actually need. Storage virtualisation would help organisations achieve a more efficient centralised management for their storage and data replication needs along with enhanced security of enterprise data. Storage virtualisation solutions enable enterprises to increase their storage efficiencies from 25 to 30 percent, to almost 80 percent. With such an increased utilisation rate, organisations can delay the purchase of additional storage hardware by using existing storage to meet increasing data demands and consolidate IT assets.
Barriers to wider adoption In-spite of its benefits, virtualisation is not necessarily easy to adopt. Concentrated risk, increased infrastructure complexity and migration challenges to a virtualised environment are a few of the key restraints for adoption of the virtualisation solution. While a well-executed virtualisation strategy can bring significant benefits to the organisation, an unplanned strategy could create manageability issues. Organisations need, therefore, to have the right networked infrastructure to extract the true benefits of the technology. A holistic view of all the organisational assets is required as implementation of virtualisation impacts organisational business and operational processes. Virtualisation should be viewed not merely as an IT decision but as a strategic decision, the benefits of which can be accrued over a period. The implementation planning should start with a thorough assessment of technology assets and IT infrastructure along with the supported business processes and then calibrate Key Performance Indicators (KPIs) to track the benefits. A big bang approach to virtualisation can easily be a recipe for disaster. Organisations typically start with virtualisation of single infrastructure components such as only servers, only storage, only application and so on. While this provides organisations with flexibility of upgrading systematically to a completely virtualised environment, virtualisation at different levels of the IT infrastructure also poses a manageability issue. Virtualised applications may suffer from lack of resources due to outages, while multiple levels of virtualisation make it difficult to isolate the problem to a certain level of virtualisation in
the scope of the entire infrastructure. As a result, organisations require clear planning of their virtualisation upgrade strategy to enable endto-end management of their virtualised infrastructure. End-to-end virtualisation orchestrates various levels of virtualisation providing the ability to recover from failures within minutes, thereby achieving high efficiency, productivity and cost savings. End-to-end virtualisation helps in eliminating virtualisation silos and uses end-to-end failure automation practices to detect failure and recover from the outage by fi xing or replacing the affected device from the network.
Consolidating infrastructures Infrastructure consolidation, followed by virtualisation, is a key trend currently witnessed in the market. With controlled capital expenditure across the board and virtualisation solutions becoming increasingly affordable, virtualisation is set to become a mainstream technology in the coming years. As virtualisation enablers such
“Since its introduction, server virtualisation has been growing at a rapid pace. Enterprises with large server farms are expected to increase adoption and benefit the most out of server virtualisation” as hypervisors become increasingly commoditised, virtualisation management solutions and end-to-end virtualisation solutions are increasingly becoming a key focus area for a number of enterprises and vendors. With enterprise focus moving from a capital expenditure model to an operational expenditure model, virtualisation serves as an enabler for cloud computing. Th is enables everything from IT infrastructure to soft ware to be provided as a service. Enterprises could choose between internal clouds with sharing across business units or external clouds that facilitate the pay-per-use model. Virtualisation is the building block of any robust, flexible, scalable and cost-efficient cloud service. Without virtualisation at server, storage, and network levels, infrastructure sharing and cloud computing would be a distant reality. In essence, virtualisation spanning across the organisation’s IT infrastructure, that is, from the data centre to the desktop, enables enterprises to create a dynamic IT environment capable of catering to the rapid scaling of enterprise computing requirements. In addition, the benefits accrued on the total cost of ownership of the enterprise IT infrastructure make virtualisation an appealing investment for enterprise decision makers. Saumya Upadhyaya is Industry Analyst, Information and Communication Technologies at Frost & Sullivan. For more information, contact: tanu.chopra@frost.com.
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INDUSTRY INSIGHT
A revolution of choice Geert Jansen on the factors that have prompted companies to migrate their mission-critical applications to open source software platforms.
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n today’s tough economic climate IT departments are being tasked with fi nding ways to squeeze more value out of already stretched budgets. The prospect of lower soft ware acquisition and operational costs means companies are turning to open source soft ware as the alternative to proprietary products, such as Microsoft Windows. As IDC has noted, “economic downturns have a tendency to accelerate emerging technologies, boost the adoption of effective solutions, and punish solutions that are not cost-competitive or that are out of synch with industry trends.” Open source offers significant savings at the point of purchase and over the lifetime of the soft ware. Technology-neutral, it gives users the freedom to run their soft ware on low-cost hardware platforms and to switch provider at any time. It’s also licence-free, with a pay-asyou-go subscription model replacing traditional upfront licensing costs. No wonder the migration to open source has been one of the last decade’s unstoppable technology trends.
Support and stability In taking the strategic decision to adopt open source, companies naturally put a high value on support and stability, both of the underlying technology and the provider behind it. Red Hat, which has a strong 15-year track record in the industry, has emerged with a winning formula of outstanding technology backed by professional, real-time operational support. While cost-cutting is undoubtedly a key motivator, moving to Red Hat Enterprise Linux, the world’s leading platform for open source computing, brings other advantages: It is easy to purchase, deploy and manage. Red Hat Enterprise Linux is a robust, commercially viable solution that comes with lower acquisition and on-going costs. World-class training and support ensure fast ROI, while Red Hat Network, an easy-to-use, web-based systems management platform, provides effective infrastructure management. It delivers record-breaking performance. Day-to-day data centre operation and industry-standard
benchmarks prove that the most demanding, mission-critical applications run better on Red Hat Enterprise Linux. Security is improved. Red Hat solutions operate in some of the world’s most exacting, security-driven environments. Red Hat Enterprise Linux has also been rigorously tested and certified by the US government’s National Security Agency. The Red Hat partner ecosystem offers a huge range of choice. Companies seeking to maximise hard-pressed budgets can choose from well over 1000 hardware platforms, while over 3500 soft ware products are certified to run on Red Hat Enterprise Linux. Some of the most successful and most ambitious companies in Europe are using Red Hat Enterprise Linux. NYSE Euronext, operator of the world’s leading and most liquid exchange group, safeguards the reliability, performance and security of its mission-critical fi nancial trading platform, having migrated 830 of its European stores from Microsoft Windows. Specsavers, the UK’s most trusted optician, enjoys freedom from vendor lock-in and simpler application maintenance. SNCF, the national railway of France, benefits from a secure standardsbased platform, capable of adapting with
Geert Jansen, Product Marketing Manager EMEA at Red Hat, is responsible for Red Hat's infrastructure products in Europe, Middle East and Africa (EMEA). Before joining Red Hat, he spent five years at Royal Dutch Shell and prior to this he was software engineer at an internet search engine company.
great flexibility to regional requirements. ImmobilienScout24, one of Europe’s most successful real estate listing companies with over three million visitors a month, dramatically reduced energy consumption and operating costs. Meanwhile Statoil, one of the world’s largest operators of off shore oil and gas activities, has achieved more efficient management of IT operations and strengthened its bottom line. Find out more, please contact 00800 7334 2835 or visit www.europe.redhat.com
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EXECUTIVE INTERVIEW
Making virtualisation a reality
not have internally (e.g. networking and some storage and soft ware technologies). We deeply integrate all components used to make the To get the lowdown on virtualisation trends at the world’s customer experience a smooth one. For the fourth largest vendor, Business Management catches up with success of all IaaS offerings, it is mandatory that Dr Joseph Reger, CTO of Fujitsu Technology Solutions GMBH. they are well integrated and provide a simple interface for provisioning, management, billing and so on. But it is equally important that Fujitsu is a pioneer in virtualisation. What is JR. Virtualisation will become more significant, they provide the highest levels of utilisation of the company’s virtualisation strategy? even though the technology might become less the infrastructure. This objective can only be Joseph Reger. We view virtualisation as a key visible as it penetrates all levels of all stacks. We achieved if all components are part of a systemtechnology. Our strategy for the IT infrastrucwill be dealing with solutions (such as resource wide resource orchestration, provisioning and ture is based largely on virtualisation as an orchestration and automation) based on virtumanagement scheme. With that approach, all enabler. We have built a global infrastructure alisation technologies, rather components are more tightly portfolio of products, services and alternative than with the technologies integrated and provide the delivery models (such as Infrastructure-as-athemselves. The main chalhighest levels of efficiency. If Service, IaaS) called Dynamic Infrastructures, lenge will be the unification of we add the economies of scale based on virtualisation as the enabler of the dyall virtualisation technologies we are building in our global namic aspects of the data centre. The competi(e.g. server, storage and netorganisation, this offering tiveness of the new, cloud-like, offerings such as working virtualisation) and will be difficult to match by IaaS, depends on our ability to utilise the latest their concerted management. individual customer installavirtualisation technologies in novel ways. FuSingle console management tions. Besides, Fujitsu will be jitsu is a staunch supporter of standardisation and automatic virtualisation offering application and busiefforts in virtualisation. We believe that virtuof all components will be an ness services on top of its IaaA alisation will penetrate all current and future attractive opportunity and an offerings, providing total IT IT stacks. We do our own development but also important lever to increase stacks for its customers. Since Dr Joseph Reger, CTO of Fujitsu support open source efforts and partner with overall efficiency. Needless to these layers are integrated by Technology Solutions GMBH, is responsible for understanding and the key players in the industry to advance the say, it will be the major technidesign, the total offering will predicting IT trends that will benefit customers most, as well as for their cause of virtualisation. cal challenge. be very attractive. What trends and opportunities does Fujitsu see in the future for virtualisation and what will be the main challenges?
implementation in the company’s strategy. A renowned industry expert, Reger has steered the company and customers in real-life implementations of dynamic IT and mobility topics.
Fujitsu recently announced its IaaS for server offering. What are the underlying technologies behind this and how does this offering help customers? JR. As I said, the most important enabler is virtualisation. We use Fujitsu’s own technologies (e.g. server and storage technologies, system software) wherever we can and partner to offer the technology components that we do
Is virtualisation a direct enabler for cloud computing? JR. Virtualisation is definitely one of the two most important direct technology enablers, the other one is the internet (and its associated technologies). The success of cloud computing hinges on our ability to share the underlying components, such as infrastructure. Sharing is essential for cloud computing to become a successful business model. The easiest, most effective way to accomplish sharing is by virtualisation; in particular by virtual machine technology. I expect that virtualisation in general will continue to play a prominent role in enabling sharing. Virtual machine technology as we know it today may give way to other technologies, such as application container-based solutions. These are, however, by nature, virtualisation technologies, too. Thus I am very confident that virtualisation will retain its role as one of the main engines of cloud computing.
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CLOUD COMPUTING
On cloud nine The buzz around cloud technology is reaching fever pitch, with both multinationals and SMBs embracing its potential. But is it the future of computing or just a flash in the pan? Business Management’s Gerhart trüb puts his head in the clouds and takes a closer look.
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ith cloud computing promising so much for organisations it is little wonder that the technology is on the lips of most IT chiefs and tech vendors. For those of you who’ve been marooned on a desert island for the past few years, this means that computing will increasingly be available as a service over the internet. Your documents, email and multimedia will be held online in a virtual cloud and will be accessible from any computer or internetenabled mobile device. According to a report from analyst firm AMI-Partners, small and medium businesses (SMBs) are flocking to use these new IT services. Around 31 percent of midsize companies currently use cloud computing as a soft ware service, double the uptake of those in 2004. So why has cloud computing become such a valuable business proposition to SMBs? Agatha Poon, Senior Analyst in Yankee Group’s Anywhere Enterprise research group, believes a big driving factor is around cost saving, particularly with the economy in its current state. “Cost saving is the value proposition for
“A lot of cloud providers are focusing on the downturn and saying that it’s in their favour because in this economy, it’s a cost saving” a lot of providers,” says Poon. “It is defi nitely one of the strongest benefits areas, but interestingly we also see that some SMBs consider cloud computing as a method for disaster recovery. This makes sense if you consider that many SMBs have a basic infrastructure in place for keeping servers and data, however, not so many have the practice to backup data or maintain a redundancy because it is very costly to keep one server in one location and another one as a backup in an alternate location.” Poon goes on to explain that a small number of SMBs will consider the flexibility and scalability of cloud computing as a further value proposition for the business. “Typically they are very business driven
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and don’t want to invest a lot of money up front. They want an appropriate budget for growth, but as the business grows of course they would like to have access to resources that can help them scale, which cloud computing can help them do.” Doug Menefee is one such CIO that has adopted cloud computing. The Schumacher Group provides emergency department physicians to 150 hospitals across the US, and because it is a medium size business, Menefee is charged with leveraging IT processes in order to drive efficiency in the emergency room in which the group operates. Over the past five years he has deployed a multimillion-dollar technology initiative to upgrade or replace every enterprise system in the company. He explains that he has essentially worked to automate the entire recruiting office, credentialing processes, utilising soft ware and building our custom applications. As Menefee was looking to redefi ne and redeploy new applications, he chose to leverage a cloud solution.“By leveraging the cloud solution we had multiple instances of our data that were being hosted either on the east or west coast or both, that were inside a multimillion dollar data centre with full-time technical support,” explains Menefee. “A big driver for us was business continuity purposes – knowing that out data would be accessible 24 hours a day, seven days a week, anywhere that we could find an internet connection. We realised that we would no longer have to rely so heavily on our own data centre to keep operations going.” Since deploying cloud computing technology, Menefee has been able to leverage a range of custom options, including platform and hardware services. “On the platform side, we do development on top of salesforce.com and then inside we have a hosted solution in PeopleSoft where they simply have the hardware at their location and they maintain all of the soft ware for us and then we do the development on top of that. The custom work that we do inside of salesforce.com is typically because the application doesn’t provide an out of the box solution for us, so we go and write a custom solution using Apex code. From here we can develop anywhere from three to four times faster in that environment than if we were developing in any other platform,” explains Menefee. There are a number of benefits around being able to design a custom range of options. In Menefee’s case it means that he is able to deliver products faster to internal customers so that they are received within a matter of hours, days or weeks depending on the individual case. “The solutions that are housed inside of our data centre, such as patient billing operations and paperless charts will take me a couple of weeks to a couple of months to deploy, whereas with our cloud services it takes a couple of hours to
a couple of weeks. So the cloud solutions, in a programming world, are much more agile and a faster application development environment.”
Concerns But while there are many reasons to embrace cloud computing there is also an area of concern that is potentially keeping SMBs from using the technology, namely IT security, which is the number one concern cited by IT managers when they think about implementing the technology in their business. Menefee has no such concerns; he believes that as a medium sized business he is able to ensure that he actually boosts the security of the Schumacher Group as there are more people looking out for the business. “I’m always concerned with security inside our enterprise,” he says. “As
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FROM VIRTUAL TO REALITY The London 2012 Olympic Games get set for an actual digital cloud. Cloud computing is an invisible technology for users but an actual digital cloud is being considered as the centrepiece of London’s Olympic Village. The cloud would 'float' over London's skyline and would be made up of 120-metre towers holding a series of interconnected plastic bubbles that would display images and data. It would also be used as an observation deck and a park. The unique structure has come from the minds of an international team of architects, artists and engineers and due to its 'flexible nature', the design team are planning to raise funds for the scheme by asking for micro-donations from millions. “It's really about people coming together to raise the Cloud," Carlo Ratti, one of the architects behind the design from the Massachusetts Institute of Technology (MIT) told BBC News. "We can build our cloud with UK£5m or UK£50m. The flexibility of the structural system will allow us to tune the size of the cloud to the level of funding that is reached.” The Mayor of London, Boris Johnson, has said he is committed to building a tourist attraction in the Olympic Park “with a legacy for the East End [of London]" and thus far, the cloud is on the short list. Despite no decision yet being reached, the cloud's team have decided to release details, no doubt in a bid to drum up debate and attention for their idea. The towers that would support the spheres would be similar to those used in Japanese skyscrapers to resist earthquakes, which would prevent the towers being buffeted by the wind.
Environmental impact In keeping with the Olympic Committee's desire to make the 2012 Olympics a 'green Olympics', the cloud will also be a 'harvesting effort'. According to Alex Haw, digital designer for the project, "people can choose to ascend the cloud on foot or bicycle; the energy that it would take to descend the cloud is converted, on the way down, into electricity through elevators with regenerative breaking, similar to those that are present in hybrid cars. The people's energy coupled with solar energy collected through on-site and off-site photovoltaic cells and various energy-saving strategies will allow us to reach carbon neutrality, whereby the cloud produces all the energy it uses." With the power used, the spheres would also light up at night, creating a spatial, 3D informational display over the skies of London.
a midsized business with about 30 individuals inside information technology, I can ensure that one or two of those individuals are primarily focused on security, and that’s what we do for the protection of our database. However, when I use a cloud computing solution I get the same benefits as every one of the enterprise level, publicly traded companies that are also customers of the cloud computing solution. So salesforce.com or Workday for instance, has literally an army of individuals and their only job is to protect and secure the data that’s inside their systems. Being a midsized business I can’t keep that individual or individuals busy for that amount of time.” And it is true that instead of pressurising a small team of IT staff to perform at a level consistent with larger competitors, it is possible for SMBs to access enterprise-class capabilities with an initial low investment and the chance to scale. However, for those that remain concerned about the privacy and security of their cloud, Poon advises working with a transparent provider who is able to provide documentation and demonstrate the level of security in place. “Typically many cloud providers will have the classic SOA programme in place, but any enterprise users, from SMBs to one large enterprise, need to read the fi ne print in their service level agreements and be ready to really negotiate for a stronger security programme,” she says. Laurie McCabe, Partner at Hurwitz & Associates, agrees that it is important to go with a reputable provider and recommends noting a checklist of points that need to be in place with that provider to ensure the data is protected and secure as well as available at any time. “Even though SMBs are very busy and are trying to install a million different things at once, it does pay to evaluate at least a couple of different services,” says McCabe. “Check it out a little bit, search around, fi nd at least a couple of providers that might fit your needs before doing free trials and evaluating exactly what best works for your specific needs.” Poon goes on to explain that on the supply side, aside from security or service availability, is another potential barrier to adoption that may play a part in whether it will help drive market uptake or not, namely whether the vendor is sustainable. She says that there are many small cloud providers quickly jumping into the market and their fi nancial health could make an impact in terms of infrastructure requirements and whether or not it will help drive market uptake.
Financial situation The fi nancial health of vendors will no doubt play a part in whether or not we continue to see increased adoption of cloud computing, as does the current economic crisis. As one of the main drivers, cost saving is key in the current market as many companies are able to recognise the clear value of implementing the technology. “A lot of cloud providers are focusing on the downturn and saying that it’s in their favour because in this economy, it’s a cost saving and through this they are able to facilitate, if not drive, sales,” explains Poon. “But if you look at it the other way round the situation is actually forcing companies to become more innovative.
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THE SILVER LINING TO CLOUD COMPUTING Werner Vogels, CIO of online retail behemoth Amazon, offers his take on harnessing the power of this revolutionary development.
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loud computing refers to the idea of making massively scalable IT capabilities available to anyone who would want to use them, on a pay-as-you-go basis. It means highly reliable IT components can be used by startups, midsized and very large enterprises alike, to provide an environment in which developers or engineers no longer have to worry about managing physical resources. Instead, they can use these resources as a service over the internet, and that will have a major effect on how applications are built. Applications will become more reliable, secure, and cost-effective. There are a number of benefits. Just look at the amount of time that businesses currently waste on managing physical resources: companies both large and small invest an enormous amount of manpower on just getting their infrastructure off the ground; factor in the cost of maintaining that infrastructure so that it is highly reliable and performing in such a way that customers can actually make use of it, and that’s a big commitment. Companies are investing a lot in managing a physical infrastructure when it doesn’t actually help them build a better product for their customers. So at Amazon, given that we had to invest in these technologies and build them at very large scale for our own operation, we are now looking at using them to help other companies also become more reliable, cost-effective and productive – without having the massive cost of actually building and maintaining those technologies themselves.
They have to look for technologies that can help them cut costs while maintaining the performance, so typically the classic cloud computing model is in demand.” So, what about the future of cloud computing, how should we expect to see the technology develop? Poon is a little reserved in her evaluation of the future of cloud computing. She believes that while there is no doubt as to the value that cloud computing can bring, adoption depends on how useful the technology is to a particular business. “If you are looking at a retailer for example, they have the seasonal sales for their store and they can pick times such as Christmas or Valentine’s Day where they know they are going to see a traffic peak. Therefore they need a lot of processing power and capacity in order to keep their website running quickly and efficiently and cloud computing will be very
We can help companies become more reliable and more secure than they are now, at a much lower price point. Plus the pay-asyou-go model means that you only pay for those resources that you use. If you look at starting a typical new enterprise product, then often you have to get a large budget upfront to make sure you have the physical resources to execute on. By using web services, there is no upfront investment, and only if your product becomes successful will you carry the cost for the resources that you’ve been using. So that’s a shift from a capital expense model to an operational expense model, which at the same time lowers the risks for enterprises to do new product innovation. There are no boundaries any more for any company in any country to access these resources. In some ways, cloud computing provides the democratisation of business creation. You no longer need access to huge sums of money to get access to physical computing resources in order to get your business or product off the ground. I think technology development will shift – from actually having to manage physical resources and having multiple system administrators in order to keep your service going, towards building better applications for your customers. That’s where the focus will be. Cloud computing will trigger a whole new range of application building that wasn’t possible before because we were so focused on just getting the basics right. And we will see that applications become more available with better performance, because there will be more automation in terms of keeping these enterprise applications running – under all circumstances – in the cloud.
CLOUD SERVICES TRENDS IN THE FINANCIAL SECTOR • 83 percent of firms surveyed are making private clouds their first priority with the majority planning to increase their investment in grid and high performance computing in the next 12 months • 43 percent are choosing virtualisation as their main infrastructure priority in 2010 • Security is now the biggest worry for those looking to invest in the cloud, a major development on the concerns that existed a year ago Source: Platform Security survey
useful to them in that sense,” says Poon. “However, there are companies that will simply need to update their website information occasionally and don’t have a need to store data in a cloud because they know that traffic will be regular, they just need minimal support.” It seems cloud computing for SMBs will ultimately depend on whether it is possible to articulate the value of cloud computing to the market of potential users of the technology. Despite the solution being in place, it is only those who require it that will in fact adopt it. And, while there is no doubt that cloud computing is still in the very early stages of development and it is hard to say just how the capabilities and benefits will change, it is certain that it will indeed evolve to become a much more sophisticated solution as time goes on.
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The only way is up How your enterprise should navigate the path to the cloud. By Brian Klingbeil.
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recessionary 2009 saw many enterprises moving to the managed infrastructure model to reduce CAPEX and costs whilst increasing business flexibility. 2010 will see that trend continue, with a growth in blending cloud infrastructure into other managed infrastructure services for business applications. Many enterprises will engage in their first cloud projects and start to shift budgets from conventional IT refresh cycles into cloud purchasing models. This shift will mark the beginning of cloud becoming pervasive within UK enterprise. Those ‘in the know’ now understand that cloud is transcending the early hype and delivering real value. Developments in security and resource allocation systems mean that enterprises can now trust the cloud with mission critical applications and enterprise cloud adoption is likely to start in earnest late this year.
“Many companies see the benefits of adopting a cloud model that does not require alterations to traffic routing and security controls”
Defining the cloud Beyond the buzzwords and mixed definitions, cloud computing is a system of delivering data centre resources as price-elastic services over an enterprise network, to control costs and deliver scalability through automation. However, it is important to differentiate between enterprise cloud and ‘consumer clouds’. Development teams that have been using cloud systems ‘semi officially’ for application prototypes will be forced to formalise these environments within the approved enterprise architecture. Many nascent environments will shift from publicly accessible ‘consumer clouds’ to full enterprise-grade cloud systems in 2010, to bring them into full compliance with their organisation’s policies.
Clear benefits Advancements in virtualisation technology, growing network bandwidth and faster hardware performance have all contributed to the emergence of flexible enterprise cloud offerings. Cloud
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computing providers allow firms to cut costs quickly and flexibly, while scaling in alignment with current business needs. By aligning IT costs with changing business cycles, companies can achieve just-in-time IT supply without having to over-purchase IT inventory. It also allows companies to reap the numerous advantages of outsourcing whilst retaining control over IT – thereby freeing up staff to focus on developing differentiating applications.
Adoption considerations Companies should now evaluate their systems to assess where migration to managed and/or cloud services would deliver optimal benefit. They should then pursue a gradual migration path in conjunction with other managed services to ensure optimum return. Gradual immersion into this new services delivery model can be done by application type – for example, moving all
marketing micro-sites to a cloud service model to address spikes in demand. Cloud migration can also be aligned to the software development lifecycle such as starting new application development in the cloud and promoting to production after quality testing is complete. Enterprise cloud migrations must also be planned in line with state-of-the-art practices and regulatory compliance. Many companies see the benefits of adopting a cloud model that does not require alterations to traffic routing and security controls. In order to maximise the benefits of cloud, its governance needs to be closely aligned with existing enterprise architectures that are already proven to work for the business. Having assessed the potential of cloud whilst keeping these concerns in mind, you can then evaluate potential cloud suppliers on the basis of their ability to transition your IT infrastructure whilst maintaining the vital security norms. A trusted supplier should also be willing to examine the optimum migration roadmap for your business, addressing cost and resource factors in addition to compliance and security challenges.
A tool for recovery Now is definitely the time to seriously consider the cloud model for your enterprise. By evaluating where the added flexibility of cloud can enable your business to be more responsive, you can closely align IT costs to revenue streams in a way that was previously impossible. By tightly coupling these costs through flexible provisioning, you will be able to scale up to meet demand and downgrade for lulls in activity or business downturn. This alignment of business drivers will enable you to seize the opportunities presented by a stronger economy in 2010. n Brian Klingbeil is the EMEA MD of Savvis, a global leader in IT infrastructure services and cloud computing for the enterprise and public sector. Prior to this, he served as VP of Finance and Strategic Planning for Savvis in the US for five years and has also held key positions at GTS Telecommunications & Qwest Communications.
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Leading from the front Fredrik Ring lifts the lid on how social networking is transforming business leadership. Don’t forget that the journey has already started in the consumer based applications such as Facebook and Twitter. Your employees are already “employees 2.0” and have been so for a while now. What needs to change now is leadership and management. So, start with management courses to form your leaders and turn them into “petrol tanks” to your brain powered engines, instead of empowerment guardians.
Leadership tools
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redrick Taylor pointed out the lack of knowledge when it came to labour efficiency in the late 19th century. Today we run into that kind of employment drilling in service centres, line production, fastfood chains or telephone sale organisations. The employee is regarded as a minute delivering asset that is as cheap and easy to replace as any cogwheel. Organisations that have built their business upon such working methods are getting smaller and smaller margins due to offshore outsourcing, for instance. Companies that cherish accumulated company knowledge tend to have better return on innovation. In the industry, this knowledge sharing was usually represented by a post box where the employees could drop ideas for the management to evaluate. These functions are more commonly presented via intranet and other business supporting systems today. Something Taylor failed to fit into his scientific management was the essence of science – people’s brainpower. By turning the hierarchal pyramid upside down we soon understand the power of systems such as Wikipedia and other crowd sourcing projects. Feeding these systems with brainpower and making them the engine in your company. That’s what Web 2.0 is all about. We are facilitating systems based on communication and user generated content to enhance
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knowledge sharing. By demanding that the employees are responsible for their own networks and relationships within the organisation, you can have community control over behaviour. Having a clear strategy of how to deal with over-engaged employees is also of importance. Usually when implementing this kind of knowledge sharing system the problem is seldom that the employees start discussing sensitive issues. Particularly coming from a culture where keeping quiet is equal to doing your job and maintaining your network in the company as a thing you do in kick-offs. In the new era sharing of knowledge, it becomes a very valuable asset for the company instead of information keeping for personal management advantages.
Company cultures As I indicated, the transformation is not only about introducing a new tool. It’s a combination of cultural change in close relationship with the proper technology to benefit from this. So in a way you need to think big, but act small. Designing the foundation of how you want to interact in line with your culture will be the basis. Select a pilot and start learning by doing, motivating your staff to participate in aligning with your business goals. And you should participate yourself by enjoying interacting with your customers and your staff.
If you believe that your organisation’s opportunities to survive in the future depend on its accumulated knowledge, innovation capacity and power to change, you need to change the bonus systems. By adapting Web 2.0 solutions into your organisation and also giving the management the right leadership tools, your leaders will be able to lead in a more coaching manner. Give bonuses to the informal leaders who are critical to your business or they will abandon you.
“Companies that cherish accumulated company knowledge tend to have better return on innovation” I’m not saying that we should all throw our balance sheets in the garbage can, but once a month we can start looking over the knowledge processes and quality enhancements in our organisations. Regarding the massive request for solutions we see in this area, our hardest job right now is staffing up. We are preparing for a paradigm shift where the fuel for the company engine has dramatically changed. n Fredrik Ring has worked as an advisor, analyst and project manager in major ECM-related IT projects since the early 1990s. He is currently in charge of ECM at the Logica Group, which has 2000 consultants and a number of larger business partners within ECM.
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MEDIA
Switching
channels As the world’s biggest broadcaster the BBC is spearheading the digital transformation of the television industry. Diana Milne meets the corporation’s Chief Technology Officer, former Yahoo exec John Linwood, to find out what the man behind the iPlayer really thinks about the future of broadcasting.
W
hen John Linwood left the US search engine giant Yahoo to join the BBC earlier this year, he experienced something of a culture shock. Having spearheaded the development of some of Yahoo’s most successful social networking products, African-born Linwood found himself in a very British institution with a very British approach to making changes: “Clearly American companies have a slightly different culture in terms of their approach to delivering things. In the BBC there’s a lot more governance because we’re spending public money so we have to be squeaky clean about how we use it. Sometimes in the BBC people are slightly more cautious. They don’t have that American jump in feet first attitude.” It soon became clear to Linwood however that the pace of change underway at the BBC would not leave him standing still for long. His arrival coincided with a period of massive transition for the broadcaster in the wake of a digital revolution, which has transformed the way viewers access television content.
Entertainment on-demand The most significant development has been the launch of BBC iPlayer, the broadcaster’s on-demand online television channel which has been a phenomenal success, attracting over 100 million requests in its fi rst year; around 700,000 a day on average. Th is, says Linwood, places heavy demands on the BBC’s IT infrastructure: “One of the challenges we share with many other suppliers on the internet is that user demand on the systems changes. For instance, if we have a very popular show on iPlayer we get a huge peak in demand.”
One such example that Linwood is particularly concerned about is the 2012 Olympics, which the BBC has exclusive rights to distribute in the UK and which Linwood says is likely to be viewed mainly online because of the timing of the games: “One example that is keeping me awake at night is the 2012 Olympics. We know that people will be accessing it from their PCs or their phones because it will be on in the daytime so the BBC is going to have to build up a huge amount of infrastructure to support that.” BBC iPlayer has also greatly increased the complexity of the BBC’s IT infrastructure as it plugs into so many of its different systems such as scheduling, live stream and metadata systems, all of which feed data into the site. Costs too are an issue as the broadcaster must meet the increased demand for its online technology but without the luxury of being able to increase its budget, as a private sector counterpart would, through revenue from increased use of the service: “Traditionally, if the BBC broadcast to 10 million people for a particular show, it didn’t actually cost any more than if only one million people watched that show. In the on-demand interactive world that is no longer true. However, the BBC is a fi xed earnings company, we don’t get any additional revenue if we get more users so we have to be really clever about how we deliver those services without incurring substantial extra costs.” The phenomenal success of iPlayer is just the beginning of the BBC’s foray into digital media, says Linwood, who reveals that it is currently looking at ways to deliver its content via social networking media. Th is is subject however, to a detailed assessment of which programmes are best suited for social networking websites: “Clearly the BBC is looking at ways to reach its audience all the time. Part of our mission statement
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is; inform, educate and entertain. So that means social networking can be the right mechanism with which to reach the audience. We’re looking at where our audiences actually are. If you want to reach Radio 1 listeners you’re looking at social networking sites like Facebook or Twitter. But if you want to reach Radio 3 listeners there are obviously not so many on Twitter.”
but when you’re looking at emerging and leading edge technologies, very often it’s the small companies that are the most creative. If you’re looking for stability, strength and guaranteed delivery you want to go with a large organisation. For instance for our desktop management I’m certainly going to go with a large, substantial organisation. But if, for example, we want to break new ground in terms of how we handle digital fi les coming out of new generation tapeless cameras, we would Outside intervention look at smaller organisations to pilot and innovate a solution.” Linwood says the biggest technical challenge the BBC will be lookAlthough the BBC, traditionally, has developed its own homeing to external vendors to solve will be the new demands placed grown technology, the increased complexity it now faces means on its corporate network, which now handles not just it is also working closely with outside vendors to fi nd soluemail and printing as it once did, but also telephony, tions to the challenges posed by the digital media world. video conferencing and broadcast media fi les. Th is Linwood has recently instigated a new open technolmeans the corporation is reviewing its entire ogy strategy, which aims to make the tendering proMILLION corporate networking strategy: “We’re putting a cess simpler by providing potential vendors with whole raft of demands on the corporate network more information about the details and technical Number of requests that it was never intended or designed for origispecifications, which the corporation requires. He the iPlayer received nally,” says Linwood. “It has changed radically in says he hopes this will encourage tendering from in its first year the past few years and it will continue to change smaller technology companies, which could potenradically in the coming three to five years.” He is tially provide more innovative and scalable solutions also involved in reviewing the BBC’s storage and data than the larger packaged solutions provided by major centre strategy following the corporation’s move to IPinternational vendors: “Historically we’ve worked with based networking and the fact that it is now moving digital fi les large vendors, which is great, because they have all the capabilthat have reached the terabyte level in terms of size. Linwood reveals ity we need,” says Linwood. “But one of the areas I’m focused on is that over the next three years, the BBC will need seven petabytes of how we drive greater innovation for the BBC in terms of our products additional storage, which creates massive technical challenges in terms and services. And part of that strategy is how the BBC can engage with of how it moves and stores that data. small companies. Of course, large organisations can be creative as well,
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Question Time is among the most popular programmes on the iplayer
iPlayer – the next generation iPlayer was first launched in 2007 and is a service that allows viewers to catch up with radio and television programmes from the past week. It is currently available on Windows, Macs, Linux, Playstation 3, Nintendo Wii and iPhones. The next generation iPlayer was launched last June with a new single interface, which fully integrates both radio and television.
The amount of traffic to the iPlayer (Oct 2009)
The top five episodes for Oct Most requested episode per series
TV
70million
53.2million
requests for the month of October
requests for TV programmes
(highest number to date)
26.1million requests for Radio programmes
How the iPlayer is being used
410,000
Russell Howard’s Good News - Ep 1
664,000
928,000
Life - Ep1
371,000
Mock the Week Series 6 - Ep 1
362,000
Never Mind the Buzzcocks Series 23 - Ep 2
Question Time - 22/10/09
Radio 94,000
151,000
Ukraine vs England 10/10/09
The Chris Moyles Show 13/10/09
79,000
Man Utd vs S’land 03/10/09
74,000
The News Quiz Series 69 - Ep 5
74,000 Cricket 02/10/09
The amount of data processed by iPlayer 7%
requests from iPhone/iPod Touch
6%
requests from PS3 applications
2%
7
requests from other sources
equal to
petabytes
of data transfered per month
85%
12.5gigabytes of data per second
or about 11million DVDs
requests from computers
400hours
The make-up of the requests
across
of video encoded per week
TV
60servers
dual Quad Core Intel Xeon machines
Radio
3%
4%
for downloads
97%
for streams
96%
for on-demand service
for live simulcast
67%
for live programmes
33%
for on-demand catch-up
Tape pre-recorded programmes
+
24 Off-air
digital satellite links live news + sport
simultaneous incoming programmes
1Gigabytes
of data per second of incoming video
25
around Gigabytes per hour of incoming video encoded at over 50Mbps
Sources: BBC | Cnet
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A moveable feast
outsourced. That’s about being a smart This complexity is increasing as the customer. You can’t outsource someBBC becomes more divided across difthing that you don’t understand yourferent locations – including the transfer self. It’s also about whether we use small of around 2500 staff from London to companies versus big companies. So we Manchester’s state-of-the-art MediaCity have an overall review underway of our complex in the Salford Quays developoutsourcing strategies and how we take ment. Linwood describes some of the those forward.” technical challenges this will create: “There are massive challenges around how Forward thinking we store data and how we move that data As part of Linwood’s drive to About the BBC about. For instance the sports team can at increase efficiency within the organiThe BBC is the world’s largest broadcaster. It times have around 100 live feeds coming sation and to support an increasingly was established by a Royal Charter and is funded by in a day. We need to find ways that we can complex IT network, he is driving the a licence fee paid for by UK households. It provides carry those live feeds across our network standardisation of IT processes across services to eight national TV channels plus regional to Manchester.” The corporation is also the corporation and the development programming, 10 national radio stations, 40 local moving staff into a new high tech facility it of an infrastructure that allows for the radio stations and to the bbc.co.uk website. BBC is developing as part of its current Broadsharing of technology across multiple World Service broadcasts on radio, TV and online in casting House headquarters off London’s divisions and platforms. “The goal is to 32 languages. It is funded by a government grant. Regent Street. It hopes to complete the standardise as much as possible. We’re The BBC has a commercial arm, BBC Worldwide, project by 2012 and the move was one of also looking for opportunities to build which operates businesses selling books, DVDs the reasons behind the restructuring of the platforms that are pan systems platand merchandise. The corporation is governed by Broadcast and Enterprise Technology area forms and a service based architecture the BBC Trust which sets its overall strategy and within the BBC’s Future Media & Technolso that we can allow many different sysrepresents the interests of licence fee payers. Its ogy Division spearheaded by Linwood. He tems to use the same back-end services.” Chairman is Sir Michael Lyons. describes the changes he has made and Cloud computing would, says Linwood, how these will fit in with relocating staff to answer many of the BBC’s technology the new facility: “We looked at the overall requirements in that sense, particularly delivery of technology services within the BBC and decided there was a when it comes to the BBC’s own internal business systems: “We’re looking number of things we could do. The first was rationalisation. We’ve put the at cloud for our internal systems because we believe that would enable a broadcast support operation teams from news, audio, music and world number of things for us. First of all we’re looking at more flexible working service together to drive efficiency and reduce management overhead. This for our employees in terms of how and where they do their jobs and how gives us greater flexibility because we can train those engineers up to work they access the systems. Cloud is a good way of doing that because it allows across all divisions so when people are ill or there is a peak in demand us to push the system beyond the bounds of the BBC so that somebody we can move those resources around. Part of the restructuring I did was who is working from home or in a café can access all the systems they need ahead of the move [to the new Broadcasting House facility] because to to get the job done.” deliver new technology services into that facility I need to support news, As a technology pioneer in so many areas, the BBC will stop at nothworld service and audio music who will all be based there.” ing to stay ahead of the curve when it comes to digital media. And LinAs well as 1100 IT staff based within the BBC, Linwood works closely wood says there’s no better time to be at the helm of an organisation that is with the many organisations to which the BBC outsources IT functions. going through such dramatic changes behind the scenes: “I think, for me, He says that a “huge amount” of the corporation’s IT is currently outthe time has come when technology and media are really coming closer sourced, for instance its playout services, all the distribution of content out together. The BBC and the media industry as a whole is going through to antenna and internal business systems, which are managed by Siemens. a huge transition as technology becomes more and more important in Linwood says he is currently carrying out a review of the corporation’s everything we do, and for me the huge excitement of the BBC is that it’s outsourcing strategy to ensure it receives the best value and the highest the world’s largest media organisation and where better to be when you’re quality services from its outsource partners: “What I’m looking at there is going through a transition like that.” how to be smarter about how we outsource. It’s very important to underJohn Linwood took up the role of Chief Technology Officer at the BBC in April 2009. In stand the criteria that drives outsourcing. We’re refining that and trying the role he is responsible for delivering the BBC’s technology strategy and delivering and managing the broadcast and enterprise technology infrastructure behind all of to understand how the BBC will benefit from outsourcing. If there is a the BBC’s output. He joined the BBC from Yahoo where he was Senior Vice President technical area that we don’t have the skills for internally then it’s better of International Engineering where he oversaw a team of 1600 staff located across 22 countries with responsibility for the development, deployment and delivery of all the to outsource that to a technology specialist that really understands the company’s services outside the US. There he developed some of Yahoo’s most successful consumer products, including social networking, social media and user-generated technology. But one of the things we’ve learnt is that when you outsource content. Prior to Yahoo he spent 11 years at Microsoft starting as an Architectural you need to retain knowledge within the organisation of the service you’ve Consultant in 1993 before progressing to several senior roles.
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INDUSTRY INSIGHT
The roadmap to economic recovery Infor’s Christina McKeon offers her own insight into how organisations can ride out the economic uncertainty by streamlining operations and reviewing processes.
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hey say that hindsight is 20/20. Certainly, the economic crisis hit many companies out of the blue. Was the writing on the wall simply obscured from our view, or were we just too blind to see it? And more importantly, has our vision cleared enough now to recognise the signs next time, before it’s too late? Th is is a time of reflection for many companies, pondering the “could of, would of, and should of ”. While we must all look to the past and learn from it, we must also look forward. Where do we go from here? What processes need to be in place to prevent this from happening again? These slower times provide opportunities for companies across all industries to review their processes in preparation for the upswing and learn how to identify future downturns more quickly. Several companies have a major lag between the time they realise demand has slowed and the time it takes to adjust. Most commonly, I fi nd this is due to disconnected and siloed information across the enterprise. The recent slowdown has led to the discovery of a breakdown in communication and data sharing between sales, production and fi nance. Th is lack of accurate and timely data sharing leads to delayed reactions and limits the flexibility to proactively respond. The cause of this is mostly a horrible reliance on disparate systems of information across the enterprise that must be manually consolidated. Companies of all sizes are prone to this and many still rely on what I call a time-lagged, stagnant collaboration, otherwise known as Microsoft Excel. Th is data is static, based on the moment in time it was pulled from the system. By the time it is passed
from department to department, the information could be weeks old and full of errors from manually re-entering the information as it climbed the corporate chain. It’s time to start learning properly from the past and revolutionising this process. No one can argue it has certainly been a rough road and some dark days still loom on the horizon, but companies should stop second-guessing the decisions of the past. Most businesses have put as much attention on cost-cutting efforts as they need to and now is the time to focus on developing the processes that can help spur growth. If this recession has taught us anything, it is that we must be forever vigilant and that we cannot always simply accept the information placed in front of us unless we understand how it was derived. Just because something works, it does not mean that it should be left alone or is more beneficial than another process. Status quo is not always best. Stringently evaluating business processes and making the necessary changes in corporate strategy and behaviour, combined with investing in new technology, can help position companies to capitalise on new opportunities the eventual economic resurgence will bring. These changes can also help companies
prepare for the next downturn. As we move through this period of reflection, take notice of the warning signs pertinent to your company. These signs are not the macro indicators, but the micro effects of a forthcoming downturn specific to your company. Visibility is knowledge, and knowledge provides the power to act. Organisations must gain greater visibility across the enterprise by scrapping manual, disparate spreadsheets in favour of integrated performance management solutions based on an enterprise-wide database. Th is empowers organisations to utilise data to accurately evaluate current performance and pinpoint the underlying factors that affect it. Furthermore, by aligning valuable resources with corporate objectives, executives are in a position to act on this information, making real-time adjustments to actual, budget or forecasting processes given the existing market climate. Furthermore, companies benefit from enhanced fi nancial and operational planning, flexible budgeting and realistic forecasting. When organisations can combine meaningful reporting with analysis, they are able to better monitor and control performance that leads to improved decisionmaking. It’s time to start learning.
Christina McKeon, Director of Product Marketing and Performance Management (PM) at Infor, is responsible for driving Infor’s global PM strategy. McKeon works with users, managers and executives within organisations to understand market drivers for PM. She has more than 17 years’ experience including working for manufacturers of power management devices and pulp and paper products.
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MICHAEL THOMAS_7jan10 25/01/2010 10:22 Page 110
CUSTOMER FOCUS
A social approach Michael Thomas offers his opinion on using the recession to add social CRM practices to your CRM strategy.
O
ne of the most common questions that I am asked is how can companies leverage and improve their CRM practices during the recession. How can they weather the storm and keep their most valuable asset – the customer – during this time and continue to add new business to their customer base. I start off answering the question by using the analogy of the yellow caution flag in a Formula 1 race where the flag signifies a hazard and all cars must slow down and hold their position until it is safe to resume the race. Holding the position is one thing but there is a lot to be gained during that time especially during a pit stop. My point is that what you do during this slow down will affect how you will proceed when the green flag signifies the end of the slowdown. Companies need to take a look at their CRM strategies during the pit stops of this slow down and make adjustments that will allow prospects and customers to engage with you more efficiently and effectively. I have heard that 80 percent of your business revenue is from the top 20 percent of your customer base. If this is true then reaching out to the top 20 percent is where you should focus your time. Take the time to pull them in and get their input and feedback. They too are struggling during this time and acknowledging this by discussing ways your company and solution can help them weather the storm will earn their loyalty and advocacy. This open collaboration and conversation will set the stage for future trusted communications. There are two major areas to address that will position your company in a positive light during this recession: focusing on the social customer, and understanding that the social customer is a mobile customer.
The social customer Companies that have been speeding along at a steady pace will slow down to find that a lot has changed. The need for foundational CRM strategies will always be there but customers and prospects are now in the driver’s seat in their in-
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teractions with you. Companies will now have to engage with them on their terms. The customers are now in control and are known as social customers. A new strategy called social CRM will need to be in place to meet them on their terms. Paul Greenberg, bestselling author of CRM at the Speed of Light defines the social CRM customer this way: “CRM is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.” The “ownership of the conversation” gives the power to the customer because they have the tools to express themselves in ways that can hurt as well as help your company’s image. Another component focuses on the way prospects find out about you. It usually begins with a search and the ability to show up in a favourable way in the search results will set the pace of how and if they will engage with you. Social tools such as blogs, social networking sites and Twitter are some of the tools of choice for customers to spread the good, bad or indifferent about your company. These same tools can be used by companies to open up new lines of communication with the audience. I will use the three components of CRM to address some social CRM practices companies should implement to engage their audience: Marketing: SEO (Search Engine Optimisation) plays a major role here. Adding a social channel to your marketing efforts may be as easy as setting up a Twitter account or Facebook group to start out with, but the key is to have activity around your company and brand that people can find. In addition to adding this channel is the ability to monitor what is being said about your brand, utilising something as simple as Google Alerts as well as other listening platforms such as Radian6 to monitor those conversations in order to engage or diffuse effectively and
quickly. Do you have a ‘follow me’ tab for social media avenues in place? Sales: Once your company and products are found, how are you engaging with the prospect to make sure lead scoring strategies are in place to route to the proper sales person or to make sure they go to the shopping cart? Do you know the right behaviour, web clicks and actions to keep their interests to entice them to buy? This could be as simple as tracking what they are looking at and if there is an area on your site where people can comment and rate your product. Taking the time to monitor this behaviour will assist in integrating the action into your lead generation processes. Is your sales team on board and interacting with their prospects with social media tools? Service: This is one of the key areas to address with social media because customers are known for expressing their opinions and frustrations over the web. Having a method to address their concerns early will prevent bad information from spreading quickly. Monitoring Twitter and engaging with customers on updates, solutions, new features and other pertinent information will keep them in the loop and give them the confidence that you are aware of what is being discussed.
The mobile customer While addressing the social media component of CRM, it is equally important to understand that the social customer is also a mobile customer. The understanding that they are searching, interacting and doing business with you most likely will be from a mobile phone or smartphone. Your company’s communications will need to be flexible in order to reach their desktop or mobile device. Giving them practical options of engagement will make it easy to communicate and do business with you. Now is the time to embrace this new median and put social CRM practices into play. You will have to adapt to your customer or face losing them. n Michael Thomas is National President and National Board Member of the CRM Association.
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iEnterprises ed_4August 25/01/2010 13:07 Page 112
EXECUTIVE INTERVIEW
used functions are today, and what the needs are for the future. How broad is the functionality? Can it grow with you? Are you locked into only one deployment model such as software as a service or on premise? Companies often overlook these details and end up suffering when deployment begins. The last feature to consider is mobile access. Eventually, most companies will arrive at the intersection where they have multiple BlackBerry and iPhones and need to maximise those devices and air time investments, and get greater usage from their existing CRM. Most executives want to make their employees’ lives easier, and help them with productivity. If an employee needs to check if a deal has been closed, he should be able to do that within seconds from a customer site.
Putting your customers first Mark Creasey, Managing Director for iEnterprises Europe, discusses the importance of CRM, especially during the worst recession for decades. How is CRM technology helping companies to spread sheets, emails and other different locaretain customer loyalty in these difficult fitions and make that centralised for easy access nancial times? and viewing. A successful CRM gets teams and Mark Creasey. Customer confidence and securdepartments sharing information so customers ing new leads within new marare better served. kets is hard to achieve during tough times. Executives tell us What are the top three feathat when times were good, they tures companies should look were “maxed out,” meaning that for in a CRM system? they were fully staffed, and leads MC. The first feature companies were generated primarily by should look for is ease of use. word of mouth. Now, they reToday, nearly everyone works quire more insight. They want to from their email inbox so it’s logiwork smarter at finding new cal to operate the CRM system dileads and collaborate more on rectly from that inbox. Ease of use Mark Creasey is Managing existing opportunities. A good also impacts user adoption, and in Director of iEnterprises Europe, a global provider of flexible CRM system helps companies turn, return on investment. The desktop and web-based CRM software, and wireless better understand their own goal is to help employees work solutions for the BlackBerry customers. It gives them visibilmore efficiently and effectively and and iPhone. With over 20 years of business technology ity into customer interactions achieve their targets; CRM should experience, Creasey advises clients on CRM and wireless so pockets of missed or new opnot be something imposed by strategy, implementation and portunities are identified and management strictly for analytical best practices. quickly acted upon. Sales, marpurposes. keting, customer support and Flexibility is the second executives gain information that was previousfeature companies should seek out. Companies ly hidden away on individual laptops, Excel need to think about what their most widely
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How can companies ensure that they are a customer-centric organisation and what pitfalls can be made when trying to achieve this status? MC. Customer centricity starts with a mindset and needs to be cultivated from the top down. One of the biggest pitfalls that companies encounter is they feel they can buy a piece of technology and that solves all issues. You need to do some soul searching and pinpoint what are indeed your top priorities, whittle them down, and build a strategy and processes to ensure that those priorities are met. The system must support the business strategy, not lead it. The most successful companies come in with a plan, and backfill. They say we want 20 percent growth next year, so what are our people going to do to get us there? We know if we land a certain number of leads, retain a certain percentage of customers, and conduct marketing campaigns that we can measure progress month over month, we will get on track. If that vision is not there, the CRM system cannot give you 20 percent growth. What emerging CRM technology trends will shape the way companies deal with their customers in the future? MC. I would most certainly keep an eye on mobility. We are a mobile workforce and typically always on. With the BlackBerry or iPhone, everything takes just seconds to access so you are free to carry out the tasks rather than searching for information. By marrying CRM with mobile devices, customer issues can be resolved faster. n
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FINANCIAL SERVICES
Staying one step ahead Edinburgh-based Standard Life has witnessed many ups and downs in the financial arena during its 185-year history. To find out how the IT side of the business has been affected by the recession and just why tech staff love working for the company so much, Julian Rogers catches up with outgoing CIO Keith Young.
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T
here is a perception, rightly or wrongly, that IT is a particularly fickle industry with technology professionals swapping jobs with almost the same frequency as they change their socks. Indeed, a statistic sometimes banded about is how even CIOs are thought to spend only around four years in a job before upping sticks and moving on. Keith Young, however, is the exception to this philosophy, having notched up nine years in the top tech seat at Standard Life. Altogether his career at the Scottish firm spans 22 years, having worked his way up the IT ladder and various management roles. Likewise, Standard Life’s outgoing CEO, Sir Sandy Crombie, joined the company’s embryonic IT department back in the 1960s, programming code that is still in use nowadays. Around 1000 of the 10,000strong workforce based in the UK, Europe, North America and Asia are involved in IT and their average length of service is just over 13 years – an impressive stat in anyone’s book. Perhaps more surprising is the fact that management near the summit of Standard Life’s IT hierarchy have an average of 20 years’ experience each at the company. “IT professionals tend to move around quite a lot, and that seems to be a fairly typical model in the industry, but we are definitely atypical,” Young reveals in a distinct Scottish brogue. Many of his long serving IT professionals were recruited as trainees, brought through the ranks to management and have chosen to stick with the company. “The way you keep hold of your most experienced and best ones is by making them feel valued,” Young explains. “You have to spend time with them, you have to make their opinions count and you have to give them careers that play to their strengths.” Of course, not everyone earmarked for management fulfi ls their potential; others feel removed from the job they originally trained to do. In order to address this “technical streams” were established to allow staff who excelled at perhaps development, design or analysis to specialise in their area of expertise. “We allowed the very best staff to rise into senior management positions with their divisions so that they didn’t have to move away from their specialism in order to have a valuable career with us.” Allowing staff to move up the ladder
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and still hang onto their technical expertise and experience is fairly unique but one that seems to work here. Although Young still casts his net outside Standard Life’s four walls when looking to recruit, his preferred option is to promote from within. After all, internal staff have the knowledge of what the company is all about and have absorbed its culture. Young says choosing to favour hiring non-Standard Life people damages morale and means risking losing key staff. “If you regularly recruit staff into senior levels rather than promoting from within, the message you send to your staff is that they’re not valuable and, therefore, you will encourage them to look elsewhere for opportunities.” Young also has a trainee programme in place that takes junior IT professionals on board every year and invests in their development. They go through rigorous tests to make sure they are the right candidates and great team players with the ability to collaborate effectively. Being an intellectual individual is not what Young is looking for. Next year Standard’s IT numbers will have to swell to cope with the injection of some serious money into the department as the business and the industry as a whole emerges from the deepest recession in decades. Young and his management team will be on the hunt for experienced people, especially project managers and senior analysts. “There’s always business cycles – kind of boom and bust situations – and you need to make sure you’re in good shape actually going into any of these storms.”
challenging talented people. A key component of the IT strategy is the group’s service-orientated architecture (SOA) which has saved around €26 million to date by replacing legacy systems like the customer database application and reducing the complexity of developing other applications. The amount saved is based on what it would have cost for Standard Life to build each unique business service every time an application was developed. Altogether Standard Life has written a catalogue of 500 business services and the leading ones are used in more than 50 applications. “If you architect it properly and you write the business service once, then it can be used across many applications.” Although Standard Life doesn’t have as many legacy systems as its peers due to a low level of M&A activity, some legacy programmes needed to be refurbished and others re-written. “They decay over time simply because business changes or the systems start to get used for functions that they were never designed to be used for, and that’s where some of the problems come,” he warns. Some of the legacy programmes had been altered so many times that they were destined to become impossible to maintain unless steps were taken. “We took them and effectively redesigned and rewrote them before putting them back in place.” Young likens the situation to a railway with lines criss-crossing the network. “Some programmes are used by almost everything, and they become key programmes, and it’s these ones that we took out, redesigned, recoded and put back into production. It means that our legacy systems are more manageable than they would be if you just allowed them to decay.” As well as the refurbishment, the strategy also provides consistency across all channels, which means information sent out to the customer, passed to a call centre operator or uploaded to the website uses the same business service. “The results that you get when we write to you or if you contact us over the phone or the net will always be the same and consistent,” Young explains. On top of this, Young and his team has shrunk the data centre and slashed its carbon footprint by more than 70 percent through virtualisation. In fact, the overall cost of Standard Life’s all-important IT has reduced by over 75 percent since 2004 – the year the group demutualised.
Around 1000 of Standard Life’s 10,000-strong workforce is dedicated to IT
Handling a crisis When Young mentions a storm he is, of course, referring to the hurricane of the past couple of years with the meltdown in the banking sector and subsequent credit crisis and recession. Unlike some CIOs, Young is quick to dismiss any notion that he is being asked to do more with less. On the contrary, it’s been pretty much business as usual for the IT side of Standard Life, although he fully expects increased legislation for the fi nancial institutions in the wake of the industry’s economic meltdown last year. “The economic problems of the last 18 months didn’t result in us making major cuts in IT,” he asserts. “In fact, our running costs in investment in IT for 2009 is pretty much the same as it was in 2008 and that investment is actually going to be increased in 2010 to prepare us for coming out of the recession.” He adds: “Although it was business as usual in 2009, we kept an eye on what was happening in the markets to be aware that we might have to make cuts should things get any worse than they turned out to be.” With turmoil in the fi nancial sector and the recession affecting most businesses, Young issues a note of caution about making snap decisions based on the short-term outlook rather than a long-term forecast. “You need to invest for the long-term because this isn’t like selling commodities where one time the market will be very high and then the market falls and you have a big programme of cuts to deal with it. We tend to have a more consistent approach to investment because you are dealing with the long term as you ride out the storms.” Earlier this year a drive for operational excellence was announced in order to be as “efficient and effective as possible”. It was also about reducing silos across Standard Life globally as well as developing and
Evolution over time With his career at the institution stretching back to 1987 when he arrived as an analyst, Young has seen IT evolve from a back-office function into a real ‘game-changer’ and business enabler. Back then the IT function was a very much inward-facing component compared with today’s customer-facing outlook. Indeed, in one way or another the IT department is often the only contact Standard Life’s 6.5 million global customers have with the business, which offers life assurance, pensions, investment management, banking and healthcare insurance products. “We didn’t used to have any direct contact with customers but that changed significantly and is continuing to change with the growth of the internet and services being provided over it,” Young notes. “Twenty-odd years ago most of the contact with customers was
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“There’s always business cycles – kind of boom and bust situations – and you need to make sure you’re in good shape actually going into any of these storms” via paper, then it moved to and is still predominantly the telephone, and now it’s increasingly moving towards the internet.” Being able to capitalise on the internet as a way of serving your customers can prove invaluable in retaining customers and cutting costs in other areas. “If you can take advantage of the web you can do two things: you can give your customers a great service, and you can cut your costs because you don’t require big call centres handling customers’ calls.” With the advent of better technology the back-office function has switched to the front in some respect, as Young explains. “When the customer contacts us over the web and they’re coming di-
rectly into the IT function, no other staff are touching that on the way, so it means you need to be secure, reliable, always there and give them the information they need fi rst time.”
Looking back Young, who is gearing up for his retirement at the end of the year – a period of his life he is “very much looking forward to”, says excellent leadership skills have been the most important aspect of his job. He admits, however, that it is a challenge maintaining regular contact with 1000 staff and getting his message across and explaining his strategies. Nevertheless, Young holds face-to-face meetings with employees and regularly attends team meetings. He’s even produced a DVD of himself delivering important messages and has used the media to get his opinion across. “What I need to concern myself with is making sure they understand what they are supposed to be doing and the things that are important, but I don’t have to worry about their technical competence.” So is he a ‘hands on’ boss? “I wouldn’t say I was and I don’t think my staff would describe me as this either, although it is necessary to get involved in some specific issues to some detail. You also need to recognise that some things could potentially cause trouble but these are few and far between.”
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ASK THE EXPERT
MAKE THE CHANGE Colin Rowland offers his thoughts on de-cluttering your organisation’s IT.
A
n IT department was once relatively simple. A server, a few computers, perhaps some firewalls, an internet connection and a help desk. Staff came to work to write documents, make phone calls and not much more. Today, work is supported by computing at almost every step of the way. In turn, IT departments vary in size, budget and platform but have come to share one striking element – complexity. As businesses have become ever more reliant on technology, so IT has built an intricate jigsaw puzzle of technologies. A typical scenario is that no business in its right mind is going to install a hugely expensive infrastructure without taking steps to ensure it works properly. So another system has to be installed to ensure the first one is performing. This layering of systems to monitor the solutions has spiralled out of control. Our recent research in the UK found that three-quarters of businesses admit they are blinded by the complexity of their IT management set up. But what surprised us more is the estimated cost. Almost two thirds of respondents admitted that complex and ineffective IT management is costing their company €5.3 million each year in downtime and staff time, on average. So how has it come to this? It is partly because there is no holistic, end-to-end picture of IT that its managers need; CIOs have been forced to take a segmented approach to performance management
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In seeking to protect investments and ensure they deliver, IT departments have ended up with information overload that hinders resolution efforts. What businesses need is for their IT departments to be able to assess quickly where the problems are, and avoid them. IT is made up of many applications and systems each performing small tasks to get user transactions completed. By generating visibility into these transactions IT management can be simplified. Each transaction from a user ‘travels’ through the system. By capturing and tracking all transactions, across all IT tiers, all the time, organisations can see the impact that transactions have on the business. But most importantly, each business transaction provides clear evidence to how an application is performing and if there is trouble on the horizon.
Costs Another advantage is that transactions also tell the cost side of the IT story; they make it easy to identify and resolve performance problems
“Businesses have to be leaner and meaner – they cannot afford to have a reactive technology infrastructure ”
by implementing partial solutions that monitor individual technology silos. We found that almost one fifth of companies were using more than five tools to monitor the performance of IT.
Support This partial approach is financially draining and does not give businesses the support they require. For example, when a performance issue hits online banking, often the first time the IT department knows about it is when customer complaints flood in. In spite of the five monitoring tools, pinpointing the problem will still be like trying to find a needle in a haystack – or multiple haystacks. Industry analyst group Enterprise Management Associates estimates that more down time (54 percent) is spent finding problems than fixing them.
swiftly but also to optimise the cost of performing those transactions. An approach that was fit for purpose 10 years ago, simply no longer cuts the mustard. Businesses have to be leaner and meaner – they cannot afford to have a reactive technology infrastructure where the systems manage the business rather than the other way around. Simplifying IT management is, in many ways, akin to clearing out your wardrobe. It might be painful to part with that tan leather jacket from the 1980s but you know it has to be done. n Colin Rowland is Senior VP Worldwide Sales at OpTier. Prior to OpTier, Rowland was SVP of Operations for EMEA at Opsware, a data centre automation software company (since acquired by HP). Before this, he was responsible for building Mercury Interactive's Application Performance Management business unit in EMEA through its high growth phase.
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EXECUTIVE INTERVIEW
Capture the moment Business Management sits down with Thomas S. Senger of Kofax to discover the tangible benefits of enterprise capture. How would you describe the concept of enterprise capture? Thomas S. Senger. Document capture has evolved far beyond its roots in simply scanning to archives. In parallel, traditional centralised capture processes or fragmented capture implementations within large enterprises, where localised departmental solutions have been focusing on specific types of documents, turn out to be a thing of the past. Today, we see a growing trend towards combining basic document capture with data capture at the earliest possible moment: right then, when documents of all formats are initially received in an organisations through multiple contact points in order to feed and initiate transactional and time-sensitive business processes. Th is combination of document capture and data capture in distributed environments is what is called “enterprise capture”. It’s a solution approach, that is literally exploding in all transaction-heavy industries like the fi nancial services sector with its hundreds of thousands of payables, receivables and claims that need to be processed on a daily base. Where do you see the main benefits of this approach? TS. The key advantage of taking an enterprise approach to document capture is the ability to
immediately deliver extracted and transformed data directly into business systems. Moving from “scan-to-archive” to “scan-to-process” has profoundly changed the strategic importance of capture as an enterprise standard. The resulting increase of speed, productivity and accuracy translates directly into competitive advantages. By capturing business-critical data at this early stage and by feeding the won information into an enterprise’s various backend systems, employees in all departments have immediate access to this data and can initiate the respective business case as soon as possible. At the same time, document preparation and transportation costs associated with capture get reduced significantly. Besides these benefits related to efficiency, compliance is also a driver for enterprise capture adoption. Operating a common capture platform helps to facilitate records management and e-discovery processes and documents can be controlled more efficiently. What should companies take into account when they plan to invest into an enterprise capture solution?
TS. The fi rst step in establishing an enterprise-based approach to document capture is to carefully review the types and formats of information that is entering an organisation. Wherever paper-based information is present, both front-office and back-office operations should have ready access to document scanning tools rated for their peak volumes. Ease-of-use is critical for front-office staff to ensure that converting paper to electronic form becomes routine. A clear understanding of what data is needed by various business processes will help when selecting the right classification and extraction tools that can be used to further automate manual handling and reduce bottlenecks. It’s important to have each department in a transactional workflow represented when making these decisions, as information that is critical to one area may be of little significance to another department. However, the key question is probably: is the new system affordable and can it provide a good return on investment? Kofax has become the leading provider of document driven business process automation solutions. What specifically makes Kofax enterprise level solutions so successful? TS. Well, because we can answer all the questions above with yes. With now over 20 years’ experience dedicated solely to document capture, we are able to provide a single, unified platform for enterprise capture which strictly adheres to a scalable, standards-based, consistent architecture that easily integrates with the largest variety of existing systems. Our solutions deliver a ROI typically within the fi rst 12 months – an argument that gets even more convincing in the fierce economic climate we’re facing these days.
Thomas S. Senger is Kofax’s SVP of Applications Software & Services EMEA. Senger oversees all customer-facing sales and services functions in alignment with the company’s newly-introduced hybrid go-to-market model, which supports both direct customer engagements and indirect sales through channel and with alliances partners.
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HOSPITALITY
Domino’s Pizza has left no stone unturned in its battle to conquer the European online fast food market. Business Management meets its IT Director JANE KIMBERLIN, the brains behind the newly launched Domino’s iPhone application and online pizza tracker service.
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TAKEAWAY TECHNOLOGY “We had a look at our customers’ technology and saw that 85 percent of our customers use Windows, the next percentage up use Mac, then around 4.2 percent are on the iPhone, so we thought we must do something for them”
T
here’s nothing new about pizza delivery. But thanks to an aggressive technology and marketing strategy, Domino’s Pizza has taken the concept to a new level. No longer content to provide telephone and online ordering facilities, Domino’s now allows customers to order their pizza over their iPhones and even track how long it will be before the food is delivered. The brains behind this takeaway technology is Jane Kimberlin, Domino’s Pizza’s UK IT Director. Speaking on the eve of the 10th anniversary of Domino’s’ online launch, she describes how strong demand is from customers ordering pizzas from its website: “Online ordering has been increasing over the last four years from 10 percent, 15 percent, 20 percent then 25 percent. We had a mega week two weeks ago, which broke every single record so far, at 34 percent. Demand is growing all the time and it’s obviously helped by broadband which means greater use of the website. Word of mouth, but also the whole digital marketing arena, are very important.”
Online ordering Although the majority of customers still order their pizzas by telephone, Kimberlin says she predicts that proportion will eventually drop in favour of online ordering instead. In the meantime the company has launched a bid to target even more customers with its iPhone applications. Kimberlin describes the thinking behind the launch of the technology: “We had a look at our customers’ technology and saw that 85 percent of our customers use Windows, the next percentage up use Mac, then around 4.2 percent are on the iPhone, so we thought we must do something for them. It’s taken off very well indeed. We’re delighted with the numbers – we’ve had thousands of orders through already on the URL.” She goes on to say that the application was designed to match as far as possible other iPhone applications in terms of functionality and appearance: “You go straight into a website that has been enhanced for the iPhone and it deliberately looks very ‘iPhoney’. It’s very intuitive to use and very advanced. It has all the functionality of our normal site – the deals are there and you can still customise your pizza.” Despite having made pizza ordering a much more techni-
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cally advanced process, Kimberlin says the company is keen for this not to impact on the job of Domino’s’ frontline staff. So it has designed the system so that all orders appear the same on the in-store system, regardless of what channel they came through: “The back office side of our stores is the point of sale system and all orders simply integrate into that regardless of whether they are iPhone orders, or whatever. All orders go straight through to the point of sale system and appear there. Our staff are fantastic and good customer service is about making pizzas and delivering them. We don’t want them to be distracted into dealing with technology.” It’s a long way from the online ordering system that was fi rst launched 10 years ago when orders were delivered to the various stores by fax. But, says Kimberlin, there is still room for improvement in the way the system is run: “IT is constantly evolving at Domino’s Pizza. We invest in it all the time. Every time we have a record event on the website we go back and look at where the pinch points were, whether we had the right levels of connectivity, if the right fi rewalls and servers were in place and if we had the right pipes to the internet.”
High flier When she’s not deploying new technology at Domino’s Pizza, there’s nothing Jane Kimberlin likes more than to take to the skies with her pilot’s license. “I probably fly about once a fortnight, generally locally around the area, maybe just to a little airfield. I do it for fun in the evenings. Sometimes I say to my colleagues ‘Let’s go for a quick trip’. But for longer trips I’ll go with a fellow pilot and just a small overnight bag. It’s a great way to unwind because you have to 100 percent concentrate when you’re flying. Nothing can get into your thought process to interfere with that.” The active CIO recently organised a charity challenge to coincide with her 50th birthday – organising for 50 people to ride 50 miles each to raise money for Macmillan Cancer Support. To find out more log onto: www.justgiving.com/ bike50miles.
Behind the scenes Kimberlin is also involved in the IT that goes into running Domino’s as a business and says there are various major projects in the pipeline, including the possible introduction of cloud computing and new CRM technology. Regarding the latter, she says: “I think that is certainly within our arena. We know where you live and we know all about you and your eating habits. But CRM is more about how good your customer experience is and what we can do to make that better.” Th is increased amount of customer data, which is highly valuable to Domino’s when putting together its marketing strategies, means it runs a large and complex data storage system: “We have a massive data warehouse for every single imaginable statistic that we can measure. We’re always adding to and enhancing that system.” One of the enhancements the team has made is to ensure the data is available to the managers of its 570 stores – wherever they are in the UK: “We’re a franchised system and most of our franchisees have more than one store. You can’t be in two places at the same time so what we have is a facility which allows them to look at all sorts of information in real time on their Blackberry or PDA or whatever mobile device they have. It’s a simple URL link from wherever they are. So if you are a franchisee for 10 stores for example, you can see how many orders you’ve had that day, whether that is up or down versus the previous week and even your service staff ’s out of the door times. And it’s refreshed regularly so minute by minute the information is updated.” Kimberlin says Domino’s is keen to explore the possible benefits of cloud computing for the organisation, however she says the company, though normally ahead of the pack when it comes to technology, is taking a more cautious approach to this particular branch of IT: “We won’t be an early adopter in this arena but it’s more about looking at
what benefits there will be and how they will be delivered. We will be looking at it from a potential disaster point of view, and in terms of cost of ownership. Everybody’s talking about it so let’s have a look at what it can do.” She goes on to say that her team is also looking into the possible adoption of VoIP within the Domino’s headquarters however, VoIP within the stores themselves is at least two years off. Where the team will be focussing serious efforts however will be in the area of social media, which the company is already capitalising on heavily to market its products: “The whole social media and the mobile arena in particular are two of the areas that we’re very focussed on. It’s really all about looking at our customer profi le and where they are. Some of our stores individually, for example, have a Facebook page. We also take advantage of things like Google Ad words and SEO opportunities. We don’t want to just be about selling people pizza, we want to be part of their lifestyle.” Th is wish to connect with customers has extended to getting them involved in tracking the pizza making process. Domino’s in the UK has recently launched Pizza Tracker – an application which has been available in the US since January 2008. It allows online customers to track exactly what stage the pizza making process is at and how close the food is from delivery. Kimberlin admits she could not have predicted how high demand for the application would be in the UK: “We were inspired by the US on this one, because when the application fi rst came out we just thought ‘this is a bit sad actually. Who’s going to sit and watch the tracker for 20 minutes?’. But we’ve had amazing success from it.” She goes on to reveal that on average 34 percent of customers that order pizzas online use the pizza tracker facility. She says this Jane Kimberlin is no surprise given the number of customers that
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Everything you ever wanted to know about pizza… Pizza is a €23 billion per year industry. Domino’s delivered 400 million pizzas last year – that’s a pizza (and a slice) for every man, woman and child in the United States. Domino’s World’s Fastest Pizza Maker Dennis Tran makes three large pizzas in just 46.4 seconds. Domino’s drivers cover nine million miles each week in the US alone. (That’s 37 trips to the moon every week!) About Domino’s pizza The Domino’s brand was founded in the US in 1960 by Tom Monaghan. Since then, that business has grown into a global network of over 8700 stores in more than 60 countries, employing around 180,000 staff and involving over 2000 franchisees. DPG is the master franchisee of Domino’s Pizza in the UK and Ireland. Since the business was purchased from DPII in 1993, it has developed to become the leading UK home delivery pizza brand. Since the first store opened in the UK in 1985 and in Ireland in 1991, the group has expanded to 583 stores (as at 27 September 2009) in the UK and Ireland. Of these stores, 456 are located in England, 45 in Scotland, 22 in Wales, 14 in Northern Ireland, 45 in Ireland and one mobile unit. The group’s total annual system sales for the 52 weeks ended 28 December 2008 amounted to €392.8 million, representing growth of 18.4 percent over prior year sales. The Group’s operating profits from continuing operations increased from €20.5 million to €25.6 million over the same period.
would phone the stores to fi nd out what time their pizza would be delivered prior to Pizza Tracker being launched: “I spoke to my colleagues in the US and they said people use it more for feedback and assurance. They were surprised themselves by how well it has taken off.” Domino’s is not the only European pizza delivery company that is investing in online and social media technology to grow market share but Kimberlin says that as the leader in the field, Domino’s still remains ahead of the pack: “One or two of our competitors do online sales and we monitor that carefully. What we believe is that we have a far better product than them because we use fresh dough, fresh cheese and fresh sauce. We stole the march on this technology and it’s hard for others to catch up now. We feel we offer an all-round better experience.” And despite working in an environment where she is surrounded by pizza every day, Kimberlin says she still regularly indulges in a slice or two: “At Domino’s we’re obsessed with pizza. It’s absolutely what we think about the whole time. I do love pizza. It’s unlike chocolate where if you have the chance to eat as much as you want, you do eventually stop. With pizza it never feels like that. Pizza is part of my balanced diet.”
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EXECUTIVE INTERVIEW
It pays to go mobile The mobile payments market is set to explode into a €400 billion industry by 2013, as expert Thomas Bostrøm Jørgensen explains. What drives the mobile payments market, and makes it such an important growth opportunity? Thomas Bostrøm Jørgensen. Significant opportunities for cost savings and increased revenue drive the market. Innovative mobile payment strategies enable organisations to transform the way fi nancial services are delivered by introducing a new mobile channel. The statistics prove the importance of the market, showing the explosion of mobile phone usage and concluding that the mobile payments market could be worth as much as €414 billion by 2013. In developing countries mobile banking services even support a paradigm shift in fi nancial transactions by bringing banking services to ‘unbanked’ populations. Mobile payments solutions providers such as Luup give access to new business models and service offerings including branchless banking, mobile payroll solutions and money transfers. What benefits and competitive advantages can organisations gain by rolling out mobile payments strategies? TBJ. Let me reply by asking back: would the readers of this article like to access new customers and revenue streams, reduce costs and increase operational efficiencies? I am sure the answer is yes. And with mobile payments solutions, organisations will gain clear competitive advantages. They can, for example, better service their customers with faster, more convenient services, increasing satisfaction. Th is in turn contributes to retention, up-sell and cross-sell opportunities. Moreover, cuttingedge branded mobile platforms appeal to new target markets enabling brand differentiation, customer acquisition and new revenue. Could you outline Luup’s credentials and your approach to servicing customers? TBJ. Luup has been developing and operating mobile payment solutions since 2002 and was the fi rst company to hold a full European e-money license. We know how to meet chal-
lenging fi nancial services regulations and support our customers with innovative strategies. Our customers chose us because we offer the
TBJ. Luup devised strategies for fi nancial institutions such as Deutsche Bank Global Transaction Banking, MoneyGram International and leading UAE bank, the National Bank of Abu Dhabi (NBAD). With NBAD we developed a SMS-cash-service that was the fi rst of its kind, enabling mobile money transfers and ATM cash-out to anyone, whether an NBAD customer or not. Person-to-person mobile money transfer and person-to-merchant bill
"In developing countries mobile banking services even support a paradigm shift in financial transactions by bringing banking services to ‘unbanked’ populations" most effective combination of credentials to be successful: a highly experienced team, innovative technology, neutrality as we are not tied to specific mobile networks and a convincing security model. Our responsive, customercentric approach allows for tailored, white label applications development. Customers can also leverage Luup’s remittance and payments gateway across networks and geographies.
payments are up and running and soon we are adding a mobile remittance service. With Deutsche Bank on the other hand we are planning instant and secure mobile payments services to client banks and corporations in 80 countries.
Which businesses other than financial institutions can benefit from mobile payments solutions? What are critical factors to success? TBJ. A wide range of businesses and organisaTBJ. There are many, but as we operate in an intions can reap benefits from Luup’s comprehennovative, at times challenging market, it is crusive portfolio of solutions. Corporates and their cial to help organisations participate as smoothly treasurers, remittance networks, governments as possible. Luup’s modular as well as not-for-profit orportfolio of capabilities for ganisations, all can achieve example can easily be selected significant operational effiand combined to create the ciencies and cost savings. We most efficient, fastest possible are, for example, pioneering market rollout. Full compliance a proposition for corporates with financial regulations and with large supply chain disthe highest standards are crititribution networks, which cal too to gain end-user buy-in enables treasurers to transfor rollouts. That is why Luup’s form B2B processes and cash unique credentials in the finanmanagement. Corporate cial sector are vital and we focus end-users can make and on customers with a financial receive payments, authorise Thomas Bostrøm Jørgensen is CEO for global mobile payments solutions services license or financially invoices and remotely initiprovider LUUP. He is an expert regulated partnership models. ate payments using a compaon innovative mobile payments solutions and business strategies ny mobile. So new solutions that enable organisations to securely transform the way financial services Can you give examples of offer real-time payments are delivered. Under his leadership, how Luup has enabled orcollection, convenience and Luup devised mobile payments strategies for a number of global ganisations to establish a the opportunity to reduce institutions. mobile payments strategy? operational costs.
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Mobile Payments Solutions
Would you like to reduce cost and access new revenue? We are sure your answer is yes!
And with Luup’s mobile payments strategies you can take advantage of innovative opportunities and our experience. Experience counts. Luup was the first mobile payments solutions provider to operate with a full e-money license. So we know how to meet the challenging regulations you face. And with proven, real life deployment experience gained in multiple markets, Luup is a partner you can rely on. In fact, we are celebrating 10 years in the mobile payments industry this year.
Gain more insights, please contact us at www.luup.com or +44 207 802 5062 (C) 2010 Luup International Ltd.
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ENERGY POLICY
ACTION ON ENERGY
EU Energy Commissioner Andris Piebalgs talks to Stacey Sheppard about the progress Europe is making in its pursuit of sustainable, competitive and secure energy supplies. The EU has set the target of 20 percent renewable energy by 2020. What is the likelihood that all 27 member states will be able to achieve this target by the deadline? What will happen if any of the EU members fail to reach the target and in what ways is the EU supporting the efforts of the individual nation states? Andris Piebalgs. The 2020 national renewable energy targets set by the new directive are not political objectives, but legally binding targets. Based on a detailed assessment of the European Commission, these are achievable, and we assume that they will be realised, as member states have a legal obligation. The Commission has provided assistance to member states in the preparation of the National Renewable Energy Action Plans. We will also assist with the monitoring and follow up of implementation. In addition to that there are several community programmes (7th framework Programme for Research, dissemination activities in the framework of Intelligent Energy for Europe programme) that are also supporting member states in the implementation of the directive.
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What is the Intelligent Energy Europe programme? AP. The Intelligent Energy Europe (IEE) programme supports the deployment of sustainable energy and contributes to the achievement of the general goals of environmental protection, security of supply and competitiveness. The programme stands for the removal of market barriers and the creation of a more favourable business environment with the aim of increasing energy efficiency and strengthening renewable energy markets (including clean transport). The IEE programme also seeks to raise awareness and change behaviour thereby fostering the understanding and better implementation of EU energy policy in Europe’s cities and regions. Intelligent Energy Europe (2007-2013), with a total budget of ₏730 million, builds on the experience gained from its predecessor, the first Intelligent Energy Europe (2003-2006) Programme. Since 2007, Intelligent Energy Europe has been included in the overall Competitiveness and Innovation Framework Programme (CIP) in order to tackle EU energy policy objectives and to execute the Lisbon Agenda.
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Specific actions eligible for IEE co-funding are detailed in the annual IEE work programmes adopted annually by the Commission after opinion of the programme committee and scrutiny of the European Parliament. The operational objectives and the priorities set out in the annual work programmes tie in with the most recent EU energy policy developments. The implementation of the IEE programme is largely based on two means: grants (call for proposals) and procurement (calls for tenders). Until now, the largest share of the IEE budget was allocated to small-scale projects (around €500K). Projects are selected and managed on behalf of the Commission by EACI (the Executive Agency for Competitiveness and Innovation). One of the main criticisms of renewable energy sources, such as solar and wind energy, is the fact that production is unreliable, supply is not particularly secure and it is very difficult to store the energy. What is the Commission doing to help overcome these challenges and appease the doubts of the critics? AP. The new directive requires member states to improve their energy infrastructure and the operation of it with the view to accommodating higher shares of renewable energy sources in the energy mix. Reinforcements, intelligent network solutions, new storage capacities, new interconnections, and revision of operational and market rules will all support this objective. It is true that certain sources are variable, but the difficulties can be overcome as we can see in the Danish and Spanish wind integration experience.
In what ways is the Commission working to improve the regulatory framework with a view to ensuring that the EU can benefit from a liberalisation of the internal market in terms of secure, competitively priced and sustainable energy? AP. The third liberalisation package adopted this summer is a big step in providing a proper regulatory framework for the EU electricity and gas markets. Firstly, the national regulatory authorities will become more independent from the member states’ governments and their powers will be enhanced. This is the backbone for the energy market regulation in Europe. Secondly, for the cooperation of regulators at the European level a regulatory agency will be created. This agency will have the important tasks of monitoring how the markets work, giving opinions on the work of transmission system operators and making binding decisions on European infrastructure. The agency will rely on its own staff as well as the resources of the national regulators. Finally, the third package provides a system to make detailed legally binding rules for the European energy markets. The Internal Energy Market increases the interdependence of member states in energy supply. In what ways would the development of a truly pan-European electricity super highway help to ensure solidarity between member states in the event of an energy crisis? AP. It is true that there is an interdependence of member states in energy supply in the Internal Energy Market. Interdependence means that a country does not take energy decisions in isolation but takes the opportunities provided by other member states into account. This is where huge welfare gains have already been reached and can further be developed. In electricity, an effi-
“The goal of the Commission’s SET Plan is to step in and support the technologies’ R&D and their deployment until this maturity is reached”
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AP. The diversification of energy sources, transport routes and suppliers is crucial for ensuring energy security; its importance has been underlined by the gas crisis in January 2009, but it was recognised also before the crisis. In the Second Strategic Energy Review ‘An EU Security and Solidarity Action Plan’ adopted by the Commission on November 13, 2008, the Commission proposed a number of initiatives aimed at increasing EU energy security. Despite the fact that at the EU level, gas supply is reasonably well diversified; at a national level, a number of member states rely on a single supplier for 100 percent of their gas needs and a number of others on just a few suppliers. Diversification is thus important to spread and reduce individual risk, as well as to fully benefit from an integrated and interconnected market-based system. The first of the five priorities of the Second Strategic Energy Review was ‘Infrastructure needs and the diversification of energy supply’. Within this priority, concrete actions have been proposed at EU level, including: the interEuropean transmission infrastructure is currently unable to maximise connection of isolated energy markets (including a Baltic Interconnection the benefits of renewable energy resources. What improvements need Plan covering gas and electricity), the development of the Southern Gas to be made to our infrastructure and how will this be funded? Corridors, the increasing of the capacity of gas storage and LNG to ensure sufAP. Our electricity system has to be adapted to the new circumstances: more disficient liquidity and diversity of EU gas markets, and the development tributed generation, more variable generation, more large-scale distant of North-South gas interconnections within Central and South(and variable) generation. The electricity transmission and disEast Europe. A Communication on the Mediterranean Ring tribution infrastructure has to be reinforced and new lines has also been announced for 2010. have to be built, incorporating intelligent solutions, buildBy 2020 renewable
cient transmission system is vital for reaching these welfare gains. In the history of electricity transmission the evolution has been to use higher and higher voltages in overhead transmissions lines. Currently it is the 400kV network that provides the backbone for electricity transmission. New transmission challenges are coming from integration of wind energy, in particular offshore wind, which needs to be transported long distances to the customers. Similar challenges face projects such as bringing solar electricity from North Africa to Europe. As these new transmission needs include transporting electricity in seas, cables using direct current technology seem suitable for this purpose. Some people think that direct current could also be interesting on land. As a result, a meshed direct current network could become a new pan-European electricity super highway, ensuring our renewable energy goals and enabling solidarity between member states.
ing new interconnections, using operational measures. By means of the Economic Recovery Plan, the EU has designated community funds for interconnections and offshore wind energy and other electricity links. The future financing of European energy infrastructure is also being discussed in the framework of the Trans-European Energy Networks (TEN-E) revision.
energy should represent
By 2020, it is estimated that the necessary capacity expansion for power generation will amount to approximately 360 GW, which corresponds to about half of the current installed capacity. As renewable enof total capacity ergy will only account for 20 percent by 2020, this obviously leaves 80 percent of power generation from alternative sources. What are the main priorities for the EU in Which of the member states are demonstrating the highest comterms of capacity expansion outside of the renewable energy sector? mitment to increased generation of renewable energy and improveAP. Fostering the transition towards a low carbon power generation system is ments in transmission infrastructure and how can they help those a high priority for the European Union. The massive deployment of renewmember states that are currently lagging behind to come up to the stanable energy in the electricity sector will require a lot of investment, both in dards required to meet the EU targets? power generation capacities and in transmission networks. By 2020, accordAP. I mentioned before the Danish and Spanish experience in wind energy ining to the scenarios prepared by the Commission in 2008, renewable energy tegration. The two cases are different: Denmark is strongly interconnected should represent 33 percent to 58 percent of the total power generation cawith other Scandinavian countries, making use of their hydro capacity in balpacity necessary to meet the future demand and to replace ageing facilities. ancing power. On the other hand, Spain can be considered as an island from Appropriate policies are needed to support this deployment. National plans the point of view of electricity infrastructure. for the promotion of renewables – to be adopted by member states in 2010 – But there is something common: they both have transmission system opwill be crucial. Any investment or choice of technology contributing to deerators (TSO) strongly committed to finding solutions and adequate answers carbonising the electricity sector will be relevant. to the challenges they face. They can serve as models, and the active participation of these TSOs in the European Network of Transmission System Renewable energy is currently quite a costly investment. What role will Operators for Electricity (ENSTO-E) in European research programmes, certechnology play in reducing the cost of renewable energy and how is the tainly gives an opportunity to make others aware of these activities. The Commission helping to support research and innovation in technology? Commission is also planning to launch a concerted action with the member AP. Renewable energy sources have traditionally gained the reputation of states on the implementation of the renewable energy directive, which will enbeing a costly investment. In the 1990s, this was true, as the oil price was low. courage exchange of experiences between member states. It is however important to realise that costliness is relative to the alternatives.
33-58%
In light of the gas crisis that we experienced last winter, how important is it that EU member states promote diversity of energy sources, suppliers and transport routes?
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As the oil price rose, even in the years before the financial crisis, renewable energy sources became more and more attractive. Another important factor is the price of carbon and its meaning. Carbon allowances are issued to or bought by those who emit greenhouse gases. This
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Electricity from renewable sources Share of electricity from renewable energy sources in total electricity consumption (%) – EU27 EU-27 BE BG CZ
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EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT means we place a price on emissions. Conversely, renewable energy sources have low or no emissions at all and therefore do not carry with them the price of carbon, as no allowances have to be bought. Technology is nowadays helping to reduce the production costs of equipment used to generate renewable energy sources. Production processes become mature and their costs are lower, while raw materials meet an increasing demand and factors of scale are reducing their market price. As a result, these types of product become commonplace, with more producers and a growing market putting pressure on price. We are, for instance, seeing this chain of maturity have its effect in the wind sector and some biomass areas. Solar photovoltaics are also likely to approach this level of maturity soon. The goal of the Commission’s SET (Strategic Energy Technologies) Plan is to step in and support the technologies’ R&D and their deployment until this maturity is reached. As such, we will be able to cover the cost-gap to traditional generation options until renewable energy sources are fully competitive, thereby mitigating the risk for market entrants. Today, we see the need to accelerate our work on technology. This
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implies an increase of the R&D budget level. In the Communication on Investing in Low Carbon Technologies adopted by the Commission on October 7, 2009, we set out the needs and technology roadmaps that can take us there. We estimate that we will need to spend €8 billion per annum, by public and private sectors combined, on the technologies identified in these roadmaps during the next 10 years. The debate on this is just beginning. Mobilising these resources will make a crucial contribution to achieving our 2020 objectives. n
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EXECUTIVE INTERVIEW
In safe hands An effective Environmental Health and Safety (EH&S) strategy can reap huge dividends for organisations across all verticals, says Chris Methven, Environment Director at IHS EMEA. How can a well managed EH&S programme bring a company cost savings? Chris Methven. A company’s ability to achieve cost savings depends upon its ability to collect, manage and report on a broad range of EH&S and sustainability information. High performing companies are leveraging integrated enterprise-level EH&S soft ware platforms and content services to uncover opportunities to reduce costs with emissionreducing process improvements. They look to eliminate redundant legacy systems and reduce labour costs to streamline delivery of emission and compliance reports, reduce emissions fees, waste disposal fees, monitoring and less frequent inspections. Our clients have documented major cost-savings through the use of integrated EH&S soft ware platforms. For example, Dow Chemical eliminated over €1.4 million in redundant emissions reporting systems, with the potential to save an additional €1.4 million over time. Reducing the risk of fi nes potentially avoids significant increases in operating costs and helps to assure accurate compliance with auditable and verifiable reporting. Oil and gas companies are now under increased pressure to comply with EH&S guidelines. How high a priority has this become at board-level within these companies? CM. Th is issue has become a very high priority, stemming from both regulatory and corporate drivers, resulting in widespread reporting and compliance initiatives. Key emerging regulatory drivers include the European Union Emission Trading System (EU ETS), Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and the UN’s Globally Harmonised System of Classification and Labelling of Chemicals (GHS). For example, under Phase III of the EU ETS, regulators will tighten the emissions
cap and they’ll be handing out fewer allowances to emitters after 2012. There are also corporate business drivers such as profitability, liability and innovation. These business drivers include EH&S topics including how emissions portfolios impact strategic asset and GHG cap and trade decisions, how management of hazardous materials manifests and minimises EH&S exposure, and the creative use of green solutions to preserve and build brand reputation. Finally we have corporate responsibility or sustainability drivers such as shareholder initiatives for greater environmental transparency to become more energy and natural resource efficient. Why would gaps in a company’s health and safety strategy lead to loss of revenue? CM. Businesses that achieve zero work-related injuries can realise several operational benefits
tentially equipment and facilities damages and associated repair or replacement costs. An integrated enterprise-level EH&S soft ware platform can significantly strengthen your company’s ability to assure worker safety and productivity. Another of our clients, Hunter Douglas, achieved a 50 percent reduction in injuries and compensation costs and an 80 percent drop in lost work days. Greater health and safety information transparency and insight enables decision makers to select or reject improvement investments based on risk impact and probability relative to potential recurrence. Compliance risks are mitigated, which improves a company’s reputation with investors, community and employees. Companies can also mitigate fi nancial risk and the lost revenue by returning to full operations quickly if a disruption occurs.
including business growth, cost avoidance, How can your company help companies to and responsive risk managecreate a successful EH&S ment. An effective EH&S strategy? strategy can support busiCM. IHS offers complete and ness growth through smart proven information managesourcing, for example, where ment solutions to meet the worker safety performance is needs of evolving EH&S proreviewed before determining grammes. Our EH&S soluwhich vendor to commistions team works closely with sion for outsourced tasks. In our clients to address their having policy compliance, specific challenges and develorganisations can ensure op a suggested set of soft ware, that vendors with high ‘expecontent and services to adrience modification rates’ are dress critical EH&S business not selected, and companies issues and deliver on EH&S with excellent worker safety improvement goals. Because As Environment Director of IHS EMEA, Chris Methven performance get the comeach customer is unique, the is responsible for European environmental business petitive advantage with high IHS solution packages are development. Prior to joining IHS productivity. Cost avoidance designed to be tailored to he spent four years with ABeam Consulting (formerly Deloitte can be realised through specific requirements. Touche Tohmatsu Consulting) where he served as a Senior elimination of lost producConsultant and Account Director tion time and fi nes/penalties, in the European Utility Practice, For additional information about focusing on technology enabled the IHS Environmental solutions, employee health and benefit business transformation projects. please visit. www.ihs.com/ environment premium inflation and po-
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HOSPITALITY
served?
Are you being
As one of Europe’s most profitable industries, the hospitality sector plays a crucial role in propping up the economy. And HOTREC, the trade association representing hotels, restaurants and cafés in Europe ensures its member’s interests are protected. Business Management meets HOTREC CEO Maguerite Sequaris to find out the issues it will be campaigning on this year.
How important in your view is the hospitality industry as a backbone of the EU economy? Maguerite Sequaris. As one of the major players in the European tourism industry, the hospitality sector certainly plays a significant role in the EU economy, both in terms of employment and GDP. According to data quoted in a recent study by the European Commission, in 2006 the sector consisted of over 1.6 million enterprises, accounting for approximately nine million employees in the EU. In the same year, the turnover of the industry reached €440 billion. To put these figures in perspective, in 2006 the automotive sector, such as production, sales and servicing, employed 6.3 million people. Th is simple comparison gives us an idea of the importance of the hospitality industry, a highly labour intensive service sector, in the EU economy and society. Nevertheless, the extent of the contribution by the hospitality industry to the EU economy is not as visible as in other sectors because our industry is highly fragmented compared to others such as utilities, energy, etc. As we always stress in our discussions with EU policy makers, 92 percent of hospitality enterprises are micro-businesses employing less than 10 people and over 99 percent are small businesses, employing fewer than 50 people. Your organisation is involved in monitoring and assessing the impact of EU legislation on the EU hospitality industry. What legislation would you say is having the biggest impact on the industry?
MS. There are undoubtedly many EU regulations that impact the industry. Too many, I would say. HOTREC has just issued a publication outlining some 60 key EU measures that are in place or under discussion which directly or indirectly affect the activities of hospitality enterprises. And these 60 measures are just the tip of the iceberg. The current proposal for a regulation on food information to consumers is a clear example of how the competitiveness of the European hospitality industry can be severely affected by a legislation that simply ignores its specificities. If adopted as it stands, this regulation would require restaurants to indicate for each item on their menus: the list of ingredients, the quantity of the food, the allergens as well as a nutrition declaration. In other words, the legislation would require restaurants to provide the same information as displayed on the labels of pre-packed food sold in shops. Let’s be realistic. Complying with this regulation would not only impose heavy burdens and costs on the industry, it would simply be unworkable for traditional restaurants and cafés. Staying in business would only be possible by reducing and standardising the menu-offer, using ready-made and pre-labelled foods instead of fresh products. At the moment this proposal is surely our greatest concern. Is there a need for greater standardisation of regulations governing the hospitality industry across the EU? MS. This is not a question to which I can give you a straightforward answer. Depending on the topics and issues at stake, our answer can be yes or no. The services provided by hospitality businesses are as varied as the issues
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and challenges they are facing. Inevitably, the answer to this question depends on the context. In certain policy areas, HOTREC opposes legislative harmonisation at EU level, while in others we consider that it could bring benefits to the industry. For example, as regards the issues related to lifestyles such as smoking, alcohol policy, nutrition, etc. Our answer is that one-size-fits-all solutions at EU level do not work and national rules are more appropriate, because they can better take into account local conditions and specifications. On the other hand, in policy areas such as VAT, payment services or the collective management of copyright, harmonised solutions at EU level can play a positive role. Of course, the reply to this question as well as the views of the industry on these issues may vary depending on the countries and the players concerned. What changes do you think could be made to EU legislation to support the growth of the industry? MS. I am convinced that the key words are better regulation and simplification. The EU institutions have to do more to fulfi l their promise of cutting red tape and simplifying the regulatory environment that our businesses have to comply with. EU legislation must be simple, understandable, effective and enforceable. It has to provide a level playing field without adding unnecessary burdens, in order to enable our enterprises to grow and compete in the global market place. In particular, impact assessments accompanying any new piece of EU legislation should better take into account the impact on the hospitality sector in terms of administrative costs. As CEO of HOTREC, I have been insisting fiercely on this point with the European Commission on several occasions. For example, in relation to the proposed requirement of food labelling in restaurants, HOTREC was particularly shocked to read that the commission’s impact assessment acknowledged that no systematic research answered the question of how much such a provision would cost. In the midst of the current economic turmoil, a favourable regulatory environment is more than ever needed to provide oxygen to the European tourism industry. The top priority for policy makers at all levels should be to ensure a sustainable framework for business. Better impact assessments, balanced legislation, reduction of red tape, improved access to fi nance and lower taxation are the main ingredients of a recipe for speedy recovery.
About HOTREC HOTREC is the umbrella organisation representing 30 national hospitality associations in 24 countries across Europe. According to HOTREC the European hospitality industry is made up of around 1.6 million different organisations which employ nine million people. HOTREC’s main role is to monitor EU policies that have an impact on the EU hospitality industry. For more information log onto www. hotrec.org.
How have your members been affected by the economic crisis of the past two years? MS. The current fi nancial and economic crisis directly affected our industry. The economic slowdown implied less business travellers as companies cut down on business meetings and seminars. As unemployment was rising, the purchasing power of European households was reducing, with a direct impact on private outings as well as private trips. In parallel, the fi nancial situation has made it much more difficult for both consumers and industry to obtain loans. As a result, many investment projects in the hospitality sector were cancelled or postponed. At the last HOTREC General Assembly in November 2009 the majority of our members reported negative business trends in their countries and considered that the recovery is not yet in sight. Just to give you a few but striking examples, in Ireland the situation was catastrophic as restaurants witnessed a decrease of 30 percent in their revenues, while bankruptcies rose from 10 percent to 15 percent. In Latvia and Lithuania, occupancy rates in hotels fell by up to 40 percent, depending on the areas. In the UK, up to 52 pubs were closed per week in 2009. In Spain, over the last 12 months, employment rates in hotels dropped by 7.4 percent. In what parts of the EU do you see the hospitality industry particularly developing in the coming year? MS. My impression is that there is still an untapped potential for growth in many of the East and Central European countries that have joined the EU since 2004, as well as in the new candidate-countries. I think that they are good opportunities for the hospitality industry, although the global economic crisis has hit hard and slowed down business development projects.
What are the biggest challenges currently facing the EU hospitality industry? MS. Besides the economic crisis, the biggest challenge is probably the increasing competition from tourist destinations in non-EU countries with lower labour costs and less administrative burdens. The tough competition from emerging destinations is testified by the fact that Europe is constantly losing market share in You have many years of experience in the EU hospithe global tourism market. On average, over the period tality industry. How would you say the industry has between 2004 and 2007 international tourist arrivals changed to meet customers’ changing needs in the Maguerite Sequaris increased only by five percent in Europe while they past decade? increased by seven percent in the world. Of course, MS. Customers are of utmost importance to the indusanother big challenge for the hospitality industry, as well as for all other try and they are certainly the driving forces for all changes. However, businesses, is environmental sustainability. Th is issue will continue to be these changes are decided by the entrepreneurs and HOTREC does not very high on the agenda of EU policy makers over the next few years. intervene in operational matters.
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CITY GUIDE 138
St Petersburg Time: + 3hrs GMT | Currency: Russian Ruble | Language: Russian | Population: l Six million ll
St Petersburg may have lost its crown as the Capital city of Russia after the Russian revolution, but vistors to this cultural landmark will enjoy an experience that parallels any trip to Moscow. Business Management gives you a whistle stop tour of Russia’s most diverse city.
Souvenir Russian nesting dolls
Church of the Resurrection of Christ
Catherine Palace
About St Petersburg was established on the site of a swamp by the emperor Peter the Great, who then declared it the new capital of the Russian Empire. It remained the capital for more than 200 years until the 1917 Russian Revolution. Today it remains Russia’s second largest city and is home to six million people. As well as being a major European cultural city it is also a strategically important Russian port on the Baltic Sea and often described as the most Western City in Europe. The city attracts visitors to its myriad cultural attractions all year round but the summer is a particularly popular time to visit, as this is when St Petersburg’s White Nights occur. On these occasions the sun shines for almost 24 hours a day and city life continues around the clock. What could be more bizarre than a walk along the city’s canals in bright sunlight at midnight?
Getting around St Petersburg has Russia’s second largest airport and is well connected from Europe and the former Soviet Union. Travellers from Asia, Australasia or the Americas may have to arrive via Moscow however. When you reach St Petersburg there is an extensive public transport net-
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TOURIST TIPS • Don’t travel to St Petersburg on a tight budget. The city is the second most expensive in Russia and the 12th most expensive in Europe, putting it ahead of Paris, Singapore and New York. Cheap accommodation is hard to find but public transport offers a way to save the pennies. • Don’t forget that all visitors to Russia require a visa. This is usually only issued to travellers with fully booked and confirmed travel arrangements. The processing of visa applications can take anything from 10 working days so arrange this well in advance. • Contact your doctor or a travel clinic for up to date information on vaccines before you travel to Russia. Generally travellers are recommended to be vaccinated for diphtheria, polio and tetanus. Food and waterborne diseases are common so typhoid and hepatitis A vaccinations are also recommended.
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CITY GUIDE 139
out along the Neva to see the Peter and Paul Fortress before returning through the Fontanka to the Mariinsky Theatre. The majority of tours are in Russian and start from around €10. If the weather permits, consider an excursion to Pushkin, formerly the summer residence of the imperial family. The Catherine Palace is surrounded by lush parkland fi lled with waterfalls, boating ponds and statues. It’s the perfect place to enjoy a picnic and escape the city bustle.
See Grand Hotel Europe
Sleep Kempinski Hotel Moika 22 Situated only 50 metres from the Palace Square and with spectacular views of the Winter Palace from most rooms, the Kempinski is also the best value five star hotel in St Petersburg. Its restaurant offers traditional Russian haute cuisine with blinis and caviar its speciality. It also features a swimming pool and state-of-the-art gym. Guests can enjoy afternoon tea every day at 5pm and it has great transport links with the Nevsky Prospekt and Gostiny Dvor metro stations that are less than a 10 minute walk away. Rates: From €212 a night. Grand Hotel Europe Th is hotel is steeped in history having been a fi xture in St Petersburg for over 130 years. According to its website, it was where the composer Tchaikovsky spent his honeymoon and where George Bernard Shaw once dined with Maxim Gorky. It is situated on Nevsky Prospekt, one of St Petersburg’s most impressive avenues and is a stone’s throw from the city’s most prominent cultural landmarks, including the Russian Museum and the Mikhailovsky Theatre. There are five restaurants to choose from and a health club that includes a gym and plunge pool. Rates: From €255 a night
work including suburban trains running to most destinations within 100km or 200km of the city centre. Buses run within the city and as far afield as Moscow and the Baltics. Cars are available to hire for around €50 a day though for newcomers to the city this is not recommended as the roads are in a poor condition and there is a distinct lack of signposting. The most convenient way to travel however is on the St Petersburg metro, which covers a network of 58 stations. The entrance to each metro station is marked with a blue M and the flat fare for all journeys is around 50 cents. Smart cards can be purchased then topped up to pay for multiple journeys over a fi xed time period.
Relax A great way to explore the city, particularly in summer, is to tour the canals by boat. The typical tour is through the Moika canal then
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The historic centre of St Petersburg has been listed as a UNESCO world heritage site and with good reason. Its highlight, the Winter Palace, is actually a vast museum showcasing a collection of over three million artefacts from across the world. The collection includes works by the likes of Rembrandt, Da Vinci, Michaelangelo and Rubens and visitors are recommended to get a tour guide to avoid missing out on the best bits. After a day spent exploring the Winter Palace’s gems, no visit to St Petersburg is complete without an evening at the opera. The Mariinsky Theatre, formerly the Kirov, offers world-class performances of both ballet and opera, including those sung in English. For a more intimate experience visit the St Petersburg Opera which features just 200 audience seats and puts on cheaper performances.
Eat Taelon For a true taste of new Russia, visit this ultra exclusive restaurant, which is housed in an opulent mansion house in the city centre. Dress to impress in this glittering setting which features marble fireplaces, gilded ceilings and an adjoining private club and casino. Specialities include caviar, oven-baked partridge in coriander sauce and baked dorade with ragout of spinach and snails. Sunday brunch comes with black and red caviar, lobster and champagne. If you’re feeling flush enjoy a glass of cognac for €159. Mechta Molokhovets Gourmands will delight in this intimate restaurant which has a menu based entirely on a famous 19th century Russian cookbook entitled A Gift to Young Housewives. The title of the book may be old fashioned however the menu in the restaurant is anything but. Cooking is state-of-the-art and includes dishes such as venison fillet accompanied by baked pears filled with cranberries and soaked in chanterelle sauce. There are only six tables in the restaurant though so booking is highly recommended.
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BOOK REVIEW 140
On the shelf This issue we peruse advice on how to capitalise on the recession, predictions for our working lives, and business lessons from a hip hop superstar.
The Upside of the Downturn By Geoff Colvin
According to Colvin, Fortune’s Senior Editor-at-Large, this recession will be a defi ning period for business. Some will emerge stronger and more dominant while others will weaken and fade. Colvin is one of world’s most respected business journalists so is able to offer practical examples from the real world to illustrate which companies have got it right and which have failed – and why. He suggests savvy businesses see the downturn as a rich opportunity to restructure, reinvent and reimagine their businesses and lay the groundwork for future growth. BM SAYS: Although just 170 pages long, this is a must read for C-Level executives looking to capitalise on the opportunities and challenges of the recession. Highly recommended.
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.
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.
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Your World. COVERED From the people you hire to the products you sell, if you’re in business, we’ve got it covered...
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Approximately 50% of new drug development fails in the late stages of phase 3 – while the cost of getting a drug to market continues to rise. NGP is written by pharmaceutical experts from the discovery, technology, business, outsourcing, and manufacturing sectors. It is committed to providing information for every step of the pharmaceutical development path. Available for: EU
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THE KNOWLEDGE 142
The white stuff Whether you’re an adrenalin junkie or you just want to bask in the mountain air we bring you Europe’s best ski resorts. St Anton, Austria St Anton may not be suitable for beginners but for seasoned skiers it provides some of the most challenging slopes in Europe. For those brave enough to venture off-piste there are miles of ski trails to explore and for the less adventurous, the powder bowls of the Valluga mountains will be enough of a challenge. There is a lively nightlife at the resort with plenty of restaurants, bars and discos but be warned, the atmosphere can get rowdy. For those wanting a more stylish stay, try the Schwarzer Adler, a luxurious, traditional Tyrolean hotel in the centre of St Anton, close to the ski lifts and featuring a spa and choice of three restaurants offering traditional Austrian cuisine.
Verbier, Switzerland With its white-knuckle black runs, Verbier is not a resort for the faint hearted, or the ski beginner. The most challenging run is the black run down the front face of Mont-fort and there are also several off-piste routes down the steep slopes. The resort’s FourValleys lift network covers a massive 250 miles worth of slopes and guides are available to help you explore off-slope. The really adventurous can try a spot of heli-skiing. Verbier has a famously vibrant nightlife, which includes 12 bars and discos, including the famous Casbah Club. The ideal hotel for party animals is the Hotel Farinet, which is home to the Casbah Club as well as several popular après-ski bars. It is situated in the heart of the town overlooking the main square and features 18 rooms and four apartments.
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Cortina, Italy Cortina hosted the first Winter Olympics in Italy and as a result has world-class facilities and wellmaintained pistes. For those less keen on the action this resorts boasts one of the world’s top ski spa hotels, the five-star Miramonti Majestic. The spa features a vast swimming pool, and spa centre with a sauna, jacuzzi, Turkish bath as well as massage and beauty treatments. It is surrounded by stunning natural parkland with panoramic views of the Dolomite mountains and offers bus excursions to Innsbruck, Salzburg and Venice Casino.
Courcheval, France This resort has a reputation for being the best in the world and rightly so. It is divided into four different villages each suitable for a different level of skier with the highest being Courcheval 1850. Each village is connected by buses and ski lifts and there are superb beginner’s slopes as well as more challenging skiing higher up. For non skiers the resort offers a dedicated snowboarding park, ice skating, tobogganing, ice climbing and lots of fashionable bars for après ski drinks. The most stylish place to lay your head after a hard day’s skiing is the Hotel Les Airelles, which is in a prime spot next to the slopes and offers an on site spa, indoor pool and hammam as well as gourmet cuisine by Pierre Gagnaire at its restaurant.
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Technology for today’s executive <<< Google Nexus One After months of speculation tech giant Google has fi nally unveiled its very own phone: the Nexus One. Manufactured by HTC, but sold by Google, could this be the smartphone to dislodge the iPhone’s crown? The fi rst thing to note is that it boasts a similar appearance to Apple’s device, thanks mainly to its gorgeous 3.7-inch touchscreen display with OLED technology that produces lush colours and deep blacks. Running on Android, the Nexus One is powered by a 1Ghz processor and although it is on the large side for a phone, it is just 12mm thin so will fit most pockets. Other smartphones have fallen short of the bar the iPhone has set but with the might of Google throwing its hat into the ring, the Nexus could just be the start of something big.
Desirability rating: aaaa
>>> Apple iMac 27 inch The fi rst thing to note about the new iMac is that it doesn’t look too dissimilar to the previous version of Apple’s sexy desktop. In essence, this is a larger, full aluminium-clad version of the 24-inch iMac but with a gorgeous 16:9 screen. Its 2560x1440 resolution is capable of producing razor sharp detail – perfect for HD footage. Th is iMac houses a powerful AMD graphics processor and comes with a Bluetooth keyboard, albeit minus an isolated numerical keypad, and the new multitouch Magic Mouse. You have the option of a duel or quad-core CPU. The likes of Sony and HP have recently released touchscreen units so it’s a shame the iMac doesn’t include this feature. That aside, this is the fi nest iMac to date and probably the best in its class too.
Desirability rating: aaaa
<<< Sony XEL-1 OLED HD TV First, let’s get two stomach-churning facts out of the way: this Sony TV has a distinctly puny 11-inch screen and costs a whopping €3000. Done. Once you’ve recovered from open wallet surgery and positioned yourself about two feet away from your new purchase, you will be left open-jawed by the XEL-1’s picture quality. Using OLED technology, it is capable of emitting light without using any kind of backlight. It’s supermodel thin at 3mm and has no loss in viewing quality from any angle. It also has an integrated digital tuner, a USB slot and two HDMI inputs for connecting Bluray players and HD consoles. OK, it’s ridiculously expensive for a tiny TV that will be no substitute for the plasma in your lounge, but OLED really is the future in television. Possibly a screen best suited to your bathroom or cloakroom perhaps?
Desirability rating: aaaa
>>> Denon AH-D7000 headphones Can you ever justify shelling out €800 on a set of headphones? Denon thinks you can, which is why its premium AH-D7000s have been receiving critical acclaim from both tech experts and audiophiles. These lighweight cans produce stunning sound quality across all genres, be it rock, pop, electronic, classical and metal. Users claim these headphones are the most comfortable on the market and are easily suited to hours of continuous listening. As you would expect for a pair of headphones the price of a bespoke Saville Row suit, the build quality is sumptuous – personified by the glossy mahogany enclosures and soft leather earcups. Even the elastomer cabling is less likely to end up tangled during use and when packed away.
Desirability rating: aaaa
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