CXO 12

COVER CXO12 v3:apr09 16/04/2009 08:21 Page 1

www.cxo.eu.com • Q2 2009

NEWS HOUND

PLUS: Javier Perez President of MasterCard Europe • Jarrod Haggerty CIO of the Serious Fraud Office • Gunnar Blomdahl CEO of Stena Line • SPECIAL FOCUS: How to manage your team through the recession

Keeping ahead of the media pack with CNBC boss Mick Buckley

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EDS NOTE cxo12:apr09 16/04/2009 08:25 Page 5

FROM THE EDITOR

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A time for change Tomorrow’s business world will be a very different place

I

“The speed and the extent of the financial crisis and now the economic crisis has taken everybody by surprise” Mick Buckley, CNBC CEO and President for EMEA (page 24)

“To get the best out of performing teams of people you need to have an environment where people are appreciated, recognised and praised for the good things that they do”

t is too early too tell what impact the credit crunch will have on the future world economic order. There are, however, some early indications of how it will shape the way companies do business in the future and how world powers will work together to prevent another crisis re-occurring.

At this year’s G20 summit, the world’s most powerful leaders gathered to attempt to find a solution to the collapse of their economies. The most important message that emerged from the summit was the desire on the part of those leaders to work together to establish global financial regulations and to empower an international organisation – the IMF – to act as a supervisory body overseeing the conduct of the world’s economies. Such an approach is essential given the fact that globalisation and the gradual breaking down of trade barriers has created a global marketplace where the strength of one country’s economy will directly affect other countries that depend upon it for business.

Changes are afoot too at ground level, where companies are evaluating the way they do business – both in the short and long term. In the short term financial pressure has forced most companies to evaluate the areas they invest in and what areas are no longer profitable. The phrase ‘trimming the fat’ is a crude one, but it is the best way to describe the actions taken by two of the companies we profile in this issue – the UK hospitality giant Whitbread and the telecoms firm Vodafone – both of which have undertaken cost cutting exercises that have seen them streamline their operations, enabling them to better negotiate their way through the recession. Like thousands of companies across Europe, the financial crisis has forced them to take a long, hard look at how they could be operating in a more cost efficient way.

In the long term, companies are looking at where to invest now in order to best take advantage of the boom times that – everybody hopes – lie ahead, once the world emerges from the downturn. This issue includes a series of articles featuring guidance from experts in the human resources field, all of which stress the importance of investing in staff training and development now – and the dangers of cutting training budgets. This advice will no doubt exasperate companies whose primary concern is how to retain their existing staff, let alone invest in training courses for them. But the fact remains that tomorrow’s business world will be a very different one in which higher standards will be demanded of those companies fit enough to have survived the credit crunch.

Javier Perez, President of MasterCard Europe (page 31)

“Staying ahead of the criminals and hackers is nearly impossible. It may sound ridiculous but their big advantage is that they are not limited by the law in what they do” Michael Lardschneider, Chief Security Officer at Munich Re Group (page 70)

Diana Milne Editor

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CONTENTS CXO:jan09

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CONTENTS FEATURES

Mr Nice Guy MasterCard Europe President Javier Perez, on the importance of being nice and why the credit crunch could be good for business

24 News hound Breaking news, shaping views and beating the competition with CNBC’s Mick Buckley

30

36

40 Port in a storm Gunnar Blomdahl the CEO of Europe’s biggest ferry operator, Stena Line, reveals how he is steering his business through stormy waters

A cut above the rest With its sights set on a cost cutting target of €26 million a year, Whitbread has left no stone unturned in its bid to trim the fat from the organisation. CIO Ben Wishart explains how

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CONTENTS HUMAN RESOURCES & IT SECURITY

44 Personal touch Vodafone’s HR Director Matthew Brearley discusses the effects of the cost savings, driving cultural change and succession planning

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48 Workforce management during a recession Kevin Martin on the importance of HCM in an economic downturn

52 When the going gets tough

By David Silverstein

60 Cerf’s up Google’s internet pioneer Vint Cerf explains why infrastructure development is more important than ever in a tight economy

66 The enemies within Jarrod Haggerty, CIO of the Serious Fraud Office, explains why companies should be on high alert against internal threats from disgruntled employees

70 Global protection for a global business Munich Re Group CSO Michael Lardschneider discusses new dangers, his love of IT security and outfoxing the bad guys

74 New age disaster planning Lyndon Bird asks whether BCM strategies will have to change

76 The shifting security landscape Graham Titterington outlines what’s next for the IT security industry

80 Lock down Bruce Schneier reveals his candid thoughts on the security landscape

REGULARS 14 The brief 16 Insight 18 Frontline 22 In my view 130 Leadership 132 Business doctor 134 On the shelf 136 City guide 138 The knowledge 140 Objects of desire 142 Hot wheels 144 Final word

85 Digital dangers The threat of online counterfeiting

CASE STUDY 55 Tim Buff, CM Group

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CONTENTS CXO:jan09

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CONTENTS COMMUNICATIONS & BUSINESS TECHNOLOGY

EXECUTIVE INTERVIEW 58 Alan Marrott, Glocent 64 Dr Giles Nelson, Progress Software 78 Trevor Dearing, Juniper Networks 102 Janne Lauanne, Videra 118 Andre Bonvanie, NewsGator Technologies 50 Tim Buff, Managing Director of CM Group

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ASK THE EXPERT 47 Denis Tournesac, NorthgateArinso 95 Andrew McDougall, Vodafone Unified Communications Group 113 Stephen Fearon, Oracle 120 Roland Rott, Exact Software

PROJECT FOCUS 98 Matthew Light, Tempura Communications 126 Ricardo Passchier, IDS Scheer

100 Virtual reality How telepresence is changing the way we do business

104 Easy does it Doing business the easy way with easyOffice CEO Mark Smith

108 Express delivery Why failure is never an option for TNT Express’ head of IT, Shwan Moubarak

112 The future of CRM 87 “Driving innovation at the speed of life” Matt Bross says he still pinches himself at having one of the “coolest” jobs in the world.

We find out why

92 Unified Communications: The future beckons The latest trends, according to Frost & Sullivan’s Lavanya Palani Batcha

114 Web 2.0 meets enterprise content management

NEXT BIG THING

By Melissa Webster

56 Ben Zifkin, Axsium 84 Andrew Thompson, Parasoft UK 106 Mark Greenaway, Adobe Systems 128 David Akka, Magic Software

118 Online marketing your way through the recession How web marketing can ensure a company’s business survival

122 Turbulent times 96 What Do You See in UC? Brent Kelly poses the question

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Managing IT in a downturn, according to Credit Suisse CIO Karl Landert

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CREDITS CXO11:apr09 16/04/2009 08:23 Page 12

15-17 September 2009 The Park Hotel Bremen, Germany

Chairman/Publisher SPENCER GREEN CEO JAMES CRAVEN Director of Projects ADAM BURNS Editorial Director HARLAN DAVIS

Editor DIANA MILNE Managing Editor BEN THOMPSON Associate Editor JULIAN ROGERS Deputy Editors NATALIE BRANDWEINER, MATTHEW BUTTELL, REBECCA GOOZEE, MARIE SHIELDS, HUW THOMAS

Creative Director ANDREW HOBSON Design Directors ZÖE BRAZIL, SARAH WILMOTT

The Next Generation Pharmaceutical Summit is a three-day critical information gathering of C-level technology executives from the pharmaceutical industry.

Associate Design Directors MICHAEL HALL, CRYSTAL MATHER, CLIFF NEWMAN Assistant Designer ÉLISE GILBERT

Online Director JAMES WEST Online Editor JANA GRUNE

A Controlled, Professional and Focused Environment NGP ’09 is an opportunity to debate, benchmark and learn from other leaders. NGP ’09 is a C-level event reserved for 75 participants that includes expert workshops, facilitated roundtables, peer-to-peer networking, and coordinated R&D meetings.

A Proven Format This inspired and professional format has been used by over 100 R&D executives as a rewarding platform for discussion and learning.

“A well organised and productive meeting with good topics and open discussion – worth the effort!”

Dr. Mark Burfoot, Pfizer

Managing Director EMEA OLLIE STEBBINGS Project Director HELEN JACKSON Senior Sales Executive IAIN GETHIN Sales Executives JOE HUNTER, JESSICA RICHARDS, RAY DAVIES, MARK BAKER

Finance Director JAMIE CANTILLON Head of Production and Events ROBERT SIMMS Production Coordinators HANNAH DRIVER, HANNAH DUFFIE, JULIA FENTON Director of Business Development RICHARD OWEN Operations Director JASON GREEN Operations Manager BEN KELLY

Subscription Enquiries +44 117 9214000. www.cxo.eu.com General Enquiries info@gdsinternational.com (Please put the magazine name in the subject line)

Letters to the Editor letters@gdspublishing.com

“This meeting provided an excellent opportunity to meet key thinkers in the clinical study pharma space and to present the contributions of our technology to them.”

Scott Watson, Aperio

CXO Level 1, Park House, 2 Greyfriars Road, Cardiff CF10 3AF, UK. Tel: +44 (0)2920 667 422. Fax: +44 (0)2920 729 301. E-mail: cardiff@gdsinternational.com

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THE BRIEF ANALYSIS

US President Barack Obama with Italy’s Prime Minister Silvio Berlusconi and Russia’s President Dmitry Medvedev

UNITED THEY STAND The world waited with baited breath as the world’s most powerful leaders met to discuss the global economic crisis at the G20 Summit. But did the event result in all talk and no action?

THERE WAS ONLY ever going to be one topic dominating discussions at this year’s G20 summit – how to solve the global economic downturn.

The extent and unpredictability of the crisis means that even

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the world’s finest political minds could not, collectively, create a silver bullet to repair the damage and prevent further deterioration of the world economy. But what they could do was herald the dawn of a

new world economic order – Monetary Fund (IMF) by €560 creating the foundation for a billion allocating around €375 global financial system billion for the IMF to lend in which the misto struggling world The G20 takes of the past economies and increased its alwould not be re€188 billion to help lowance to the IMF by peated. boost world trade.

Did they achieve this? In terms of cash flow to plug budgetary deficits

€560 billion

and pay off debts – the G20 was true to its word. It increased its allowance to the International

It also created a €188 billion overdraft facility for struggling countries to draw on and a €75 billion fund that international development banks can draw on to lend to the

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THE BRIEF ANALYSIS

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NEWS IN PICTURES world’s poorest countries. It will of co-operation among the also support lending activities world’s leaders – accentuated to the poorest countries by sellby the fact that they have ing €4.5 billion worth of gold reagreed to re-group later this serves. year to re-assess the situaWhile these figures may tion. sound impressive, what the Moreover, the power grantG20 did not achieve was the ed to the IMF by the G20 to disputting together of a compretribute the funds it has hensive global economic stimuallocated indicates that the lus plan. Neither did it address world’s leaders are keen for an the problems of misinternational financial matched currencies institution to take the President Obama and the domino lead in remedying described the G20 as a effect of the the situation. By falling dollar and tripling the IMF’s pound on other lending power the and emphasised the countries.

G20 has made the effectiveness of the event However it did reorganisation a major sult in the creation of a global player responsible new Financial Stability Board, for helping to turn the credit which will be made up of all crunch story around.

G20 members and could form Speaking after the event the basis for a global financial President Obama described regulator. The G20 also agreed the G20 as a “turning point” to a series of measures aimed and emphasised the effectiveat tightening financial regulaness of the event in having actions, which will extend global commodated the various financial regulations to hedge member countries’ needs: funds and other financial insti“Each country has its own tutions and could put an end to quirks and own particular isunchecked tax havens. Most sues that a leader may decide importantly the summit sowed is really, really important, the seeds for a new approach something that is non negoto running the world’s tiable for them,” he told a economies with US President news conference. “And what Barack Obama taking the lead we tried as much as possible by suggesting the US should to do was to accommodate shift from its previous position those issues in a way that did of deregulation and globalisanot hamper the effectiveness tion and start to adopt a more of the overall document.” balanced approach by introducGlobalisation and the ining more regulation of financial terdependence of world curmarkets. rencies means that it is only The fact that the summit through the world’s ended with a firm set of finaneconomies working together cial measures having been that a solution to the financial agreed on, shows a new spirit crisis will be found.

A demonstrator wears a placard during a protest outside the Royal Bank of Scotland building in London before the G20 summit. The beleaguered bank has announced 9000 job cuts globally and former CEO Sir Fred Goodwin has become a public hate figure after refusing to give up his UK£700,000-a-year pension

turning point

US President Barack Obama and his wife Michelle wave before he makes a speech in Prague. President Obama laid out an ambitious plan to rid the world of atomic weapons during the speech

German Agriculture Minister Ilse Aigner announces a ban on cultivated, genetically-modified corn in Germany following a survey showing the environmental impact of such activities

Coffins line up on the drill ground of the Financial Police school near L’Aquila, Italy, during the collective funerals for the victims of the earthquake earlier this month, which claimed almost 300 lives

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EUROPEAN BUSINESS ROUNDUP NEWS

Car sales in the UK plunged by 30.5% in March 2009 compared to the same period last year according to the latest figures from the Society of Motor Manufacturers and Traders.

According to the figures the number of new UK registrations in March was 313,912 compared to 451,642 in 2009. This, said the SMMT, was alarming given the fact that March is the month when new car registrations become available.

The organisation’s Chief Executive Paul Everitt renewed calls for a car scrapping scheme in which owners are provided with incentives to buy new vehicles.

The Spanish government has stepped in to rescue one of the country’s biggest retail banks after negotiations for it to be purchased by a rival fell through.

He told the BBC, “It will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand. The UK is the only major European market not to implement such a scheme,” he went on to say. Evidence that the scheme works is shown in France and Germany where such schemes have been introduced car registrations to rise by 10% and 40% respectively.

Savings bank Caja Castilla-La Mancha’s fate is now in the hands of Bank of Spain administrators who have taken over after removing its management.

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The government has guaranteed up to €9 billion of the bank’s debts. Meanwhile both Banco Popular SA and Banco Santander SA are both in decline and unemployment has reached 14% across Spain, reflecting the country’s economic woes.

SPAIN

Swiss banking giant UBS is to shed 8700 jobs by next year after announcing losses of €1.3 billion in the first three months of 2009.

Sports goods giant adidas has announced it is shifting its focus further towards the fashion market, raising sales in the sector to 30% from 20%.

To boost its fashion kudos, the company will be launching a new fashion brand called adidas SLVR. Last year adidas made €1.5 billion in fashion sales, according to Reuters. Overall group sales, including those for the Reebok brand, reached €10.8 billion.

GERMANY

Speaking at the bank’s annual shareholder meeting, UBS CEO Oswald Gruebel said the shortterm outlook for the bank was bleak: “I am forced to present you with another round of unsatisfactory performance figures and to announce further drastic measures. Our outlook remains cautious and we face many uncertainties.” UBS has been hit hard by the financial crisis and has already announced 11,000 job cuts since the middle of 2007. It has made around €37 billion in writedowns and in 2008 transferred billions of euros worth of toxic debts to the Swiss National Bank.

SWITZERLAND

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EUROPEAN BUSINESS ROUNDUP NEWS

A €6.0 billion economic stimulus plan has been unveiled by the Dutch Prime Minister Jan Peter Balkenende. He warned that public debt was increasing in the country and that as a result there would be cost cutting by 2011 to reduce the deficit by at least 0.5% of GDP per year.

Last year the government launched a €6 billion stimulus package for companies and injected a further €13.75 billion into the country’s financial system.

The latest stimulus package represents around one percent of the country’s GDP. It includes investments in road construction and the scrapping of a tax on air travel, subsidies for renewable energy production and funds to address youth unemployment.

HOLLAND

French carmaker Renault is moving some of its production back to France from overseas in exchange for government aid.

The move follows a promise by President Nicolas Sarkozy to lend Renault and Peugeot Citroën €3 billion each in exchange for not shutting French factories or dismissing French workers. Renault’s decision to move production from Slovenia to its Flins factory outside Paris will create around 400 jobs. In response the EU Commission has announced it is seeking an explanation from the French government as to its decision amid concerns that the carmaker was adopting a protectionist stance.

Renault has said no jobs will be lost in Slovenia as a result of the shift.

FRANCE

Dermot Mannion, CEO of Irish airline Aer Lingus, has resigned following the airline’s announcement of a €119.7 million pre-tax loss for 2008. Mannion, who joined the airline four years ago, will be replaced temporarily by Aer Lingus Chairman Colm Barrington.

In a statement following his resignation, Mannion said his decision would help bring “fresh thinking and new ideas” to rejuvenate the business. Aer Lingus has been hit hard by the economic downturn and also dogged by controversy after making the decision to cut the number of flights from Shannon to Heathrow.

During his time in power however he successfully oversaw the introduction of the airline’s long haul routes and its privatisation and listing on the Irish stock market.

IRELAND

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Norway is to contribute €70 million to fund Galileo, the EU’s satellite navigation project. In the past the EU has struggled to secure financing for the satellite and has had to subsidise it using unused funds from the zone’s agriculture budget.

Around 11 European firms have been shortlisted to bid for future Galileo contracts. So far two test satellites have been launched and when fully operational up to 30 satellites will be launched as part of the project.

In a statement explaining Norway’s decision to help fund the project, Norway’s economy and business minister, Sylvia Brustad, said: “The project will be of huge importance for the development of the European space industry and it is therefore important that Norwegian businesses are now able to compete.”

NORWAY www.cxo.eu.com

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FRONTLINE NEXT GENERATION SECURITY SOLUTIONS

REVENGE IS SWEET DISGRUNTLED EMPLOYEES pose a serious threat to UK companies with 58 percent prepared to take data if threatened by redundancy.

That is the verdict of a study conducted by the IT consultancy firm NCC group which revealed that 40 percent of UK staff have indeed already started to remove confidential data to use to negotiate a new job if necessary.

The firm warned that companies must be on their guard against the in-

creased risk of data theft from their own employees.

This threat has increased due to the availability of technology, which makes it easy to remove, and store data, such as memory sticks able to hold many gigabytes of data.

failures

TOP JOBS THE ASSOCIATION of Executive Search Consultants Member Outlook report has identified industry sectors in which job opportunities will increase globally by the following amounts in 2009:

48%

Education Professional services Media/entertainment Healthcare IT Government Pharmaceuticals/ biotechnology Natural resources

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39% 34% 32% 31% 30% 26% 26%

viding simple, easy-to-use manageBUSINESSES OF ALLSIZES today ment of anti-malware and personal are increasingly dependent on firewall protection. their IT systems to run their operaThe first benefit of an SaaS sotions and, as a result, they have belution like PMOP, when compared come more sensitive to vulnerabilities and other IT security to traditional anti-malware protection for desktops, is the absence of concerns. Add to that the increasupfront investments to implement ing mobility of the workforce and it. Traditional protection for deskthe inherent difficulties in managtops requires on-premises ing roaming devices, and hardware and software what we have is a investment (adminisscenario in which “In fact, tration servers, the managemany IT system repository servers, ment of security databases), introoperations beand downtimes ducing additional comes ever are caused by human points of failure, more complex, errors” added vulnerabilities costly and sophistiand recurring maintecated. In fact, many IT nance and upgrading costs. An system failures and downtimes SaaS desktop anti-malware soluare caused by human errors due to tion, on the contrary, hosts all the the manual nature of managing management infrastructure within traditional, on-premises IT manthe vendor’s infrastructure. The savagement solutions.

In order to address these chal- ings in this regard will be greater, the more distributed the environlenges, new Software-as-a-Service ment is (usually each location in a (SaaS) solutions are emerging which can replace or extend the ca- distributed environment requires at pabilities of traditional, on-premise least one server in the on-premises model). Considering an average improducts. In particular, SaaS manplementation of an anti-malware agement solutions for desktop solution in a medium-sized busianti-malware, such as Panda ness, the savings generated by an Managed Office Protection SaaS-based solution could reach (PMOP), can be leveraged at any50 percent of the total costs. time, from any web browser, proFor more information go to www.pandasecurity.com or contact Bruno Rodriguez, International Business Development Director bruno.rodriguez@pandasecurity.com.

QUICK FACT Women earn up to

60% less than men in the finance sector, an Equality and Human Rights Commission report says

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FRONTLINE

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‘YOU CAN QUOTE ME ON THAT’

QUICK FACT More than

“We have to demonstrate responsibility, at the public and the private level, and we have to be ready to deal with unexpected events, which have been a characteristic of this crisis. In short, we have to remain permanently alert”

97% of all emails sent over the net are unwanted, according to a Microsoft security report

BUSINESS IS CHILD’S PLAY Dr Nipan Maniar of the PLAYING MAKE BELIEVE could be University of Portsmouth, an exthe key to business leaders surpert in creating in-game learning viving the credit crunch, accordfor computers, said: “There is no ing to a team of British scientists. doubt that the business life of They are embarking on a the future will include a unique experiment in which greater use of virtual business executives worlds technolouse PlayStation’s In India gies. There is a new virtual global trend toworld Home as wards mobile a forum in of small businesses workforces. In which to disnow have “mobile India for example cuss ideas and workforces” 43 percent of small collaborate on poto medium businesses tential projects. now have “mobile workforces”.

As well as encouraging idea He goes on to say that this sharing among the business trend is primarily being driven by leaders, the project will also exwireless communications and plore the way companies can rethat the true benefits of a mobile duce office space and travel costs and reduce executives’ car- workforce will only be realised in virtual work environments: “In bon footprints. the current economic climate where renting office space is often the second biggest overhead, it makes good business sense for companies to explore the opportunities and benefits of workforce mobility and using virtual worlds as places to get business done more effectively and at a lesser cost than in the physical world.”

43%

European Central Bank President Jean-Claude Trichet on reacting to the economic slump

“Talks have taken more time than expected, but the time it'll take us to close the deal is not a critical matter. I’m optimistic and I believe we’ll reach an agreement” Willie Walsh, CEO of British Airways, stresses merger plans with Spain’s Iberia have not crash landed

“[PetroChina's] chairman is very supportive of this joint venture between our two groups and we should be ready to make the launch decision before the year end,” Total CEO Christophe de Margerie on the proposed development of the French energy company’s first major gas block in China

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FRONTLINE

INVESTING IN BUSINESS SURVIVAL A LACK OF INVESTMENT in employees is threatening industrialised countries’ abilities to maintain competitiveness in the post-recession economy, claim researchers from Cognisco Systems.

In a study entitled Knowledge – The New Commodity, it states that developed countries such as the UK and the US will face the biggest challenges due to a lack of investment in knowledge development. In contrast the survey found that Asian countries did not plan to cut spending on staff training so

FROM THE VAULT

would retain their economic competitiveness. These differences mean developed countries are at risk of being overtaken by emerging economies according to the study. It claims that although the UK and US are in a recession, emerging economies like India and China have positive growth and are capturing a larger share of domestic markets. Because most businesses are engaged in globalised markets, knowledge development and training is critical to remain competitive.

ISSUE IN NUM8ERS

195 million

86

is the number of MasterCard cards issued in Europe to date

Rising oil prices last year resulted in a 25-30% rise in costs for European ferry operator, Stena Line

€26 million

UK hospitality firm Whitbread aims to save

a year through its restructuring programme

BT Group’s 21st Century Network now operates across 170 countries worldwide 20

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3

PAUL COBY, CIO of British Airways. Back in issue seven of CXO we took a trip to Heathrow to meet the man behind the British Airways technology strategy and discover the true value of IT to the airline’s operations. For Coby, getting his head around the business and what it is trying to achieve is crucial for the technology vision of the company. “I think IT departments often have trouble integrating themselves and getting themselves completely in line with the strategy and the business. That is what I have tried to do from the start” he said.

To see more, go to www.cxo.eu.com and click on the past issues section.

HOUSE OF PAIN NOT EVEN the UK’s top politicians are immune from IT security threats as a recent outbreak in the parliamentary IT system has shown.

The Conficker virus, which has been in circulation on the internet since 2008, has found its way to computers used by MPs and members of the House of Lords.

As reported by Channel4 News, an email has since been sent to all Parliamentary staff warning them of the virus which states: “We therefore ask that if you are running a PC or portable computer not authorised to be on the network

that you take it off immediately.”

Rob Cotton, CEO of the IT security company NCC Group told Channel4 News: “This incident clearly shows, once again, that when it comes to even the most basic of security procedures, parliament is lagging behind everyone else. One of the foremost rules of good corporate IT governance is that machines not regulated by the organisation should never be allowed to connect to its network, and for good reason. For the parliamentary network to have to ask all unauthorised computers to be taken off its network, is, frankly embarrassing,” he went on to say.

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FRONTLINE €300million

UK businesses waste

a year powering idle computers

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FOR LOVE NOR MONEY A NEW STUDY has shown that 51 percent of the global workforce would sacrifice status and a high salary for more meaningful work. The news comes at a surprising time, with the economy in peril and employees being laid off at an alarming rate. During this current, prolonged period of uncertainty, it would sound plausible if workers began putting less empha-

sis on finding meaning in their jobs and simply concentrated on earning a living.

However the study surveyed approximately 100,000 people in 34 countries in North America, Europe and the Asia-Pacific region and found that the majority want their jobs to provide a degree of emotional fulfillment, even if that means sacrificing money and status to achieve it.

Most notably, though, it is workers in the US who seem to be slightly less focused on meaning and more on the dollar, with 43 percent saying they would take less pay for more meaningful work, compared to 49 percent of Europeans and 54 percent of employees in the Asia Pacific region.

Source: Kelly Global Workforce Index

MAKING IT EASY WHAT A WASTE UK BUSINESSES WASTE €300 million a year powering idle computers according to the 2009 PC Energy Report.

The report claims that three in 10 workers in the UK do not turn off their computers before leaving the office for the day, but that 27 percent said the main reason why they do turn off their computers is because of environmental considerations.

This compares to 21 percent of employees in the US. Kateri Callahan, President of the Alliance to Save Energy, which conducted the report, said: “Powering down inactive PCs can provide a simple yet effective way for businesses to reduce overhead costs and environmental impact. The economic crisis and volatile energy prices make it even more imperative for businesses to save money by saving energy.” She went on to say that employees turning off computers could reduce a machine’s energy use by 80 percent.

words featuring well-known sequences of numbers or letters, such as 1234 or QWERTY. A STUDY BY CYBER-ARK in partnership with A further 16 percent used their own first Information Week has revealed that IT users name as a password. are woefully naïve when it comes to setting Adam Bosnian, VP of products and stratetheir own passwords, choosing ones that can gy at Cyber-Ark, said: “With four percent of easily be guessed by hackers. users coming up with the impressively It analysed 28,000 passunimaginative ‘password’ or a simiwords, which had apparently lar derivative as their password, been stolen from a wellthis study confirms what we’ve known website – and known for some time here at found that 14 percent of Cyber-Ark, namely that there is had apparently been stolen from a users had opted for passa lot of naivety when it comes well known to password security out there in website IT userland.”

He went on to say that five percent of the 28,000 stolen passwords were names of popular TV shows or singers and that over a third of the users could have their accounts easily compromised by hackers.

“This report is a real eye-opener, as it shows how poor password security is in the real world of employees. It also illustrates the need for IT managers plus their staff to seriously educate users about the need for better password security,” he went on to say.

28,000 passwords

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FRONTLINE IN MY VIEW

ANTONY JENKINS, CEO of BarclayCard on why he believes in the future of contactless credit card technology One of the things we care about most at BarclayCard is making customers’ lives easier. All of us as customers are busy in our daily lives. Anything that can make transactions at the point of sale a little bit easier is going to be appreciated by customers. Whether it’s buying a coffee or a newspaper or whatever. That’s why we think contactless technology has great potential.

If you look at the heritage of BarclayCard from its establishment in the 1960s it’s always been an innovative and market leading brand. It’s in our DNA and we think we should be leading the way in investing in the next wave of consumer benefits.

We’ve made a seven-figure investment in the technology. We can’t be specific about the number but it’s a considerable investment.

The challenge that you face on this sort of project is customer adoption. Customers, like all of us, are inherently conservative. Once they have experienced the benefits for themselves adoption of the new technologies follows on quite quickly. So you need to be able to communicate those benefits to them as clearly as possible.

I believe that you could conceivably completely do away with plastic credit cards. At the point of sale you could simply use a fingerprint, which is very futuristic. I do think the technology is there for that but its adoption and how quickly it takes off depends on customers' attitudes and receptiveness to that sort of thing.

I think Europe can continue to lead the way with these types of technologies. The US is making in-roads into contactless technology but not at the same pace as we’re doing here in Europe. Obviously not all European countries use technologies like chip and PIN but most are moving towards that today.

In many ways we could see plastic credit cards as the shortest-lived payment mechanism in mankind’s history. If you think about what a credit card is, it is only a mechanism for containing some pretty basic information, principally the customer’s account number. That sort of information could be stored in various different ways. I’m sure that in the future we’ll still have cash but in the next 10 years could we see the death of plastic? Absolutely.

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FRONTLINE CANVASSING OPINION

THE RISKS ARE CHANGING BUT IS THE APPROACH?

TODAY’S COMMON TALKING POINTS for companies and individuals alike are recession and regulation.

Across industry worldwide budgets will be subject to closer scrutiny and it is now generally accepted that the global economy is contracting. Companies are closely examining their IT security spend against affordability and value. The most likely outcome is that IT security investment will be reduced in line with overall IT budgets as expenditure and discretionary spend is

put on hold until the direct impact of the global economic crisis eases.

In view of this it is imperative for companies to remain focussed on prioritising key information security risks and responsibilities and to ensure that effective mitigation and risk controls are in place.

Assessment of the cost versus benefit risk against IT security budgetary spend has always been a

fine balancing act for any company. However, for now and the foreseeable future informed opinion is that the IT security threats faced by companies are on the increase due to a variety of contributing factors. The likelihood of loss or damage to a business will also grow in line with the threat unless countered. The question remains; the risks are changing but is the approach? For more information, see www.qinetiq.com.

A SURVEY RELEASED last month by Booz & Company explores corporate responses to the global economic crisis. The study, which surveyed 828 senior managers from a variety of industries across 65 countries, asked respondents to assess both their company's financial strength and competitive strength.

The survey found that companies found it difficult to identify effective responses to the current economic downturn and 40 percent questioned whether their leadership had a credible plan in place. 65 percent of struggling companies were found to have responded insufficiently to ensure their own survival and onequarter of companies that considered themselves financially secure were not taking advantage of opportunities to improve their position.

COMPANY INDEX Q2 2009 Companies in this issue are indexed to the first page of the article in which each is mentioned.

Aberdeen Group Adeptic Adobe Al Mahara Allianz American Express Axsium Barclaycard BBC World Service Beefeater Bluecoat Breakthrough Management Group Int. BT BT Global Services Business Continuity Institute BW Bank Canto Cantor Fitzgerald CM Group CNBC Costa Coffee Credit Suisse Deutsche Bank easyGroup easyOffice El Bulli Exact Software ExxonMobil Forrester Research Frost & Sullivan

48 53 4, 106, 107 138 24 74 56, 57, OBC 30 116 36 72 52 87 24 74 30 115 74 50, 55 24 36 122 24 104 104 138 81, 120,121 24 116 92, 112

Garmin Glocent Google Human Productivity Lab IBM IDC IDS Sheer Incognito Software Incremedia Juniper Networks L’Oreal Louis Vuitton Magic Software Masa MasterCard Mercedes-Benz Morgan Stanley MPS & BBI International Munich Re NewsGator Nokia Northgate Arinso Omega Oracle Ovum Panda Security Parasoft Pizza Hut Premier Inn PricewaterhouseCoopers

140 58, 59, 141 60 100 24 114 126, 127 124 51 78,79 85 85 2,128 138 30 142 74 116 70 9, 118, 119 140 13, 35, 47 24 6, 113 76 18, 83 IFC, 84 36 36 66

Progress Software Qatar Finacial Centre QinetiQ Raffles RBS Rolex Salesforce.com SAP Serious Fraud Office Shell Sony Stagecoach Stena Line Stonesoft Tempura Communications TGI Friday’s TNT TNT Express Twitter Tiffany & Co. UEFA Videra Visa Vodafone Vodafone Unified Communications Group Wainhouse Research Warsaw School of Economics Whitbread

64, 65, 135 24 23, 69 138 30 24 112 112 66 24 140 30 40 11, 144 98, 99, IBC 36 108 108 116 85 30 29, 102, 103 30 44 90, 95 96 30 36

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COVER STORY

Making

headlines Providing 24-hour credit crunch coverage, keeping advertisers happy and staving off the competition – it’s all in a day’s work for CNBC CEO and President and Managing Director for EMEA, Mick Buckley, who tells Diana Milne there’s no better time to be a player in the media game.

I

t’s Wednesday lunchtime at CNBC’s London studios and Mick Buckley is having his photograph taken against the backdrop of an interactive map showing live coverage of Europe’s stock markets. As the photographer snaps away, the numbers on the colour-coded map, which features in CNBC’s daily news broadcasts, change by the second. “This doesn’t paint a very good picture,” jokes Buckley as Europe turns an ominous shade of red behind him and the minus numbers rack up.

Later, watching intently as a bank of screens show CNBC’s global market coverage, he describes how rapidly he has seen events across the world’s economies unfold – and the complexity of providing coverage of this for his viewers: “The speed and the extent of the financial crisis and now the economic crisis has taken everybody by surprise. This has been a global story that has broken out in the most unexpected of places. Nobody could have predicted, for example, that Iceland would have become the centre of the story at the time that it did. It’s also been a complex story to explain to our viewers. It’s fair to say that regulators, senior business people and viewers have been challenged by the complexity of some of the financial instruments involved.” And for Buckley and his team there is no margin for error when it comes to reporting the credit crunch story.

“We have a huge responsibility to actually get our coverage right,” he says, pointing out that for CNBC’s audience accurate and fast information is vital. The channel is broadcast to over 340 million households worldwide and the bulk of its viewers are also newsmakers – business

executives and financial professionals that rely on the data CNBC provides to make crucial commercial decisions. “We’re not a general news channel with a broad-based audience,” says Buckley. “Our audience is made up of senior, multi-private investors and financial professionals.

They have a pretty high base level of understanding of financial issues.

They get it. In terms of what they want, it’s data. But data is available everywhere so what we seek to give them is the story of what’s behind that data – what are the big macro trends by sector.”

Success story Not surprisingly these professionals’ appetite for this data has grown in today’s economic climate and CNBC’s viewer figures are soaring. In the past 10 years its monthly viewing figures have risen from 1.7 million to 6.7 million. In 2008 its viewer figures in the US alone grew 30 percent and as a result it experienced double digit revenue growth. “From a television point of view we’re having our best audience levels for 20 years,” reveals Buckley. Our websites have been going now for 18 months and the audience levels have doubled in a very short period of time. In October, for example, we had 400 million page views to our global website.” Feeding this insatiable appetite for data means providing round the clock coverage of the world’s financial markets online and on television in real time as the financial markets of Asia, Europe and the US open and close. In a typical week 850 senior leaders are interviewed on the channel and CNBC’s reporters, based in 21 bureaux worldwide, are on the front line when the big business stories break.

“From a television point of view we’re having our best audience levels for 20 years”

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All images: inside CNBC’s London studios

It’s difficult for Buckley to pick out coverage of an event that he is particularly proud of but he highlights the channel’s reporting of the Shanghai stockmarket crash in February 2007.

Describing the moment when the Shanghai Composite Index fell sharply in one day following rumours in the market about the capital gains tax being increased, he says: “The market drop was towards the end of the day in Shanghai so we instantly had to get our bureau network in Asia on the case. And immediately the story was happening live on CNBC. By using our bureau network across Europe we were able to tell that story as markets opened and closed and business leaders and CEOs were coming on the channel to give their perspective of what this meant. The story started at 9am London time and for us it finished at 10pm London time as the US markets closed. It was a day when CNBC’s global strength in terms of our bureau network and technology and fantastic team of journalists and back-up technicians came together to produce the very best coverage of that story.”

Globalisation and the domino effect of the world financial crisis means CNBC has had to adjust its coverage so that it appeals to an international rather than regional audience in each continent where it provides coverage – the collapse of the Shanghai stock market being a case in point. With this in mind, last year the channel removed regional tags from its operations, re-branding CNBC Europe as simply CNBC to reflect the increasing demand for pan regional and global business news. Its European operation continues to broadcast nine hours of EMEA specific programming a day, however the channel is now treated as a global operation that broadcasts news about every region to every region.

Describing the shift that led to this move, Buckley says: “When we launched the channel 10 years ago there was a need to differentiate our European programming, but since then so much has changed in the way we do business. Every story we cover has global implications and the adjustment to the brand reflects this.”

Feeling the heat But this global news coverage doesn’t pay for itself – advertising revenue is the channel’s lifeblood and the channel is as vulnerable to the economic downturn as the companies whose plunging stocks it reports on.

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Its growing viewer figures however, ensure the channel remains a powerful platform for advertisers and for now Buckley remains confident that there will be ample commercial revenue to pay for the news content CNBC provides. In 2008 it achieved 20 percent year-on-year growth for Europe, the Middle East and Africa and it has experienced compound growth in advertising revenue of 28 percent since 2006. Buckley says he expects growth in 2009 to reach around eight percent. “I’m very attentive to what’s going on with our advertising sales. But at the moment things look pretty good for this year,” he notes. “We’re not in a local country retail advertising space; we’re an international channel and we have a really good diversi-

“Every story we cover has global implications and the adjustment to the brand reflects this” fied portfolio of advertisers from a sector point of view as well as from a regional point of view.” He goes on to say that its advertising clients include IT giants such as IBM and BT Global Services, financial services providers such as Deutsche Bank, Qatar Financial Centre, and Allianz and energy companies, including Shell, and ExxonMobil. CNBC also attracts advertising from luxury services and products manufactures, such as watchmakers Omega and Rolex who are attracted to the channel’s lifestyle programming, such as CNBC Life which is broadcast at weekends and is, according to Buckley, “A combination of high-end travel, luxury sport, entertainment and current affairs.” Describing the programming schedule, he says: “The

PROFILE OF A TYPICAL CNBC VIEWER Viewers are, on average, 46

years old

75% male

54% are from three big markets – France, Germany and the UK

7% have a net worth of over €950,000

An average income of over

€93,000 22% are self-employed or private investors

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weeks are about how to make money and the weekends are about how to enjoy the money you’ve made.”

Despite the fact that CNBC is currently 40 percent ahead of its main competitor Bloomberg in terms of annual viewer figures, it is nonetheless operating in a fiercely competitive market, made even more so by the proliferation of digital television channels and online news coverage worldwide. Buckley’s response to this is to ensure CNBC remains sharply focussed on its target audience. “With fragmentation in the digital space it’s really important that you have a valuable niche. And we have the most valuable audience in television. We have an audience that everybody aspires to in terms of their quality. We are happy understanding who that audience is and programming to their needs.”

Buckley goes on to explain the profile of a typical CNBC viewer: “Our typical viewer is male and aged 45. They have a huge network of contacts and a salary in excess of €95,000 and a net worth of €421,000.

These viewers are C-suite executives, financial professionals and private investors.” And he says he has no intention at present of trying to reach a wider audience, given the appeal of this one to CNBC’s advertisers: “I’m happy growing the audience but the reason why I wouldn’t change

it is because digital fragmentation has made that audience more and more valuable to advertisers. We’ve seen significant growth in our advertising across the last five years.”

Commercial considerations Getting the balance right between pleasing advertisers and providing original content to viewers is a challenge for any media organisation, however Buckley says CNBC has achieved this by offering not just “spot advertising” but the opportunity for customers to sponsor programme slots and organise business events around the billing of a show. Shell for instance, has sponsored CNBC’s daily Questions for the Future show and organises post-screening B2B events in different countries in conjunction with the programme. CNBC also has a division called Creative Solutions which produces bespoke content for advertising clients. “It’s really about mixing traditional television advertising with real solid and effective B2B communication,” remarks Buckley.

His understanding of the commercial process stems from the fact that his background is in the business, not the editorial side of media. Before coming to CNBC Europe, he was an Executive Vice President for news channels at Turner Broadcasting where he spent eight years. “My background is actually commercial and I’ve worked in television all my career in a variety of different places,” he says.

However, while the pressure is on for Buckley to bring in the big bucks from advertisers, he says the most stressful part of his job is being first to break the big stories. “I wouldn’t describe this as a stressful job because it’s something I really enjoy. Clearly the biggest pressure of the job is the responsibility of making sure that our coverage is the best.”

As our interview comes to an end the banks of television screens in the gallery flicker on with news of the latest developments in the financial crisis. Meanwhile, Buckley returns to the job of supervising a 24-hour news operation, where the cameras never stop rolling and where, in today’s tough economic climate, no media operator can afford to pause for breath. n

ABOUT MICK BUCKLEY Mick Buckley was appointed to the role of President and CEO EMEA of CNBC in August 2004, having previously been Executive Vice President and Commercial Director.

Prior to joining CNBC, Buckley spent eight years at Turner Broadcasting Systems Europe. He held a series of distribution and sales roles for a number of Turner channels including CNN and its entertainment channels. He left TBS to pursue the “Advanced Management Programme” at Harvard in 2002.

He graduated from the University College of Wales with a BSc honours degree in International Relations and Strategic Studies.

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Mr

Nice Guy Y

ou’d expect the head of one of the most successful businesses in Europe to rule his organisation with an iron fist. But according to Javier Perez, President of MasterCard Europe, being a “nice guy” is the key to running a successful business – even in today’s cutthroat banking industry.

“I believe that being a nice guy gets you results,” he says. “Today to get the best out of performing teams of people you need to have an environment where people are appreciated, recognised and praised for the good things that they do. And being able to have a frank and honest discussion about the things that didn’t work out is the secret to having a performing organisation. If you don’t have a nice environment with nice people it’s very hard for that to happen well.”

And judging by MasterCard Europe’s results for 2008, Perez has been very nice indeed to his team. The company is one of the few in Europe to have experienced double digit growth in a year when most were battling to survive. The company’s gross euro volume grew by 15.5 percent, purchase volumes by 15.7 percent and purchase transactions by 13.2 percent. In the same year alone, European customers made 6.4 billion

purchase transactions with their MasterCards. Beaming proudly as he relates these latest results, Perez clearly has all the evidence he needs to support the fact that being nice gets results. And seemingly not even the prospect of worsening economic conditions across Europe can wipe the smile off his face.

Indeed, he believes that MasterCard could profit from the changes in the spending habits of consumers during the credit crunch – particularly the pattern of spending little and often rather than making less frequent high value purchases. “We have a situation in Europe, like everywhere else, where we have worsening economic conditions. What is the consumer doing to deal with that? Well the way people are behaving is to simply do what they want to do but they are doing it differently. A typical example is the spending behaviour of a Belgium family on holiday. In the past the family would travel by plane and paid say 1000 euros for the four of them. Now they will drive instead and make lots of smaller purchases along the way such as paying for gasoline, buying meals en-route, then when they get there buying food from supermarkets instead of paying for big meals in restaurants.”

Javier Perez, President of MasterCard Europe, is one of the few company leaders who believes the economic downturn will be good for business.

Diana Milne reports.

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MASTERCARD CHIP TECHNOLOGY The role of chip technology in the payments industry is growing rapidly, and issuers all over the world are embracing chip programmes for a growing list of reasons.

Chip is a powerful fraudfighting tool. It’s also a cash displacer, a loyalty builder, and a competitive differentiator. And consumers are realising a whole new world of advantages with chip and PIN, from security to convenience to time savings.

The cornerstone of the new chip payments infrastructure is the global EMV standard for credit and debit payments, jointly developed by Europay, MasterCard and Visa in 1996. The latest version of the standard, EMV 2000, is a powerful, rich and comprehensive definition of chip payment functionality.

All over the world, MasterCard is helping customers leverage their investment in EMV to build market share, identify new revenue streams, and gain competitive advantage. EMV chip technology brings the potential for stronger security, wider acceptance, deeper relationships, and new marketing programs. MasterCard Chip Solutions give customers everything they need to migrate to chip and evolve their businesses on their own terms.

This situation, he goes on to say, is beneficial to MasterCard because it relies not on the value of single transactions but on the volume of transactions that are carried out: “MasterCard is not that sensitive to the economic conditions as long as customers keep spending money. It is not so dependent on volume but is very dependent on transactions. So for us it’s more attractive to have 10 transactions of €80, than one transaction of €1000.” Another attraction of the credit crunch to MasterCard, claims Perez, is the fact that consumers will increase their usage of credit cards in a bid to better control their finances: “[In this climate] people start to be a bit more mindful and rather than happily using cash, we have seen in the past more usage of plastic in order to keep the money in the bank longer and take advantage of the card. When you have a lot of money in the bank and you’re not that concerned you just burn cash and it’s fine. When you’re a little bit concerned, you start thinking, ‘Maybe I can match my salary with my expenses by taking advantage of my credit card and paying by the end of the month.’”

That’s not to say that Perez believes MasterCard is immune to the woes affecting financial services providers across the world. He acknowledges that

HISTORY OF MASTERCARD

1966

1979

1983

The Interbank Card Association (ICA) is founded

Master Charge is renamed “MasterCard” to reflect commitment to international growth

The company introduces the hologram security device, an industry first

1969 ICA acquires exclusive rights to the “Master Charge” name and the trademarked interlocking circles

1988 MasterCard acquires the Cirrus ATM network

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there could come a point where the credit crunch is bad for MasterCard’s business. Going back to his earlier analogy, he says: “The other end of the spectrum is that if that Belgium family becomes unemployed and they simply don’t have any money to spend that is bad for MasterCard. I know from experience the impact it will have on MasterCard if indeed the consumer stops spending. To what extent the incremental spending of small amounts will compensate for that remains to be seen.”

technology change and expense that would be necessary on the acquiring side in order to deploy chip. You would have to change every terminal in Europe without exception in order to deploy chip.”

He goes on to say that reaching standardisation among the card providers also hampered progress – an obstacle that was later overcome by the introduction of the EMV standard which was developed through collaboration between Europay, MasterCard and Visa. “At the beginning MasterCard had one standard. Visa had another. Some domestic schemes Changing times had another. So we had to create the EMV code in order to avoid language While he bases his predictions of consumer spendissues in which one chip doesn’t talk to another. Or a ing habits on the patterns displayed in the past, Perez chip doesn’t talk to a terminal. So when you put all knows that the payments landscape has changed dramatthose things together that is why we have been slower ically in the 30 years since the MasterCard brand was than we thought.” launched. To date the number of MasterCard cards issued This slow progress is even more frustrating for Perez

by European financial institutions is a massive 195 million given that technology is now rapidly moving onto the and making payments by plastic is now a global phenomnext level, leveraging the the EMV payment platform for enon – fuelled in recent years by the explosion in the popcontactless payment technology. In the UK alone ularity of online shopping. Today technology is MasterCard has issued one million MasterCard PayPass Number of revolutionising card payments further, and addressing branded Barclaycard cards, and has been involved in MasterCard cards many of the public concerns that proved obstacles to their partnerships with Royal Bank of Scotland and the UK’s issued to date wider adoption. In particular the introduction of chip-enStagecoach bus company to introduce the first ever use in Europe abled cards through the EMV standard, has addressed seof contactless bankcard payments on public transport in curity and fraud concerns. Over half of the MasterCards the UK and France’s La Banque Postale, Germany’s BW that have been issued in Europe are now chip-enabled.

Bank, and the VfB Stuttgart football team, as well as the However, according to Perez, this is not enough. He says progress on the inintroduction of PayPass for students of the Warsaw School of Economics. troduction of chip-enabled cards in Europe has been disappointing – given While slow deployment of the technology by retailers has delayed the that it was a decade ago when the company first introduced the technolowidespread adoption of chip and PIN cards in Europe, Perez said that where gy to its customers. He blames the slow progress not on customer uptake it is deployable, merchants have been highly responsive to contactless paybut on the response by retailers. ment innovations – primarily because it makes their jobs easier. “We are re“We thought chip would come out faster. And we thought the multi-apceiving an extremely good response from retailers to the contactless plications would come faster. The first time we recommended chip was 10 technology. They absolutely love the PayPass product because it provides years ago. It’s been slower than we expected. It’s relatively simple to modmuch more speed at the register and a very nice experience for both the ify the cards because they expire every three years, more or less. But it is cashier and the consumer. It makes the transaction faster and easier and hard to modify the acquiring infrastructure, such as the terminals that are quicker. So that is evolving really well.”The key to spreading adoption of placed on the retail side. I think we underestimated the magnitude of the the technology, says Perez, is to ensure that it is not proprietary and that

195 MILLION

1991

2002

2006

Europay and MasterCard launch Maestro, the world’s first online pointof-sale debit network

MasterCard merges with Europay International to create MasterCard International.

MasterCard launches and completes the initial trial of its MasterCard PayPass contactless payment programme in Orlando, Florida, with Chase, Citibank and MBNA

A new corporate name, MasterCard Worldwide is launched along with a new corporate signature and tagline, The Heart of Commerce

1997 Launch of the Priceless, advertising campaign which goes on to run in 98 countries and in 46 languages

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branded contactless cards or those made available through partnerships with transport providers, for example, can also be used to make payments at other outlets: “Retailers like the subway in Paris have realised that proprietary technologies are not the way of the future. If they want the consumers to use the card they need to make sure it can be used everywhere.

In other words, if you as a consumer can have a card that can be used everywhere, the chances are you can also use it in the subway. Therefore (in the future) you will see a migration from proprietary technologies like Oyster to products more like PayPass. The same thing but a global technology that can be used everywhere.”

In control

MasterCard, resulted in profits of €38.54 million for the teams that reached the knockout stages. MasterCard commissioned a study by one of the world’s leading marketing experts Professor Simon Chadwick of the UK’s Coventry University, who said at the time: “In uncertain economic times, sport’s universal appeal remains strong, making it one of the most lucrative industries to be involved in.” Backing up this claim, Perez says: “We have the best sponsorship platform in the world, which is football. The consumers like it, the retailers like it and that’s giving us excellent results.

We continue to use those assets. They deliver good results. And we intend to continue using them.”

Like the captain of a good football team, Perez has proven that keeping his team happy gets results. But as playing conditions in the financial services sector get ever tougher, and with competitors hot on his heels, Perez must now work harder than ever to ensure MasterCard remains at the top of the league.

Another innovation MasterCard is hoping to introduce, taking advantage of EMV technology is the In Control technology, which allows customers to control their spending on credit cards by customising them to have certain limits on spending amounts and where the customer can actually spend money.

This, says Perez, will appeal not just to the budget conscious but “We want to make sure that in this also to parents and to companies changing environment, we continue with corporate credit cards: “It to provide to all our stakeholders the means the consumer, through accessing a website, will be able best possible product that would to set spending parameters for enable them to face difficult times” their credit card. You will be able to define where and when you spend money and how much you can spend per transaction. Whenever your card does something that you want to be informed about, the system will send you an SMS. This is very useful for the consumer but also for companies and for families. For instance children can be given cards that they can only use for school transport or school cafeterias.”

Ever the nice guy, Perez claims that the thinking behind the product is that it will enable customers to better weather the financial storm. “I guess in a situation like today the first question we ask is how MasterCard is going to wrestle with the economic environment?

I have already said that it doesn’t impact us much directly. But it does impact our customers, the banks and the retailers. So we are very keen to make sure we continue to deliver value to all our customers. We will deliver value to society in general by providing a means by which people can spend money wisely and be able to continue to have access to payments in an organised and safe way.

We want to make sure that in this changing environment, we continue to provide to all our stakeholders the best possible product that would enable them to face difficult times.”

The successful introduction of MasterCard’s new products relies less on current economic conditions than on the company’s aggressive branding and marketing strategy. Perez says the “below the line” approach, such as direct mail, still continues to deliver strong results for the company, however the company’s continued success has allowed it to embark on a high profile above the line campaign. One of the keystones of this is sponsorship of international sports events – most notably the UEFA Champions League, which according to

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A cut above The

rest

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HOSPITALITY

With its sights set on a cost cutting target of €26 million a year, Whitbread has left no stone unturned in its bid to trim the fat from the organisation – shedding unprofitable brands and outsourcing services. CIO Ben Wishart explains to CXO why the hospitality giant needs to shrink before it can grow.

T

here’s nothing new in today’s economic climate about an organisation streamlining its operations. But back in February 2008 when Whitbread announced that it was to undertake drastic cost cutting measures few could have predicted the impact the credit crunch would have on European businesses. Whitbread, however, was ahead of the pack when it came to forecasting the downturn – and at a time when most companies were expanding – it announced streamlining processes aimed at saving it €26 million a year. Already it had disposed of four of its key brands – Pizza Hut, TGI Friday’s, David Lloyd Leisure and Marriot Hotels. Now the time had come for the company to look within and explore how it could reduce its operating costs.

Key to this strategy was the streamlining of its IT and logistics operations and the outsourcing of these to Kuehne + Nagel in April 2008.

The next stage will be to outsource finance and accounting services to India through a multi-million euro, five-year deal with Steria.

Heading these changes is Ben Wishart, CIO of Whitbread, who has the ruthless task of trimming the fat from the organisation’s operating costs – a job regarding which he is unapologetically pragmatic. “The rationale is one of focussing on opportunities to reduce cost. Largely it is that simple he says “The team who used to manage the finance and accounting – and still manage them today but are in the transition process – are great people who used to do a really good job. But the truth is that in the 21st century there are also people in India who will do a really good job and they will cost the business a lot less money to do it. Our focus is to, at least once a year, have a really good look at our overheads and look at the next list of opportunities that we could go for.” So does the company plan to do more outsourcing of its IT operations when it conducts the next assessment of its overheads? “I can’t think of anything that we’ve got line of sight on outsourcing at this stage,” says Wishart. “We feel

that we’ve bitten off quite a big chunk in terms of doing finance and accounting in parallel. So when those two are both up and running and stable, we’ll go back to the drawing board.”

Streamlining Saving money is not the only motivation behind Wishart’s overhaul of Whitbread’s IT and logistics operations. The organisation, he says, is now very different from the one he joined four years ago when Whitbread was made up of eight business units. Today it comprises five key brands – Premier Inn, Costa Coffee, Beefeater, Table Table and Brewer’s Fayre – on which it is now entirely focussed– with the aim of increasing the number of Premier Inn businesses by 50 percent to 55,000 rooms and to double the size of the Costa Coffee business to 2000 outlets in the next five years.

The streamlining of parts of Whitbread’s operations has meant consolidating IT and logistics systems, not just to cut costs, but also to bring in greater efficiency to help drive the company’s expansion plans for its remaining brands. One of the problems Wishart inherited when he took up the role was that there were disparate IT systems for each of the company’s business units – a situation he has since remedied by creating an IT shared services centre: “When I joined the business four or five years ago, there were eight business units and they were largely independent of each other in terms of the IT business decisions they took. We started by creating an IT shared services centre around the things that were common across all of the businesses. For instance, everybody used the same till process around every business and they all used the same HR and accounting software. Then once we started selling more businesses, it was largely about taking volume out of those areas rather than doing something radically different.”

Describing the problems the fragmented nature of the IT systems was causing, he says: “Obviously if you are managing an IT operation

“Our focus is to, at least once a year, have a really good look at our overheads”

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WHITBREAD BRANDS: Premier Inn Premier Inn is the UK's largest and fastest-growing hotel brand with over 36,006 rooms and 518 hotels across the UK. A joint venture with Emirates has seen the Premier Inn brand develop in the Gulf region, with its first budget hotel in Dubai opened in Spring 2008. Premier Inn also has a joint venture in India with Emaar-MGF to roll out 12,000 rooms in 10 years.

Beefeater Part of the Whitbread family, Beefeater launched as a brand back in 1974 with the opening of its first restaurant The Halfway House in Enfield outside London. As the name suggests it was predominantly known as a steak house. Whitbread has invested heavily in the Beefeater estate which now stands at 141 restaurants nationwide with more opening in 2009.

Table Table This new eating experience first opened its doors in 2005 and now has over 100 restaurants nationwide, with more opening in 2009.

Costa Coffee Costa is now officially the largest and fastest growing coffee shop chain in the UK. It opened its 1000th milestone store in Moscow last year. Costa was founded by Italian brothers Sergio and Bruno Costa in 1971. With over 750 stores in the UK and over 300 internationally, Costa has enjoyed a period of rapid growth since it opened its first store. It now operates in 23 countries.

in a fragmented way across a multi-brand operation like Whitbread, then you’ve got more management overhead and if you’re not terribly well co-ordinated you end up paying different prices for the same thing in different parts of the business. Also you just don’t notice the areas where there is operational inefficiency because it doesn’t stare you in the face.”

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Despite having successfully re-modelled Whitbread’s IT systems, and established a shared services centre, Wishart says he is still not satisfied that the systems in place are simple enough for staff to navigate – adding that he believes that in their present state, the systems are preventing staff from doing what they do best – pulling pints and serving customers with a smile. “We think there are a number of areas where the way in which the business process has been constructed and the system that’s been designed to support it drives re-work, errors and non compliance to process. Frankly, if you manage the Dog

“I think the key challenge of my job is keeping everybody focused on the fact that this is about business processes not about systems” and Duck Beefeater in Wellingborough you want to be out at the front of house with your guests, serving great food and giving people a good time. But in actual fact you get dragged into the back office to carry out some processes for more time of the week than you’d like to. We want to take that problem away from our managers so that we can get them focussed on what we think is absolutely the right thing to do which is serving people a great meal and great drinks in comfortable surroundings.”

IT Strategies Keeping IT aligned with businesses processes is the main role of any good CIO, but in the case of Whitbread, because IT plays such a

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crucial role in frontline operations, it is even more important for Wishart to convey the importance of his department’s role within the organisation. “I think the key challenge of my job is keeping everybody focused on the fact that this is about business processes not about systems,” he says, admitting that ensuring the company’s systems are up and running 24/7 gives him sleepless nights: “The number one issue that I wake up in the night worrying about is the availability of our systems that drive availability into our hotel business. We have 38,500 rooms in the UK. We book on average about 19,000 of those every day through our internet site and the rest come through a direct conversation with us either in a hotel or in the reservation centre where they are booking directly into the reservations system that sits behind the website.”

Wishart adds: “The average lead-time for a reservation is between two and three days. So the availability of those systems and their use for our guests and the people who are talking to our guests on the telephone is more important than anything else.”

However those numbers are set to become even more daunting for Wishart as the company expands its hotel and Costa businesses both on its UK home turf and internationally. Last year Whitbread announced plans to boost its hotel portfolio by over 1000 rooms and to add fi ve new pub restaurants. This followed the announcement that it was to acquire 21 Express by Holiday Inn hotels. It is also expanding the Premier Inn brand internationally having entered into a joint venture agreement with Emirates Group to launch the Premier Inn brand in the Middle East, where it has already launched its first property in Dubai. India is another important market for Whitbread and it has entered into a joint venture agreement with the developer Emaar-MGF which will see it build 80 hotels in the country over the next 10 years – an investment worth up to €320 million. Costa Coffee too is undergoing expansion with Whitbread planning to open outlets in China and Russia through joint ventures it has established there.

The expansion of the business into new markets overseas in particular will bring new challenges for Wishart – however he says

Whitbread PLC employs over 33,000 people and serves 8.5 million customers every month in its 1500 outlets across the UK.

he is confident that the international operations can operate using the same IT systems as their UK counterparts: “The IT that we’re putting in place is based on what we have learnt from the model that we’ve built in the UK because we think that we are pretty good at delivering a low cost IT environment,” says Wishart. “We can’t put exactly the same IT that we used in the UK into the international marketplace because some of the things that we used in the UK won’t travel because of different currencies and tax regimes and so forth.

But we’re working generally with the same people and partners that we worked with within the UK that have other products that are more susceptible to international travel.”

He goes on to say that his department has implemented a reservation system in Dubai that will also be used in India and that the Premier Inn website is able to interface in Dubai and India with local reservation systems.

Whitbread’s streamlining and efficiency drive is clearly paying off.

Cutbacks made in other areas are helping to fund the expansion of the company’s core brands – resulting in an increase in overall revenue by 12.6 percent in 2008. Clearly thinking ahead has paid off for the company. But according to Wishart there is only one factor driving Whitbread’s success and its IT strategy – putting the customer first: “We have achieved our success with a relentless focus on what’s right for our customers. And what is right for our customers is to create an environment where you can have a really good meal and a drink and where the environment is really pleasant.” 

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SHIPPING

There aren’t many CEOs making multi-million euros investments in their businesses at a time when most are cutting back. But as Diana Milne discovers when she meets Stena Line CEO Gunnar Blomdahl, the tide hasn’t yet turned for Europe’s biggest ferry operator.

A

s CEO of Europe’s biggest ferry operator, Gunnar Blomdahl knows he will be steering his business through stormy waters in the year ahead. Soaring fuel prices last year, followed sharply by the European economic downturn, have already dealt a big blow to the firm, which in 2006 doubled its profits and in 2007 achieved profits of around €665 million. “We think the next year will be a problem so we do not have high expectations,” says Blomdahl. “Definitely we will make less money.” Describing how oil prices resulted in extra costs of around 25 to 30 percent, he says the company’s freight business has been hit particularly hard: “I think the recession hit freight quite early, because the factories don’t produce as much as they are cutting down. So there’s less freight going from the factories to the consumers and so on. Like most companies we are down between five and 10 percent on freight. It’s not so easy to judge the passenger business yet.”

Because Blomdahl is unable to forecast how conditions will develop as the economic downturn unfolds, he says it is difficult for him to know what areas to invest in. “We are challenged of course by the recession. You have got to be really careful about what you are doing in terms of planning long term. It will be more difficult than when you have growth each year. Oil prices and currencies are also a concern. It’s very hard to predict what the actual currency rates will be. You have to plan carefully and be focused on tight cost control.”

ABOUT STENA LINE Stena Line is an international transport and travel service company and one of the world's largest ferry operators. It has three business areas: Scandinavia, the North Sea and the Irish Sea. Stena Line’s route network consists of 18 strategically located ferry routes. Stena Line has a modern fleet with a total of 34 vessels including fast ferries (HSS), traditional combi-ferries, RoPax-ferries for freight and passengers, and pure cargo ships. During 2006, around.

15.86 million passengers travelled with Stena Line. During the same period 2.99 million cars and 1.79 million freight units were transported.

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Despite this uncertainty, Blomdahl is keen to forge ahead with plans to expand the company’s North Sea operations through the launch of two brand new superferries, which will travel on the Harwich-Hook of Holland Route. The vessels will be the world’s largest RoPax ships and will have a capacity for 30 percent more passengers. The company has also invested in upgrading and lengthening its Stena Britannica and Stena Hollandica ships at a cost of around €70 million. Describing the importance of these investments, Blomdahl says: “The next area for investment will be in the North Sea where we will introduce the biggest ferries in the world and that investment has a value of about €100 million. That will happen between 2010 and 2011 and will be a very important investment for Stena Line. There is a lot of business between Holland and England. So we need to have big and efficient ferries travelling between there.”

He goes on to say that the ships, though requiring a huge initial investment, will eventually result in energy cost savings for the company: “These ferries actually have less fuel consumption per unit and it’s very important in the future to be more effective,” explains Blomdahl. “We made the investment because we believe in the market and we want to be more efficient per unit. That is very important if oil prices go up again.”

Stena Line has also invested €39 million in a new port terminal in Belfast to capitalise on growing passenger travel between Scotland and Ireland, which increased by one percent to 1.2 million in 2007. The three storey terminal built on reclaimed land will enable Stena Line to relocate its Belfast operations two miles closer to the Scottish coast, facilitating easier travel between the two markets. “It’s a big market for passengers and freight and it’s very important to keep hold of that,” says Blomdahl.

One of the reasons why Blomdahl is confident about continuing to make these sorts of investments despite difficult operating conditions is that he believes there is strong demand for passenger travel on ferries – a demand which he says could in fact become stronger in view of current economic conditions, given the relative low cost of travelling by sea rather than air. “If you look back, there is that pattern before when we had other recessions,” he says. “There is the possibility that this could be an opportunity for us.” With this in mind he says the company is not planning to make any significant cutbacks: “We have no plans right now. We are looking more at the timetables and maybe taking out the odd roundtrip here and there.

But no plans to do any bigger things.”

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Port in a storm

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“This is a very complex business with two very different sides to it, the passenger business and the freight business” It has also invested significantly in its customer reservations and ticketing systems in a bid to ensure the booking process is as painless as possible for its passengers. These systems have been home-grown to ensure those that created them have as good an understanding as possible of the company’s operations. “All our systems are brand new and have been designed to ensure there are no disturbances,” says Blomdahl. “We have our own IT department that constructed most of the systems, so it’s an in-house operation but it’s very high quality. We have our own booking systems for freight and passenger travel and we also have a goods booking system on the internet. More and more of our bookings are coming in that way. Around 50 percent of our bookings both in freight and travel are now done online.” He goes on to say that the system ensures Stena Line meets regulations to register all cus-

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tomers: “We need to register our customers as per the law. So it’s very important to have good systems. We have invested a lot in this in the last five years.”

The fact that Blomdahl has to manage both Stena Line’s passenger and freight operations makes his role doubly complex as he must stay on top of two very different parts of the business. However, he says the key to achieving this is effective delegation. “This is a very complex business with two very different sides to it, the passenger business and the freight business,” he says. “We are not making all the decisions from the top. There are professional and dedicated people that work for us. For instance, route directors on both sides of the business take most of the decisions about any changes to the routes.”

He is also supported by the management of Stena Line’s parent company Stena AB, which also runs Stena Bulk, Stena RoRo, Stena Drilling, Stena Teknik, Northern Marine Management, Stena Fastigheter and Stena Adactum. “We have a strong and dedicated owner. He is a private per-

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FAST FACTS

€39 MILLION Amount Stena Line has invested in a new port terminal in Belfast

50 PERCENT Proportion of bookings made online

25-30 PERCENT The extra costs incurred due to the recent spike in oil prices STENA LINE TRAVEL

Denmark, France, Germany, Great Britain, Ireland, Northern, Ireland, Republic of, Netherlands, Norway, Poland, Sweden

son so we can take decisions very quickly and that’s good for us,” he says. Blomdahl’s role is to make some of the biggest decisions about the business – one which he admits is not for the faint hearted. “To do this job you have to be brave enough to make big decisions and be able to invest €100 million here and there. Because if it goes wrong that could cost you a lot.”

While he is keen to stress that he does not micromanage, Blomdahl says he is by nature a stickler for detail – a quality exacerbated by his background in hotel management – and when travelling on his own ferries, cannot help but notice the slightest thing that is out of place. “Because of my hotel background I am used to watching all areas. So when I travel on the ferries I can always spot if a bulb is not working properly. I’m interested in that because I think it’s all about the detail sometimes.” It’s this attention to detail which he hopes will steer Stena Line through the economic storm and ensure that it remains on course despite the tough challenges it faces in the year ahead. n

Inside Stena Line’s ferries

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PEOPLE MANAGEMENT

Personal touch Global telecoms titan Vodafone has vowed to shave UK£1 billion off its expenditure by 2011 as the recession takes a vice-like grip on the industry. Part of this belt-tightening has seen job losses, including 500 in the UK. CXO catches up with Vodafone’s HR Director Matthew Brearley to discuss the effects of the cost savings, driving cultural change and succession planning.

CXO. What impact will the plans to make UK£1 billion in cost savings have on the HR function?

Matthew Brearley. It’s very true – we absolutely do have to take costs out of the organisation. Any organisation that has grown, particularly by acquisition and organically, means that over time you need to have a little bit of a spring clean to bring yourself back into a healthy, fit, sensible shape to really perform.

In the telecoms market we are seeing falling margins and price erosion. In the UK there are five network operators and multiple competitors. So you have to go and see what your cost base looks like. For an organisation like Vodafone, a clearly significant part of your cost base

is your people. You have to ask yourself whether your organisation is geared to deliver your strategy, have you got excess and have you got options to do things differently? A classic HR question you will ask is what is core to your business and what is not core that could be done by somebody else. For example, not many organisations run their own payroll anymore; they let somebody else do it.

For HR, we’ve got a big part to play in our organisation design and organisation development, helping to create the healthy organisation of the future. We need to work with leaders to help them understand the scale of the change we need and how they can change their behaviour. Of course, if you do get to the point where there’s exits from the organisation you have to manage that process and you have to do it to give the best possible experience that you can, because, of course, every single one of your employees, even if they’re leaving, still hopefully are customers and we want them to be advocates to recommend us in the future, too.

CXO. What are the focus areas for Vodafone’s people strategy?

MB. We’ve got multiple areas of focus. We’re a very diverse organisation. If you relate this particularly to Vodafone UK, which is my part, we have a real focus around our talent-management strategy. It is absolutely key for us to get the leadership and the talent of the portfolio right for our organisation. We have a very clear focus on what we call creating a ‘connected organisation’, which has two real parts to it. The first part is about creating an organisation that’s absolutely obsessed with our customers, our brand and our services.

So it’s getting us to live inside our organisation to see what we really want to be outside, and then secondly it’s about creating a really high performing organisation – being lean, being agile and on the case in terms of how we go about driving performance in the organisation.

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Passing the baton: Good planning was key in Vittorio Calao’s (bottom) succession of Arun Sarin (top) as CEO CXO. Vodafone is an enormous global giant. How do you drive cultural change through a company of that size?

MB. It’s a good question. Driving change is hard at the end of the day. I think you do it through a number of key moves; there’s no one single lever that is the critical lever. First and most importantly, you do have to start by being really clear about where you’re heading. What’s the change you’re trying to put in place? Be really honest about where you are and where you’re trying to get to. The clearer you can be about that the better you can then map the path between the two. The different levers you start to pull are, first, the whole leadership lever.

Is our leadership community really clear on trying to take the organisation forward and engage, align and get people on that journey?

I think line managers – those people such as team leaders, supervisors or anyone that has a people management accountability – are critical for driving change. Whatever this big organisational direction is, the change you want to make becomes real when you relate it to the team in which you work. The job of the local team to create the conditions for change.

CXO. Talent management takes on a huge degree of importance when there’s a war for talent. How do you develop the talent in Vodafone and how do you work on preventing staff attrition?

MB. Talent management is absolutely key and part of the key goals for us in Vodafone. The first thing that’s critical is that you have to put in place an infrastructure around talent management.

There is no one particular route to getting this right. For example, do you develop internally? Do you externally bring in capability? Do you have a great performance management system? Do you have a way of assessing who is performing and who’s not?

You have to have definition around potential – who has real potential in your organisation and potential for what? You have to have career routes and career paths that enable people to move. You have to have a development infrastructure that allows people to grow and develop and be trained to build on what they’re great at. In some cases, of course, you’re looking to plug gaps and help people develop in areas where they’re weak. You also need a very clear recruitment strategy, in terms of how you are bringing people and how you’re tapping into the market to get the very best people. Best is going to mean something different for all different organisations.

CXO. Would you describe Vodafone as a long cycle or short cycle company, and does this affect the investment and quality of staff development?

MB. It’s important what you determine by long and short cycle. As a business, we’re both. We’re a long cycle business in terms of being quite a capital intensive business; we run a big network of 13,000 base station sites based across the UK and there is technology investment constantly going in. When you’re running that sort of capital intensity you have to be long term in the planning, however as an organisation we’re also a very commercial business. We’re on the high street, we’re out in the market, online, through all sorts of channels interacting with our customers, and therefore you’re trading daily, weekly in terms of optimising. So as a business we’re both long cycle and short cycle. With our people, on the whole, the philosophy of Vodafone is more long cycle, however we’re also big enough, brave

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enough to admit the days of a job for life are difficult to achieve.

Fundamentally, we want to retain great people but we all sometimes recruit people who we think are not quite good enough and we are happy to let them go. It’s about balance.

CXO. What are the basic metrics behind the HR function of Vodafone?

MB. The metrics here are important. The ones that sit at what I will call the top level of the organisation, so on our whole company’s balance scorecard, are really three key things that we measure. Number one is our employee engagement levels. We’re looking constantly at the engagement of our people. Are people truly motivated? Are they feeling disengaged from the organisation? The second part is what we call ‘employee advocacy’. You might be engaged but are you a real advocate for driving loyalty behind Vodafone’s brand, its products and its services? We’re looking for real brand advocates. The other one we constantly monitor is attrition.

CXO. Last summer Vittorio Colao took over from Arun Sarin as CEO. The whole transition seemed to go very well but what was Vodafone’s take on the handover and what lessons can be learned from that for businesses in general?

MB. I definitely think that particular transition has been very successful. I think that is down to a number of factors. A while ago Arun recognised the real need for having a successor in his board and clearly Vittorio was that person, and actually we’ve really worked on developing Vittorio and enabling him to make a smooth transition.

“We’re looking constantly at the engagement of our people. Are people truly motivated? Are they feeling disengaged from the organisation?”

I think the generic lessons that come from this are the importance of good succession planning and the importance for every key leader, to be thinking about who is their successor? I think it is about having structured development sort of processes that we call our ‘development boards’ where twice a year you sit down, you look at the whole talent pipeline, you look at who’s coming through, you choose and you say, ‘Actually that’s a great person but they need this breadth of experience before they could make that step. Let’s move them.’

A colleague of mine on the UK board moved a couple of years ago over to Vodafone Ireland as the CFO. Then we brought him back ready to come into the UK as a CFO. It’s about putting stepping stones, being prepared to make old moves to prepare people for internal succession. If you don’t do that, the net consequence is you’ve got to go outside and look for somebody new, and then I think your risk increases dramatically.

CXO. How do you identify leaders?

MB. Leaders have some unique characteristics. I like to use a very simple little model of what I will call potential. When you’re looking for po-

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Matthew Brearley tential leaders in the future I’m always looking for three things. You’re looking for the innate drive in somebody. That’s doesn’t just mean pure ambition and ego. Have people got a real drive to make a difference? I think as a great leader you need a good engine inside you but you’ve got to have a drive to do good things. Number two, you have to be able to influence or make an impact.

This becomes quite behavioural and for many leaders and is one of the most common things they have to work on developing. Does someone have presence, do they have gravitas, and can you learn that or do people have it? Fundamentally, you’ve got to be able to influence and you’ve got to be able to make an impact. Finally, the third area is actually hard to develop. It’s actually your innate IQ. It’s your capability, the mental horsepower that you’ve got. Typically in most organisations you need to be fast on your feet. You just need to have what it takes to be able to genuinely lead from the front, and if you can get those three pieces all together you’ve got so many ingredients for great potential.

CXO. Naturally, there is an emotional issue behind succession. How do you mandate for the emotional and the political side of your job?

MB. My starting point is that you’ve got to treat everyone as a unique individual. I think whenever you’re building an organisation with multiple numbers of people you know everything is not going be perfect because we are human. Error is built in, mistakes happen, there will be behavioural issues, but you build on the basis of the best things to happen, not assuming things are all going wrong. But when they do you’ve got to make sure you handle issues in a very human way yourself as an organisation. If you’re very black and white and say, ‘The policy is this, you’ve done that’, all you normally get is conflict.

An example is where you’ve got a number of people all going for one particular role, but only one person gets it. You then have a number of very capable people who get very disenfranchised so you have to help those people overcome the disappointment. You have to be very honest with them. I think just being dead honest with people and having good common sense is actually a great strategy in its own right, and you then have to find ways of supporting them to help bridge gaps, give development in their careers, which means next time around hopefully they’ll succeed. n

ASK THE EXPERT

HR moving ‘on-demand’ NorthgateArinso’s Denis Tournesac, examines the impact of the economic climate on HR technology.

T

he global economic downturn has brought about interesting times for the HR team. We only need to open a newspaper to see stories of job cuts, pay cuts and recruitment freezes. All this leaves HR dealing with staff cuts, while managing the needs of those people left behind, keeping staff motivated and managing the talent that will lead the business through the economic storm and out the other side.

When CEOs are looking to cut overheads, justifying the HR team’s time and resources is more important than ever. Reporting is crucial as a means of demonstrating HR’s value to the business and technology can have an important role to play in helping the HR team to operate as efficiently as possible.

However, at a time when budgets are stretched, how can HR choose between the myriad technology delivery models on offer?

The average HR manager wants a global view of HR, as well as in-depth local knowledge and expertise that’s not bogged down in admin. But is it possible to have your cake and eat it?

Sign of the times The recession brings with it fewer opportunities for extensive capital expenditure. The initial layout for a big software

Paris-based Denis Tournesac is Executive VP OnDemand at NorthgateArinso. He is responsible for euHReka OnDemand, the first SAP-based Human Capital Management software to be delivered ‘as a service’. He started his career with NorthgateArinso – at the time ARINSO – as Regional Director for Southern Europe and Canada. Prior to this, he was the EVP Southern Europe at Control Data Systems.

project can be huge and updating existing systems is seen as a ‘non-urgent’ task that can wait until more secure financial times.

As a result, now is a good time for managers to be looking at alternative models of software delivery, including software delivered ‘on-demand’, which can be well suited to recessionary times.

of choice for large enterprises. There was a time when HR modules in large ERP implementations were cumbersome and difficult to use. That’s no longer the case, although there’s still work to be done to shake off this reputation. Another factor to consider when implementing IT to support HR is what you’re actually going to use it for. As well as processes and admin, HR directors also need to look at how IT can support the more strategic part of HR, including talent management and succession planning.

NorthgateArinso launched euHReka OnDemand, the first application that makes SAP HCM available as a service, to help HR direc-

“The average HR manager wants a global view of HR, as well as in-depth local knowledge and expertise that’s not bogged down in admin.

But is it possible to have your cake and eat it?”

Going on-demand On-demand technology is nothing new.

Thanks to companies like salesforce.com, it has already proved it can work for applications like CRM and marketing. However, there’s no reason why HR shouldn’t enjoy the same benefits.

Users are much more demanding of workplace technology than they were a few years ago. We go home and happily log in to Google and Amazon, where the interface is easy to use and simple to navigate. It’s no longer acceptable to go into work the next day to use clunky, complex technology. A good on-demand system has got to have a good user interface to be successful.

Weighing it up However, it’s important to remember that when it comes to HR support, one size certainly doesn’t fit all. On-premise software is reliable and scalable, so it is still the model

tors manage admin and reporting, as well as the more strategic parts of the business. We wanted a clean, simple user interface and a choice of modules so HR teams could pick and choose the aspects of HR they want to use the product for.

Having it all?

Just because the economy is in a bad way doesn’t mean investment in new systems to improve efficiency should stop. In fact, it’s more important than ever for reporting to be transparent, in order to improve talent management and competence management processes. HR directors should weigh up all the options available to them carefully.

Different delivery models suit different companies. What is important is that when the right system is up and running, it helps prove HR’s value to the rest of the business at a time when the team is needed more than ever. n

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HR FOCUS

WORKFORCE MANAGEMENT DURING A RECESSION It’s vital not to allow near-term survival tactics during the recession to cloud your strategic Human Capital Management (HCM) strategy, argues Kevin Martin, Vice President and Group Director of Aberdeen Group’s Extraprise Research.

H

uman Resources executives are under more pressure than ever to ensure that their activities are aligned with business priorities, and to deliver consistently higher performance without increasing their budget. Everyone is looking to get more from less – more from their people, their processes and their technology. The events of the last several months have resulted in a landslide of uncertainty and caution for most organisations. The economic challenges are very real. But so is the challenge to stay focused on strategic Human Capital Management (HCM) priorities as near-term survival tactics cloud the strategic focus. Now more than ever, HR executives must step up and ensure the strategic value of HR to the business, and work to maintain a laser focus on organisational priorities by delivering the right talent to the right place at the right time.

To uncover the most pressing business issues and decision criteria influencing HCM strategy in 2009, Aberdeen Group conducted an in-depth analysis of business worldwide via surveys and interviews with more than 400 HR executives and line of business managers during November and December 2008. The results from this research were published in Aberdeen’s benchmark report The 2009 HR Executive’s Agenda. The research and analysis presented in Aberdeen’s report not only outlines how organisations plan to utilse HCM to weather the current economic storm, but also provide a roadmap to increase the strategic impact of HR during these tumultuous times.

Economy and Focus Uncertainty is the key word for 2009. The global economy is shaky at best. And, according to the BusinessEurope employers association, an es-

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TABLE 1. HR EXECUTIVES’ OPINIONS Metrics that matter for HCM in 2009 (on a scale of 1 to 5 where ‘1’ is least important and ‘5’ is most important): Quality of hire = 4.13 Customer satisfaction (non-employee) = 4.05 Employee performance = 4.01 Employee retention = 3.79 Employee engagement = 3.72 timated 4.5 million Europeans risk losing their jobs this year. In the US, more than 650,000 new unemployment claims were filed in the month of March and the total of continuing unemployment claims is now 5.5 million.

Not surprisingly, the economy is the top macro socio-economic pressure facing organisations globally in 2009 by more than two-to-one. However, according to 60 percent of executives surveyed by Aberdeen, it is also increasing the importance their organisations place on HCM this year. Like every other part of the organisation, HCM will be required to do more with the same or less. However, 42 percent of best-in-class organisations expect a budgetary increase for HCM (includes processes, programs, and technology) in 2009. And best-in-class are 55 percent more likely than all other organisations to anticipate a budgetary increase for HCM in 2009.

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Talent management Talented employees always have lots of options, even in a downward trending job market. Looking ahead to 2009, the top workforce-related challenges facing organisations centre on talent management – specifically the retention, development and recruitment of top talent. In fact, on a scale of one to five, where ‘one’ equals least concerning and ‘five’ equals most concerning, the most pressing challenges centre around the current workforce (Figure 1).

Identifying best-fit talent It may seem counterintuitive to still be talking about the war for talent given the staggering reports of job cuts in recent months. However, during depressed economic conditions, the importance of an engaged and productive workforce becomes magnified. As more job prospects flood the market, the ability of an organisation to know what makes for the talent that best fits its culture and is most apt to succeed in specific job roles will become increasingly more important from both recruitment and development perspectives. The use of competencies among organisations is a primary best-in-class differentiator and will see strong growth over the coming year.

Employee engagement is key To address the fear, uncertainty, and doubt that the current economic climate brings, and to help employees maintain focus on the tasks at hand, best-in-class organisations are focused on increasing employee engagement. When employees are engaged and aligned with the organisation, it drives performance. In fact, the pursuit of ‘engagement’ across the talent management value chain (from recruitment to induction to performance management and succession planning) is a primary strategy among bestin-class organisations in 2009. In fact, at Aberdeen’s 2009 HCM Summit in March, 51 percent of HR executives in attendance cited that their organisations allocate budget for employee engagement purposes.

Also, 75 percent of executives surveyed believe HR at their organisation has become more strategic over the past 12 months. However, on a scale of one to five where ‘one’ signals that HR is largely reactive, very tactical and not tied to business objectives and a ‘five’ signals that HR is very proactive and closely tied to the lines of business and business strategy,

executives in North America rate HR a 3.36, whereas executives based in European companies rated HR a 3.63.

Aberdeen’s research has revealed that the predominant hurdle to becoming more strategic is too much time spent on tactical HR activities.

However, another barrier cited by nearly a quarter of all organisations surveyed is the inability to link HCM initiatives to business strategies. Given the increasing importance of focusing on execution of business strategy, over-

“This is certainly the time when HR executives must step up and demonstrate their ability to help the organisation navigate this tumultuous storm and provide a sense of calm” coming this barrier will be crucial to success. However, it will also be increasingly difficult to do this when budgets for HCM programmes are already being stretched. Understanding how to partner and align with line of business leaders will be a key strategy for ongoing success in 2009. For organisations that achieve this partnership, significant performance results follow (Table 1).

Conclusions In the midst of this global economic crisis, consumers seek to tighten spending wherever possible – and corporations are doing the same.

The economy is most definitely going to impact HCM spend and priorities, yet HCM can also impact what Aberdeen’s research shows is the top business priority in 2009 to execute business strategy. This is certainly the time when HR executives must step up and demonstrate their ability to help the organisation navigate this tumultuous storm and provide a sense of calm. But through careful consideration of 2009 priorities, organisations can still make advancements. Avoiding the temptation to ignore long-term objectives like engagement and retention will drive performance now and in the future. n

FIGURE 1. TOP WORKFORCE-RELATED CHALLENGES IN 2009 4.05

4.03

4.00 3.94

3.95

3.90

3.90

3.87

3.85

3.82

3.80 3.75 3.70 Retaining top talent

Developing leadership skills of existing managers

Recruiting top talent

Workforce productivity

Developing future leaders

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EXECUTIVE INTERVIEW

21st century training Tim Buff, Managing Director of CM Group, explains how elearning makes a real difference to your company’s operations.

CXO. How does Luminosity work?

TB. We’ve deliberately made Luminosity the easiest to use toolset on the market, so that people with no IT skills can use it. This means that an organisation’s own trainers and subject experts can create their own elearning and publish it out to a wide variety of devices. The platform is collaborative – that means courses can be created and published by individuals working alone or, more likely, in conjunction with a team dispersed across the organisation. It means that you can create and deliver more training, faster and at lower cost.

Tim Buff is Managing Director of CM Group. After qualifying at PricewaterhouseCoopers, he has spent 25 years in the IT industry, the last 18 of which have been at the board level of datacomms, software and training companies, where he has been responsible for a combination of finance, operations and HR functions.

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CXO. Please explain about the CM Group and how long you have been in elearning.

Tim Buff. We’re a UK-based company with offices near Bristol and in the US. We were founded in 2000 by IT professionals focussed on educating people on complex knowledge-based topics, originally in the IT arena but now more widely across any industry sector. We’ve gained a lot of practical experience in what works and what doesn’t and have partnered with customers to develop their learning strategies using innovative approaches to elearning, blended solutions and distance and community learning. We’ve been developing elearning since 2002 and are one of the biggest suppliers to Microsoft in the US for their official elearning materials for global distribution. Elearning is great for knowledge-based training and we’ve been pioneering its use for wider programmes such as soft skills training and to encourage behavioural change.

under pressure. For many larger organisations, elearning is the only practical way of reaching large numbers of staff, but even for smaller businesses the economic drivers are forcing a re-evaluation of what they do to seek out more efficient, yet lower cost and more effective training interventions. With recent technological advances, elearning has suddenly become significantly more affordable. Combine this with environmental drivers and the current economic climate and you can see why organisations are so interested in it.

CXO. Why the growing interest in elearning?

TB. Skilled staff are essential to an organisation’s success. Leading companies are reticent to compromise here, even when budgets are

CXO. How have advances in technology affected your approach?

TB. Historically, the problem with elearning has been the cost and time spent in creating cours-

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es, but since we’ve developed the Luminosity creation and deployment platform we’ve been able to dramatically speed up the process and reduce the cost significantly. A vital side benefit is that elearning is now quick and easy to update. The end result is agility and reach – not words previously associated with elearning.

CXO. So is elearning limited to internal staff training?

TB. Not at all, it can be a great way to reach partner communities. These could be customers, distributors or just members of the public – the crucial thing is to engage and interest people with up-to-date, relevant materials which are attractive, accessible and interactive.

CXO. Why are different publishing options important?

TB. Given the investment in creating elearning, it’s vital to be able to easily deliver it out in a choice of ways to maximise the return on your investment. It’s all about reach and flexibility.

Luminosity enables automatic reformatting and publishing to CDs, any SCORM compliant Learning Management System (LMS), Luminosity’s own LMS, SharePoint portals, intranet sites, websites, mobile phones, even the latest handheld gaming devices.

CXO. How do you track whether people have done the elearning and what assessment results they achieve?

TB. You will need some form of LMS. This is a system which hosts your elearning courses, controls access to them, records who has done what and any assessment results. This automated system will take a lot of manual effort off your administration team and provide comprehensive reports.

CXO. Where do you see the future taking us?

TB. The future means more elearning, more immediacy, more knowledge sharing, more community learning, more virtual networking and mentoring. So whichever way you choose to create your elearning, make sure you have the flexibility to future-proof your solution. n

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HR FOCUS

WHEN THE GOING GETS TOUGH David Silverstein of Breakthrough Management Group International (BMGI) on why companies should fight to retain staff even in times of downturn.

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uring this depression and yes, I do describe it as a depression, many companies find themselves in survival mode.

When your survival instincts rule the day, thinking about things five, three or even one year down the line may prove impossible. For those who are worried about their earnings but are fortunate enough to know that they’ll still be around on the other side of the abyss, there are opportunities to take care of things right now that will provide significant competitive advantage down the road.

For several years, I’ve had clients asking me how they can squeeze five days of training into three days, or two days into four hours. The reason: People were just too busy and didn’t have the time. And since business was booming, getting the training right so that there were real results at the end of the day, wasn’t as important as ticking the box to say it had been done.

Today, circumstances are very different – and results matter more than ever. My experience since about the middle of last year is that really well run companies are seeing the downtime of many employees as a great time to upgrade their skills. If you’ve already decided that you don’t want to lose critical skills by letting go of people, then there is no better time to take advantage of the fact that people just aren’t as busy as they used to be. For front-line employees, the calculation is pretty simple. If business is down 10 percent, they should have about 10 per-

“My experience since about the middle of last year is that really well run companies are seeing the downtime of many employees as a great time to upgrade their skills”

cent more time free for training and updating their skills (about four hours a week). For managers, of course, the maths might not be quite so simple, but the point remains the same.

There’s been a huge rush to reduce headcount in this difficult economic climate and this reaction is certainly understandable. But the cost of headcount reductions is often underestimated. It’s actually much more expensive than just severance pay. Often there are soft costs associated with re-organising work, and in the long term there are big costs associated with recruiting and train-

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ing replacements when business picks back up. Severance pay itself however can be very costly, especially if you’re talking about long-tenured employees to whom you’re offering many months – not weeks – of severance pay.

The rationale for displacing long-standing employees is an odd one to me – and one that shows a genuine lack of courage on the part of employers. While it may not be said aloud, the reason often is that we can replace our older employees with lower cost people, which often means younger people. It doesn’t have to be that way and there’s never been a better time to right a long-standing wrong.

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TRAINING MATTERS According to a report by the Chartered Institute of Personnel and Development, training and developing staff remains a priority for UK companies despite the economic downturn. The organisation warned however that budgets for training are being squeezed and the priority for companies is to focus on training for management and leadership development.

Seven out of ten employers surveyed by the CIPD said learning and development remained a high priority for them despite the financial situation. While 46 percent said their company’s financial situation had worsened, only 32 percent said their budget for training had been cut while 36 percent said they expected this to be cut in the following year. In order to meet business objectives during the recession, 81 percent of the organisations said the most important skill to develop would be management and leadership. Indeed 61 percent of the companies said they would be investing in

new programmes to train line managers to help them in turn to deliver effective training.

Claire McCartney, Learning, Training and Development Advisor at the CIPD, said: “The recession is undoubtedly placing pressure on training budgets, but there is no evidence of budgets being slashed indiscriminately. A skilled and motivated workforce will be essential to ensure organisations are well placed to take advantage of the recovery when it comes.” She went on to say that the CIPD believes the UK government should be doing more to support these companies: “Government should do more to help. The CIPD wants to see more of the Train to Gain budget spent on management and leadership training – particularly to support SMEs. Well trained people managers can have a direct and valuable impact on the performance of their staff and their organisation’s success.”

Over the past 50 years, we’ve come to expect that if two people are doing the same job, the one that’s been doing it longer should make more money. And generally speaking, they do. But why? Have you ever asked yourself that question? The answer should be that the older, more experienced worker does the job better. If the job doesn’t demand better, though, then why pay more? If nothing else the European job market can pride itself on being one of the most competitive in the world. And if the job can be done by someone else – just as well – for less money, then doesn’t that define the market value of the positions?

More progressive companies have begun to embrace this philosophy and rather than replacing older, more expensive workers with younger ones, which leads to discontent, severance, recruiting, and training costs, they’re simply renegotiating salaries with their existing employees. In the end, the honest, more transparent conversation serves both employer and employee well.

So what’s the ultimate conclusion I’m trying to lead to? Keep good employees and use this downturn as an opportunity to improve their performance even further. Keep the experience—AND increase the knowledge and skills. You can make the compensation numbers work with a little honesty – and courage – and in the end both you AND your employees will be the winners.

ABOUT BMGI BMGI is a leading global provider of results driven performance excellence and innovation solutions.

Specialising in strategic problem solving, it works with leading companies around the globe to help “in-source” new capability and develop new core competencies.

Founded in 1999, BMGI has developed a loyal clientele that today exceeds 200 active businesses in industries as diverse as biotechnology, health care, finance, telecommunications, retail, manufacturing and energy.

BMGI has offices in 12 countries and has more than 150 employees worldwide.

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GREAT CHANGE LEADERS ARE MADE, NOT BORN Successful and sustainable transformation efforts require leaders who know how to manage change. At the simplest level, managing change means: • Knowing what you want to accomplish and creating a compelling vision that motivates others • Understanding stakeholders and communicating with them early, consistently and often • Managing the varying levels of support and resistance that will inevitably emerge in response to any change

CM GROUP CASE:apr09 16/04/2009 08:18 Page 55

CASE STUDY

Next generation learning CM Group’s Tim Buff investigates how technology can help when developing your training strategy.

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erhaps it’s because we were taught that way at school and are used to it, perhaps it’s a good networking opportunity, perhaps we just want a day out of the office – whatever the reason, many people feel comfortable with traditional instructor led training; in a classroom, surrounded by other learners. But with increasing pressure to reduce costs and increase flexibility, many organisations are looking around to see if there are alternatives to the time-honoured approach. After years of mixed success, new technologies are now fuelling a rapid shift to elearning.

Why elearning?

• After the fixed cost of developing or buying in elearning, the marginal cost of delivery is virtually nil • Use of facilities, travel costs and time are all reduced • Lower environmental impact • Training can be rolled out quickly, en masse to large numbers of people in different locations • Learners can be allowed to take the training at their own pace, they can refer back to it, even redoing it later if they want • Delivery is of consistent quality, learning experience and message • Updates can be distributed to everyone immediately • Learner progress and assessment results can be tracked automatically, minimising administration effort • Learners spend less time away from the job • Younger delegates in particular, expect and are used to an elearning type approach The problem with the first wave of elearning products was that although powerful, they weren’t designed for non-technical authors. So many organisations had to outsource course development to specialists. But this approach increases the cost of development usually into five figures, and results in long development times – typically three or four months. When combined with the problem of keeping cours-

es up to date, it’s easy to see why elearning adoption was patchy.

Enter the second generation elearning technologies. Elearning courses can now be authored within the organisation itself by personnel with no IT training. Months have been turned into days and with rapid maintenance, courses can remain accurate and relevant.

Deployment speed is slashed and volumes and reach increased.

But before rushing into elearning, it’s essential to remember that any elearning has to be part of a staff development strategy, in other words the overall aims should be clear before embarking on using elearning: • The audience: Do they have any particular characteristics, language needs and what skills do they need to develop?

• What are the areas covered by the training and who are the subject experts that can help? Do you need to harness internal staff skills and experience or supplement with outside specialists?

• What are the ‘quick win’ areas? – which training requirements will result in immediate and significant benefits?

• Are the learners in a single location, or distributed across multiple sites and time zones?

• Are there infrastructural issues to consider (availability of classrooms and trainers, bandwidth, delivery devices, etc)?

• How will you monitor learner attendance and progress?

• How will you measure and evaluate the effectiveness of the training, the ROI and cost benefits?

CM Group’s Luminosity is a second generation elearning creation and delivery platform and typifies the features organisations can expect to find.

• Easy to use, rapid authoring of rich elearning, by non IT specialists working alone or in teams, automatically managed by a central server • Shared media library, enabling reuse of media assets and learning objects across multiple projects • Optional workflow support to streamline any multi-stage authoring processes • Ability to control the output format and branding • Automatic publishing to websites, intranet portals, SCORM compliant Learning Management Systems, SharePoint type portals, mobile phones and even hand held gaming devices Remember, the real benefit of using the latest technologies within your training strategy is not just the cost reductions that they offer. It is the speed, relevance and effectiveness that products like Luminosity enable. n

Tim Buff is Managing Director of CM Group. After qualifying at PricewaterhouseCoopers, he has spent 25 years in the IT industry, the last 18 of which have been at the board level of datacomms, software and training companies, where he has been responsible for a combination of finance, operations and HR functions.

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NEXT BIG THING

Labour lessons Ben Zifkin discusses the main benefits companies can achieve through an effective Workforce Management Initiative.

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orkforce Management (WFM) solutions possess the unique ability to increase revenue and reduce operating costs, while enhancing both the customer and employee experience. Many of the simple, stand-alone programmes historically used to manage scheduling and timecards are now being replaced by advanced software that carries the promise of greater profitability through reduced labour costs, increased sales, enhanced customer service, and improved talent attraction, retention and productivity.

Reduce labour costs Automating complex pay rules can yield significant cost savings from an immediate and profound reduction in payroll errors.

Systematic payroll errors can translate into

cies, processes and practices can lead to material hard cost savings.

Enhance customer service Retailers realise how important it is to have the optimal level of staffing to meet customer demand. Unfortunately, when relying upon either a manual process or an antiquated system to create schedules, retailers inevitably find themselves at peak hours with too few associates scheduled to handle a flood of prospective customers, resulting in reduced service levels. An automated labour forecasting/schedule WFM solution that relies on historical sales information, current trends, labour standards and special event information allows companies to ensure staffing levels will meet sales demand consistently throughout the week and deliver the appropriate customer service experience.

“Workforce Management solutions provide employees with two very important things: empowerment and flexibility” millions of euros of overpayments each year.

Consider the case of an organisation that recently went through a pay rule accuracy review. The end result was the identification of more than €1.8 million in savings per year over five years by executing the following simple but critically important changes: Paying more closely to schedule through checks and flags for employees who are working time outside their scheduled hours; implementing grace rules to reduce overpayment to employees who come in earlier than shift start and leave later than shift end; and automating a holiday rule calculation to reduce errors in amounts paid to employees. Simple changes to poli-

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Increase sales One of the most compelling benefits from the implementation of a comprehensive WFM application is a measureable sales lift from more effective forecasting and scheduling. In May 2007, lingerie retailer La Senza Corporation implemented a Labour Forecasting and Schedule Optimisation solution to improve staff scheduling and overall operational efficiency. With more than 3000 employees in 340 retail locations, La Senza needed a consistent and reliable process for scheduling and managing its workforce. Within the first months of the deployment, La Senza immediately

experienced increases in same-store sales as a result of its ability to better match store traffic with the labor supply.

Attraction, retention and productivity Unlike most cost saving initiatives, Workforce Management solutions enhance the employee experience. Your employees will now be able to take more ownership of their day-to-day activities. Employee self service allows employees to initiate transactions, follow up and report on information pertinent to them without the hindrance of going through a supervisor or Human Resources. At any point, employees can request time off, view their vacation balances, see their paystubs, and a host of other functionalities. Employees can even swap shifts and indicate their availability to ensure that they maintain a modicum of flexibility and work/life balance.

Workforce Management solutions provide employees with two very important things: empowerment and flexibility. Creating this kind of environment not only makes your employees more satisfied and productive but it makes it significantly easier to attract new talent and retain existing talent.

In difficult economic times like these, the organisations that manage their people most effectively will be the most successful. By addressing the three most important aspects of your business – revenue, cost and experience – Workforce Management initiatives are the optimal programmes for any organisation in any industry. Most importantly, a Workforce Management solution will not only help your company weather the current storm, but it will set you up to be opportunistic as the climate improves. n

Ben Zifkin is a co-founder of Axsium, a global business and technology consulting firm dedicated to Workforce Management. As Axsium’s Partner in charge of International Operations, Zifkin has established a reputation for delivering quality solutions to many of the largest and most complex organisations throughout the world.

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EXECUTIVE INTERVIEW

Solving compensation management Alan Marrott, President/CEO of Glocent, speaks exclusively to CXO about the ins and outs of incentive compensation management (ICM), and how it helps companies save time and money.

CXO. For those interested in understanding more about ICM software, would you share some thoughts about the market and your approach to it?

Alan Marrott. First, I think that it’s important to clearly define the ICM market. It isn’t the old performance management business where automated systems fell short of expectations; and it isn’t the recent makeover of those applications, now being touted as sales performance management (SPM) systems. Succinctly put, it is the automation of the manual processes, or the improvement of out-dated internal systems, currently used to collect, track and evaluate sales data needed to compile critical business intelligence. Using that previously untapped business intelligence, ICM software accurately calculates variable pay, while also assisting business executives to more effectively motivate sales forces and develop more profitable sales strategies.

“Based on a company’s size, Glocent reduces commission administration overhead by up to 80 percent” Recent regulations, such as SarbanesOxley, and the current economic downturn make the market more appealing than ever before. Research confirms that over 90 percent of businesses, which would benefit from automating the process, still use spreadsheets. This confirms that the market is in its infancy; and it should flourish for some time to come. Glocent was designed to address any ICM challenge. Unlike performance management systems, its architecture and algorithms support unlimited flexibility and extreme complexity. We have yet to encounter a business strategy for which we could not model, calculate and report incen-

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tives, and we have encountered some very complex scenarios.

CXO. After developing and marketing your product over the past eight years, how would you differentiate Glocent from other sales compensation solutions?

AM. The answer to that question lies in the philosophy behind Glocent. Where other applications claim to simplify what is perhaps the most difficult financial process to automate, Glocent bases its data collection and calculation capabilities around accommodating even the most complex sales scenarios. While competing vendors promote their ‘on-demand’ products, we argue that attempting to simplify this strategic process undermines a businesses’ sales arsenal. We don’t ask a client to adapt to our system, we eagerly adapt Glocent to model their business needs. We are so confident in our product’s capabilities and value that we remove all risk for our clients. Once we guide you through the requirements process, you will understand why we are so confident.

CXO. Can you share with us some of the specific benefits your clients have gained after implementing your system?

AM. With our ‘we grow as you grow’ pricing philosophy, every client realises an ROI from purchasing Glocent within the first year, if not immediately. Based on a company’s size, Glocent reduces commission administration overhead by up to 80 percent. Glocent also brings full transparency to the incentive management process. Everyone, from the sales rep to the CFO, knows how commissions are determined. Commission disputes are virtually eliminated. Perhaps most important, the credibility that Glocent brings to the variable pay process leads to increased productivity and profitability.

CXO. Given the current state of the global economy, how do you expect it to affect your business?

Alan Marrott has over 20 years of experience in international software development and management consulting.

Before founding Glocent, he held a variety of positions at Weyerhaeuser, American Management Systems, Nynex, Mannesmann Mobilefunk and US West.

He graduated from Brigham Young University with a BS in Management Information Systems.

AM. I believe that most business leaders agree that the present crisis will demand higher levels of financial accountability and transparency. Correspondingly, we have received more unsolicited inquiries about our product and consulting services during the past three months than any other quarter in the company’s history. Glocent has proven that it is one of the most efficient means to cut costs while also increasing revenue.

Since we have operated our company without incurring any debt, and grown only as fast as the client base supported, we are confident that we not only will survive the uncertain times of the future, but actually expect to experience significant growth. n

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16/4/09 09:03:34

What you think is a Sales Incentive May actually be a

Sales Killer!

What management often sees as a sales incentive, the sales force sees as a complicated, faulty, imprecise maze filled with traps and DISAPPOINTMENT. This “catch 22” traps untold revenue for nearly every business on the planet.

Golcent solves this compensation management problem.

Many clients find that the ROI is “immediate”.

Check out all the details at our website www.glocent.com.

This problem is not going away…any other way!

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INNOVATION

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

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hen Vint Cerf speaks about the web, people sit up and listen. Widely thought of as the founding father of the internet, Cerf, along with research partner Robert Kahn, designed the TCP/IP protocols that govern data transfer across the net along with its basic architecture. In 2005, the pair received the highest civilian honour bestowed in the US, the Presidential Medal of Freedom – recognising the fact that their work on the software code put them “at the forefront of a digital revolution that has transformed global commerce, communication and entertainment”. For many, Cerf is as close as you can get to internet royalty.

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

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

In Cerf’s view, the internet should be an egalitarian entity used by anyone and everyone, one where suppliers of the service are unable to discriminate against a user merely because of who or where that user is.

“We are arguing that the internet should be nondiscriminatory in terms of its access, although we accept the argument that for larger capacity you may have to pay more,” he says. “What we are after is an open

environment where both consumers and suppliers of applications are treated fairly.”

Investment Naturally, in order to attain the open environment that Cerf is so keen to see happen, the infrastructure itself needs investment. But in a tight economy, are companies in the mood to invest in internet infrastructure? “We have a situation where the incentives for companies providing internet access are distorted by a natural desire to maximise their investment to the detriment of innovation,” concedes Cerf. “I think we need to provide adequate incentives for all parties, those providing underlying facilities and those providing value-added services, to have fair and nondiscriminatory access to the underlying bit-carrying capacity of the internet. Monopolising provision of service does not produce innovation; in fact, it sometimes inhibits it. People want to know why they should invent a new, less expensive solution when they are able to charge more money for their service by sticking with the old way of doing it.”

However, Cerf sees innovation as critical to long-term prospects, and as a result insists there must be some kind of incentive for investors to create the appropriate infrastructure. He believes that there will certainly be opportunities to find ways to invest in infrastructure, particularly in light of the current financial crisis. “Perhaps there are subsidies that could be provided? Maybe there are other tax benefits that could be provided?

What we need to do is be creative about providing incentives for building infrastructure, and at the same time ensure that it is as openly accessible as possible to all parties who want to innovate on top of it,” he explains.

He likens the shared asset to a road system – everyone drives on it and the roads are used simultaneously by lots of different users – which is exactly how packet switching works. “Packet switching may be a way, like the road system, to allow people to share common infrastructure,” says Cerf. “From my point of view, in order to create broadband access there needs to be a financial or other business incentive, whether that’s R&D tax credits or credits related to revenue gained on new investment – if there are ways of providing incentives to business for creating openly

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

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THE FUTURE OF THE INTERNET?

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

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

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

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

sharable infrastructure, then that’s a hint of the direction in which one might go in this current climate where at least the present legislation is intending to provide a substantial amount of government support for investment in infrastructure of all kinds.

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

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

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

Ideas for the 2010 infrastructure include ensuring that every new mile of highway or bridge that is built has conduits built-in so that it could carry fibre. This way the road wouldn’t have to be dug up later in order to pull fibre along that particular length of road. Other examples include the use of so-called Smart Grids. “For the first time in history, we may have the opportunity to not only adapt our supply of electrical power to demand, but have control over some of the energy-consuming devices in businesses and residences. We can communicate when to run the hot water heater or the air conditioning in order to moderate peakload demand, and if we manage the demand as well as the supply, then we may be able to avoid investing huge amounts of money in peak load capacity that we only use two or three percent of the time. Similarly, if we’re investing in new electrical grid distribution media, maybe that same framework will allow us to also invest in new high-bandwidth telecommunications facilities, fibre being an obvious example.”

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

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

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

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

“Look at education. Here, the product is learning; but technology opens up new opportunities with regards to how you deliver it. For many years, the way you delivered it was by having a professor up on the podium and students sitting in chairs taking notes. But we now recognise that not everyone can afford to go on a four-year course at a college and devote themselves exclusively to that. Nonetheless, they still have to learn new skills and knowledge in order to maintain the edge that they need for the jobs they’re doing. So the university, which is providing education as a product, needs to package not only the four-year degree and the two-year degree, but also the two-week special course or the part-time MBA program. In this instance, repackaging the product of education and delivering it through the network could be a very power-

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

ful revenue enhancer, to say nothing of growing a market that doesn’t exist compared to residential colleges.”

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

Google has a number of applications that help people manage this information, such as Google Docs and Spreadsheets, and Cerf insists that it is the increased level of collaboration provided by advances such as cloud computing that is making the difference. “Companies that are trying to help people analyse, evaluate and accumulate their information can take advantage of the internet – and in some cases, of what Google offers – to help people organise their information and evaluate and analyse it.”

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

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

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

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

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

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EXECUTIVE INTERVIEW

On the front foot A business that is event driven can respond to opportunities and potential threats, says Progress Software’s Giles Nelson in an interview with CXO. CXO. What does it mean for a business to be event driven?

Giles Nelson. We are finding that businesses are increasingly operating in dynamic environments and that they need to better respond to the events that are occurring both within their own enterprises and also with their interactions with customers and partners. It’s no longer acceptable in many industries to respond tomorrow – it must be today and in some instances it must be now.

By being event driven, organisations can respond more proactively. An event-driven business has the capacity to respond to new and changing circumstances in ways that allow it to respond to new opportunities or to potential threats. It is a business that understands what is happening – when it is happening and where it is happening – with the capacity to respond quickly enough to take advantage of that knowledge.

CXO. How are businesses now benefiting from this?

GN. One of the benefits is what we call ‘operational effectiveness’ – real-time visibility with the ability to take action where needed. These organisations can operate much more finely tuned and calibrated processes by being event-driven.

We have one telecommunications customer that monitors its prepaid mobile transactions to automatically ensure that customers who request services have sufficient balance in their accounts. Another customer, a gaming company, uses real-time event-driven monitoring to track the action at the tables and ensure no cheating takes place.

A retailer tracks its deliveries to ensure that they match the advance shipping notices, as well as to identify receipt of special orders so that customers are automatically alerted. A logistics customer tracks incoming shipments to ensure that the transportation providers are provisioned properly – and in a timely fashion.

Another event-driven business tracks its loan

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processes to ensure that bottlenecks do not go unattended. A similar loan processor tracks online loan activities, knowing that it must package those loans and resell them on the secondary market. It uses an event-driven model to anticipate the need and get the best terms.

CXO. The range of businesses deriving benefits is truly diverse but is this about technology or culture?

GN. That is a great question. An organisation cannot be event-driven unless it has the technology to monitor what is happening. So it needs ‘events’. That’s where Complex Event Processing or CEP technology comes in, since when you have events flowing around your systems you need

GN. I suppose that is a matter of perspective – and timing. If you are first to adopt this approach, you may see it as a differentiator but perhaps a ‘desirable’ rather than necessary one. But if your competition exploits the potential, then watch out; it is likely to become necessary for your survival. That is how markets evolve. For example, consider the history of the overnight shipment market and the adoption of real-time tracking.

Federal Express introduced real-time package tracking as a differentiator. Being first to do so, it certainly wasn’t ‘necessary’, it was a nice feature.

After all, given the number of packages shipped daily, how many times do you really ‘need’ to know exactly where every package is. Fast forward to today, and can you imagine an overnight shipper that does not provide real-time tracking of where packages are? The market evolved such that it is now required by all. Business cycles need to become more and more responsive. Becoming event driven is ultimately the only way to ensure you’re being as responsive as you possibly can to your customers, partners and competitors. n

“An event-driven business has the capacity to respond to new and changing circumstances in ways that allow it to respond to new opportunities or to potential threats” software tools to monitor and analyse them.

Technology both ‘generates’ events and offers the tools to monitor and analyse them. So technology is clearly an enabler.

But perhaps equally important is the organisational culture. You need an organisation that recognises the benefits of knowing what is happening – as it is happening. That tends to be those organisations that have creative approaches as to how to build and sustain competitive advantage. More and more organisations recognise this and are looking to adopt event-driven approaches. Either because they want to be a leader in their chosen market – or because they are chasing a competitor that has already established such a position.

CXO. Is this just something exotic – a luxury product, or does everyone need this?

Dr Giles Nelson, Senior Director of Strategy and Evangelism at Progress Software, is responsible for the strategy and evangelism of the company’s Complex Event Processing (CEP) product, Apama. Before his current role, Nelson was CTO EMEA. Prior to joining Progress Software, he was the co-founder of Apama, the pioneering event processing software vendor acquired by Progress Software in April 2005, where he co-invented the core patented technology.

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against redundancies or to support themselves in times of financial hardship: “People may take the opportunity to commit fraud for various reasons, from a personal point of view. In this climate employees are losing their jobs and there’s less cash around so the appetite to commit fraud from a personal point of view may increase.”

The key to detecting fraud – like any crime – is to know the suspicious signs to look out for. Haggerty says there are some obvious signs such as an employee who suddenly seems to have more cash to spend than usual: “Obviously there are typical things, like if someone rocks up in a very nice car or starts spending more money than usual. If somebody seems to be spending well beyond their means then that’s an obvious sign.” However Haggerty’s training has taught him to also watch out for the more subtle signals that an employee may be committing fraud – such as an employee who never takes leave, preferring to be in the office as much as possible: “Often when people commit fraud of opportunity, the fraudulent activity starts to grow and grow and they keep having to move cash from one area to stop up another area. We start to see that they don’t take leave because they need to be in the office to keep moving the money

Every year companies invest millions of euros in guarding themselves against outside criminal threats. But what about the threat that exists within their own organisations? Diana Milne meets expolice officer, now CIO of the UK’s Serious Fraud Office, Jarrod Haggerty, to find out why the enemy may be closer than you think. hen Jarrod Haggerty joined the Australian police force, he never imagined that his experience of catching street criminals would enable him to land a job as one of the world’s top corporate forensic experts.

But six years on the beat on the streets of Victoria proved perfect preparation for a career in rooting out fraud from some of the world’s top blue chip companies. In fact so highly valued is his experience that he has been seconded from PricewaterhouseCoopers’ Forensic Technology practice which he runs, to take up a six-month contract as the Chief Information Officer (CIO) of the Serious Fraud Office.

Describing how he made the transition from cop to CIO, he says: “I did six years with the Victoria Police in various roles – mainly general duty policing and detective roles.Then I left there and put myself through university for three years where I did a finance “In this climate employees are degree. I joined PwC in Australia on the graduate prolosing their jobs and there’s less gramme as an auditor in 1999. I lasted three months cash around so the appetite to within the audit division until the company found out commit fraud from a personal I was an ex-policeman with a finance degree who had point of view may increases” worked in forensics. I then started off in the forensics department doing general investigations for about a year and a half.”

The role took Haggerty to PwC’s Birmingham office where he developed a forensic technology practice before moving to PwC’s London office.

While he did have to retrain to join the corporate world, his policing experience meant he was well prepared for both investigating fraud and taking part in legal cases or acting as an expert witness in court cases: “Some of what I do now is being involved in the courts as an expert witness. So the police force was great preparation for that,” he says.

In his role as CIO of the Serious Fraud Office he is charged with ensuring that the organisation makes the best use of technology in its investigations and in tackling its caseloads. This is more important than ever before, he says, given current economic conditions and the fact that companies are under increased pressure to detect and eliminate fraudulent behaviour that is draining their finances: “In this sort of climate, companies are taking a good look at their spending and their financial systems,” says Haggerty. “The appetite to tackle fraud will increase because of cost cutting efforts on the part of those companies.” He goes on to say that disgruntled or cash strapped employees pose a significant threat to companies in today’s climate as many will commit fraud as retaliation

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ABOUT THE SERIOUS FRAUD OFFICE he Serious Fraud Office is an independent UK government department that investigates and prosecutes serious or complex fraud. It is part of the UK criminal justice system.

The Office is headed by the Director who is appointed by and accountable to the Attorney General. The Attorney General is appointed by the Prime Minister and is responsible to Parliament for:

T • • • •

the Serious Fraud Office the Crown Prosecution Service the Treasury Solicitor’s Department the Department of the Director of Public Prosecutions for Northern Ireland • the CPS Inspectorate • the Revenue and Customs Prosecution Office around.” Often, he says, it is only when that employee leaves the post that the fraud they have committed is uncovered. This means that as European companies are forced to cut jobs, more fraud is expected to be uncovered in the coming months.

Haggerty’s policing experience has proven invaluable in terms of his ability to detect corporate fraud, as he testifies, “The police gave me the right background from an investigations point of view to have an investigative frame of mind. It teaches you to look at the things and realise that they are not always as they first appear.” To foster that same investigative frame of mind within corporations can be challenging he admits, but with the right systems in place, companies can sniff out fraud before it starts to impact their bottom line. This involves having a robust fraud risk management plan in place, and, from a technology perspective, having good controls procedures over IT systems. One of the biggest mistakes companies make, says Haggerty, is having disparate IT systems that do not communicate with each other, hence failing to detect fraud being committed concurrently on two systems. Haggerty says this will fail to flag up one of the most common forms of fraud committed with large corporations; creating a ghost employee with a salary that is paid into a genuine employee’s account: “Often companies will have a very disparate IT infrastructure. There will be one system running for HR and a separate system running finance and payroll. Those systems won’t talk to each other and there’s no ability to run tests to detect the ghosting of an employee. In the HR system a record could be created for a new employee with a fictitious name and address. The bank details however will be the same as those of a genuine employee that are held on the payroll system. Because the two systems don’t link up, the company will never be able to see that it is paying both employees into the same bank account.”

As technology plays such a crucial role in the way fraud can be detected, one of Haggerty’s main tasks as CIO of the Serious Fraud Office will be to look at the way it uses electronic information to investigate fraud and to develop technology that will allow it to drill down through data at a faster and more efficient rate. This is particularly important given the fact that technology has enabled fraudsters to vastly increase the impact of their ac-

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JURISDICTION England, Wales and Northern Ireland fall within the SFO’s jurisdiction. The SFO does not have jurisdiction over Scotland, the Isle of Man or the Channel Islands.

tions, and the speed at which they achieve their ends. While the motivation for fraud has not changed the methods for committing it have changed dramatically, with emails replacing postal mail as the primary delivery method for fraudulent material: “What I’ve seen from a PwC perspective is that the nature of fraud hasn’t really changed but the reach of it has,” says Haggerty.

“Years ago when people were committing fraud they would send out say, 200 envelopes. Technology today allows people committing the same sort of fraud to send out two million emails instead.” For this reason he hopes to equip the SFO with technology with the intelligence to automatically detect fraud when scanning through thousands of emails: “There’s a big programme running at the SFO where the organisation is looking at software that is being developed in the market which would allow it to drill down into information and be able to investigate it at a fairly timely level. They are looking for technology that would mean they wouldn’t have to trawl through lots of emails but would alert them to fraud far quicker and would streamline the process.”

Haggerty is the first CIO to be employed at the SFO, and with just six months to plan the organisation’s IT strategy for the next three to four years, he has not got an easy task on his hands: “The SFO has not had a CIO before and from that point of view it’s a change for the people there and for the systems they are using,” he says. “One of the biggest challenges is implementing these changes and making people aware of the changes we are going through. I must sit down and understand the changes they are facing and what the market is facing. I need to write a strategy for them for the next four to six years from a technology point of view and within a six month time frame that is definitely tough.” But having experienced life on the beat, Haggerty says he is more than prepared to tackle the challenge no matter how tough times get.

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IT SECURITY

Global protection for a global business Michael Lardschneider, Chief Security Officer (CSO) at Munich Re Group – one of the world’s largest reinsurance companies, with 5000 customers in 150 countries – chats with CXO about new dangers, his passion for IT security and how to outfox the bad guys.

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ecurity and business continuity are two critical facets of business today that many organisations ignore at their peril.

With the financial loss and subsequent damage to reputation being somewhat incalculable, these last few years have seen the rise of the dedicated CSO role to try and cover almost all operational eventualities. With 25 years’ experience in security at Munich Re, (short for Munich Reinsurance Company), under his belt, it’s safe to say that Michael Lardschneider knows a thing or two about warding off threats posed to the group. He currently works in the Integrated Risk Management unit in charge of the whole gamut of security and business continuity; a role in stark contrast to his early days, when he worked on loss prevention strategies in the event of robberies and theft.

A few years into this early role, the opportunity to move to the IT department emerged and Lardschneider grabbed it with both hands. “As a member of the IT helpdesk team I learned a lot about computer viruses,” he re-

from the outside, but it’s much more difficult to detect and stop attacks by insiders at the group. One such threat posed by malicious employees is their ability to walk off with confidential data that could be sold to criminal gangs. Memory sticks and USB drives are shrinking in size but have the ability to hold vast chunks of data. “You realistically cannot prevent this sort of thing from happening,” this CSO suggests. “Shutting down all the ports where one could extract data from an IT system whilst satisfying the need to communicate is not feasible in my eyes.” He says you need to put faith in your workforce. “The best way of minimising risk is to show, as an employer, that you have confidence in your staff. Letting them know, but not threatening, that their employment depends very much on the success of the company and keeping them happy and motivated is the best line of defence against this kind of incident.”

“More and more people have the ‘always on’ mentality, so any second that one tries to fight against this development is a wasted second. We need to find solutions to cope with that development” veals. This part of the business became a passion of his as he got a taste for tackling emerging cyber threats. “One Monday morning in 1990, I had to solve an issue with four PCs that did not boot anymore and my investigations, analysing the MS-DOS 3.2 Master Boot Record and the PartitionTable, proved that some malicious code had caused issues with the operating system – the virus also infected me. From then on, analysing virus code and investigating malicious behaviour of PCs became a favourite hobby of mine.”

He soon became Munich Re’s virus protection expert and later the Chief Information Security Officer (CISO) for the group’s worldwide operations, before arriving at his current position. Down the years he has seen a myriad of threats, but keeping one step ahead of the bad guys is an uphill battle, admits Lardschneider. “Staying ahead of the criminals and hackers is nearly impossible. It may sound ridiculous but their big advantage is that they are not limited by law in what they do – they just test exploits, attack and hack without caring for the existing laws.” Munich Re, like any other organisation looking to safeguard itself against attack, has to abide by strict regulations. These regulations apply to monitoring activity on the network, analysing log files or assessing vulnerabilities in systems.

“We know that we cannot win the battles,” he notes philosophically, “but we can make it harder for the average attacker.” One of Lardschneider’s tactics to outfox the villains is to build and maintain a multilayer defence, which allows him and his team to react when the first or second layer is breached. This proves effective when an attack is perpetrated

While there is little doubt that it is becoming easier for rogue employees to steal information, the way in which organisations do business means that they are becoming increasingly harder to defend. Ask any CSO or CISO and most will bemoan the fact that company perimeters are being stretched as more staff use mobile devices and connect to the network in all four corners of the globe. Indeed, perimeters are becoming harder to actually define nowadays. “It is a headache,” Lardschneider admits. “And the headache is getting bigger the more one thinks about how young people communicate today.” He says that the way that staff expect to do business and communicate, both internally and externally, has evolved dramatically, with the next generation of workforce driving this trend.

“Youngsters use their email accounts if their instant messaging system does not work or the SMS of their telecom provider is out of order, so

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security advice WISE WORDS: Lardschneider’sof bus iness and its size, but in most

y, its kind “Security depends on the compan w why your car top management this: ‘Do you kno cases my advice would be to ask bably be ‘So I can stop my car.’ has brakes?’ The answer will pro the real reason is it allows I would correct them by saying that a car without brakes, so basic you to drive faster. You cannot buy ip it with better brakes so you security is built in, but you can equ that better security also means can go faster. This analogy shows Unfortunately, many managers see more chances to be successful. a hindrance to communications. security to be a road blocker or This mindset needs to change.”

the kinds of communication available have changed dramatically from when I was young. In a few years they will be the ones hired and will expect companies to run IM and use social networks to communicate and do their business, so you could say that the perimeter has already gone.” He continues: “More and more people have the ‘always on’ mentality, so any second that one tries to fight against this development is a wasted second. We need to find solutions to cope with that development.”

Common dangers While Lardschneider suggests that the human element in any business is one of the biggest threats, information overflow is another important aspect – something that Munich Re is all too aware of. “The amount of information we receive per day is tremendous and I sometimes think that it is more than the average person can consume without driving them crazy.” Filtering this avalanche of information, whilst adhering to the raft of regulations, is “a kind of art,” according to Lardschneider. “I say this because we have to separate the valuable from the unnecessary and make sure that we follow the regulations with regards to retaining documents, as well as adhering to when to delete personal data and how to store confidential data.” Lardschneider appears modest when he describes the situation as “not easy”.

He continues by saying that the main ‘technical risks’ facing Munich Re at the moment are botnets and malicious software. “These can tear down your complete infrastructure for quite a while and cause a lot of insecurity. You need to assess whether the calculated results are right or do you mistrust them and calculate a second time in a different environment?. “Also, which bits of information have been disclosed by an incident?” Another challenge for Lardschneider and his team is cleaning

systems and avoiding re-infections in a global network or by unknown builtin backdoors in web applications.

Second opinions On the business continuity side, Lardschneider believes that the best ‘testers’ a CSO has are their peers in other companies. You can bounce ideas off one another and suggest weak links in the system and how things can be improved, he notes. “The magic words are quality and assurance; we are in very close contact with business continuity experts from other companies and encourage each other to ask critical questions, to evaluate and review concepts, and to discuss emergency plans. It’s the community that shows you risks and makes you think about different scenarios that you have not thought about before.”

Of course, being a reinsurance company means that Munich Re has to seek out third parties to check and assess how it operates, including emergency tests. This is then funnelled into “lessons learned sessions”, says Lardschneider. “This concept will never be perfect but we can be sure that we did our best,” he concedes.” As for the road ahead, Lardschneider says he and other CSOs in other industries will be busy following how the economic crisis plays out and how it will impact on security and continuity strategies. Assessing crisis scenarios will, of course, feature high up on his agenda.

Lardschneider’s time spent in security has taught him that a CSO cannot afford to rest on his laurels because there is always more to be done. “I have been in the business for 25 years and I’m pretty sure that the next 25 years will continue to be very interesting and challenging,” he concludes.

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New age disaster planning

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

A

senior BCM executive for one of the UK’s leading retailers has a comment he often uses when people like me try to make the subject too complex or too academic. He says BCM really should stand for “Basic Commonsense Management”. I have been reminded of this comment made by Steve Mellish, Business

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Continuity Manager of Sainsbury’s, many times during the past few months as horror after horror has unfolded in the world’s leading financial institutions.

I am not so naive as to believe better BCM would have prevented the financial meltdown in itself, but I wonder why basic BCM principles were not adopted by organisations

as part of their risk management philosophy.

The reason, of course, must be that banks use risk management purely as a means of hedging financial risks whilst largely ignoring the context of those risks. After all, it takes very little financial expertise to understand that if money is loaned to people who have no means of paying it back and secure it against assets that have very little chance of realising the amount loaned on them, there will be a problem somewhere down the line.

It also takes no great insight to understand that if you let highly intelligent but totally inexperienced mathematics graduates design a theoretical risk model that pertains to show that if you parcel up bad risk and move it around the world quickly enough it becomes safe, you might have a problem.

Have top bankers, government regulators, central banks or even their political masters never played ‘pass the parcel’ or had to gently discourage their newly grown-up children when they suggest they should re-mortgage the house and gamble the proceeds on a spread betting website? Apparently not, because that is exactly what they have done in their professional lives.

Business continuity might not be as intellectually challenging as risk management or as boringly grandiose as much of the box ticking that claims to be corporate governance. However, if we believe Mr Mellish, it is doubtful if the application of basic commonsense (aka business continuity) would not have spotted these systemic problems and addressed them well before the dire financial consequences crystallised.

Misconceptions You might ask whether business continuity is just about ensuring we always have computer systems running and buildings for people to work in after a disaster or terrorist attack? Well the answer is ‘no’ and sadly it is amazing that senior executives still make that mistake after nearly two decades of the development of BCM as a critical business discipline. Perhaps the problem has been poor communication by BCM professionals, so adopting the Mellish rule I will try and spell out what BCM really is and why it really matters, particularly in a recession.

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Firstly, BCM has little to do with the detail of threats, theoretical or actual. Secondly, it has even less to do with the likelihood of any particular scenario happening. Thirdly, it is not specifically concerned with the recovery of technology unless that is (as is usually the case) critical to business survival. BCM has everything to do with understanding your business properly, how it works mechanically in terms of how things fit together, what are its vulnerabilities and in particular what ‘single points of failure’ does it suffer from. I attended a conference in the US in which one speaker told us about her ideas for BCM in the healthcare sector. The presenter spoke only about recovery of administrative ICT systems, which was mainly about billing and managing cash flow. When challenged about patient care and medical service continuity, the presenter erroneously claimed this was not within the remit of BCM. Conversely, I heard a presentation last year in Singapore on a similar theme at which the entire focus was on keeping the core functions of the hospital running under any situation and this was achieved by engaging the commitment and interest of both the medical and administrative staff. Nurses in particular provided massive input to developing a holistic BCM approach for the hospital.

manager for a global bank (who does not wish to be named) told me recently that suddenly everyone has woken up to BCM. Why can you identify the business impact, plan for mitigating it and train/exercise all stakeholders in dealing with a terrorist attack, but not do the same for a liquidity crisis? The principles are the same, the strategies and potential solutions will be different but they still need the same rigorous practical approach.

A lack of fully embedded BCM might be a contributory cause to the difficulties we now find ourselves in, but perversely some organisations seem to see the solution as a further dilution of the BCM resources. Kenny Seow, a well-known BCM consultant in the Asian financial community told me: “When I was working for a stock exchange in Asia, getting a meaningful level of commitment to

Applications When we apply this to the financial world, BCM is not just about keeping the technology infrastructure up and running so that traders can make (or possibly lose) vast sums of money. It is much more about the long-term strategy and survival of the organisation, the application of good management judgment (or commonsense) and the elimination of single points of failure in the process itself not just in the technology. BCM is integral to proper corporate governance, in that it understands what processes are vital to protect and sets about formulating practical ways to provide that protection. It is true that in many cases part of that protection is related to the recovery of data and restoration of IT services – but that is the means not the end in itself.

Belatedly this message seems to be getting across to corporate boards, for years bemused by mathematical formulae that they had no chance of understanding. One BCM

“BCM has everything to do with understanding your business properly, how it works mechanically in terms of how things fit together, what are its vulnerabilities and in particular what ‘single points of failure’ does it suffer from”

BCM from member stockbroking firms always eluded me, no matter what the business conditions were. During the Bull Run, nobody paid any attention to BCM as the priorities were the pursuit of growth and profits. When the downturn came, the focus shifted to cost containment. BCM, classified along with other ‘overheads’, quickly became a casualty of austerity measures”.

Tangible benefits This reaction is somewhat understandable. BCM is not a tangible commodity, so it can be difficult to understand the full benefits of the concept. To see these benefits you only need to look at examples of poor planning. In the 1993 World Trade Center bombing, out of the 350 enterprises affected 150 enterprises went out of business. Years later, after 9/11 some large businesses had learned lessons – Morgan Stanley, Cantor Fitzgerald and American Express were able to resume business quickly whilst other failed. However, what is generally forgotten about 9/11 is that of all the companies affected the vast majority were small businesses relying upon the big name companies’ employees for their trade. It has been reported that of these small businesses, over 70 percent, never opened again.

The same anonymous BCM global manager quoted earlier summed up an earlier attitude: “My current company is pretty enlightened in BCM terms but in one of my previous jobs at a large global investment bank, the Head of Treasury once told me not to waste his time on business continuity.

Every deal we make is worth hundreds of millions. We could make or break but we know how to manage the risks. So please do not talk to me about business continuity. I know business continuity – when the building falls over, I’ll roll my dice and make a call then!”

In a booming economy it is easy to think that sufficient resources are available to deal with anything that might happen. I don’t think many people assume that they can buy themselves out of trouble any more. When money is tight, you must not create situations in which unplanned large costs might suddenly occur. The best way to insure against that is to introduce proper business continuity, not pseudo-science risk models or the endless paper trails of corporate governance.n

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SECURITY TRENDS

The

shifting security landscape

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

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

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

We will look at these factors in turn.

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

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

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A hostile world The world, which is here represented by the internet, is a hostile place. Hacking has been transformed from a kind of sporting contest into a mainstream criminal activity driven by financial gain. The cyber criminal world is large and highly organised. There is really no such thing as cyber crime, but rather the criminals have found new ways to perpetrate lots of old world crimes on a larger scale. Law enforcement is hampered by the technical complexity of detection, the speed at which the criminals can change their strategy, and the international nature of much of the activity. Attacks are growing “It is exponentially in both volume and sophistication.

The defence

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

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

Automated tools can sift and correlate these and show what has

not surprising that the need to satisfy external regulators, to adopt new technology without incurring undue risk, and to stand up to more ferocious attacks is driving the security industry to offer new types of products”

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

The ‘hot’ areas where interest is growing most rapidly are:

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

• Application protection: The opening up of IT systems to external use is causing the focus of protection to shift from the network to applications, data and servers. Application protection is being enhanced both

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

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

Delivering information security

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

An extreme example of this is Microsoft’s intention to make some of its anti-malware products free. The vendors are consolidating and we expect to see acceleration in this process in response to the economic downturn. Security is moving out of its silo and over the Graham Titterington is a Principal Analyst at Ovum, specialising in last few years we have seen the big business continuity, IT security, and information storage. With 30 years IT vendors buying companies to of experience in the IT industry, Graham has contributed to a wide range increase their range of security ofof Ovum research including taking leading roles in producing reports ferings. This is largely the result of on identity management, web services security, business continuity, realising that security depends on networked storage and e-business security. Prior to joining Ovum, good management practices in the Graham worked on the verification of safety critical control systems wider sense and it is therefore senin the aerospace and nuclear power industries. He is is a chartered sible to integrate security planning engineer and a chartered mathematician. into IT management. This view is consistent with leading management frameworks such as ITIL and COBIT. by placing greater attention on developing applications that are inherFinally we are seeing a trend to deliver security as a service rather ently secure, and by using an ‘application firewall’ to filter communicathan by selling software products or hardware appliances. Remotely tions going in and out of the application. SQL Injection attacks through managed services are provided by the security vendors, but will database applications to steal corporate data are still one of the hackers’ increasingly be delivered by ISPs and telcos. They provide pools of favourite weapons. Applications can be made more secure by improved expertise and economies of scale, although at the low end of the development processes such as those that have been published by leadscale this comes at the expense of flexibility. ing ISVs, by using code analysis tools to check for bad coding practices, The future and by adding security testing to the pre-delivery QA procedures.

Economic crises always increase the rate of change as we shall • Protecting mobile devices that have been lost, including laptops: see in the security sector. However in a hostile world the demand for Two complementary approaches are enhanced access control and security can only increase and we will continue to see rapid innovaencrypting data that is stored locally on the device – and indeed on tion from a shrinking supplier base. removable media.

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EXECUTIVE INTERVIEW

Smart storage solutions

Simplifying the data centre infrastructure, according to Juniper Networks’ Trevor Dearing.

CXO. What’s happened to the decentralised data centre model that everyone was adopting until now?

Trevor Dearing. After a decade or more of decentralised, distributed information systems, many organisations are realising that decentralisation often comes at the expense of efficiency and reliability. As a result, these organisations want to bring their distributed, decentralised systems back into a central data centre where they can take advantage of the latest advances in technology, such as WAN acceleration and virtualisation, to boost data production and improve enterprise-wide IT performance.

CXO. What is driving this change?

TD. Actually, there are a number of trends that we’re seeing. These include data centre consolidation, support for server and desktop virtualisation, cloud computing, disaster recovery and business continuity and service oriented architecture (SOA). With these types of strategies, organisations are attempting to deliver acceptable application performance to their users as easily and as cost-effectively as possible. The benefits that can be derived have made the recentralisation and optimisation of data centre resources a very high priority for 2009.

CXO. If the benefits are that good, how easy is it for an organisation to undertake a re-think?

TD. Improving data centre performance isn’t as easy as it sounds. In fact, there are several factors that can make data centre performance improvements tricky to achieve; for example, growth, complexity, systems and software, security, disaster recovery and business continuity, and last but by not least, virtualisation. Of all these challenges, infrastructure

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complexity is perhaps the most significant.

This is because complexity can hinder efforts to improve data centre performance and reduce costs – sometimes both.

today suffer from ‘technology sprawl’ – the uncontrolled proliferation of servers, systems and devices – which adds yet more layers of overall complexity. Servers, systems and devices may run different operating systems and use different management tools, making them difficult to integrate. Technology sprawl reduces data centre performance and efficiency, which raises costs – another large concern for IT organisations as they want to cut data centre costs at the same time that they’re improving data centre performance.

CXO. Can you explain how complexity is the enemy of an efficient data centre?

TD. Growing complexity in the data centre slows application performance and delays the deployment of any new business-enabling applications the enterprise is looking to deploy, while also getting in the way of innovation. For example, to compete successfully, organisations must increase customer access to data and do so quickly, at low cost and with minimal risk to network security. Technology complexity, however, leads to inefficient use of infrastructure resources, higher operational costs, and increased security risks or downtime due to human error and network failures.

CXO. So it’s fair to say that balancing lower cost with better performance is a big issue for IT managers in their data centres today?

TD. I think it’s fair to say that this is one of the primary concerns we hear from IT managers about the data centre – high performance with cost avoidance. Even if something improves data centre performance, they also need it to reduce operational costs. The current economic drivers are fuelling the need to cut costs and improve data centre performance. It is interesting to note that in addition to motivating IT organisations to search for ways to save money, they’re also motivating them to search for ways to make money: improved service delivery, increased productivity, streamlined processes through integration and consolidation, compliance, QoS-based services based on users, applications and systems.

CXO. What about sustainability issues in the data centre – are they relevant in this discussion?

TD. Yes, absolutely. In many cases, organisations that are burdened by complexity in the data centre are also running out of power and space. That’s because many IT environments

CXO. What would your closing thoughts be on the data centre of the future?

TD. In the end, the same globalisation that fuels growth is forcing companies to improve data centre performance. And the best technology vehicle for achieving that is the highlyscalable, low-latency network.

Trevor Dearing is the Head of Enterprise Marketing for Juniper in EMEA. He has worked in the telecoms industry for 23 years in a variety of roles. He began in R&D developing networking solutions for digital CO voice switches, and newlyinvented ethernet technology. His career then moved to a predominantly data networking focus.

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there certainly is security theatre in the financial industry, it won’t last. People will, for example, eventually figure out that two-factor authentication doesn’t reduce identity theft and fraud.

Lock DOWN

CXO. What do you see as the key security issues currently facing financial institutions and their customers?

BS. Crime. Crime, crime, crime. Crime in the form of fraud. It may come with the fancy name of identity theft, but it’s really just fraud due to impersonation. That’s the key issue, and it’s not changing. The tactics of fraud might change – phishing, pharming, key logging, social engineering, password guessing, whatever – as security measures make some tactics harder and others easier – but the underlying issue is constant.

CXO. Are customers’ concerns about online security matched by those of their banks and credit providers or is there any disconnect with what consumers want and what companies are prepared to do?

BS. There is always a mismatch, and you can easily see it when you look at where the liabilities are. If financial institutions manage to pass the cost of fraud onto consumers, then of course the consumers will want more recourse than the banks provide. Think of a situation where someone steals a customer’s password, breaks into a customer’s account, and steals money. It’s far cheaper for the bank to foist the cost of that fraud onto the consumer. But the consumer is perfectly right when he says: ‘What do you mean, it’s my fault? I wasn’t involved.’ The best way to mitigate security risks is to have the entity best situated to mitigate the risk be responsible for the risk. Customers can’t improve a bank’s computer security, so it makes no sense to give them the risk. The bank can improve security, so it should be responsible for the risk, regardless of who is at fault.

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

The so-called ‘rock star’ of the security industry, Bruce Schneier, exclusively reveals his controversial views on current security issues.

CXO. You’re on record criticising post 9/11 airport security measures as little more than window dressing and have claimed they don’t actually make passengers safer. Do you see any similarities to this situation and the steps financial companies take to protect their customers?

Bruce Schneier. The phrase I use is ‘security theatre’, and one of the reasons we fall for it in airline security is that attacks are very, very rare. Security theatre is exposed when it’s obvious that it’s not working, and there simply isn’t the attack data to assess the effectiveness of bag screening, liquid confiscation, photo ID checks and other useless security measures.

Financial fraud is different, because there is a measurable crime rate that reacts as security countermeasures are applied. Financial companies know what is and isn’t working. They may decide not to tell their customers and keep up a charade of security theatre, but that only works in the short term. So while

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CXO. What needs to be done to truly create an environment where customers are protected from threats such as identity theft? Are banks and other financial institutions capable of achieving this on their own or will outside influence be required?

BS. It’s easy. Make banks responsible for all the costs of identity theft. Once you set the economic incentives properly, the marketplace will come up with all sorts of technical and procedural solutions.

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CXO. Do you see any particularly striking new security threats emerging at the moment?

BS. No. I’m asked to make predictions like this regularly, but honestly, I think we’re going to see more of the same for the foreseeable future.

“The tactics of fraud might change as security measures make some tactics harder and others easier, but the underlying issue is constant”

CXO. Do you think the war on phishing is winnable? And if so, how?

BS. It’s not a war on phishing, it’s a war on fraud. Phishing is just a tactic, and if you concentrate your effort on defeating that particular tactic – something I agree is possible but will take a great deal of hard work and coordination – the criminals will just move to another tactic. If we’re ever going to truly reduce fraud, we need to look beyond tactics and deal with the economic motivations of both the criminals and the victims. n

Scott Beale/Laughing Squid. laughingsquid.com

CXO. Does the increased ubiquity of online commerce mean that resolving new security threats is a purely technological issue or are there other aspects to consider?

BS. Mitigating security threats is never a purely technological issue.

Security always involves people – people doing the attacking, and people as the victims – so security will always have a people component.

And actually, one of the reasons online crime is so successful is that so much security tries to take people out of the equation. Technology can do a lot to improve security, but it can only augment what people do, not replace them.

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

WORMHOLE: SECURITY IN ACTION n recent months a worm, a malicious software programme, has swept through corporate, educational and public computer networks around the world. Known as Conficker or Downadup, it is spread by a Microsoft Windows vulnerability, by guessing network passwords and by hand-carried consumer gadgets like USB keys.

Experts say it is the worst infection since the Slammer worm exploded through the internet in January 2003, and it may have infected as many as nine million personal computers around the world.

Worms like Conficker not only ricochet around the internet at lightning speed, they harness infected computers into unified systems called botnets, which can then accept programming instructions from their masters.

Many computer users may not notice that their machines have been infected, and computer security researchers said they were waiting for the instructions to materialise, to determine what impact the botnet will have on PC users. It might operate in the background, using the infected computer to send spam or infect other computers, or it might steal the PC user’s

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personal information.

Microsoft released an emergency patch to defend the Windows operating systems against this vulnerability in October 2008, yet the worm has continued to spread even as the level of warnings has grown in recent weeks.

Security researchers at Qualys, a Silicon Valley security firm, estimated that about 30 percent of Windows-based computers attached to the internet remain vulnerable to infection because they have not been updated with the patch, despite the fact that it was made available in October last year. The firm’s estimate is based on a survey of nine million internet addresses.

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NEXT BIG THING

Super software Parasoft UK’s Andrew Thompson looks at software development in an economic downturn.

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oday we are offered a unique opportunity. The current economic conditions are forcing the hand of many companies into reducing headcount in order to preserve the business. Yet, the modern customer is an unforgiving animal and will still expect first class customer service.

So why is this a unique opportunity? It is now the time for IT departments to stand up and be counted! Dead wood can be cut from the teams and processes tightened up. Effective use of IT will make or break companies in this recession. It will become imperative for IT to become responsive to both internal and external customers.

Let me paint you a picture. Imagine an IT project where project managers had a precise knowledge of timeframes, and how each aspect of the project was progressing. Where developers had the courage to make changes to software they had not touched before, safe in the knowledge that they would not break anything. And where testing was a formality, not a desperate fight to stop errors affecting your customers. Is this a nirvana that only exists in the minds of the clinically insane? I am here to tell you it is not. The technology and processes are already here and being used by companies such as Cisco, IBM and, of course, Parasoft.

What we are talking about here is a software development production line similar to that on which cars are built. There is a strict process in place that defines what happens and when. In addition, when a defect is found, the production line is analysed until the process that introduced the error is identified and fi xed at source.

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increases, both in the development team as they spend less time fixing problems and also in the test team, as there are inherently less issues to find. This system is commonly called ‘static analysis’, and tools to do this are available both as freeware and as commercial offerings.

For a truly responsive organisation, changes to applications need to be able to be made quickly and with the confidence nothing else got broken. For this we need to implement an automated regression test suite. Then, when an error is detected by the test team,

Procedures Developers will complain about becoming a commodity, or needing to exercise their creativity, but let me give you an analogy.

If you are building a multi-million euro skyscraper, would you let the builders exercise creativity in what they did and when? No, you would follow a strict process to ensure strong foundations and to have a safe and secure environment. Why should a commercial software project be any different?

So what are some of these processes?

During the development cycle the team need to be sure that what is being built can be rebuilt at a moments notice. Therefore an automated build system should be set up that creates a fresh environment on a daily basis, builds the application from the code in the versioning system, and alerts the team to any errors or warnings in that build process.

“It is now the time for IT departments to stand up and be counted! Dead wood can be cut from the teams and processes tightened up” An analysis system is added that prevents developers coding in a style that has already been proven to introduce errors. By preventing these erroneous coding styles we start to do two things. The first is that quality starts to improve. The second is that productivity

Andrew Thompson, MD of Parasoft UK, has spent 25 years in the IT industry. He has held various technical roles, and worked on systems as diverse as NTL’s broadband provisioning service through to telephony voice recognition systems.

root cause analysis is performed and a new static analysis rule and regression test are created to ensure that this error does not get reintroduced, or indeed is present elsewhere in the application; so enhancing your future production capabilities.

Parasoft are helping many of the Fortune 500 companies to set up Automated Defect Prevention systems such as this with our tools, processes and services. This is not a silver bullet however. Strong leadership is required to implement change – this is where you come in, but the benefits to the company and your customers are enormous.

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Digital dangers A digital recession could be on the horizon as online counterfeiting activity intensifies, according to research by Marks & Clerk. CXO investigates.

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usinesses are concerned that counterfeiting will increase as a result of the recession, and want to see much stronger controls put in place to protect them from internet abuses, according to new research by global intellectual property firm Marks & Clerk. In a survey of over 200 UK businesses 97 percent says they believed that counterfeiting will increase in the recession, while 80 percent claimed businesses will be at “much greater risk” than in previous downturns due to the phenomenal growth of the internet. They compare the situation to the last major UK recession in the 1990s during which the internet was still very much in its infancy. Of the businesses that took part in the survey 75 percent of respondents argue that stronger action is now required to protect companies from counterfeiters.

A clear majority of 61 percent argue that the solution lies in the creation of a more powerful cybercrime authority, with stiffer penalties being imposed directly on infringers. 55 percent go so far as to suggest that stronger penalties should also be levied against the online marketplaces themselves, such as eBay, in enabling counterfeiting to prosper. Over three quarters (76 percent) feel that the law has failed to keep up with the challenges posed by the rise of the internet, in protecting business’ intellectual property.

A digital recession?

Pam Withers, Partner at Marks & Clerk, says the credit crunch could bring with it a form of digital recession: “This is the first recession in the digital era and businesses are anxious about the consequences. The success of the internet has meant that we are seeing increasingly vociferous criticism of those who play a part in counterfeiting – even those who do so unwittingly. Even before the slowdown, strong brands such as Tiffany’s & Co and L’Oreal were critical of the role the internet plays in enabling the sale of counterfeit goods, which is intensifying as the recession takes hold.”

She goes on to say that one of the biggest issues for companies is the fact that there are no global

been immune from censure as a result of their increasing dominance and the effectiveness of their advertising strategies,” says Pam Withers. “The market needs a clear line to be drawn by the courts to establish where the ground lies, and if the onus should be solely on the consumer, or if the internet has now got too big for this to remain the case. But both sides will need to play ball.

Businesses need to take firmer action to protect their brands, while service providers need to recognise their responsibilities and engage with the problem.

Beating the competition

regulations or legal frameworks governing the authorities’ responses to intellectual property crimes committed online: “One of the major headaches has been the lack of certainty for businesses due to the fragmented treatment of these issues from one country to another. The internet is an international channel requiring a more co-ordinated response, which may account for the frustration expressed in our survey about intellectual property systems. Our survey proposes a more powerful cybercrime authority, which could well allay the fears of brand owners and satisfy popular online marketplaces, establishing a clearer framework to punish the real offenders.”

Searching for answers The Marks & Clerk survey found that businesses’ concerns extend more broadly to the role that search engines play in enabling access to counterfeit goods. 59 percent believe that a protocol needs to be created to engage search engines in the fight against counterfeiters. This is notable in view of the long-running dispute between Google and Louis Vuitton’s owner, LVMH. LVMH objects to the service provider selling keywords to the highest bidder, including rivals or potential counterfeiters. “Search engines have not

Amongst other findings is the fact that businesses are also concerned about the threat of legitimate competition on the web, particularly when it relates to misinformation from competitors. Of the respondents 58 percent object to the practice of competitors paying for sponsored keywords in their name, and argue that this too should constitute trademark infringement. Yet tellingly, the survey suggests that businesses are reluctant to take on the mantle of protecting their brands in the online marketplace themselves. Only 25 percent think that the burden should fall on businesses to police their brand more effectively, although 39 percent recognise that they could nonetheless allocate more of their own resources to the problem. Kirsten Gilbert, Associate at Marks & Clerk Solicitors, says: “While the internet poses many challenges to brand owners as a powerful distribution channel which can be abused, the tactical moves of competitors should be separated from the more damaging threat of counterfeiting.”

Gilbert adds however that the introduction of any regulation to counteract these threats should be balanced with the need to ensure businesses’ profitability and commercial freedom is not compromised: “Tying the hands of online marketplaces or service providers is dangerous, not least as so many small and medium businesses rely on the internet for distribution. Online channels also give companies the freedom to react more quickly to market needs and pricing sensitivity, which will prove yet more essential in this market. Retail data shows that online sales are holding up well in a recession that has hit our bricks-and-mortar high street hard. Any moves towards tighter regulation need to be balanced so changes remain cost-effective for all, and are matched by equal commitment from brand owners directly.” n

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TELECOMS

“Driving innovation at the speed of life” From a humble upbringing on a farm in Missouri, Matt Bross boasts what he describes as one of the “coolest” jobs in the world as CTO of BT Group and CEO of BT Innovate. Gerhart Trüb discovers what makes his role so great during a delve into group’s technology operations.

CXO. BT’s 21st Century Network (21CN) is one of biggest IT programmes in the world, transferring the telephone network over to an IP system.

What has 21CN achieved so far and what savings will be realised?

Matt Bross. 21CN is a large, ambitious programme to simplify the multiple networks into a single global IP infrastructure. The programme has, in economic terms, delivered in excess of UK£600 million in cost reductions against a UK£1 billion target. I believe we have the largest Ethernet footprint within the UK on that infrastructure. We’ve rebuilt the entire core infrastructure in the UK around high capacity dense wave, division multiplexing and switching technology that enables the on ramping of the explosion in wireless data and explosion of broadband traffic as we begin the next chapter. This will enable the deployment of super fast broadband on fibre optic cables out to the street furniture within the UK. The 21CN network operates across 170 countries throughout the world so this benefits our broadband profile which delivers 24MB broadband across a huge swath of the UK, the biggest Ethernet footprint in the UK, and a set of new services. So it has enabled core cost reductions and new services to be introduced within the UK.

It creates a fabulous social network of the small to medium size community in the UK and we’re moving from closed innovation where BT would have had to invent every product, service, and application, to an open innovation model that has really benefited our customers, and our shareholders, enabling them to participate more widely in the innovations that are taking place globally. So 21CN has enabled the core cost reductions, the faster drumbeat of new services introduced within the UK and globally, and that’s a specific insight into one of the market areas around the small to medium-sizes enterprise where you can see just the market difference from the old approach to the new approach.

CXO. What role do you play in the evolution of 21CN today?

MB. 21CN has moved to becoming an operational programme, with the continued rollout and delivery sitting with my colleagues in BT Design.

My energies are put into ensuring that we leverage up that investment for the benefit of our customers, employees and shareholders. We look to prepare BT for the future by generating and articulating clearly the revenue generation, cost reduction and customer experience enhance-

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21 CN is a mammoth project

ment propositions on the super fast broadband infrastructure that we’re delivering. This is where my focus is now because the delivery of 21CN is squarely in the hands of the operating groups. First you innovate it, then you design it and then you operate it.

CXO. How important is innovation for a giant telecoms group like BT? MB. BT has always been an innovative company but in this time space we have had to innovate the way we innovate. We have had to change innovation at its core, being the best at doing internal R&D to open innovation, moving from a company that was focused on technological innovation to a company that’s focused on innovation and the experience that we drive. We have became a company that was looking at only longterm type trends to much more dynamic innovation planning cycles. I call it a move from the ‘blue sky approach’ of innovation to purpose-driven innovation where what you’re doing, even if it’s in the mid or longer-term research programmes, can be tied back to core questions that will really get people business motivated.

As we look globally, there’s less and less capital right now certainly to spread around and the need to collaborate in innovation is of paramount importance. We’ve scanned over 460 start-up companies this year for innovative ideas and collaboration ideas but by bringing innovation into the company it lowers the cost of that innovation and can ensure that it’s much more relevant to the customers. So what we’re doing is unleashing innovation beyond the boundaries of the payroll of BT so that there’s not a gap between what’s possible out there and what we deliver to the markets that we choose to serve. And because we’re leveraging up the investment that BT’s doing internally, this will be the lifeblood of successful companies as we come out of this downturn.

CXO. People often still have this mental image of BT as a fixed line telephone company, but this couldn’t be simply further from the truth. How would you say that BT has grown and evolved since you joined in 2002?

MB. BT has gone through a series of transformations since 2002. Back then there was massive debt on the balance sheet and ‘deleveraging’ the balance sheet to create oxygen for the transformation of the company was one of the first jobs. But if you look at the transformations, we’ve gone from a predominantly narrow band company to a broadband company. I think we actually just clocked over 10 million broadband subscribers from a base that was measured in tens of thousands in 2000.

We have gone from a telco to a global network and IT services company that is trusted with the largest most critical infrastructures for companies around the world, whether it is Reuters, Unilever, MasterCard, Coca-Cola, Pepsi, and so on. We have gained significant trust and credibility. With the transformation from a telco to a global network and IT services company, we’ve booked about UK£8.3 billion pounds of new contract value in the last 12 months.

I think the current transformation really is around becoming a global innovation platform as opposed to a global network, one where our customers can successfully address the global marketplace on a variable cost basis faster than they could otherwise achieve themselves. And this is driving us to move from being a network and IT company to a ‘softco’ where the platforms that underpin what we do and much more ‘realtime’, are much more agile.

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quality of people’s lives or the success of business.

And for me, as we deploy the significant sums of investment that we do at BT, if we can strive to innovate at the speed of people’s life as opposed to at the speed of technology, we take on a higher purpose and create more of what is relevant in the daily lives of our customers. So I really love the range of things I get to learn and understand – from the nano-sciences all the way through the most advanced applications of social networking. Who wouldn’t have fun doing that?

An example of that would be one of the recent acquisitions where we acquired Ribbit out of the West Coast, which is kind of billed as Silicon Valley’s first telco. Through this we can actually begin to embed communications into the workflow. Instead of network services being a big infrastructure like a PSTN (Public Switch Telephone Network) or like a frame relay network, you start to embed communication and messaging into the workflows of companies. And this is really the transformation that we’re undergoing right now and we’ve worked to significantly transform the innovation agenda of the company from a closed innovation model to an open innovation model. This where open innovation, in my judgment, is defined as BT’s organisational capability to find innovation globally, bring it back and fuse it together with the best of the men and women inside of BT. Then using our innovation platform, get it in front of customers faster than ever before.

You are so correct that BT has gone through a significant transformation and in some ways outside of the UK if you look at our global services customer survey, for the better part of last year the number one or number two message from our global services customer base is that we are an innovative company that’s delivering network and IT services globally. So it is a vastly different business than the recent past and certainly when I joined.

CXO. In the past you described life at BT as “one of the coolest jobs on the planet”. Do you still feel this to be the case?

MB. Absolutely. Pretty much every day I pinch myself that I should be serving a company like BT as the CEO of innovation and as the Chief Technology Officer because this is a venerable organisation when it comes to technology. My passion is less fuelled from technology than by what I call ‘driving innovation at the speed of life’. I believe that things exist in the domain of invention, and they may be very important inventions until they cross a threshold and that threshold actually is a pretty bright line. They then become innovations when they are enhancing the

CXO. You appear to be passionate about your role. Are you very much a hands on technology chief?

MB. I think that I understand the value of people in this equation. My management philosophy is that if you take care of people, they will take care of business because people make things work. My absolute passion is around helping innovation and the talent that we have – that’s not rhetoric. When it comes to my management style, people who know me would say that I understand at quite a deep level how things work but I’m also very comfortable with trusting the people that we put in place to do the analysis and to do the design engineering architecture and get on with it. n

Matt Bross on his role “I continue to serve as the group Chief Technology Officer but have taken on the accountability as CEO of BT Innovate, which carries two primary accountabilities. One is engaging in the communities within BT where BT works and operates to stimulate innovation in those communities, and second is with our customers – engaging them in a very direct way to help them innovate within their businesses more effectively, innovate within the ecosystems that they operate, and extract more out of the relationship with BT itself from the innovation agenda.

“Internally, I think of it as really restocking the shelves for our market-facing units and other operating groups in the areas of new revenue generation, cost reduction, and customer experience opportunities. It’s about taking the idea generation coming from multiple sources and driving it into well-articulated propositions that those market-facing units can use to drive the financial performance and the customer experience that they intend to put into the marketplace.

It’s about making sure that we’re prepared for the future with the right kind of revenue generation, cost reduction, and customer experience enhancement agenda. At BT Innovate we’ve probably had three customer engagements every day of the year last year.”

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UNIFIED COMMUNICATIONS

The Future Beckons Lavanya Palani Batcha of Frost & Sullivan discusses the latest trends in unified communications.

Emergence of UC

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nterprise communications technology is increasingly being considered as a means to achieve several critical objectives in an enterprise. Increasing productivity, higher efficiency, faster turn-around times, enhanced client interaction, quicker ROIs, and a significant reduction in long-term costs are some of these mission-critical objectives.

In trying to achieve these business goals, enterprises need to overcome several limiting factors such as cut-throat competition, multiplicity of devices, communication over multiple remote locations, lack of infrastructure, unsatisfied clients, and even the current state of the economy.

Advancements in technology, products, and applications, and the growth of Internet Protocol (IP) networks have given birth to the unified communications (UC) story, which is considered by many as an integral platform in the future of enterprise communications. It is anticipated that unified communications will alleviate many of the issues and bottlenecks that afflict enterprise communications today and indeed, chart the course for an enhanced communications scenario in the enterprise.

TANGIBLE BENEFITS Cisco’s Tim Stone outlines how unified communications technology is transforming businesses.

“We find that the way that people are communicating within organisations is changing. People are being asked more and more to collaborate across organisational boundaries and also communicate when working remotely, such as at home, on the road or in hotel rooms. We are also seeing the ‘consumerisation’ of IT driving UC because employees are asking to use a broader variety of devices and applications.

“Here at Cisco, we have a whole host of different devices. For instance, we have a lot of people here using Mac computers now, even though it is not really an IT supported device but rather an IT tolerated device. There are also around 10 different types of phones that people are using. While people use things like Skype and Facebook at home there is the capability of having these things in the workplace, which we see as a key driver.

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Unified communications defined The proliferation and adoption of the IP telephony platform by enterprises serves as the principal thrust for unified communications. In the simplest of terms unified communications is the convergence of voice, data, and video networks on an IP system. This convergence becomes even more relevant in this day and age because of the diversity of devices, networks, and media available.

Frost & Sullivan’s unified communications definition and framework includes a wide range of applications as explained below: • Enterprise telephony: Includes KTS, WPBX, PBX, IP-PBX systems, IP phones, and digital phones.

• Email: Includes e-mail and related calendaring software licenses.

• Unified client: Includes software clients, which provide instant messaging capabilities and/or the ability to launch other unified communications applications such as IP Telephony and conferencing and collaboration with presence awareness • Unified messaging: Includes applications which integrate the storage and accessibility of voice, fax, and email messages into a single mailbox, which can be accessed through email, telephone, web browser or a unified client. It also includes sales of voicemail systems as they form an addressable opportunity for unified messaging solutions.

• Conferencing and collaboration: Includes audio, video, and web conferencing, and collaboration tools that enable the communications and sharing of information, files, and presentations in real time.

• Presence: Includes middleware applications, which provide a realtime status indicator of a user’s ability and willingness to communicate through different communication tools within a network or enables integration of multiple unified communications applications. It also includes all-in-one application servers, which provide presence, instant

“We have been working on an architecture that facilitates these different devices and applications that will help collaboration for organisations. We can see the business case around UC in three distinct areas. First, convergence of voice, data and video in one networking environment.

Second, employee productivity, which means UC can help your workforce to be more productive, communicate better and have shorter decision cycles. Thirdly we are also starting to see some deployments for what we call ‘business transformation’, such as in vertical industries where organisations are able to work differently and more efficiently, as well change some of the processes that are being used within.

“By virtualising the environment you eliminate a lot of the costs in the telephony world, so you don’t need someone to reconfigure the system every time someone moves desks, for instance. Also, much more flexible working practices, such as ‘hot desking’, can be implemented. We have seen anywhere between five and 35 percent cost reductions by

THE SEVEN PRINCIPLES OF OPEN COMMUNICATION Unified communication. Unification of all relevant business communications, both real time and non-real time, into a simple, seamless experience.

IT-based communications. Complete openness across the entire information and communications ecosystem.

Fixed mobile convenience. Combining the best of both the wired and wireless worlds into a single converged user experience.

Business process integration. Strong productivity gains through a deep embedding of real time communications into mission-critical business processes.

Rich user experience. Intuitive, human-centric access to information and communication as needed, allowing people to share information as easily as natural languages enhance personal performance.

Business continuity and integrity. Carrier-class redundancy, resiliency, reliability, security, and scalability to ensure the success of virtualised communications.

Open service delivery. Allows customers to choose from a wide variety of open communications access methods.

messaging, call management, and conferencing and collaboration capabilities on one platform.

• Mobility: Includes middleware applications and soft clients, which enable the delivery of corporate desktop and voice communications through mobile devices.

• Contact centre applications: Such as Automatic Call Dialling (ACD), Interactive Voice Response (IVR), Computer Telephony Integration (CTI).

• Outbound and multimedia systems: Includes product license sales of customer facing applications in the contact centre.

taking the first stage of converging networks together and having one virtual system.

“If you look at the economic situation that we are in at the moment you will see that the ability to have web, audio and videoconferencing online is a major advantage.

For instance, telepresence can have a major impact on your carbon emissions. This is part of the reason why we have deployed 390 telepresence systems to date. Indeed, the utilisation rates are very high, with 49 percent of a 10 hour working day devoted to using these systems. We have conducted 250,000 meetings using telepresence and this has avoided 47,000 trips and we estimate €140 million in cost savings so far. The sectors that have traditionally been adopters of telepresence has also been financial institutions and local governments, although manufacturing has been a positive sector. Generally speaking, the more locations you have and the more mobile your workforce is, the more need you have to collaborate across functions.”

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Several of these applications have been in existence albeit in silos, as enterprises implement specific applications as per their current need.

However, it is anticipated that these enterprises would advance to further augment their unified communications experience in the future.

Potential across industries Enterprises that have offices across multiple locations with a large mobile workforce needing real-time collaboration between customers, colleagues, business partners, etc, are likely to enjoy the best use of unified communications. Industries that generally have an inclination towards the use of high-end technology are also expected to be able to gauge the underlying long-term benefits of implementing unified communications in their premises.

The potential for the adoption of unified communications exists across industry verticals such as manufacturing, hospitality, aviation, etc. The requirements for each vertical are unique and the essence of unified communications is such that it can cater to a specific need in each of them. The hospitality segment, constantly in search of avenues

“The proliferation and adoption of the IP telephony platform by enterprises serves as the principal thrust for unified communications” for greater customer satisfaction, is likely to benefit greatly from unified communications. Rich interactive user experience provided by IP telephony, the seamless voice and data connectivity through the mobility application for the hotel’s mobile staff, and other innovative facilities are expected to prove to be features offering immense benefits. Let’s consider another example of a manufacturing enterprise setup spread across the globe; the various locations catering to different business functions within the enterprise. With the need to reduce carbon footprints, this manufacturing setup could meet its objectives by deploying unified communications applications such as video-conferencing. With the ability to connect several locations in real-time, thereby providing the enterprise with a reliable collaboration tool, it is expected to result in a satisfying communication experience whilst saving time and costs significantly.

Emerging trends The integration of unified communications and critical enterprise business processes such as CRM, ERP, etc, is seen as a development, which would enable enterprise customers to view unified communications as a significant value proposition.

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Lavanya Palani Batcha, is Research Analyst for Frost & Sullivan’s Information and Communication Technology Practice.

In the context of contact centres, the deployment of unified communications can result in a marked improvement in the productivity of the agents. They would have the provisions to be seamlessly connected through voice, video, IM, and email to their supervisors and associates on one side and customers on the other. These inherent advantages of unified communications are likely to facilitate the agents to perform multi-tasking. If agents can significantly diminish the time taken for their transactions, then it presents a case where the investment in the technology can be justified.

Unified communications in the contact centre can enable higher efficiency and quicker responses from the agents and this entails the ultimate ROI benefit.

In conclusion Considering the economic slowdown today, enterprises are focusing on optimising costs and unified communications has the potential to be one of the key methods to significantly reduce long-term costs associated with communications and travel. In the bargain, the enterprise is also expected to achieve favourable ROI as well as higher goals such as increases in productivity and efficiency.

Whatever may be the size of the enterprise, the business processes, the nature of its workforce, or even its fortune in a sluggish market, it is definitely worth understanding unified communications and how it can be leveraged for the wellbeing of the enterprise.

ASK THE EXPERT

Next Generations communications

Andrew McDougall puts unified communications (UC) under the spotlight to get to the bottom of how it can deliver real benefits and cost savings.

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C is not a product but an intelligent and time efficient use of technologies to enable ways of working that improve customer service, reduce transaction costs and deliver flexible working. It is estimated that in 2010 the worldwide UC marketplace will be worth around €4.8 billion.

Employees and organisations have many means of communicating with each other, with customers, partners and suppliers. From office phone, office voicemail, e-mail, mobile phone, mobile voicemail, instant messaging, text messaging and the internet, all inconsistent with one another and all with differing costs.

This array of communication choices is making it increasingly difficult for businesses to manage the overload and with more and more workers going ‘virtual’ working from home, travelling or from other remote locations, it is becoming harder to find the best way of reaching them. But whatever your occupation, there are demands made on your time that can be dramatically impacted by technology that allows communications to be managed from one place.

between individual employees, the extended virtual organisation and external customers.

Empowering staff by freeing them from a complexity of technology, allows them to concentrate on why they are communicating. By giving people the flexibility to work from the office, remotely or on the move, and providing them with the ability to work dynamically and collaboratively, effectively sharing the same information as their office colleagues, organisations can maximise their skills and enhance both employee and customer satisfaction.

UC in practice

Real differences Companies need a way of pulling all these disparate communications streams together to become a unified entity. UC incorporates a variety of methods you can deploy as part of a UC strategy to help you work more intelligently and efficiently, driving cost savings through technical efficiency, allowing your business to improve customer service, make faster decisions and locate relevant resources quickly and efficiently.

It delivers, via a single interface, a comprehensive range of communications services and associated information designed to reduce the delays and frustrations of communication

You may ask whether you will need to invest in new technology. I would say that UC does not necessarily involve major investment in new technology. Almost all vendor UC offerings incorporate a variety of methods to integrate with existing voice technology (TDM and VoIP). Depending on which services are already deployed in the existing infrastructure it is obviously the case that some additional investment will be required to support the new user tool and additional contact media (video, instant messaging and so on).

When investigating UC for your business you need to consider the ongoing cost of ownership for any vendor solution and not just the immediate outlay, which may appear low cost from a software license perspective only. It is also paramount that you have a plan that addresses real business needs both now and as far as possible into the future so that whatever you buy is aligned to that plan.

Another concern is that UC will involve a completely different way of working, but It doesn’t have to. Either through orchestrated change programmes or with the passage of time people’s work habits will evolve to utilise the new ways of working made possible by UC. It is definitely aligned more easily within organisations that have already accepted an information sharing and collaboration culture and so the challenge for the organisation, is to steer such change into patterns that reflect desired behaviours and away from undesirable ones.

Andrew McDougall, Head of Vodafone’s Unified Communications Group, was previously CEO of Central Telecom, acquired by Vodafone in December 2008 to become the Unified Communications Group. Under McDougall’s leadership Central became one of the UK’s largest and most successful independent telecoms companies with specific expertise in IP telephony, voice, managed services and unified communications.

Vodafone’s Unified Communications Group has helped Cambridgeshire County Council to transform its working environment by providing its employees with fast, simple, ‘always on’, access communications. Alan Shields, Technical Architect, Cambridgeshire County Council, said: “Our vision is that staff work flexibly, balancing work life pressures and the needs of the community – satisfying these and their own requirements. Upon project completion the council will benefit from a truly UC solution, providing over 5000 government employees with a platform to effectively communicate, share and interact together from anywhere at anytime, enabling new forms of flexible working and significantly improving the quality of public services offered.” n

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ANALYST VIEWPOINT

Making contact the modern way Brent Kelly, Senior Analyst and Partner at Wainhouse Research, demystifies some of the issues and challenges associated with the migration to unified communications. hances a user’s presence information based on calendar data, location services, or computer keyboard state.

By knowing both device status and an individual’s context, people are able to reduce human latency and more effectively reach out and communicate with the other people in their particular value chain.

Presence will become the dial tone of the 21st century because it allows people to know when someone is available, as well as how to best contact them. One interesting proof in our company that presence reduces latency is that we have completely eliminated internal voice mail because we never call someone unless we first establish an instant messaging session asking two questions: First, are you there? Second, may I call you?

Internal phone tag has been completely eliminated.

Challenges and pitfalls

he need to communicate and collaborate between individuals and groups of individuals has grown exponentially as suppliers, manufacturing, R&D, engineering, production, operations, sales, marketing, finance, and retail have all become globally dispersed. Companies of all types and sizes are acknowledging the competitive need to streamline the flow of knowledge and information worker expertise both within and without the organisation, regardless of where in the world that knowledge and expertise needs be applied. The big economic wins in this decade, and the next, will likely go to those companies, and their key partners, who are able to flatten and accelerate their knowledge chains through real-time, ad hoc, global collaboration. UC is emerging as a proven framework for reducing human latency in knowledgeintensive business processes.

A well-designed and implemented unified communications system should significantly reduce or eliminate multiple communications attempts in favour of more rapid, ad hoc, one-on-one and group meetings, facilitated by presence, instant messaging, voice, and conferencing capabilities. UC systems will, typically, tightly integrate real-time media with collaborative services and any devices a person uses within the context of any workflow application.

Rich presence is a fundamental enabler for a UC system. Rich presence gives status information about any of the communications tools a person may use along with the person’s working context. For example, telephone status information (on-hook, in a call, in a conference call) adds significant information about how people are working, and it complements and en-

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Implementing a UC solution requires the same level of discipline and planning one would use when upgrading a production line or when installing a new line of business application. The companies having the most success with UC are those which employ some kind of defined procedure or process for integrating new technology with people, business processes, and existing technology. A company does not want to deploy a UC client that supports VoIP and desktop video and then afterwards wonder if the underlying network infrastructure can support the increased bandwidth demand IP voice and video will require.

WHY BUSINESSES DEPLOY UNIFIED COMMUNICATIONS

Other 13% Revenue growth 5%

Productivity 86%

Business continuity 10% Cost reduction 78%

Source: Wainhouse Research

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Brent Kelly identifies the tangible cost savings for organisations looking to take the plunge with unified communications.

Reduced travel. The caveat is that in most organisations, travel costs are so spread out that they are never rolled up to a single number. So some internal reporting and accounting procedure work will likely need to be done to prove that a UC solution can really save the company money.

Consolidating infrastructure. We have seen some significant savings occur when companies consolidate their voice systems into centralised or regional solutions versus having individual PBXs at numerous locations. Cost savings typically appear in reduced maintenance, on-net calling and a smaller number of trunk lines being required.

Audio conferencing. Some companies claim significant savings when bringing audio conferencing in-house, enough in fact to pay for the entire UC deployment. Our own experience is that premise-based audio conferencing works for some companies, but the hassles and cost associated with managing an on-premise audio conferencing solution out weigh the benefits for others.

ROI or TCO? One of the key concerns with unified communications is justifying the expense or generating a ROI. As shown in the pie chart, companies are investing in UC for two primary reasons: First, to increase productivity and second, to reduce costs. We have found that trying to justify a UC solution based on productivity increases is a difficult sell to management.

Instead, we suggest that people look at UC from a total cost of ownership (TCO) perspective versus a ROI perspective with productivity increases being soft benefits one may also accrue. Most companies already have many of the elements that make up a unified communications solution: presence and IM (either premise-based from a free public service), one or more enterprise PBXs, audio conferencing (either premise-based but more likely from a service provider), web conferencing (usually from a service provider), and some video conferencing.

Given that companies already have access to all of these capabilities, it seems reasonable to look at a UC solution, which enables a common interface and user model for all of them, from a total cost of ownership position.

Reducing risk and maximising control Other practical reasons for deploying a UC solution can be from a control and risk standpoint. For example, companies may want better control over who its employees are sending instant messages to and what the content of these messages are. A premise-based IM solution may reduce certain kinds of risk by giving the organisation more control. Companies can archive instant messages and they can apply message hygiene software so that instant messages are scanned for sensitive words, phrases, links, etc prior to the message being sent.

Conclusion

Do the homework Many companies have heterogeneous environments where there may be multiple kinds of devices (PCs, Macs, mobile phones) as well as telephony systems from multiple vendors and back office systems running a variety of operating systems. Care must be taken to ensure that the UC solution selected will meet the needs of all prospective users and that it will integrate with the existing infrastructure and solutions. Performing a needs analysis is a healthy exercise prior to considering a UC solution because it will help pinpoint which people or groups of people can really take advantage of such a solution.

Creating a baseline that includes not only the network hardware, firmware versions, and current bandwidth, but also the kinds of devices and the existing software licences available, will also be important. For example, if people already have Microsoft Office Professional, then individuals using Office Communications Server will not need an additional license for the Microsoft Office Communicator client. Small things like doing a needs assessment, profiling user needs, creating a baseline, and examining existing licences can save organisations lots of money when ultimately deploying a UC solution.

There are a number of organisations deploying unified communications solutions. The keys to success include understanding the need, deploying a solution that fits with an organisations people, its existing processes, and its existing technology, and creating a cost model that provides real TCO reductions in a short period of time. In reality, most companies do not see quite the TCO reductions they target when deploying a UC solution, but they are clearly able to have a much better communications solution with the same or somewhat less total spend. n

Brent Kelly is the unified communications (UC) Practice Manager at Wainhouse Research where he focuses on unified communications markets, strategies, products, and services.

He has written numerous reports, white papers and articles on UC and collaboration.

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PROJECT FOCUS

Investing in videoconferencing Matthew Light, Managing Director of Tempura Communications, lifts the lid on how his videoconferencing solutions can deliver tangible benefits for organisations.

W

ith the global recession taking its toll on some of the organisations that haven’t evolved in particular, the opportunity to implement cost justified enhancements that give an edge against competition is now. Here at Tempura Communications we work with an array of suppliers that enable us to bring together the best of breed based on technology, geographic locations and customer requirements. Our primary focus is on delivering WAN infrastructures or internet access to businesses of all sizes. Our project values are of varying sizes, but at last the converged network is really starting to

“Our preference is to hold an exploratory meeting with clients at the earliest opportunity once either a project is beginning in planning, or as part of that planning exercise” happen. VoIP and videoconferencing are drivers behind the requirement for quality of service networks that can be cost justified through the savings in inter-branch communications and travel costs or assisting the acceleration of the technology.

MPLS is one of the network designs that has enabled convergence, but bandwidth availability and technology advancements are another. With greater availability comes volume that brings down the cost. Recently we replaced a 30Mb leased line with 100Mb and still saved the customer money. In terms of MPLS connectivity we can offer anything from two sites to 255 sites across technology from ADSL to leased line available across the world in over 180 countries. Unlike the individual

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providers themselves, we are able to offer a choice of ISP services with the key differentiators identified, as well as adding in our managed services such as desktop-hosted VoIP and hosted videoconferencing.

Just into the New Year a requirement was raised for videoconferencing from one client that had 16 offices, some of which were in remote locations in Africa. This was fulfilled utilising our TempuraVIDEO software service, with high-definition video being delivered over a combination of leased line and DSL services and satellite broadband in Africa.

The video technology employed is designed to work over shared or low quality networks, but when combined with leased line infrastructure is truly amazing.

Other requirements that are commonplace at present are centred on resilience. This is where our product mix plays a key role as we offer complete resilience across different providers, perhaps different technologies, and even over different physical technologies such as our 10Mb Symmetrical Wireless failover service offered on fibre leased lines.

Our preference is to hold an exploratory meeting with clients at the earliest opportunity once either a project is beginning in planning, or as part of that planning exercise. From that meeting we can gather the requirements and ‘nice to haves’ and come forward with often more than one possible solution as well as add in the possibilities with other technology.

Another recent example of this, followed a meeting to discuss a network upgrade requirement replacing individual internet connections with an MPLS to facilitate a distributed CRM system. In the end the project upgrade was justified through the implementation of VoIP and linked the key management across four sites in the UK and France with desktop video.

We hold these meetings with the aim to understand the problem, build a solution but also demonstrate other ideas. With technology changing so quickly it is possible to over-

look what can be done, and this is where our experience and values come in. With no cost, nor obligation to perform these meetings, there is no downside to organising a face-toface, videoconference, or teleconference call to see if there is any synergy between the two organisations.

We encourage organisations to engage with us early in their plans, to receive a general overview with the network being core to the delivery of services to a dispersed workforce, or to the desk in a single office environment. Our solutions cover movement of data; telecoms and video enable a comparative and universal approach. For more complex meetings we have the full backing of organisations such as BT, easynet, NTL, Polycom, and Sony and can bring in expertise or utilise offices of these organisations to host further talks or demonstrations.

Matthew Light, MD of Tempura Communications based in Basingstoke, UK, has over 11 years’ videoconferencing experience and works to advise UK, European and American businesses from SMEs, corporate and government departments and organisations, as well as reseller channel partners on both the networking and conferencing aspects of the projects at hand.

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TELEPRESENCE

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ince technology became centrally important to business operations, researchers around the world have been working to streamline communications across long distances. Communication via digital channels began in the 1980s, and spread to the masses thoughsoftwaresuchasMSNMessengerandSkype.Nowthenext level has arrived, in the form of telepresence. Howard Lichtman, President of Human Productivity Lab, defines telepresence as: “Visual collaboration solutions that address the human factors of participants and as closely as possible attempt to replicate an in-person experience.”

According to Lichtman, the technology of telepresence is so advanced it is capable of convincing users they are in the same physical space with someone who is on the other side of the world. He describes the intelligence behind the technology: “The creation of an in-person experience is accomplished by a combination of factors: Mirroring the environment, so it seems like all the architectural elements on both sides of the world are the same, creating a feeling of being in the same physical space.” Low-latency video and audio codecs, high-quality private IP networks, life-size images, fluid video, accurate flesh tones and spatial acoustics are also used to maintain the illusion. It’s important to ensure the camera is out of sight, because people behave differently when they’re aware they are being filmed.

“Telepresence firms minimise the bezels and use large rear projection video walls or large beam-splitters to create a more immersive experience, so that it’s very different from the observant experience of watching a TV set,” Lichtman says. “When you get the human factors of the experience right, people will actually use it, and they’ll use it much more than they would have used traditional videoconferencing.” He adds: “You don’t need draconian travel restrictions, because you still want people to travel and move the ball when that is the most appropriate form of communication.”

More reliable Not only is the technology beneficial for creating a personal experience and avoiding the ‘pain’ of the old system, it is also creates a much more reliable network with the right kind of bandwidth, ensuring there are no screen remnants or fragments. Lichtman explains that it maintains a very low latency to ensure there is no delay between sites.

“In the old days,” Lichtman notes, “videoconferencing was delivered over a lot of point-to-point circuits. So firms might have had a T-1 data line between a main videoconferencing room in London and an office in New York and that would be all it was dedicated to.

Virtual reality

Howard Lichtman tells CXO about the revolutionary new technology that is changing the way companies do business.

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Instead of point-to-point circuits, companies are now changing the way in which they communicate, using IP videoconferencing both internally and externally. Previously, the technology was generally used for headquarters to talk to remote offices. Now companies are investing in what Lichtman describes as ‘telepresence community of interest networks’ (CoINs).

“You can invest in telepresence CoINs that will not only connect you to your other locations but will connect you to the other members of the community of interest network. You’re buying connectivity into a cloud that’s going to support your own locations, but now you can call people in other companies. You can call your vendors, suppliers, joint venture partners, your law firm, your service providers, etc. What you’re seeing is the value of joining this telepresence community, and the interest of watching the networks grow,” says Lichtman. He adds that COINs are now beginning to take off in a big way, as the ROI becomes even greater with more companies joining the community. And the more partners a business is able to communicate with, the better.

flights a month between between London and Philadelphia. They had a corporate policy where business class travel was available for flights over five hours in length so it was a very expensive proposition. They were able to put in telepresence solutions and cut that travel in half.

“The other advantage is that if you have a problem you can immediately huddle the team. You can immediately get people around the world together in a natural format where you can be productive, where that might not have even been possible with travel.

Industry specific “As more and more people join COINs, the value of being connected goes up,” Lichtman says. “As the value goes up, more people will join; as more people join, the value goes up more – it’s a very positive cycle.

For the movie industry it means they’re building editing rooms, where you can work in the editing process in real time between different locations. In the banking sector, they can take subject matter experts in one centralised location and transport them to any of their branch locations.

Lichtman compares the development of telepresence to that of the telephone and fax machine. As more people began to use them, they became normalised into business operations, and the technology continued to improve.

Telepresence communications currently exist mainly on the executive floors of Fortune 500 companies, with only executives seeing, using and understanding this new process of communication. Lichtman advises that the experience of telepresence cannot be understood without being experienced.

“To understand the power of it, you have to go and sit in one of these environments, and say, ‘This feels like I’m sitting in the same room with a guy who is half way around the world. We’re having a normal conversation, it’s not painful, we can be very effective in it, we can share data. I can show him my PowerPoint slides. I can show him this Excel spreadsheet and we can work in it simultaneously.’”

One of the main advantages of telepresence is the ability it provides to avoid the need for travel when holding meetings. Lichtman gives the following example: “When I was Vice President of Business Development at TeleSuite, which was one of the pioneers in the industry, GlaxoSmithKline was one of our customers. At the time they were taking around 700

Howard S. Lichtman is President of the Ashburn, VA-based Human Productivity Lab, the world's leading consultancy on telepresence, telepresence managed services, and telepresence inter-networking.

High adoption The US currently boasts the highest rate of telepresence adoption, but Lichtman says the rest of the world is not far behind. “Europe is number two by far, and it’s spreading rapidly to Asia; the Pacific Rim is now starting to get more popular. Although telepresence offers many advantages over traditional teleconferencing, there are still a few familiar downsides. You can’t shake hands with the person you are meeting, for example. You can’t go out and have a drink at the bar, or even hand them your business card.

Lichtman says the technology will only get more realistic as the technology develops. “There’s an amazing jump in realism between the average telepresence setup and traditional videoconferencing, which I call the ‘plastic camera on the TV set on the dessert cart’. The experience is only going to get more real. It will also get cheaper, as IP networks develop around the world and there are submarine cables and fibre optics going to more countries. The cost of delivery and the cost of the network and the managed services that support it are more expensive than the endpoints. It’s those costs that will go down.” He concludes: “Good things will come of this, in the same way that good things came out of the internet. The quality and the amount of information that is being exchanged will go up dramatically, and that will be overwhelmingly positive.”

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EXECUTIVE INTERVIEW

The BIGGER PICTURE Janne Lauanne, Business Area Director at Videra, discusses the new ways of producing high quality remote work services CXO. Videra has a new idea of how to provide videoconferencing to customers, right?

Janne Lauanne. Yes, we do. We have travelled a long way in the videoconferencing business, from an equipment manufacturer to a full-service provider. What we have learned during this time is that customers only seldom need mere videoconferencing equipment, which still is the most common way of doing business in our field, to sell equipment and possibly support services.

What customers actually need, as simple as it sounds, is to meet each other as if they were in the same room and never mind the technology. This is what we decided to do by providing our customers with top quality connections with each other, regardless of their geographic locations. In other words, the underlying idea of our fully outsourced Virtual Office service is that Videra becomes the customer’s videoconferencing resource, their videoconferencing department, so to speak, and takes care of all technological details on behalf of the customer.

CXO. How did you end up with this kind of a solution?

JL. It was as much a change towards an even more customer-oriented organisational culture as a strategic decision. We discovered that our customers do not want to pay considerable amounts of money just for the mere joy of having videoconferencing equipment in the corner of a meeting room.

Customers simply want to have remote meetings, pay for the added value they gain and forget about technical or support aspects.

From our point of view, customers have more important things to do than worry about videoconferencing and telepresence equipment.

We let them do their work and take care of remote meeting arrangements on their behalf. This was the basis for developing our Virtual Office service, which has been quite a success story ever since. Videra strongly emphasises the importance of creating longlasting customer relationships that create a genuine win-win outcome. In everything we do, we strive to be our customers’ valued partner and help our customers to develop and expand their own business. Creating tangible added value for our customers is at the core of our business.

CXO. What is the major difference between your service and other solutions on the market?

JL. The biggest difference is service. The other is cutting-edge technology which is, of course, critical to our Virtual Office service, but what really counts is that everything our customers need for videoconferencing they can get from Videra. And they only pay a small fee for using the service, or a fixed monthly fee if that suits them better. This means no major investments, no problems with networks, no pressure for IT-personnel and no problems

Janne Lauanne is Business Area Director for Videra in Stockholm, and he is also Senior Partner. He joined Videra in 2001 and became partner in 2003. As a Virtual Office Business Area Director, Lauanne is in charge of expanding Virtual Office business to new markets and developing remote conference services that create added value to the customers.

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with installation. We deliver everything that is needed, from conferencing equipment to displays and installation. We also teach our customers to use the service, and our support services have a very good reputation among our customers. Our own R&D department also plays a key role in developing new service features that the standard products on the market do not offer by default.

“In everything we do, we strive to be our customers’ valued partner and help our customers to develop and expand their own business” CXO. Could you tell us a bit more about your customers?

JL. We serve a wide range of customers from education to multinational corporations and from government to small-sized businesses.

Our customers include several multinational companies such as Fortum, which is one of the major energy producers in Europe, which is an excellent example of our high-quality delivery and support services on the European level. Geographically speaking, we have provided our customers with service sites on nearly all continents. We have a global network of trained installation and on-site support personnel for international operations, even though our home market is in central and northern Europe.

CXO. How does Videra’s future look?

JL. Videra’s future is very bright. We are growing steadily but rapidly, both organically as well as through corporate acquisitions, and we are expanding our operations in Europe.

There is a growing demand for high quality remote meeting services in the markets, and we are happy to meet that need. 

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COMPANY FOCUS

easy does it Having witnessed strong demand for its no frills, no ties offering in the UK, easyOffice is now preparing to expand overseas. CEO Mark Smith tells CXO why he believes the world is ready to do business on a budget.

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n these times of economic uncertainty – it’s no surprise that business, for easyOffice at least, is booming. The company’s offering – no frills offices to rent for as little as a week – has a strong appeal for start-up firms that lack the confidence to commit to a long lease. And even long-established companies are choosing to relocate their premises to offices with a fast get out clause. To date, the company has offices to rent in the London boroughs of Kensington and Camden. However, says CEO Mark Smith, it won’t be long before the offices, featuring easyGroup’s distinctive orange decor, appear across the country. “We’ve now got a live hit list of seriously interested people around the country. That list probably contains about 40 locations right now. We will be starting operations in Glasgow this year and then we’ll be moving onto Edinburgh.

“Working for the easyGroup is very exciting. I think it’s tremendous. We’re very light in terms of administration. We don’t have many layers of management.

I report directly to Stelios” The next list of locations we’ve got includes two in Manchester and potentially two in Bristol. “Once easyOffice has established operations in Manchester and Bristol it will be looking to open premises in

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Gatwick”, then says Smith: “We’re going to pause for some breath and fill those offices up.”

The breakneck speed at which easyOffice has developed its business reflects the business philosophy of its parent company, the easyGroup, which has developed a reputation for breaking the mould by making its budget concepts a reality and bringing them to the market swiftly.

Smith says the way in which the company operates is geared towards ensuring nothing stands in the way of progress: “Working for the easyGroup is very exciting. I think it’s tremendous. We’re very light in terms of administration. We don’t have many layers of management. I report directly to Stelios (Sir Stelios Haji-Ioannou, who founded easyJet then went on to set up the easyGroup). We like helping the little guy out. We like to try challenging new ideas. It’s an exciting and enthusiastic environment.”

Unfortunately, he says, other business people don’t necessarily share the same enthusiasm or willingness to make decisions quickly, which Smith admits can be frustrating: “The biggest challenge is the time it takes between agreeing with a landlord to take on an office, to actually building that office. They walk at their own pace and because we’re enthusiastic and we want to get things done tomorrow, we do find all that planning frustrating. That’s a big challenge for us.”

He’s the first to admit however, that being part of the easyGroup has proven a business advantage for easyOffice, providing it with a distinct edge over other serviced office providers. “One of the things that has not been a big challenge has been explaining to people what the easy brand is,” says Smith. “Everybody seems to recognise it. If I was being tough on ourselves, I’d say the easy brand is all we’ve got really. Because to run a serviced office is easy. It’s not difficult. It’s not science. The advantage we have is the easy brand,

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which people do have confidence in. They know about easyJet and they know about Stelios.”

To leverage this advantage Smith has worked hard to ensure that easyOffice remains loyal to the easyGroup’s philosophy of providing a no frills product at a cheap price and in a flexible package: “We have very flexible contracts and, just like booking easyJet tickets you go on to the internet and book your office space,” he says. The offices are absolutely fine. But we try to keep costs to a minimum. It will always be no frills.” This approach also suits easyOffice’s target customers: Young entrepreneurs who are starting out in business with what they hope will be a great money making idea. “The typical profile is someone who has had a good idea and they’ve maybe been working on it at home on their kitchen table,” says Smith. “They’ve then got two or three colleagues and they want to take it to the next level which is to find some office space.”

Often these types of start-up companies would find it difficult to secure a long-term lease with a landlord – and would not want to commit themselves to a long-term agreement because they are not sure themselves how successful their business will be Smith goes on to say: “The beauty of it is that they can go into the space, then if it does not go as well as they would have liked they can get out early. On the other hand, if their idea goes well they can get bigger and they can grow from a two-person company then take another office and become a six person-office renting bigger office space.”

Smith says that although he is concerned about the effects on his business from current economic conditions, he has found that customers who recently booked office space for three months are now booking for an additional three months. In fact so confident is Smith in the future of his company that he now has his eye on international

THE SERIAL

ABOUT EASYGROUP

MARK SMITH

easyGroup is currently made up of the following brands: easyJet easyInternetcafe easyCar easyMoney easyCinema easyBus easyHotel easy4men easyJobs easyPizza easyMusic easyCruise easyMobile easyWatch easyVan easyOffice

expansion – into Europe and as far as the Middle East. Smith’s initial idea is, once the business has become well established in the UK, is to start opening offices in the destinations which easyJet flies to and where the brand is already well recognised.

“My first calling would be to look at the routes that easyJet already flies to,” says Smith. The company will be known in those localities so it would make sense. What I have said to Stelios is ‘let us prove ourselves in the UK first’. “He also however, believes there is strong potential for the easyOffice ENTREPRENEUR concept in the Middle East, particularly in Dubai, where until recently, when oil prices Sir Stelios Haji-Ioannou – who prefers to be known and the global economic downturn created as Stelios – is best known for creating the easyJet harsh economic conditions for the compabudget airline in 1995, at the age of 28. Nowadays, nies, thousands of foreigners flocked to the the company has grown into one of Europe’s leading emirates to set up their own businesses. “We airlines with some 170 aircraft flying over 400 routes could definitely go to Dubai,” he says. between 103 airports in 26 countries. In 2000, he Smith has come to easyOffice with a floated the low-cost airline on the London Stock strong background of working in serviceExchange. Approximately 45 million people a year fly orientated industries, including a rival servwith easyJet. iced offi ces provider, Regis: “I used to run Stelios is the son of a highly-successful Greek their London area business. Before that I ran shipowner, the late Loucas Haji-Ioannou, who provided several logistics companies,” he explains. the seed capital for Stelios’ independent business “For the last six years I have been with servcareer, which started when he created a shipping iced offi ces.”

Where this venture is different company – Stelmar – at the age of 25. however, is that it is, like many of those comIn 2006, at the age of 39, Stelios received a panies renting easyOffi ce space, a start-up knighthood from Queen Elizabeth II for services to company; albeit with the weight of the easyentrepreneurship. Since then, he has launched a number Group behind it.

And as Smith says, “To get of philanthropic initiatives supporting entrepreneurship, things off the ground you need an awful lot higher education and environmental sustainability. of energy.”

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NEXT BIG THING

Redefining innovation to beat the credit crunch The recession does not necessarily mean the death of innovation; rather it is innovation that will define the eventual winners, as Adobe Systems’ Mark Greenaway, explains.

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ith its associations to credit derivatives, innovation is something of a dirty word at the moment. Many see innovation as at odds with the ‘managing the fundamentals’ business mantra that the credit crunch has imposed.

In the resulting spending cutbacks, R&D and innovation teams risk reduced budgets if their efforts are seen to be straying too far from business fundamentals. Yet, I would argue that organisations need innovation now, more than ever.

Consumers are feeling the pinch and reevaluating the way they bank, shop, travel, communicate and entertain themselves and their relationships with related organisations.

The upshot is that suppliers need to work harder than ever to retain their customers and maintain the revenue flows that will enable them to ride out the recession.

the ‘incremental innovators’ stand a better chance of retaining their customers and associated revenues.

Incremental innovation is not about replacing existing processes and systems, but instead finding ways of driving greater value from them. Finding technologies, for example, that can co-exist with and extend existing investments, and drive more value from those processes and systems.

Intelligent

Strategies Good products and keen pricing are important but research has shown that delivering great customer experiences is the key to retaining loyal customers. A recent Forrester Research report entitled ‘Customer Experience Correlates to Loyalty’ showed that there was at least a medium level of correlation between customer experience and loyalty in each of the 12 industry sectors surveyed; in most cases the correlation was much higher. Further, the correlation has increased over the last year in every industry.

This is where innovation comes back into the equation. Not necessarily innovation for speculative, future gains but rather innovation around the business fundamentals that delivers immediate and incremental improvements in the customer experience, differentiates the company from its competitors and breeds loyal customers. An approach often referred to as ‘incremental innovation’. Compare that to the other option – stop innovating until the economic climate improves and it’s clear that

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RIAs. Volkswagen UK re-launched its website last year as a RIA to provide customers with a virtual car showroom. Alongside interactive brochures and videos, customers now have a graphical and intuitive interface for searching the Volkswagen range by price, engine, CO2 emissions and performance. A 3D configurator allows them to customise their chosen car (there’s over one million unique combinations) and then find a local retailer and book a testdrive. All from the same web page. The web is an important stepping stone for new car purchasers and Volkswagen is now delivering an engaging customer experience from day one.

Mark Greenaway is Director at Adobe Systems, UK and Ireland. With over 14 years’ business experience, Mark has held senior sales and consulting leadership roles in the technology industry.

Rich Internet Applications (RIAs) offer great potential to add incremental value to existing systems and processes by improving the customer experience. RIAs are a simple way of converting the data-driven processes of back-end IT systems into a multimedia presentation layer. RIAs dynamically combine data from existing systems, providing easyto-understand information and easy-to-use services for the consumer.

The growing usage of interactive simulation calculators on banking websites and product configurators in retail shows that many industries have already seen the value of

A further use of RIAs lies in their ability to deliver intelligent forms. Almost all organisations rely on online forms at some point in the customer engagement process. Yet, the problems with existing online forms should surprise no-one. Typically, the paper form is transferred to a series of web pages with little consideration for the user experience.

An eBookers/Datamonitor survey showed that a typical on-line application form is between eight and 11 pages and that five percent of customers will be lost for every page.

Rebuilding online forms as intelligent forms can provide a far more engaging customer experience. Basic information can be pre-populated by back-end systems. The form will then dynamically build on one page, while interactive guidance can be offered via integrated tutorials or dynamic links to company representatives. Intelligent forms not only increase the completion rate of applications but also enable the integration of cross-and up-sell opportunities.

The credit crunch has not killed innovation but it has put the emphasis on innovation around the business fundamentals. Even at a time of constrained budgets, it is clear that RIAs have significant potential to maximise return on existing investments in IT by creating more engaging customer experiences. n

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Are your customers getting lost?

Enter Adobe.

Now with ADOBE® LIVECYCLE® ENTERPRISE SUITE software, you can streamline processes and limit paperwork, allowing customers to easily engage with you at their convenience. Your services should not require a map. Learn more at http://www.adobe.com/engagement. Business never looked better.

©2008 Adobe Systems Incorporated. All rights reserved. Adobe, the Adobe logo, and LiveCycle are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and /or other countries.

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LOGISTICS

Express Delivery

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Speed is of the essence for TNT Express, which means any failure in its IT systems could prove disastrous. The man in charge of ensuring the worst never happens is TNT Express’ Head of IT Shwan Moubarak.

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OWNTIME is not an option for a company whose business survival depends on being able to deliver the goods – fast. That is why the head of TNT Express’ IT systems, Dr Shwan Moubarak has set a target of 99.97 percent for the availability of the company’s systems – a target which he is proud to say, he has never failed to reach: “In our view we have to provide extremely reliable systems. So our target for our infrastructure system is to be available 99.7 percent. And we always exceed that year after year.”

TNT Express’ network of operations is vast, spanning 200 countries, with 750,000 staff employed worldwide. It delivers 4.4 million parcels a week using a network of 2331 depots, hubs and sorting centres and operating 26,760 road vehicles and 47 aircraft.Moubarak has the task of co-ordinating IT operations across the group, which involves managing hundreds of applications, including tracking systems for customers, RFID and GPS solutions and mobile worker units for the global network of drivers.

To make the task easier the group has implemented a unified IT structure across all its operations – this also ensures that the customers interface with the same system wherever they are in the world: “A common infrastructure and system means we can deliver a consistent face to the customer globally,” says Moubarak. “There is one track and trace system for our customers. They can review any package from the UK to Singapore and it’s the same screen that everybody sees. Using this unified system we can maximise efficiencies with our suppliers and we can support the IT of TNT Express at an incredibly low percentage of revenue.” Elaborating on how having one uniform IT system enables the company to save costs, he says: “We don’t have to reinvent the wheel all the time. Each process is only done once instead of eight times. So for example we’ve only got one common SAP implementation for finance and administration.”

This wasn’t always the case. When Moubarak took up his role as head of ICS (Information Communication Systems) in 1993, the company’s IT systems were fragmented across different business divisions.

He describes how he succeeded in restructuring the IT infrastructure: “When I got here, in the international business alone, there were three operational systems, four sales and marketing systems and at least two or three finance systems. We got rid of all that. We also had four or five data centres. We consolidated all that to the UK where we now have a worldwide computing centre for help desk and support and processes. We replaced the entire system and rationalised it from an organisational, infrastruc-

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tural and applications point of view. The organisation is currently in the process of migrating to a Linux operating system and Oracle databases.

Logistics is one of the industries that benefits most from time saving technologies and TNT Express is quick to capitalise on the latest cutting edge technology to make its business more efficient. It has deployed RFID for parcel level tracking and plans to roll out GPS, which is currently used for vehicle tracking, across its entire fleet: “RFID is currently used for parcel tracking on certain traffic lanes and for specific global accounts. It is used throughout our road network and is being introduced on the air network. Wholesale use of RFID to track every one of the millions of parcels we deliver each week will come sometime in the future,” says Moubarak. He goes on to say that GPS is already deployed for vehicle tracking on parts of the Express fleet and will be deployed across the whole Pick Up, Delivery and Linehaul fleets in the coming years.” Mobile worker units have been deployed by TNT Express for its drivers since the 1990s however the company has recently upgraded the technology and now plans to roll it out to drivers in 17 additional countries by the end of the year: “Our new breed of Windows based mobile solutions are being deployed to replace the earlier devices,” says Moubarak. “We have over 10,000 of our PUD drivers using the technology and total replacement is on track to complete during 2009. Early issues which related to maturity of the technology have been resolved and we now expect high levels of reliability,” he goes on to say.

EUROPEAN ROAD NETWORK Main hub Main hub-depot e.g. direct linehaul 35 countries 87 international depots 523 connected 16 road Hubs

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INVESTING IN INFORMATION TECHNOLOGY Delivering information as quickly and safely as parcels and documents requires solid information technology (IT). The possibility to “track and trace” consignments is but one application of IT. TNT also uses innovative technology to offer electronic booking services, reduce costs, and speed up its processes.

Regardless of this spending on new technologies however, Moubarak believes the most important investment the company can make is in skilled IT professionals as it is the human element within the technology infrastructure that plays the most crucial role in keeping it running: “We manage hundreds of IT applications but the key thing is our people. The secret to successfully managing the IT applications is having professionals in place who understand the business processes and the technology and link the two together,” he adds. “To be honest any company can buy this technology. We all have the same suppliers but our competitive advantage is our people and the challenge is to keep them, add to them and make sure they are with us.”

While TNT clearly plans to continue investing in cutting edge technology and trained personnel, the organisation like all companies in Europe faces the prospect of a hard year ahead. Already the company’s profits have plunged – particularly within the TNT Express division. A report published by the company in December 2008 regarding TNT’s financial position revealed that volumes in the premium Express market in Europe continue to decrease and are now “well below levels of the comparable period in 2007”. According to the statement, “TNT does not assume improvement in these economic circumstances in the immediate future”. The company now plans to take “aggressive steps” to reduce its costs to protect revenue and margin levels. TNT as a whole is now targeting structural cost savings totalling €270-330 million.

As part of this TNT Express is targeting structural savings of €170-210million to be achieved by 2010, of which €90-125 million will be achieved in 2009.

These figures mean TNT Express has been unable to publish a full year 2009

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express 75,032 employees 200 countries of operation 2331 depots/hubs 228 million consignments 7.4 million tonnes carried 46 aircraft

post 84,92 employees (42,777 FTE) 8 countries of operation 456 mail depots (including 10 sorting centres) 4,693 million mail items delivered in the Netherlands

outlook and is instead to release its results on a quarterly basis. It has however set out some objectives for the year ahead including improving intra regional connectivity in emerging countries and refocusing the organisation on a regional basis.

Despite this gloomy outlook Moubarak remains confident regarding the company’s continued investment in IT and the management’s understanding of the role of technology in driving the company’s business objectives: “I’m a member of the board and I report directly to the CEO which shows that they are committed to this [IT’. At the end of the day our impact on the business processes and the business itself are very high. So, frankly, if the systems go down our major hub with all the planes going in and out will stop . IT itself is fully integrated with the business and it’s not a luxury item.”

Moubarak’s own background as a mathematician means he is well prepared to tackle the technical complexities of his job – but he says his professional experience has taught him, that as a discipline IT should be regarded as a business process first and foremost: “You have to look at IT from the point of view of running a business. And you’ve got to be close to the business to understand the role it plays in that. There are people who think IT is all about technical wizardry but you have to think about it in a more down to earth way in terms of how it adds value to the business. It is about relationship building and about putting the business case forward in a coherent and articulate fashion.” n

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CRM FOCUS

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

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

Global market landscape The CRM market has witnessed healthy growth rates in the past couple of years and the trend is expected to continue. In 2008, the market registered a growth rate of 12 to 15 percent and reached a value of €7 billion despite economic meltdown. SAP has maintained its leadership in CRM followed by Oracle. Both the companies experienced higher growth in their on-demand software compared to that in their on-premise software. Riding on the increasing demand for Software as a Service (SaaS)-based CRM software, Salesforce.com has strengthened its market position further. There has been a significant increase in the demand for and acceptability of open source CRM software as well. North America and Western Europe are the largest markets for CRM software. Regions like the Middle East, Africa, and Eastern Europe have also registered high growth in the CRM market. In the Asia Pacific region, both India and China are attracting more CRM vendors due to long term growth prospects in these countries.

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

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

Social CRM Earlier, CRM was more operational in nature. Customer insights were used to increase the employees’ effectiveness in managing the relationship with customers. Today the customer is demanding more personalised products and an individualised relationship with the company they choose to do business with. CRM products have undergone remarkable transformation to meet this rising demand. Social tools such as wikis, blogs and enterprise mash-ups have been incorporated into CRM solutions.

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

Recent trends Higher bargaining power and the demand for personalised products by end customers, the advent of new technology like Web 2.0 and cloud computing, strong focus on the ROI of CRM software, and untapped demand for medium and small segment businesses have prompted CRM vendors to look for new technology and innovative business models.

On-demand CRM Under this model, companies generally purchase a license to use the software and the service provider manages the logistics and hosts the infrastructure at his premises. Companies can even choose to rent a solution and then decide whether to purchase the solution at a later date. With the software running at a centralised remote location, on-demand solutions provide lower software implementation and customisation costs as well as faster implementation.

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

However, clients’increased focus on ROI and investment requirements for such solutions is going to increase in the coming years. Customers are likely to demand more clarity on pricing and a stringent case for the return on their CRM software investment. Reduced funds are expected to increase interest in ondemand or SaaS-based models. This is expected to prompt more vendors to offer such services and experiment with unique pricing models, such as connecting the application’s cost with the customer’s profitability to gain market share. Vendors who are able to deliver high value solutions at low cost using innovative models are most likely to succeed in future.

Santosh Kumar Sinha is Industry Analyst for the Information & Communication Technology Practice, South Asia and Middle East at Frost & Sullivan.

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Customer satisfaction Oracle’s Stephen Fearon discusses CRM in the midst of an economic downturn.

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he twin pressures of the downturn and disruptive technology will lead to an arms race in the large B2C sectors such as retail, telco, banking, transport and others. The weapons will be used in battles around competitive differentiation, customer retention and margin management. Among these weapons will be a new CRM capability that leverages disruptive technology – the Customer Application.

Impact of twin pressures Behaviours are being changed. The downturn has led customers to be even more discerning and demanding about who they buy from and the service they receive. From the supplier side, the downturn has brought greater competition as suppliers chase after ever scarcer resources. So customers want the best service and best deals, and competition escalates as suppliers take actions to win and keep customers.

“Behaviours are being changed. The downturn has led customers to be even more discerning and demanding about who they buy from and the service they receive” Disruptive technology accelerates the decision making on both sides of the equation. Web 2.0 technology is being absorbed into mainstream commerce through activities such as social networking and opinion sharing. ‘Anytime, anyplace, anywhere’ access to e-commerce applications through platforms such as the iPhone is becoming the benchmark for the customer. These two factors mean that information will be found, shared, digested, decisions made and transactions completed in an instant.

At any time convenient to the customer, they could drop their supplier, or investigate other suppliers or maybe explore and purchase a new product or service. With no warning, a supplier could lose a customer or, con-

Stephen Fearon is the Vice President in charge of Oracle CRM Sales Development and CRM On Demand for EMEA. In this role, he guides the leading edge of CRM across the region. Fearon has been with Oracle for 15 years.

versely, by making the right information available to the right customer at the right moment, sell more to an existing customer or win a new customer.

Next generation CRM 101 will still apply – the Customer Application will bring the core pillars of CRM to bear at a moment of truth of the customer’s choosing.

Consider this scenario: John is a customer of a retail book chain, so is Jane, a friend of John’s. Independently John and Jane are shopping in a particular mall. They both have a Customer Application on their phones and have given permission for certain suppliers to know where they are in return for receiving relevant offers and loyalty points. In this case, location based services feed information about them back through the network to the CRM of the retailer.

Through the 360-degree view of customers, the CRM knows that they both like a particular author (perhaps they have browsed this author on their website or purchased his work before). Through the retailer’s own customer community, the CRM knows that they are friends. The CRM senses a possible moment of truth to win more business – the CRM Loyalty engine sends them both a message via their Customer Application suggesting that they meet in the branch at the mall, it also includes a review (by their friend Michael) of the new book.

The message includes loyalty points or a voucher that they can use in a part points/part cash purchase at the point of sale in the store. It also contains a further loyalty incentive to review the book for the customer community, Twitter or Facebook status (‘Just read xxx book, its great and I recommend it’ with a link to the retailer site). Similar concepts, including self-service, and with or without location based services, can be applied in travel, hospitality, wealth management, media/ telecoms, speciality products and so on.

Prediction How close is this? Oracle’s Siebel CRM and CRM On Demand is the foundation for this. We are collaborating with customers right now to build the first Customer Applications. How will they benefit? Competitive differentiation, margin management and customer retention…. and customer acquisition. n

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By IDC’s Melissa Webster

Web 2.0

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meets enterprise content management

y now, most large organisations have begun to think seriously about how they’ll incorporate Web 2.0 tools and technologies into their IT stacks. The enormous popularity of social media and social networking on the consumer web is driving these tools into the enterprise – like it or not.

In fact, reactions to Web 2.0 have been mixed. On the one hand, organisations have struggled with user adoption and training issues for years. Here at last are tools and technologies that users proactively seek out and learn on their own. Web 2.0 tools bring a lot of value to collaboration and knowledge management, and can help boost information worker productivity. Employee blogs, wikis, microblogging, and, increasingly, employee-generated video are all on the rise. Indeed, many companies tell us they find they need to have a Web 2.0 strategy to attract younger workers.

Risks

records management facilities that enable the organisation to manage the lifecycle of all kinds of content in accordance with governmentand board-mandated regulations.

ECM systems need to evolve to support the new kinds of content that Web 2.0 technologies create, and the authoring interfaces they provide, along with the new kinds of metadata these solutions generate. They need to support wikis, blogs, RSS feeds, microblog tweets and so forth, and capture and make use of the metadata generated by things like social tagging, content rating and social networks that enable new ways to search for information and identify experts. Not surprisingly, this is an area in which content management vendors of all stripes are aggressively investing today, either through their own R&D or via acquisition, and the leaders are already shipping products that incorporate some of these capabilities.

Disconnect and overlap

On the other hand, organisations have to It may be a while before the dust settles, Melissa Webster is Programme Vice President worry about risk, including the risk that comhowever. There are still many areas of disconfor Content and Digital Media Technologies at IDC pany proprietary information or internal disnect and also overlap between document cussions could find their way onto the public collaboration systems and enterprise content internet. From a compliance and litigation preparedness perspective, management systems, and the content lifecycle is not a simple linear everything is discoverable and anything can be a record –whether it’s process. In some cases, the content management system manages a document, an email, an IM or a tweet. the lifecycle of the content from authoring to publishing, but in other Doing nothing just isn’t an option. As IDC research shows, in the abcases, the content is created and managed in team sites, and migrated sence of IT-supported tools, employees will resort to the free consumer later on to a content management system (and ultimately, an archive) Web 2.0 tools they already know and love. The challenge is to leverage once it has been approved, or published. the power of Web 2.0 in a ‘safe’ way – in the context of the organisation’s Web 2.0 technologies need to be integrated with both collaboration policies and procedures, and its information governance strategy. and content management solutions, and ultimately, the effectiveness of This is where enterprise content management (ECM) systems these integrations will rely in part on improving the integration between have an important role to play. Content management systems arose the collaboration and content management systems themselves. This is out of the need to securely store, manage and version documents another dimension that ECM vendors understand very well, with most and document fragments (or, in the case of web content management offering collaboration solutions today. Customers should ask their ECM systems, pages and components of pages) along with their metadata. suppliers for their guidance around the best practices for leveraging They have evolved to manage images and rich media such as video Web 2.0 in the context of content management and collaboration, and and audio. They provide a robust repository for content, along with evaluate their longer term vision and product roadmap. n

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MARKETING

ONLINE MARKETING YOUR WAY THROUGH THE RECESSION Adam Wilsher, Brandboost Manager, MPS & BBI International, explains how web marketing can ensure a company’s business survival.

The effects of the current recession are serious and ongoing, so naturally companies have to examine cost reductions in every area of their operations. What frequently happens at times of economic downturn is that major cuts are made to marketing budgets, because this seems to be the least painful choice when compared with, for example, inroads into investment in production or IT. However, curtailing marketing spend can lose companies their position in the marketplace and competitors that maintain their marketing presence are likely to come out stronger when the economy revives. Fortunately the digital age has brought with it an increasing interest in promoting businesses via the web.

For instance, Forrester Research forecasts that European online advertising spend will rise by 10 percent in 2009, in spite of the recession, with UK companies being the most active online marketeers.

The company also predicted ADAM WILSHER that rich media and video ads would contribute almost 59 percent of all spending on display advertising by the year 2013. Other aspects of online marketing are showing a similar growth.

Online marketing is very cost-effective and this naturally makes it attractive to businesses with severely restricted budgets. But it can offer far more than this, using sophisticated interactive methods and a varied range of platforms to put companies within reach of new target audiences - nationally, across Europe and worldwide. The recession has provided a spur to the uptake of online marketing, but is not the reason for it.

Audience expansion and measurement One of the major benefits of the digital revolution in marketing is that, through web analytics, it offers the opportunity to accurately measure the effectiveness of a marketing initiative and who it is targeting. Analytics is also used in the context of e-commerce to record transactions and analyse purchasing history. Thanks to this the conduct of marketing

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campaigns can be transformed. Rapid tactical responses can be made by changing and updating content, presentation and delivery of messages and information. New approaches can be tried, reviewed and revised, fine-tuning the message for niche markets, specific audiences and developments in the business environment. Continual testing and adjustment is possible, providing for greater flexibility in implementing marketing strategies than ever before.

By going online, advertising, marketing and PR projects can be given a new impetus through using an increased range of communication channels with greater speed of delivery than established methods. E-shots (online mailings), e-newsletters, online PR and online advertising can be supported by a range of strategies using pods, blogs, forums and mobile phone messaging (SMS, MMS and Smarts). Social networks, including the rapidly expanding Twitter platform, can be used by businesses to increase awareness of brands, services and corporate philosophy.

Web audiences The web is a global phenomenon and is therefore the ideal communications resource for a global market. A snapshot of a selection of BBC Radio’s World Service monthly download and podcast figures shows high uptake levels for both general and niche interest programmes (see www.bbc.co.uk/radio/siteusage)

BBC WORLD SERVICE MONTHLY DOWNLOADS (JANUARY 2009)

Global News Documentary Archive Business Daily World Business News Digital Planet Science in Action Africa Today China Reel Xtra Arabic Business News (Russian)

1,969,061 1,830,352 322,354 198,521 168,625 122,004 96,095 71,797 21,672 19,790

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Search engine optimisation ONLINE MARKETING: THE INFORMATION PYRAMID (SEO) can maximise the effectiveness of delivering the corporate message. With over 80 percent of Internet users using search engines Project to track down websites relating to their interests, and with a majority Information produced about the project in story format satisfied enough to repeat the to appeal to targeted general constituency Newsletter process, SEO plays a vital role in generating web traffic and therefore supporting both online and ofInteractive forum or webinar allows for Forum exchange of ideas and opinions fline marketing and communications programmes. Key words and phrases likely to be emWebsite-based blog and podcast can Blog/Podcast ployed by web users in their search be created and updated on a regular basis for information, products and services are an important aspect of Instant updates of project SEO. Marketeers and copywriters Twitter new and anecdotes for need to adapt the style and content general access of their text material to optimise its web effectiveness, not only for SEO but to adjust to the formats of their targeted communications platpolicies can be processed and presented in digestible forms. A précis of the forms. They have also had to take note, as much as possible, that their project information may be published as a newsletter; a précis of the mailings and messages avoid being classed as spam. newsletter may be published to a blog or podcast and a précis of that may Filtering through be Tweeted (placed on the Twitter platform, which offers a 140 character It is estimated that about 90 billion spam emails are sent out daily message size limit for focused and potentially highly creative statements). throughout the world and spam filters have varying success in blocking them. Marketing companies are careful to use opt-in lists for their mailings Information pyramid and there are a range of words and phrases that should be avoided if posThis digital cascade may well drive interested constituents up the insible. A number of sites carry useful lists of these, such as www.marketformation pyramid to learn more about what is being reported on. The other ingforsuccess.com/wordstoavoid.html. side of the coin is that a much larger base constituency can be reached with It is advisable not to use terms like “free offer” or “no obligation”. the messages from an organisation, and those constituents can be fed with The main areas that spam filters are concerned with obviously include interesting snippets of information delivered direct to their computer or moadult material, both text and explicit images, but they are also sensitive bile via Twitter, blogging platforms, subscription e-newsletter or by direct apto medical supply references. It is important however not to become too plication and download for the main body of information. All of these diverse focused on avoiding spam classifications, in the same way as risk avoidand differing platforms are capable of ‘cross-fertilising’ each other and highance can lead to the negative consequences of risk aversion. Web users lighting the advantages of each particular system in terms of their appeal to a are increasingly experienced in how spam filters work and will generalparticular audience. The blog can carry a newsletter sign-up and a Twitter noly pick up on material they wish to view or read. The best advice is to be tification; the newsletter can also carry links to both. The current recession conscious of the filtering process, but not to let it damage or diffuse has been taking its toll on business confidence and a recently published marketing objectives.

Eurostat report (“Recession in the EU-27: output measures”) records that “overall economic sentiment for the EU-27 was more than 30% below its avCommunication platforms erage level for 1990-2007”. However, online marketing is showing itself as a The range of platforms available makes information potentially more useful tool to drive businesses forward in difficult market conditions and, with accessible to a wider audience than by using traditional marketing methits support, conditions and confidence should improve. ods, such as placing advertising or editorial in the broadcast or print media.

In fact, these organisations are extending their audiences and readerships MPS & BBI International, based in High Wycombe, Bucks, have over 80 clients for their web and marketing services. Company websites include: through their own web expertise and by harnessing new communications www.mpsuk.co.uk technology. www.bbi.co.uk www.brandboost.co.uk (online marketing and communications) Diverse options for delivering information mean that even complex www.dynnamite.co.uk (DyNNamite, is a specialist DotNetNuke (DNN) operation offering off-the-shelf and customised website designs (skins), complemented by module development and hosting services). product launches, financial reports, research documents or environmental

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EXECUTIVE INTERVIEW

21st century business tools NewsGator Technologies’ Andre Bonvanie describes the benefits and pitfalls associated with Enterprise 2.0.

CXO. How can Enterprise 2.0 tools help organisations get their hands on the right information when they need it and improve internal and external communications?

Andre Bonvanie. Enterprise 2.0 tools help organisations with much more than improving communications. At some banks, cashiers are alerted on potentially fraudulent customers by RSS (Really Simply Syndication) feeds. Other companies that are using our NewsGator Social Sites product let geographically distributed teams collaborate on projects. They’re using social bookmarking to share information without having to clog up the email server and using micro-blogging for inside-the-firewall discussions. And there are companies that want to make sure that the right information is delivered to the right people within a secure environment.

All of these scenarios rely on Enterprise 2.0 because it enables people to create, share and tag information and feeds, so that other people can find it easily and collaborate with the right people to get results; inside and outside the organisation if the corporate infrastructure permits.

CXO. How can it deliver a competitive advantage and drive innovation, especially in these tough economic conditions?

AB. Social software is a new way to do old things, such as discussion of ideas for improvement and knowledge management. The current economic climate forces organisations to ‘think’ differently. First and foremost, it needs to invite everyone in the organisation to share ideas and information to create new initiatives; whether it is about cost reductions or new products, or about creating a better work place. Those or-

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work with these groups to set standards on appropriate use. But in the end you will find that social norms enforced by users in the participating communities can be very effective at policing user exchanges and thus mitigating risks.

Andre Bonvanie leads NewsGator Technologies’ European office.

NewsGator provides social computing solutions including NewsGator Enterprise Server and Social Sites.

For more information, contact him at andreb@newsgator.com or +31 (20) 561-7038.

ganisations that turn out to be the most nimble will be able to recover quickest and take a leading role in their market.

CXO. What are the common mistakes that companies make when it comes to this area?

AB. Although you might think that Enterprise 2.0 solutions are founded upon bottom-up involvement from frontline staffers, successful participation needs grassroots activity and a different leadership approach: Senior executives often become role models and lead through informal channels. It is also important to see these tools as part of the mainstream work of an employee, not as ‘another thing to do’ on their already long list.

Most companies also have difficulty finding the right balance between freedom and control.

Common reasons for not starting Enterprise 2.0 initiatives is discomfort with it, or even fear, and stalling by legal, IT and HR concerns. You should

CXO. How are your products and services making a difference for organisations today?

AB. Our products help organisations to do different things. We help ‘globalise’ companies by enabling them to share ideas, documents and conversations via communities that are not hierarchically or geographically restricted. These companies can offer more creativity and service to their customers. Another customer tells us that their employees spend less time – up to 30 minutes per day – to find the appropriate information to do their jobs better and therefore they can be more responsive to their clients. This is achieved by making sure that each employee receives their daily portion of personalised information using our product and avoids the need for people to search for relevant information.

One company reported to us that they see their aging workers retiring in greater numbers and need to find a way to attract new talent.

They started going to universities and tried traditional recruitment, but this company didn’t appeal to students at all because of the traditional work environment they offered. After they embraced an Enterprise 2.0 strategy they immediately got attention from students. Now their Enterprise 2.0 strategy has become a successful HR strategy as well. In simpler terms of savings, we have customers that tell us they save hundreds of euros in IT costs because people use less email, or save a bundle because they don’t have their employees travel as much to get things done.

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ASK THE EXPERT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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FINANCIAL TECHNOLOGY

TURBULENT

TIMES After becoming Credit Suisse CIO in May 2008, Karl Landert’s first year in the job has coincided with an unusually turbulent period for the industry. CXO’s Huw Thomas spoke to him about managing IT in an age of uncertainty.

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sked to define his role as head of Credit Suisse’s IT function, Karl Landert likens it to being a mayor who has to manage the different aspects of day to day life in a busy city. “There are dozens of buildings and an infrastructure which is sometimes old,” he says. “You need to replace it to cope with growth and the influx of people coming in from rural areas. Your role is not purely a technology role anymore.” If Landert is a mayor, then the city he became responsible for little over half a year ago is one located in the middle of a war zone, facing unpredictable attacks from all sides. Good news is in short supply in the financial services industry, with the ongoing credit crisis leading the Swiss giant to report a third quarter loss of more than €800 million.

Given the situation, a siege mentality would be understandable.

But if Landert is fazed by this baptism of fire, he does a good job of hiding it. “It’s been a challenge because a lot of things have changed in the first few months,” he confirms. “But it’s also been highly rewarding. If you don’t enjoy working with your own people, your IT organisation, but also with

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your peers on the business side, don’t do this job. It’s a people’s job and with all the challenges that we are facing and all the bad news, the one most rewarding thing you have is working with a good team, having a good spirit, and making some of the tough decisions you need to make. But as long as the team is working well, people enjoy working with each other, I think that gives you a lot of motivation.”

In the choppy waters currently being navigated by those in IT in the financial industry, a major challenge is building any kind of long-term strategic plan. When the managers are anxiously awaiting the next bombshell that threatens to blast them out of their corner office, it can be hard to both get their attention and convince them to part with jealously guarded funds.

Though Landert is far too discreet to voice such a forthright assessment, he nonetheless recognises such pressures. “Given the seismic events we are seeing right now, we see these profound changes coming along,” he confirms. “Nobody can afford to have a long-range strategy which is very detailed. I think one of the common themes which I see throughout all the

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frastructure, at technology processes and standards and last but not least, at your workforce. It’s the key point that you align all these activities because they all highly depend on each other and you cannot change one without affecting another.”

A common response to uncertainty and constrained budgets is a greater reliance on outsourcing. By not actually owning technology and processes themselves, organisations can find it that much easier to walk away if circumstances change suddenly. Landert confirms that this is very much a part of Credit Suisse’s plans, but that the issue is not as black and white as it might sometimes appear. “You’ve got to have a clear strategy, and the clear strategy now regarding outsourcing is what parts of the overall value chain you outsource and what you keep in-house,” he says. “More and more you want to keep in-house design knowledge and architectural knowledge, beyond the pure contract management that you always keep in-house, in the retained organisation. And you want to have the ability to do what is called today multi-sourcing. By keeping that in-house you can utilise different partners and use competition between different partners. But it’s also easier to switch vendors.”

Of course, any decision regarding outsourcing has to take geographic and vendor risks into account. The key issue for Landert is that design and management authority remains inside the company.But contrary to the prevailing winds blowing through the industry, Credit Suisse is even looking at bringing some previously outsourced elements back into the organisation. Landert tells us that the possibility of bringing certain helpdesk functions back in-house are currently being explored. “I think it’s the realisation that most companies, although they are global by nature, have a very big challenge in providing you with a consistent global service,” he explains. “Sometimes you have local champions, who are better prepared to do that.

Secondly, what is driving it is where we have customer “To survive and to satisfaction issues, which are leading us to this conkeep your cost levels clusion. For example, in Europe we re-insourced some acceptable you need of the helpdesk and the desktop end-user computing to have a constant services, which we had outsourced previously in some of the European offices. We’re looking at it on a broad process of eliminating scale right now.” It’s an important consideration. While your heritage and it can be tempting to go for the lowest cost option in your end-of-life things we do in our long-term strategy is about bedifficult times, doing so at the risk of alienating cusapplication systems” coming a very agile IT division of financial services or tomers can lead to yet bigger headaches. of the bank. The agility has to be within the whole IT orCredit Suisse operates an integrated bank model ganisation in structural technology-type of activities, with IT acting as a shared services unit to all the secin the way you set up your operating model in order to react to and be able tions of the organisation, from asset management, to private banking, to survive some of the volatility we have and some of the changes which to investment banking. Serving all these specific needs at a time when will come along.” It seems that even the biggest organisations are going to financial markets are in such a state of flux must surely present some have to put major plans on the back burner in favour of being prepared for problems? “Right now one of the challenges we have is certainly sizing an increasingly uncertain environment.

IT and the way we provide our services to some of the peak volumes we For Credit Suisse at least, this shift in focus is already underway. have seen,” Landert responds. “We have been reacting very fast to deal Though, as with any move that requires a drastic direction change, it canwith some of the volumes which were created by this market volatility not be done overnight. “You need to look at the way that you do financials and by the events we have seen. Right now the challenge is how can we and how you account for IT costs and the investments you do,” Landert consustain the business, how can we make sure that when we have these tinues. “You’ve got to tackle some structural aspects of the organisation. events where you triple and quadruple your volumes, that all the sysYou’ve got to look at the operating model that includes some of the sourctems are really delivering on their SLAs. Reaction to these events has kept ing strategies you have. You’ve got to look at your architecture and your inus pretty busy.”

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It’s not just IT Landert explains the importance of Credit Suisse’s people.

“To attract and retain best talent we have what we call strategic workforce management programmes in every region, which are coordinated globally. We have career development paths and the whole framework to develop people. It is pretty unique and it’s something we use globally to show the career paths which we have in the company. We have a very good and successful mobility programme for people to move between the different divisions within the IT organisation.

“And when I speak about mobility programmes we are speaking about an organisation of roughly 12,000 people, including contractors and some of our partners. We’ve got more than 1000 projects running simultaneously, more than 1000 applications. There are lots of different cultures in a multinational environment. This gives you the ability to attract a lot of talent who will actually enjoy working in such organisations. I think there’s another change that is also happening right now; you need to hire for potential. You need to hire people that also enjoy moving along the organisations as you start to be more process-oriented, especially in certain application development areas. You also need to specialise people in a certain type of roles, like grouping together test people and having a quality assurance test competence centre, which you may locate in whatever geography. That’s also a change in the way that people have been working in the past.”

To ensure that the company’s IT doesn’t stagnate, Landert promotes the concept of managed evolution. It essentially boils down to a constant evaluation of the bank’s IT assets which enables change to be made without potentially crippling investments. “To survive and to keep your cost levels acceptable you need to have a constant process of eliminating your heritage and your end-of-life application systems,” he says. The approach allows the technology portfolio to be contained, both in size and complexity, reducing redundancy and enabling a much greater level of component reuse. Key to its success are solid architecture and strong standards. “That is one thing we do and we have been very successful in it in the last 10 years, in different parts of the IT organisation, Landert continues. “Constantly re-engineering and reinvesting in our systems enables us to eliminate some of the old ones and reduce complexity.

That allows you to become more flexible and agile and to also meet business needs in a faster way.”

It is maintaining this overarching philosophy which is key to Landert’s role. Returning to the idea of what the modern CIO actually is and what responsibilities the IT function has, he offers a stark assessment. “We are not a service provider; we are an IT organisation of a financial services institution and we need to understand our business,” he says. “We

need to be respected and accepted by our counterparts and our colleagues in the business, and we need to speak with them in the same language. We walk the talk and what we say is what we deliver. These are some of the key principles.”

As stated earlier, Landert sees being a CIO as like being a mayor, making sure there aren’t potholes in the roads and that the buses run on times. To do this requires the ability to get a good overview of the business, to avoid getting bogged down in details. “At this level I don’t want to make a call about which kind of technology we want to use or what application we want to build,” he says. “You need to have a view on how you spend and how you prioritise spend along the business areas you are supporting. You need to have a view about what kind of skills you need today, what you will need in the future and how it will develop.”

Perhaps most importantly, it is about setting the right tone. In times as trying as those we now face, it is essential that management leads from the front and brings together all the disparate elements of this global organisation. “These interdependencies are what you need to manage besides the people side and interfacing with the business and working with your people to keep them engaged,” Landert concludes. “Engagement of the organisation is a key factor in being successful.”

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PROJECT FOCUS

Regaining control though Process Intelligence Companies are looking for innovative means to increase transparency and improve company performance, and Process Intelligence is a new technology that offers solace in these troubled times says Ricardo Passchier.

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hese are turbulent times for businesses.

Confronted by the credit crunch and a slump in share prices, both profitability and confidence have suffered a severe blow. Add to this the failing economy and the equation is complete.

How can organisations equip themselves to regain control of business performance and simultaneously manage risks? Sound, and above all, timely management information plays a key role.

Although financial indicators reflect the symptoms of possible problems, they do not identify the root causes. Detailed analysis of the underlying process behaviour is required in order to determine the cause of poor performance. Process Intelligence is the answer, various companies have been using it for several years now. These include:

a best-run business. The company strives for operational excellence and aims to achieve best-inclass purchasing processes by simplifying and – wherever possible – automating processes using insights provided by Process Intelligence.

The transparency thus generated leads to improved decision-making and allows the software vendor to compare purchasing processes across its various sites and locations. On the one hand, the company uses process data as part of its improvement programme (based on Six Sigma) and on the other, as part of its Sarbanes-Oxley compliance programme. The data obtained demonstrates whether processes were carried out as prescribed and to what extent control measures have proved effective.

“Once companies start using this technology, they then have a powerful tool with which to regain control, especially now that markets are in decline and confidence is waning” CosmosDirekt

Yodobashi Camera

A leading German direct writer uses Process Intelligence to meet explosive market demand.

Growth has been accelerating rapidly since 1994, which in turn has placed a significant burden on processes, systems, and organisation. In order to deliver its operational excellence strategy and realise sustainable improvements, the insurance company has embedded process monitoring into its improvement methodology that closely resembles Six Sigma. Within a year, throughput time was reduced by 50 percent and complaints by 60 percent.

A large Japanese consumer electronics retail chain was having structural challenges guaranteeing delivery dates for the products it sold online. By implementing Process Intelligence, processes are now transparent and the retailer is able to make better agreements with its partners. Whenever deliveries look as though they may be running late, the retailer can intervene far more quickly and is able to inform the customer. This has a positive effect on customer satisfaction and stock turnover. It has also led to less variation and reduced throughput time.

The time between order confirmation and dispatch has been reduced to a minimum of six hours and a maximum of 12 hours, from 24 and 48 hours respectively.

SAP The largest business software vendor in the world deployed Process Intelligence to become

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Ricardo Passchier heads business development at the Netherlands branch of IDS Scheer, worldwide leader in Business Process Management (BPM).

Passchier has worked as a management consultant in a variety of industries, advising leading multinational companies on BPM for many years. ricardo.passchier@ids-scheer.com

Swisscom A privatised Swiss telecommunications provider investigated one of its core processes – closing telephone subscriptions – in order to reduce its throughput times and the volume of customer complaints. It was only apparent that there even was a delay once customers started to complain. Using Process Intelligence, the company was able to respond pro-actively rather than reactively. The time required to process contracts has been drastically reduced meaning that customer payments are received far sooner. This places a reduced burden on working capital and simultaneously improves customer satisfaction.

All in all, various target groups benefit from the deployment of Process Intelligence including COOs, CFOs, and CROs, as well as a diverse group of professionals involved with performance, compliance, and risk management. Once companies start using this technology, they then have a powerful tool with which to regain control, especially now that markets are in decline and confidence is waning. Those companies that can take a lead in this area will establish a competitive advantage and emerge as the absolute winners once the economy recovers.

For more information, visit www.ids-scheer.com/CxO.

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NEXT BIG THING

Beyond the impasse David Akka looks at how developing Rich Cloud Applications with an ‘end-to-end’ application platform can save time and money.

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ith the internet revolution, IT has now almost returned to the days of the ‘Dumb’ Client, where all major computation takes place at the Server – and where the ‘Thin’ Client is named for the fact that it acts basically as a window within the cloud. Though a ‘Thin’ Client remains conveniently low, the reality is that it’s limited in its abilities, lacking the richness users have come to expect from ‘Fat’ Client/Server or desktop applications.

Rich Internet Applications (RIA) provide the best of both worlds by offering fully interactive (desktop-style) business applications that are installed at a single location (the Server) and are accessible anywhere through the cloud. However, the advantages gained from combining lower cost of ownership with enhanced user experience does come at a price: System complexity.

So how are popular solution technologies today currently delivering rich Client applications? Let’s look at two. First there is the

Drawbacks But, both these options have their drawbacks. While the hosted platform enables organisations to cut costs by ‘consuming’ only the software that they need, the reality is that you effectively outsource your missioncritical data to an outside company and have no control over the intellectual property (IP) investment of your application. In times of economic uncertainty, when even the most successful vendors can disappear overnight, you may not be too thrilled to wake up tomorrow morning to find your customer information and sales etc suddenly unavailable, or worse, gone.

What about the do-it-yourself Client-side platforms? Beyond the hype, these tools actually only represent the tip of the Rich client development iceberg. Under the Client-side surface is a highly complex development process involving a mix of moving parts including both the Server tier (responsible for the business logic, the data and back-end in-

David Akka M.Sc, MBA, is the Managing Director of Magic Software Enterprises (UK) Ltd. Akka has been with Magic Software since 1998 and is considered one of the organisation’s foremost authorities on Cloud computing and SOA methodologies. Prior to working with Magic Software, he held the position of CTO, Service Delivery Manager and worked in several management consulting roles.

very popular Platform-as-a-Service (PaaS) route. This is personified by solutions such as Force.com, where the full cloud package is available for a subscription fee. Then there are the Client-side platform toolkits, such as Adobe Flex or Microsoft Silverlight, where you build your rich user interface within your own development team.

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tegration), and a Session tier (the inter-lying communication layer between the Client and the Server that requires system programming skills).

Attempting to combine the comfort of a Client-Server ‘tightly-coupled’ connection with the highly interactive user experience of a web style ‘loosely-coupled’ setting isn’t

easy. It requires sophisticated system design and programming skills, leading to higher cloud development costs.

We must also consider that broadband internet is currently not sufficient to run tightlycoupled business applications featuring tens of interactive fields per screen. To compensate, a Rich client must support more logic at the Client end and must partition the processing between the Server and Client. Again, more costs.

“Rich Internet Applications (RIA) provide the best of both worlds” New breed A way out of the impasse may lie in the new breed of ‘end-to-end’ cloud application platforms. One such platform is Magic Software’s uniPaaS, which can be used either on-site or as a hosted Platform-as-a-Service (PaaS), providing the choice “to be, or not to be” in the Cloud. But more than that, uniPaaS provides all the parts of the solution – including the hidden part of the ‘iceberg’ – without requiring separate and expensive development. Hence ‘end to end’.

Using metadata rather than hard coding, uniPaaS leaves the designer free to describe the application’s business logic and perfect the compelling user interface while the platform then takes care of the rest, similar to the capabilities of the hosted PaaS – but without the limited deployment of the Cloud. uniPaaS applications are also accessible independent of the browser, so developers don’t need to re-write their code specifically to support the growing multitude of browser types out there today.

With a full end-to-end, metadata-driven application platform, navigating the Enterprise cloud challenge has never been easier and the rewards have never made more sense: A user experience surpassing the richest Client-Server applications, plus the incredible fact that it’s available over an http connection - a win-win scenario for both Enterprises, ISV’s and their customers! 

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

he true extent of the financial crisis is still unfolding. News of redundancies and acquisitions are fast becoming the daily norm. But, what impact will these events have on employees and managers who remain in these ‘troubled’ companies? How will companies pick themselves up and re-engage and motivate their staff in the wake of such events?

Too many companies which have recently been acquired or had to make large scale redundancies spend time wallowing in their troubles and mourning their losses, with managers too quick to apologise and justify tough decisions on issues such as staff redundancies.

Whilst managers need to be professional and humane in their decision making, to get a business back on track it is essential that they make these tough decisions quickly and then re-group in order to re-motivate staff, look to the future and embrace the changes taking place.

Making staff redundant is probably the hardest element of managing staff, but it is often essential for business survival. The truth is that in companies large and small, managers handle the process of redundancy badly. They fail to communicate the situation appropriately, often neglect the wellbeing of staff leaving and do not re-engage with remaining staff quickly enough so they are left feeling flat, fearful and unmotivated, which in the long run, impacts productivity.

Basic lessons to learn include firstly not over-apologising for the decision. People will understand that it is in the best interests of the company and the future of employment for the majority who remain. Next, managers should pay meticulous attention to the manner of communication. No employee should hear the news second hand and managers must do whatever it takes to communicate with any number of people on any number of sites as quickly as possible.

Managers should never underestimate the personal relief employees will be feeling that it was someone else and not them

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that was made redundant, or the degree to which they will need to get active again to make the whole exercise worthwhile. The best way they can honour their ex-colleagues is to make the company successful as quickly as possible.

Standing around grieving does no one any good and guilt on the part of the leaders serves no purpose whatsoever. Employees will want to look to the future so it is essential that managers re-focus on building the business and talking about the future in a positive way.

The key to handling redundancy successfully is also recognising that there is a psychological process that every person or business faced with big changes has to undergo in order to fully accept that change. It is ‘the cycle of grief’ change model, discovered originally by Elizabeth Kubler Ross. It recognises the different stages that people go through to come round to accepting a dramatic change in their lives, and is relevant for any situation where people suffer trauma as a result of an unexpected event. The cycle moves from shock and denial, anger and depression, through to dialogue and negotiation and finally acceptance.

As managers leading people through redundancy, whether they are leaving or staying, you should remember that staff will be moving through this cycle. This will not only encourage you to empathise with them, but makes your role as a manager more clear. You need to move your employees through the cycle to reach the final stage of acceptance quickly, which is when the business will get back on track. n

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

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

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

5

Remember that in employment situations, this depression and detachment does not last long.

People eventually get fed up of feeling low, and it only takes Acceptance one person, one leader-for-a-day, within the group to stand up one day and say ‘come on guys, let’s get on with it’, and the cohort is ready to move. A good manager will spot the leader for that stage and encourage them. They then move on to ACCEPTANCE and this is when your business will be ready to move forward.

4

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

Shock and denial

Once the person is ready to move out of denial, they move into ANGER. This is natural, even if they agree with the decision.

They are angry because their life has been disrupted and they are now out of control. Someone is to blame. So as a manager you will be blamed; the company will surely be blamed.

Don’t argue. Instead let them express their anger.

Empathise with them; tell them you understand and that it’s ok for Anger them to be angry.

2 3

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

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BUSINESS DOCTOR

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Executive coach Frances White answers your business dilemmas.

Dear Business Doctor, rk at an investI am hoping to find wo ur t, but I am facing ment bank in Frankf st the fact that many hurdles - not lea gh jobs around. there simply aren’t enou omics and have done I have a degree in econ vestment bank in an internship for an in petition for graduFrankfur t, but the com my lack of practical ate posts is fierce and being turned away experience means I am or positions. from even the most juni

ty to do the job – strong I believe I have the abili level of literacy, numerical skills, a high s etc. But how can I good negotiation skill tial employers and get that across to poten e when I am competpersuade them to hire m e experienced people? ing with so many mor

career success. Did you make contacts at that bank whom you can contact for advice or a reference? If not, do that.

So the real question is, how can you distinguish yourself from others in order to start the career you seek? The answer is – you will need to do two things.

One is to continue to apply for the roles you want and present yourself and your skills in such a way as to make you stand out from the pack. This is all about having impact – knowing your customer and what is important to them, presenting yourself in such a way as to meet those important criteria. You say you have good skills; perhaps you need to sharpen your sales skills in order to sell yourself more effectively.

Whatever you are doing, it is not working; you need to alter your sales strategy.

The second is to get some practical work experience. It may not be in the role you want or even the kind of organisation that you most want; but some work experience in another industry sector will give you some additional credibility and knowledge. This may well distinguish you from the pack.

Who knows, you may find you enjoy the new role and are successful!

R egards, Sarah Charleston Frankfur t

Dear Sarah,

Y

our assessment of the current situation is that competition for jobs is fierce, which is true. You are competing with others who have at least as many skills and qualifications as you do. You lack practical work experience which will give others an important edge. Businesses are sensible to recruit the most experienced people from a large selection available.

Your internship gives you at least some experience and whilst there, you should have developed your network. Networking is probably the most important skill for any individual who wants

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

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or, al Dear Business Doct with an internation ed oy pl em tly en rr I am cu of e job cuts in the wake ad m s ha at th nk ba age, . Being 52 years of the economic crisis le d that I will not be ab ie rr wo ly al ci pe es I am nt.

I am made redunda to get another job if apat I have considered I am so concerned th d of fering to take a an er oy pl em y m g proachin ces ll increase my chan wi is th se ca in t cu pay con uld also express my of being kept on. I co manager the value y m to e in tl ou d an cerns to the organisation. that I believe I bring I a good idea or should is is th k in th u yo Do to see what happens? keep quiet and wait R egards, Q uentin Brown Geneva

face challenges (just the kind of energy you DO need in a tough market) or someone who seems paralysed with fear about the future and is therefore probably being less productive, less innovative, less decisive?

Stay positive, look for how you can help your business to be even more to be successful and know that you are earning your salary. Act like the successful and productive employee that you are and keep your concerns to yourself – find other ways to manage any anxiety. Coaching is a great way to help you to stay focused on what matters and not obsess about what might go wrong. 

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

Dear Quentin,

T

he very best way to remain valued within any business environment, is to deliver exceptionally good performance year after year. That is what organisations most want; it is also what makes life good for your boss. Be low maintenance and add high value to your boss’s area and he/ she will be happy to keep you employed.

You say that job cuts have been made already – so your role has not been considered to be redundant, it is seen to add value, which is good. Businesses do not make people redundant who are just expensive. They make roles redundant which they honestly consider are not adding value – or at least not adding enough value to justify the expense of the headcount. It is not personal, nor is it what most managers wish to have to do. Yet it is part of a natural business cycle.

Your very best strategy is to have a positive outlook, to be optimistic. A recent McKinsey study suggested that optimists see life more realistically and show confidence that they can deal with life’s challenges, whilst pessimists tend to become paralysed with fear. Who would you rather keep in your business; one who is demonstrating with a positive outlook that they can

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BOOK REVIEW

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ON THE SHELF CXO takes a look at what the latest corporate book releases have to offer.

Inside Steve’s Brain

Business Lessons from Steve Jobs, the Man Who Saved Apple, by Leander Kahney In Inside Steve’s Brain, Kahney distills the principals that guide Jobs as he launches killer products, attracts fanatically loyal customers and manages some of the world’s most powerful brands. The result is a unique book: Part biography and part leadership manual, a revealing analysis of one of the critical business figures of our time, with some interesting nuggets of information about what makes him tick.

CXO says: A fascinating look at the thought processes and inspiration behind the man responsible for the success stories of both Apple and Pixar. A worthwhile, informative and concise read for anybody looking to learn more about Jobs.

The Armchair Economist

Economics and Everyday Life, by Steven E. Landsburg Economics impinge on almost every aspect of our everyday lives so Landsberg demonstrates how the laws of economics can reveal themselves in surprising ways. He examines everything from taxes, unemployment and illiteracy to the mating game, the death penalty and environmentalism to solve the puzzling questions that occur in daily living. This 240-page book asks why popcorn costs so much at the cinema, when it makes sense not to recycle, and why laws against polygamy are detrimental to women.

CXO says: This book was first published in 1995 so some of the material is a little dated. Nevertheless, it’s a fairly entertaining read with jokes, truisms and thought-provoking analysis that make you think differently about a whole host of situations that you encounter every day.

What Would Google Do?

By Jeff Jarvis

In What Would Google Do? Jarvis explores the principles, ideas, philosophies and worldview underpinning Google’s success. By reverse-engineering Google, Jarvis discerns its core practices, strategies, and attitudes to lay out a blueprint for what corporations, governments and individuals can do to build on their success.

CXO says: A bold and vital look at the most important challenges facing organisations today, this book will change the way businesses ask questions, solve problems and chart a course for the future.

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

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

Red Square

About

Getting around

From the airport

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

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

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

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

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

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

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

The journey should cost around $US45 but many foreigners unwittingly wind up paying at least double. There a few car rental stands but to get the best deals it’s probably best to book in advance.

If you are on a budget, buses to the centre operate from 5.40am until midnight. Be warned that passport control at both airports can be time-consuming so factor this into your journey.

Not your usual station

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TOURIST TIPS

Bolshoi Theatre

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

• Learn to say ‘neyt’ to your host.

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

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

Relax

• Keep your wits about

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

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

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

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

St Basil’s Cathedral

1, Red Square For authentic Russian fare head to this conveniently-located restaurant in the same building as the history museum.

Reservations are needed, even in the daytime. Meals from US$50 Pushkin Café Considered by many as the best eatery in Russia with its early 20th century atmosphere. The food is exquisite. The first floor is open 24 hours a day.

Dinner costs around US$50

Sleep Hotel Metropole Moscow Location is everything in Moscow and the Metropole doesn’t disappoint, with its perfect spot near to Red Square. A traditional Russian-feeling hotel.

Rates: From US$400 a night.

Ritz Carlton Hotel This eagerly-awaited hotel opened in 2007 with the stated aim to raise the standard for luxury hotels in Moscow. Sumptuous surroundings and décor make this possibly the finest in the city.

Rates: From US$300 a night.

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THE KNOWLEDGE

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The wow factor Looking to broker a big deal over dinner? CXO guides you through a handful of restaurants guaranteed to impress your clients.

Masa, New York, US Situated in New York’s Time Warner Centre, Masa is a sushi restaurant considered to be one of the best, albeit the priciest, in the world. Just don’t go leaving your wallet at home – dinner will set you back around US$400 per person, not including drinks, tax or tips. With just 26 seats, this dimly lit and intimate restaurant serves unique cuisine prepared by chef Masa Takayama.

Takayama opened his eponymous restaurant, as well as Bar Sushi next door in 2004, and it quickly gained a reputation in New York for its exotic ingredients. The owner flies fresh fish in from his homeland of Japan and serves up Kobe beef. He can often be seen serving the food himself and working behind the bar. Masa’s exclusivity means that reservations need to be made several weeks in advance.

Raffles Grill, Raffles Hotel Singapore Raffles is a colonial-style hotel that dates back to 1887 and is named after Singapore’s founder Sir Stamford Raffles. Today, it is managed by Raffles International and the Raffles Grill is where Singapore’s elite flock for that special dining experience. The hotel’s opulent surroundings and that traditional Raffles aura blended with a touch of French decadence provide the perfect backdrop.

The quiet ambience and formal attire does give you a feeling that you are attending an official dignitary dinner. The lobster bisque comes highly recommended, while the Raffles Grill boasts an impressive and extensive wine list.

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Al Mahara, Burj Al-Arab hotel, Dubai This underwater themed fish restaurant sits at the bottom of Dubai’s iconic Burj Al-Arab hotel. Al Mahara, which translates as ‘oyster’, begins with a simulated submarine ride from the reception to the dining area. Once inside, you will find the tables are placed around an enormous glass aquarium packed with fish of all sizes and varieties. It certainly is a jaw-dropping view as you tuck into your meal. Being situated in the world’s only 7-star hotel, it’s no surprise to learn that the service is exceptional. A special mention has to go to the whole bass for two people, while the sushi foie gras is an unexpected and tasty combination. Al Mahara is open from 12.30pm-3pm and 7pm to midnight daily. A formal dress code is observed.

El Bulli, Girona, Spain El Bulli has been voted the best restaurant in the world by virtually every culinary magazine and association. This restaurant reinvents dinner as an art form, with its picturesque setting in Girona on Spain’s Costa Brava. Owner Ferran Adriá spends months in his kitchen, or “laboratory” as he refers to it, perfecting new techniques and tastes. The flavours and textures are the result of incredible amounts of work, and an unrivalled understanding of the gastronomic make-up of each fresh ingredient. A highlight is the 27-course food festival that will awaken taste buds you never knew you had. One downside for food lovers is that El Bulli is only open from April through to September.

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OBJECTS OF DESIRE Technology for the mobile executive A glance at some of the gadgets designed to make your life easier.

Garmin nüvi 1200

Nokia E75 The latest handset to roll off the Nokia production line is the stylish E75. First impressions are that this is a solidly-built phone with a fairly slim design (14.4mm thick), which is all the more impressive when you discover the slide-out, full QWERTY keyboard concealed underneath. The 139-gram E75 offers the usual features like internet access and email on the move, a 3.1MP camera, MP3 player, video calling, VoIP capabilities and Wi-Fi, whilst the GPS receiver is a handy addition. The vibrant 2.4-inch screen displays 320x240 pixels.

There’s nothing worse than driving around in circles in a foreign city desperately trying to track down your destination. And we all know that men will only stop to ask for directions as a last resort. Most new cars come with factory-fitted sat navs as standard but the alternative is to invest in a portable device that sits on your dashboard. Leading manufacturer Garmin has just released its latest version – the ultra-thin and portable nüvi 1200. Featuring a bright 3.5-inch touchscreen display, it also has Garmin’s popular text to speech technology. For the time being it has only been released in the US but a European version is on its way.

Desirability rating:

Desirability rating:

Omega Limited Edition Omega is synonymous with British secret agent James Bond – being 007’s timepiece of choice – so the Swiss watchmaker is looking to cash in with their exclusive James Bond range. This one is the Seamaster Planet Ocean 600m Co-Axial “Quantum Of Solace” Limited Edition. It’s an impressive looking watch with the sapphire crystal domes lens laser engraved on its inner surface. It also has an engraved 007 medallion and the individual edition number of the watch.

Perfect for any wouldbe spy.

Sony P-Series Tipping the scales at a feather-light 638 grams, this diminutive, clamshell-design netbook boasts a crystal clear 1600x768 resolution, eight-inch widescreen display (no more scrolling horizontally to view web pages) and is powered by a 1.33GHz Intel Atom processor. This P-Series has a Motion Eye webcam for video chatting with friends and colleagues. It also houses a 60GB hard drive and 2BG or RAM but best of all, it comes with a full-size keyboard, perfect for all your typing needs.

Desirability rating: Desirability rating:

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What you think is a Sales Incentive May actually be a

Sales Killer!

What management often sees as a sales incentive, the sales force sees as a complicated, faulty, imprecise maze filled with traps and DISAPPOINTMENT. This “catch 22” traps untold revenue for nearly every business on the planet.

Golcent solves this compensation management problem.

Many clients find that the ROI is “immediate”.

Check out all the details at our website www.glocent.com.

This problem is not going away…any other way!

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HOT WHEELS Travel in style This issue’s star car is a recently-unveiled four-door saloon that promises all the power and poise you would expect from a fullyfledged sports car.

aimler’s luxury brand MercedesBenz has released its new flagship saloon, the E-Class. And judging by initial interest in the car, the company won’t have too much trouble finding customers, even though the auto industry is battling a sharp slump in sales amid a global recession. Already 50,000 orders

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had been placed prior to the announcement of the car in late March. The previous generation of the E-Class racked up sales of 1.5 million so the new model has a long road ahead, but the early signs are encouraging.

The version pictured here is the heart-pumping E63 AMG with 525hp and seven-speed sports transmission. Reassuringly, this is the most powerful E-Class to date thanks to a beastly 6.3-litre V8 under the bonnet. Put the pedal to the metal and the E63 will propel you from 0-100km/h in a blistering 4.5 seconds before hitting a top speed (electronically limited) of 255km/h.

Mecedes-Benz claims the new AMG RIDE CONTROL sports suspension copes equally well with the agile manoeuvres of the racetrack and more comfortable, sedate driving. Inside, the interior is a blend of blacks and greys, apart from the bright blue driver’s display. As you would expect, the build quality feels high-end.

The E-Class range goes on sale in August with a price tag for the E63 thought to be around €90,000. 

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CATALOGUE PAGE CXO:apr09 16/04/2009 08:17 Page 143

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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HR needs three eyes: one on the past – don’t lose sight of the systems that generate value; one on the present – determine if current processes are efficient; and one on the future – be proactive in meeting new challenges.

Providing for its customer’s needs and demands is the goal of financial institutions now more than ever. But it is a tricky remit to fulfill. Your customers want it all – security, cost-efficiency, speed, added functionality and, most of all, convenience.

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FINAL WORD

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The right protection Security is a critical part of running any modern organisation, however the efforts of those responsible for it often go unnoticed. This shouldn’t be the case, suggests Klaus Majewski, VP of Marketing at Stonesoft.

M

ost organisations face the challenge of implementing and maintaining good security efforts with less and less money. If the company assets have not been threatened by any security incidents lately, the top management may start to wonder why they are investing this much money in security. Of course, everybody below them knows that if there have not been any major incidents, the security efforts have been successful.

Many organisations make the mistake of not reporting security efforts and their results to the top management on a regular basis. If the top management can see, for example, how security investments keep blocking attacks, ridding emails of viruses, protecting valuable data on mobile devices and allowing secure information flow for all employees and business partners, they are more willing to spend that money.

Challenges One of the biggest security challenges is that secure internal networks no longer exist. This became clear to all from the recent effects of the ‘Conficker’, also known as ‘Downadup’, computer worm. The worm spread through both network connections and with removable media such as USB memory sticks.

It easily circumvented basic perimeter protection, because people brought it in using, for example, USB memory drives in their laptops. Once the worm got inside the organisation’s internal network, it was easy to go on infecting more computers. Consecutively, this turned the internal network into a hostile environment. Many organisations

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located somewhere outside of the organisation. How can you find out if the data security in the cloud service has been compromised? How do you know if a security breach has been fixed? Luckily, there are different technologies to make even the cloud services secure, but they cost money. Cloud service providers will not use them unless their customer – you – insists on good security from them and ways to provide reliable proof of it.

Virtualisation do not protect their internal networks against hostile internal computers.

A good solution for this is provided by segmenting and layering the network defence. First, create security segments inside the internal network that separate servers from user workstations. After that, implement intrusion prevention systems to prevent worms from spreading across these segments. Most organisations have anti-virus software installed in their workstations and servers, so it adds another layer to this defence scenario.

Another recent security problem is posed by the increasing popularity of cloud services. Cloud services are very cost effective for the business, adapt easily to business volume changes and, most of all, are available from any device, at any time and from anywhere. This is a blessing for the business people, but a nightmare for the security people.

First, none of the security people have any access to the servers, which are located somewhere in the cloud, after all, it is a cloud service. Secondly, all company crown jewels, for example, the customer database or even R&D secrets, are now

Yet another new emerging challenge for the security is virtualisation.

Virtualisation people concentrate on consolidating computers and disk space to provide improved efficiency and greener IT. They are not interested in security matters; they just want to make those systems work as efficiently as possible.

Most of the time security comes as an afterthought when the system is almost ready to go on production. Do you think that people implementing virtualisation will wait until the security people have made it secure – if this is even possible at that late stage? No, they will start production. After all, the virtual system is in the internal network, which is protected and secure, right? n For more information log onto www.stonesoft.com

Key points • R eport security efforts continuously to top management • R ealise that the internal network is not secure • R equire security from cloud service providers • Secure virtualisation

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